S-4

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 14, 2001
                                                          REGISTRATION NO. 333-
                                             REGISTRATION NOS. 333- THROUGH 333-
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                          ----------------------------

                                    FORM S-4
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                          -----------------------------

                             Sonic Automotive, Inc.
             (Exact Name of Registrant as Specified in its Charter)


                                                                                        
        Delaware                                    5511                                   56-2010790
(State or Other Jurisdiction of        (Primary Standard Industrial )                    (I.R.S. Employer
 Incorporation or Organization)           Classification Code Number                  Identification Number)


                        5401 East Independence Boulevard
                                 P.O. Box 18747
                         Charlotte, North Carolina 28212
                            Telephone: (704) 532-3320
   (Address, Including Zip Code, and Telephone Number, Including Area Code, of
                    Registrant's Principal Executive Offices)

                               Mr. Stephen K. Coss
                       Vice President and General Counsel
                        5401 East Independence Boulevard
                                 P.O. Box 18747
                         Charlotte, North Carolina 28212
                            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, Jr., Esq.
                             Moore & Van Allen PLLC
                       100 North Tryon Street, Suite 4700
                      Charlotte, North Carolina 28202-4003
                            Telephone: (704) 331-1000

                         ------------------------------


            Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.

            If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

            If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule
462(d) 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. [ ]

                         -------------------------------


                         CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------


                                                                                                            

                                                                               Proposed              Proposed
                                                                               Maximum               Maximum
                                                      Amount                   Offering             Aggregate         Amount of
Title of each class of securities to be               To be                     Price                Offering        Registration
          registered                               Registered(1)              Per Unit(1)             Price(1)            Fee
- ------------------------------------------------------------------------------------------------------------------------------------
11% Senior Subordinated Notes due                   200,000                    1,000              $200,000,000        $47,800
       2008, Series D                                 --                        --                    --                --
Guarantees of 11% Senior Subordinated
Notes due 2008,Series D(2)(3)
- ------------------------------------------------------------------------------------------------------------------------------------


     (1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(f)(1) of Regulation C of the Securities Act of 1933, as
amended.

     (2) Each Registrant other than Sonic Automotive, Inc. is a subsidiary of
Sonic Automotive, Inc. and is guaranteeing payment of the notes. Pursuant to
Rule 457(n) under the Securities Act of 1933, as amended, no registration fee is
required with respect to the guarantees.

     (3) No separate consideration will be received for the guarantees of the
notes by the subsidiaries of Sonic Automotive, Inc.


            The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant 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 in such dates as the Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.



                         TABLE OF ADDITIONAL REGISTRANTS



                                           Subsidiary                           State of                        IRS
                                           ----------                           --------                        ---
                                                                                Organization                    Employer
                                                                                ------------                    --------
                                                                                                                ID No.
                                                                                                                ------
                                                                                                           
Autobahn, Inc ............................................................      California                      94-3124481
Capitol Chevrolet and Imports, Inc. ......................................      Alabama                         63-1204447
Cobb Pontiac Cadillac, Inc ...............................................      Alabama                         63-1012553
FA Service Corporation ...................................................      California                      94-3285891
FAA Auto Factory, Inc. ...................................................      California                      94-3285893
FAA Beverly Hills, Inc. ..................................................      California                      95-4673054
FAA Capitol F, Inc. ......................................................      California                      94-3350030
FAA Capitol N, Inc. ......................................................      California                      64-3279958
FAA Concord H, Inc. ......................................................      California                      94-3264558
FAA Concord N, Inc. ......................................................      California                      94-3266151
FAA Concord T, Inc. ......................................................      California                      94-1730939
FAA Dublin N, Inc. .......................................................      California                      94-3267515
FAA Dublin VWD, Inc. .....................................................      California                      94-3267514
FAA Holding Corp. ........................................................      California                      94-3338764
FAA Las Vegas H, Inc. ....................................................      Nevada                          94-3330754
FAA Marin D, Inc. ........................................................      California                      94-3320521
FAA Marin F, Inc. ........................................................      California                      95-4746388
FAA Marin LR, Inc. .......................................................      California                      94-3345068
FAA Poway D, Inc. ........................................................      California                      94-3264557
FAA Poway G, Inc. ........................................................      California                      33-0792049
FAA Poway H, Inc. ........................................................      California                      94-3265895
FAA Poway T, Inc. ........................................................      California                      94-3266152
FAA San Bruno, Inc. ......................................................      California                      94-3264556
FAA Santa Monica V, Inc. .................................................      California                      95-4746387
FAA Serramonte, 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
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
Smart Nissan, Inc. .......................................................      California                      94-3256136
Sonic Automotive-Bondesen, Inc. ..........................................      Florida                         59-3552436
Sonic Automotive of Chattanooga, LLC .....................................      Tennessee                       62-1708471
Sonic Automotive-Clearwater, Inc. ........................................      Florida                         59-3501017
Sonic Automotive Collision Center of Clearwater, Inc. ....................      Florida                         59-3501024
Sonic Automotive F&I, LLC ................................................      Nevada                          88-0444271
Sonic Automotive of Georgia, Inc. ........................................      Georgia                         58-2399219
Sonic Automotive of Nashville, LLC .......................................      Tennessee                       62-1708481
Sonic Automotive of Nevada, Inc. .........................................      Nevada                          88-0378636
Sonic Automotive Servicing Company, LLC ..................................      Nevada                          88-0443690






                                                                                                            
Sonic Automotive of Tennessee, Inc. .......................................     Tennessee                       62-1710960
Sonic Automotive of Texas, L.P. ...........................................     Texas                           78-0586658
Sonic Automotive West, LLC ................................................     Nevada                          88-0444344
Sonic Automotive-1307 N. Dixie Hwy., NSB, Inc. ............................     Florida                         59-3523302
Sonic Automotive-1400 Automall Drive, Columbus, Inc .......................     Ohio                            31-1604259
Sonic Automotive-1455 Automall Drive, Columbus, Inc. ......................     Ohio                            31-1604276
Sonic Automotive-1495 Automall Drive, Columbus, Inc. ......................     Ohio                            31-1604281
Sonic Automotive-1500 Automall Drive, Columbus, Inc. ......................     Ohio                            31-1604285
Sonic Automotive-1720 Mason Ave., DB, Inc. ................................     Florida                         59-3523303
Sonic Automotive-1720 Mason Ave., DB, LLC .................................     Florida                         57-1072509
Sonic Automotive-1919 N. Dixie Hwy., NSB, Inc. ............................     Florida                         59-3523301
Sonic Automotive-21699 U.S. Hwy 19 N., Inc. ...............................     Florida                         59-3501021
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-Camp Ford, L.P. .....................................................     Texas                           76-0613472
Sonic - Capital Chevrolet, Inc. ...........................................     Ohio                            31-0743366
Sonic-Carrollton V, L.P. ..................................................     Texas                           75-2896744
Sonic-Classic Dodge, Inc. .................................................     Alabama                         56-2139902
Sonic - Coast Cadillac, Inc. ..............................................     California                      95-4711579
Sonic-Development, LLC ....................................................     North Carolina                  56-2140030
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 Nissan, Inc. .....................................................     Florida                         65-0938818
Sonic-FM VW, Inc. .........................................................     Florida                         65-0938821
Sonic-Fort Worth T, L.P ...................................................     Texas                           75-2897202
Sonic-Freeland, Inc. ......................................................     Florida                         65-0938812
Sonic-Global Imports, L.P. ................................................     Georgia                         58-2436174
Sonic-Glover, Inc. ........................................................     Oklahoma                        74-2936323
Sonic - 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 - LS Chevrolet, L.P. ................................................     Texas                           76-0594652
Sonic - LS, LLC ...........................................................     Delaware                        Not applicable






                                                                                                            
Sonic-Lute Riley, L. P. ....................................................    Texas                           75-2812871
Sonic-Manhattan Fairfax, Inc. ..............................................    Virginia                        52-2173072
Sonic-Manhattan Waldorf, Inc. ..............................................    Maryland                        52-2172032
Sonic-Montgomery FLM, Inc. .................................................    Alabama                         56-2169250
Sonic-Newsome Chevrolet World, Inc. ........................................    South Carolina                  57-1077344
Sonic-Newsome of Florence, Inc. ............................................    South Carolina                  57-1077343
Sonic-North Charleston, Inc. ...............................................    South Carolina                  58-2460639
Sonic-North Charleston Dodge, Inc. .........................................    South Carolina                  58-2479700
Sonic - Park Place A, L.P. .................................................    Texas                           75-2963437
Sonic Peachtree Industrial Blvd., L.P. .....................................    Georgia                         56-2089761
Sonic-Reading, L.P. ........................................................    Texas                           76-0605765
Sonic-Richardson F, L.P. ...................................................    Texas                           75-2901775
Sonic-Riverside, Inc. ......................................................    Oklahoma                        73-1574888
Sonic-Riverside Auto Factory, Inc. .........................................    Oklahoma                        73-1591124
Sonic-Rockville Imports, Inc. ..............................................    Maryland                        52-2172034
Sonic-Rockville Motors, Inc. ...............................................    Maryland                        52-2172033
Sonic-Sam White Nissan, L.P. ...............................................    Texas                           76-0597722
Sonic-Shottenkirk, Inc. ....................................................    Florida                         56-3575773
Sonic-Stevens Creek B, Inc. ................................................    California                      94-2261540
Sonic-Superior Oldsmobile, LLC .............................................    Tennessee                       56-2122487
Sonic of Texas, Inc. .......................................................    Texas                           78-0586661
Sonic Resources, Inc. ......................................................    Nevada                          Not applicable
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
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 Nevada-1, LLC ..........................................................    Nevada                          88-0468209
SRE Nevada-2, LLC ..........................................................    Nevada                          88-0465280
SRE Nevada-3, LLC ..........................................................    Nevada                          88-0465279
SRE South Carolina-2, LLC ..................................................    South Carolina                  58-2560892
SRE Tennessee-1, LLC .......................................................    Tennessee                       56-2200186
SRE Tennessee-2, LLC .......................................................    Tennessee                       56-2202429
SRE Tennessee-3, LLC .......................................................    Tennessee                       56-2202479
SRE Texas-1, L.P. ..........................................................    Texas                           74-2962385
SRE Texas-2, L.P. ..........................................................    Texas                           74-2963860
SRE Texas-3, L.P. ..........................................................    Texas                           74-2963859
SRE Virginia-1, LLC ........................................................    Virginia                        52-2252370
Stevens Creek Cadillac, Inc. ...............................................    California                      77-0093380
Town and Country Chrysler-Plymouth-Jeep, LLC ...............................    Tennessee                       62-1708483
Town and Country Dodge of Chattanooga, LLC .................................    Tennessee                       62-1708487
Town and Country Ford, Incorporated ........................................    North Carolina                  56-0887416






                                                                                                            
Town and Country Ford of Cleveland, LLC .....................................   Tennessee                       62-1708484
Town and Country Jaguar, LLC ................................................   Tennessee                       62-1708491
Transcar Leasing, Inc. ......................................................   California                      94-2713550
Village Imported Cars, Inc. .................................................   Maryland                        52-0896186
Windward, Inc. ..............................................................   Hawaii                          94-2659042



      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.


The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is declared effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.

                    THIS PROSPECTUS IS SUBJECT TO COMPLETION,
                             DATED DECEMBER 14, 2001
      PROSPECTUS

                                  [SONIC LOGO]

                    Offer to Exchange All of Our Outstanding
           Registered 11% Senior Subordinated Notes Due 2008, Series B
                                       And
          Unregistered 11% Senior Subordinated Notes Due 2008, Series C
                                       For
           Registered 11% Senior Subordinated Notes Due 2008, Series D

      We are offering to exchange all of our outstanding 11% Senior Subordinated
Notes Due 2008, Series B and 11% Senior Subordinated Notes Due 2008, Series C
for $200.0 million in aggregate principal amount of our 11% Senior Subordinated
Notes Due 2008, Series D.

      The Series B notes were issued in a registered offering on December 10,
1998. As of the date of this prospectus, there is $125.0 million in aggregate
principal amount of Series B notes outstanding. The Series C notes were issued
in a private offering on November 19, 2001. As of the date of this prospectus,
there is $75.0 million in aggregate principal amount of Series C notes
outstanding.

      The terms of the Series B and Series C notes are identical in all material
respects. The terms of the Series D notes will be identical in all material
respects to the Series B and Series C notes.

      When issued, the Series D notes will be registered under the Securities
Act of 1933, as amended, and will contain no legends restricting their transfer.
If all of the Series B and Series C notes are exchanged for Series D notes in
this exchange offer, we will have a single series of registered notes
outstanding with an aggregate principal amount of $200.0 million.

      This offer expires at 5:00 p.m., New York City time, on ___________, 2002,
unless extended.

      The exchange offer for the Series B notes is conditioned upon valid
tenders of at least $50.0 million in aggregate principal amount of Series B
notes. The exchange offer for the Series C notes is not subject to this
condition. Validly tendered Series C notes will be exchanged regardless of the
aggregate principal amount of Series B notes tendered for exchange.

      You should carefully review the procedures for tendering Series B or
Series C notes under the caption "The Exchange Offer" beginning on page 27 of
this prospectus. If you do not comply with these procedures, we may not exchange
your Series B or Series C notes for Series D notes.

      If you currently hold Series B notes and fail to validly tender them, then
you will continue to hold registered Series B notes, but the total principal
amount of the Series B notes outstanding may be reduced by the exchange offer.
This may reduce the liquidity of the Series B notes after the exchange offer.

      If you currently hold Series C notes and fail to validly tender them, then
you will continue to hold unregistered Series C notes and your ability to
transfer them will be subject to transfer restrictions, which could adversely
affect your ability to transfer Series C notes.

      Although the Series D notes will be registered, we do not intend to list
them on any securities exchange and, consequently, do not anticipate an active
public market for the Series D notes.

      BOTH ACCEPTANCE AND REJECTION OF THIS EXCHANGE OFFER INVOLVE RISKS. SOME
OF THE RISKS ASSOCIATED WITH THE EXCHANGE OFFER AND AN INVESTMENT IN THE SERIES
D NOTES OFFERED THROUGH THIS PROSPECTUS ARE DESCRIBED UNDER THE CAPTION "RISK
FACTORS" BEGINNING ON PAGE 11 OF THIS PROSPECTUS. NEITHER THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THE NOTES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL AND
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                    The date of this prospectus is       , 2002



                               TABLE OF CONTENTS

                                                                            Page

      Prospectus Summary ................................................      1
      Risk Factors ......................................................     11
      The Exchange Offer ................................................     27
      Selected Consolidated Financial Data ..............................     35
      Description of Notes ..............................................     37
      Material United States Federal Income Tax Considerations ..........     73
      Plan of Distribution ..............................................     73
      Legal Matters .....................................................     73
      Experts ...........................................................     74




                 WHERE YOU CAN FIND MORE INFORMATION ABOUT SONIC

      This prospectus incorporates business and financial information about us
that is not included or delivered with the document. This information is
included in annual, quarterly and current reports, proxy statements and other
information we file with the Securities and Exchange Commission (the
"Commission"). You may read and copy these reports, proxy statements and other
information at the Public Reference Room of the Commission 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 1-800-SEC-0330. Copies may be obtained from the Commission upon payment of
the prescribed 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. 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 to whom we provide 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. You must make your request for documents no later than five
business days before you make your investment decision concerning our securities
to obtain timely delivery of these documents. In addition, you must request this
information by ______________, 2002 or at least five business days in advance of
the expiration of this exchange offer.

      This prospectus is a part of a Registration Statement on Form S-4 filed
with the Commission by Sonic. This prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits thereto.
Statements about the contents of contracts or other documents contained in this
prospectus or in any other filing to which we refer you are not necessarily
complete. You should review the actual copy of such documents filed as an
exhibit to the Registration Statement or such other filing. Copies of the
Registration Statement and these exhibits may be obtained from the Commission as
indicated above upon payment of the fees prescribed by the Commission.

      We incorporate by reference into this prospectus the documents listed
below and any future filings made with the Commission (including the exhibits
filed therewith) under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, until we close this offering or it is
otherwise terminated:

      (1)  Our Current Report on Form 8-K dated January 17, 2001;

      (2)  Our Annual Report on Form 10-K for the fiscal year ended
           December 31, 2000;

      (3)  Our Quarterly Report on Form 10-Q for the fiscal quarter ended
           March 31, 2001;

      (4)  Our Quarterly Report on Form 10-Q for the fiscal quarter ended
           June 30, 2001;

      (5)  Our Quarterly Report on Form 10-Q for the fiscal quarter ended
           September 30, 2001;

      (6)  Our Definitive Proxy Statement dated April 4, 2001; and


                                       i



      (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 the Securities Exchange Act of 1934, as
           amended.

      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, as applicable.

      Except as otherwise indicated, all references in this prospectus to "we,"
"us," "our," "our company" or "Sonic" means Sonic Automotive, Inc. and its
subsidiaries.

      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 are not making 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 and the information
incorporated by reference is accurate only as of their respective dates. Our
business, financial condition, results of operations and prospects may have
changed since those dates.

             CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

      This prospectus and any related supplements or amendments contain
statements that constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are not historical facts,
but only predictions and generally can be identified by use of statements that
include words such as "believe," "expect," "anticipate," "intend," "plan,"
"foresee" or other words or phrases of similar import. Similarly, statements
that describe our objectives, plans or goals are also forward-looking
statements. We intend such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in the Private
Litigation Securities Reform Act of 1995, and we are including this statement
for purposes of complying with these safe harbor provisions. These statements
appear in a number of places in this prospectus and include statements regarding
our intent, belief or current expectations, or those of our directors or
officers, with respect to, among other things:

     o our potential acquisitions;

     o trends in our industry;

     o our financing plans;

     o the effect of the Internet on our business and our ability to implement
       our Internet business strategy;

     o trends affecting our financial condition or results of operations; and

     o our business and growth strategies.

      You are cautioned that these forward-looking statements are not guarantees
of future performance and involve risks and uncertainties, and that actual
results may differ materially from those projected in the forward-looking
statements as a result of various factors. Among others, factors that could
materially adversely affect actual results and performance include those risk
factors contained herein and incorporated by reference, such as:

     o local and regional economic conditions in the areas we serve;

     o the level of consumer spending;

     o our relationships with manufacturers;

     o high competition;

     o site selection and related traffic and demographic patterns;



                                       ii



     o inventory management and turnover levels;

     o the effect of the Internet on our business;

     o realization of cost savings; and

     o our success in integrating recent and potential future acquisitions,
       including integration of acquired information systems.



                                      iii




                               PROSPECTUS SUMMARY

     The following summary is qualified in its entirety by the more detailed
information included elsewhere or incorporated by reference in this prospectus.
Because this is a summary, it does not include all of the information that may
be important to you. You should read this entire prospectus and the documents
that we incorporate by reference before deciding whether to participate in the
exchange.

     Sonic Automotive, Inc. is the second largest automotive retailer in the
United States, as measured by total revenue, operating 156 dealership franchises
and 29 collision repair centers in 25 metropolitan areas of the United States.
We own and operate franchises for 29 different brands of cars and light trucks,
providing comprehensive services including sales of both new and used cars and
light trucks, replacement parts and vehicle maintenance, warranty, paint and
repair services. We also arrange extended warranty contracts and financing and
insurance, which we refer to as "F&I," for our automotive customers. Our growth
in operations has been strategically focused on high growth metropolitan
markets, predominantly in the Southeast, Southwest, Midwest and California, that
on average are experiencing population growth that exceeds the national average.

     Each of our dealership locations provides similar products and services,
including (1) new car sales, (2) used car sales, (3) parts, service and
collision repair and (4) F&I services. As compared to automotive manufacturers,
we and other automobile retailers exhibit relatively low earnings volatility.
This is primarily due to the differing expense structures between automotive
manufacturers and retailers. For the nine months ended September 30, 2001,
approximately 38% of our expenses, primarily rent and salaries, were fixed
expenses. The majority of our variable expenses are variable, and relate to
sales commissions and advertising which can be adjusted as demand patterns
change. We believe the diversity of our revenue sources at our full service
automotive dealerships and our flexible expense structure mitigate the effects
of economic cycles and seasonal influences.

     Our Class A common stock is traded on the New York Stock Exchange under the
symbol "SAH." Our principal executive offices are located at 5401 East
Independence Blvd., Charlotte, North Carolina 28212, telephone (704) 532-3320.
We were incorporated in Delaware in 1997.


                                       1



                               The Exchange Offer

     On November 19, 2001, we privately placed $75.0 million of 11% Senior
Subordinated Notes due 2008, Series C, which we refer to as Series C notes. We
sold the Series C notes to the following initial purchasers:

           o Merrill Lynch, Pierce, Fenner & Smith Incorporated; and
           o Banc of America Securities LLC.

     These initial purchasers then sold the Series C notes to qualified
institutional investors.

     At the time of the private placement of the Series C notes, we entered into
a registration rights agreement with the initial purchasers of the Series C
notes. Under the registration rights agreement, we agreed to offer to exchange
registered Series D notes for all of our outstanding Series B and Series C
notes. We agreed to commence this exchange offer on or before April 3, 2002 and
to complete the exchange offer on or before May 3, 2002. If we do not complete
this exchange offer on or before April 3, 2002, except under limited
circumstances, we must pay liquidated damages to the holders of our Series C
notes until the exchange offer is completed.

Securities to be exchanged (see page 27)   On July 31, 1998, we issued $125.0
                                           million in aggregate principal amount
                                           of 11% Senior Subordinated Notes due
                                           2008, Series A in a transaction
                                           exempt from the registration
                                           requirements of the Securities Act of
                                           1933.  On December 10, 1998, pursuant
                                           to a registered exchange offer, we
                                           exchanged all of the outstanding
                                           Series A notes for 11% Senior
                                           Subordinated Notes due 2008,
                                           Series B.  The Series B notes are
                                           currently governed by the terms of an
                                           indenture dated as of July 11, 1998
                                           and are identical in all material
                                           respects to the Series A notes.  As
                                           of the date of this prospectus, there
                                           is $125.0 million in aggregate
                                           principal amount of Series B notes
                                           outstanding.

                                           On November 19, 2001, we issued
                                           $75.0 million in aggregate principal
                                           amount of 11% Senior Subordinated
                                           Notes due 2008, Series C in a
                                           transaction exempt from the
                                           registration requirements of the
                                           Securities Act of 1933. The Series C
                                           notes are currently governed by the
                                           terms of an indenture dated as of
                                           November 19, 2001 and are identical
                                           in all material respects to the
                                           Series B notes. As of the date of
                                           this prospectus, there is $75.0
                                           million in aggregate principal amount
                                           of Series C notes outstanding.


The Exchange Offer (see page 27)......     We are offering to exchange all of
                                           our outstanding Series B notes and
                                           Series C notes for $200.0 million in
                                           aggregate principal amount of our
                                           registered 11% Senior Subordinated
                                           Notes due 2008, Series D.  The terms
                                           of the Series D notes will be
                                           identical in all material respects to
                                           the Series B and Series C notes.  The
                                           Series D notes will be governed by
                                           the terms of an indenture dated as of
                                           November 19, 2001.


Expiration date; extension of tender
  period; termination; and
  amendment (see pages 28 and 33)          This exchange offer will expire at
                                           5:00 p.m. New York City time on
                                           _____________,2002 unless we extend
                                           it. You must tender your outstanding
                                           Series B or Series C notes prior to
                                           ____________, 2002 if you want to
                                           participate in the exchange offer. We
                                           may terminate the exchange offer in
                                           the event of circumstances described
                                           on page__under the caption "Exchange
                                           Offer". We have the right to amend
                                           any of the terms of the exchange
                                           offer subject to our obligations
                                           under the registration rights
                                           agreement.


                                       2



Conditions for completion of the exchange
   offer (see page 33)...                   The exchange offer is subject to
                                            various conditions. In particular,
                                            we are not obligated to, and will
                                            not, exchange Series D notes for
                                            Series B notes unless at least $50.0
                                            million in aggregate principal
                                            amount of Series B notes are
                                            tendered for exchange (the "Minimum
                                            Exchange Condition"). All conditions
                                            must be satisfied or waived prior to
                                            the expiration of the exchange
                                            offer. We will not waive, or cause
                                            to be waived, the Minimum Exchange
                                            Condition.

Procedures for tendering Series B and
   Series C notes (see page 29)...          We issued the Series B and Series C
                                            notes as global securities. When we
                                            issued the Series B and Series C
                                            notes, we deposited them with U.S.
                                            Bank Trust National Association, as
                                            custodian. U.S. Bank Trust issued
                                            an uncertificated depository
                                            interest in the Series B and
                                            Series C notes, which represent a
                                            100% interest in the Series B and
                                            Series C notes, to The Depository
                                            Trust Corporation,which we refer to
                                            as DTC. Beneficial interests in the
                                            Series B and Series C notes, which
                                            direct or indirect participants in
                                            the DTC hold through uncertificated
                                            depository interests, are shown on
                                            records that the DTC maintains in
                                            book-entry form.

                                            If you wish to participate in the
                                            exchange offer, you must transmit
                                            to U.S. Bank Trust National
                                            Association, which is the exchange
                                            agent, on or before the expiration
                                            of the exchange offer, either:

                                              o  a completed and signed letter
                                                 of transmittal or a facsimile
                                                 thereof, in accordance with the
                                                 instructions contained in this
                                                 prospectus and the letter of
                                                 transmittal,and any other
                                                 documents; or

                                              o  a computer-generated message
                                                 transmitted by means of DTC's
                                                 Automated Tender Offer Program
                                                 system and forming a part of a
                                                 confirmation of book-entry
                                                 transfer in which you
                                                 acknowledge and agree to be
                                                 bound by the terms of the
                                                 letter of transmittal. The
                                                 exchange agent must also
                                                 receive on or prior to the
                                                 expiration of the exchange
                                                 offer either:

                                                 o  a timely confirmation of
                                                    book-entry transfer of your
                                                    outstanding notes into the
                                                    exchange agent's account at
                                                    DTC, in accordance with the
                                                    procedure for book-entry
                                                    transfers; or

                                                 o  the documents necessary for
                                                    compliance with the
                                                    guaranteed delivery
                                                    procedures.

                                             Do not send letters of transmittal
                                             and certificates representing
                                             Series B and Series C notes to us
                                             or to DTC. Send these documents
                                             only to the exchange agent.


                                       3



Procedures for tendering
certificated Series B and Series C notes
(see page 30)........                     If you are a holder of book-entry
                                          interests in the Series B and
                                          Series C notes, you are entitled to
                                          receive, in limited circumstances, in
                                          exchange for your book-entry
                                          interests, certificated notes which
                                          are in equal principal amounts to your
                                          book-entry interests. No certificated
                                          notes are issued and outstanding as
                                          of the date of this prospectus. If
                                          you acquire certificated Series B and
                                          Series C notes prior to the expiration
                                          of the exchange offer, you must tender
                                          your certificated outstanding notes in
                                          accordance with the procedures
                                          described in this prospectus under the
                                          heading "The Exchange Offer -
                                          Procedures for Tendering -
                                          Certificated Series B and Series C
                                          Notes."

Procedures for tendering
Series B and Series C notes held by a
broker (see page 30)........              If you hold your Series B and
                                          Series C notes through a broker, do
                                          not complete the letter transmittal.
                                          Please contact your broker directly
                                          for instructions on how to
                                          participate in the exchange offer.

Guaranteed delivery procedures
(see page 31).........                    If you wish to tender your Series B
                                          and Series C notes and your Series B
                                          and Series C notes are not immediately
                                          available or you cannot timely deliver
                                          your Series B and Series C notes, the
                                          letter of transmittal or any other
                                          documents required by the letter of
                                          transmittal to the exchange agent, or
                                          you cannot complete the procedure for
                                          book-entry transfer, then on or prior
                                          to the expiration of the exchange
                                          offer you must tender your Series B
                                          and Series C notes according to the
                                          guaranteed delivery procedures set
                                          forth in "The Exchange Offer -
                                          Guaranteed Delivery Procedures."


Withdrawal (see page 32).......           Your tender of Series B or Series C
                                          notes pursuant to this exchange offer
                                          may be withdrawn at any time before
                                          the exchange offer expires.
                                          Withdrawals may not be rescinded. If
                                          you change your mind again, you may
                                          tender your Series B or Series C notes
                                          again by following the exchange offer
                                          procedures before the exchange offer
                                          expires.

Termination of certain rights of the
Series C notes (see page 28)..........    Pursuant to the registration rights
                                          agreement and the terms of the
                                          Series C notes, holders of Series C
                                          notes have certain rights pending the
                                          closing of the exchange offer.  After
                                          the closing of the exchange offer,
                                          holders of Series C notes will not be
                                          entitled to these rights except in
                                          limited circumstances.

Accrued interest (see page 33).....       Interest on the Series D notes will
                                          accrue from the most recent interest
                                          payment date on which interest was
                                          paid on the Series B and Series C
                                          notes.


                                       4




Resales of Series D notes (see page 31).... Based on interpretations by the
                                            Commission staff, we believe holders
                                            of the Series D notes who are not
                                            broker-dealers, can offer for
                                            resale, resell and otherwise
                                            transfer the Series D notes without
                                            complying with the registration and
                                            prospectus delivery requirements of
                                            the Securities Act of 1933, as
                                            amended if:

                                            o  you acquire the Series D notes in
                                               the ordinary course of your
                                               business;

                                            o  you are not participating, do not
                                               intend to participate and have
                                               no arrangement or understanding
                                               with any person to participate,
                                               in the distribution of the
                                               Series D notes; and

                                            o  you are not an "affiliate" of
                                               Sonic, as defined in Rule 405
                                               under of the Securities Act of
                                               1933.

                                            By executing the letter of
                                            transmittal related to this
                                            offering, or by agreeing to the
                                            terms of the letter of transmittal,
                                            you are representing to us that you
                                            satisfy each of these conditions.
                                            If you do not satisfy these
                                            conditions and you transfer the
                                            Series D notes without delivering
                                            a proper prospectus or without
                                            qualifying for an exemption from the
                                            registration requirements of the
                                            Securities Act of 1933, you may
                                            incur liability under the
                                            Securities Act of 1933.

                                            Our belief that you can offer for
                                            resale, resell and otherwise
                                            transfer the Series D notes
                                            without complying with the
                                            registration and prospectus delivery
                                            requirements of the Securities Act
                                            of 1933 if you meet the conditions
                                            listed above is based on Commission
                                            staff interpretations given to
                                            other, unrelated issuers in other
                                            exchange offers. We will not seek an
                                            Commission staff interpretation in
                                            connection with our exchange offer.
                                            We cannot assure you that the
                                            Commission staff would make a
                                            similar interpretation with respect
                                            to our exchange offer and will not
                                            be responsible for or indemnify you
                                            against any liability you may incur
                                            under the Securities Act.

Delivery of Series D notes
(see pages 29 and 33).......                We will deliver Series D notes by
                                            book-entry transfer as soon as
                                            reasonably practicable after
                                            acceptance of the Series B and
                                            Series C notes. If we do not accept
                                            any of your outstanding Series B or
                                            Series C notes for exchange, we will
                                            return them to you as promptly as
                                            practicable after the expiration or
                                            termination of the exchange offer
                                            without any expense to you.

No appraisal rights (see page 28)...        No appraisal rights are available to
                                            holders of Series B or Series C
                                            notes in connection with the
                                            exchange offer. If you do not tender
                                            your Series B or Series C notes or
                                            we reject your tender, you will not
                                            be entitled to any further
                                            registration rights under the
                                            registration rights agreement,
                                            except under limited circumstances.
                                            Your unexchanged notes will,
                                            however, remain outstanding and
                                            entitled to the benefits of the
                                            indenture.


                                       5



Prospectus delivery (see page 31).... All broker-dealers must comply with the
                                      registration and prospectus delivery
                                      requirements of the Securities Act of
                                      1933. Each broker-dealer that receives
                                      registered notes for its own account
                                      pursuant to the exchange offer must
                                      acknowledge that it will deliver a
                                      prospectus in connection with any resale
                                      of the registered notes. The letter of
                                      transmittal accompanying this prospectus
                                      states that by so acknowledging and by
                                      delivering a prospectus, a broker-dealer
                                      will not be deemed to admit that it is an
                                      "underwriter" within the meaning of the
                                      Securities Act. We have agreed that for a
                                      period of 180 days after consummating the
                                      exchange offer we will make this
                                      prospectus available to any broker-dealer
                                      for use in connection with any resale.

Material United States federal income
tax considerations(see page 73)...... Your exchange of Series B or Series C
                                      notes for Series D notes should not be a
                                      taxable exchange for United States federal
                                      income tax purposes. You should not
                                      recognize any taxable gain or loss or any
                                      interest income as result of the exchange.

Exchange agent (see page 34).....     U.S. Bank Trust National Association

Risk factors (see page 11)......      You should consider carefully the matters
                                      described in the section entitled "Risk
                                      Factors," as well as the other information
                                      included in this prospectus and the
                                      documents to which we have referred you.

Legal limitation.........             We are not making any offer to sell, nor
                                      are we soliciting any offer to buy,
                                      securities in any jurisdiction in which
                                      the offer or sale is not permitted.


                                       6



                          Summary of the Series D Notes

     The following is a brief summary of certain terms of the Series D notes.
For a more complete description of the terms of the notes, see "Description of
Notes" in this prospectus.

Issuer............................  Sonic Automotive, Inc.

Notes offered ....................  $200.0 million aggregate principal amount of
                                    11% senior subordinated notes due 2008,
                                    Series D. The terms of these notes will be
                                    identical in all material respects to Series
                                    B and Series C notes.

Interest rate....................   The Series D notes will bear interest at a
                                    rate of 11% per annum.

Maturity ........................   August 1, 2008.

Interest payment dates ..........   February 1 and August 1, beginning August 1,
                                    2002.

Guarantees.......................   Each of our operating subsidiaries will
                                    guarantee the Series D notes. Future
                                    subsidiaries may also be required to
                                    guarantee the Series D notes.

Ranking .........................   The Series D notes will be unsecured senior
                                    subordinated obligations and will be
                                    subordinated to our floor plan facilities,
                                    construction/mortgage facility, revolving
                                    facility and other senior indebtedness. The
                                    Series D notes will rank equally with our
                                    senior subordinated indebtedness and will
                                    rank senior to our subordinated
                                    indebtedness. Because the Series D notes
                                    are subordinated, in the event of
                                    bankruptcy, liquidation or dissolution and
                                    acceleration of or payment default on senior
                                    indebtedness, holders of the Series D notes
                                    will not receive any payment until holders
                                    of senior indebtedness have been paid in
                                    full.

                                    As of September 30, 2001, after giving
                                    pro forma effect to the sale of the
                                    Series C notes, our use of the net proceeds
                                    of that sale, and assuming that all
                                    Series B notes and Series C notes are
                                    exchanged for Series D notes, we would have
                                    had $253.6 million of debt which would have
                                    been senior or secured (excluding floor
                                    plan debt), no debt ranking pari passu to
                                    the Series D notes and $5.5 million of
                                    unsecured subordinated debt.

Optional redemption ..........      We may redeem some or all of the Series D
                                    notes at any time on or after August 1,
                                    2003 at the redemption prices described in
                                    the prospectus.

Change of control.............      When a change of control occurs, each
                                    holder of Series D notes may require us to
                                    repurchase some or all of its notes at a
                                    purhase price equal to 101% of the principal
                                    amount of the notes, plus accrued interest.

Covenants.....................      The indenture governing the Series D notes
                                    will contain covenants that, among other
                                    things, will limit our ability and the
                                    ability of our subsidiaries to:

                                    o incur additional indebtedness,

                                    o pay dividends on, redeem or repurchase our
                                      capital stock,

                                       7




                               o make investments

                               o create certain liens,

                               o sell assets,

                               o in the case of our restricted subsidiaries,
                                 make dividend or other payments to us,

                               o in the case of our subsidiaries, guarantee
                                 indebtedness or secure debt,

                               o engage in transactions with affiliates,

                               o create unrestricted subsidiaries and

                               o consolidate, merge or transfer all or
                                 substantially all of our assets and the assets
                                 of our subsidiaries on a consolidated basis.

                               These covenants are subject to important
                               exceptions and qualifications, which are
                               described under the heading "Description of
                               Notes" in this prospectus.

Exchange offer; registration
 rights.....................   Under a registration rights agreement executed as
                               part of the sale of the Series C notes, we and
                               the guarantors agreed to:

                               o use our reasonable best efforts to file a
                                 registration statement within 60 days after the
                                 issue date of the Series C notes enabling
                                 holders of Series C notes and of the Series B
                                 notes to exchange their Series C notes or the
                                 Series B notes for publicly registered Series D
                                 notes with identical terms,

                               o use our reasonable best efforts to cause the
                                 registration statement to become effective
                                 within 135 days after the issue date of the
                                 Series C notes,

                               o use our reasonable best efforts to complete the
                                 exchange offer within 165 days after the issue
                                 date of the Series C notes and

                               o file a shelf registration statement for the
                                 resale of the Series C notes if we cannot
                                 effect an exchange offer within the time
                                 periods listed above and in other
                                 circumstances.

                               We will not complete the exchange offer until
                               after our February 1, 2002 interest payment on
                               the Series B and Series C notes. The interest
                               rate on the Series C notes will increase if we
                               do not comply with our obligations under the
                               registration rights agreement. See "Exchange
                               Offer."

Use of proceeds.............   We will not receive any proceeds from the
                               exchange offer. We are conducting the exchange
                               offer to satisfy our obligations under the
                               registration rights agreement.


                                       8



                Summary Consolidated Financial and Operating Data

     We have accounted for all of our dealership acquisitions using the purchase
method of accounting and, as a result, we do not include in our financial
statements the results of operations of acquired dealerships prior to the date
they were acquired by us. The Summary Consolidated Financial and Operating Data
of Sonic discussed below reflect the results of operations and financial
position of each of our dealerships acquired prior to September 30, 2001. As a
result of the effects of our acquisitions and other potential factors in the
future, the Summary Consolidated Financial Data set forth below is not
necessarily indicative of the results of operations and financial position of
Sonic in the future or the results of operations and financial position that
would have resulted had such acquisitions occurred at the beginning of the
periods presented below. In accordance with accounting principles generally
accepted in the United States of America, the summary consolidated financial and
operating data has been retroactively restated to reflect Sonic's two-for-one
common stock split that occurred on January 29, 1999. This summary consolidated
financial and operating data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Sonic's consolidated financial statements and the related notes thereto,
incorporated by reference in this prospectus.


                                       9








                                                                                                           Nine Months Ended
                                                                 Year Ended December 31,                        September 30,
                                         ------------------------------------------------------------------------------------------
                                                                                                             
                                                  1998                  1999            2000              2000              2001
                                                  ----                  ----            ----              ----              ----
                                                        (dollars and shares in thousands, except per share amounts)
Income Statement Data:
Revenues:

    Vehicle sales ..................           $  1,407,030      $  2,903,868     $  5,201,750       $  3,968,319     $   4,026,470
    Parts, service and
    collision repair ...............                162,660           364,184          687,975            513,920           581,153
    Finance, insurance and other ...                 34,011            82,771          162,751            125,362           139,802
                                          ------------------  ----------------  ---------------       ------------   --------------
      Total revenues ...............              1,603,701         3,350,823        6,052,476          4,607,601         4,747,425
Cost of sales ......................              1,396,259         2,896,400        5,187,289          3,951,528         4,048,753
                                          ------------------  ----------------  ---------------       ------------   --------------
Gross profit .......................                207,442           454,423          865,187            656,073           698,672
Selling, general and administrative
expenses............................                150,130           326,914          633,356            473,745           527,009
Depreciation and amortization.......                  4,607            11,699           22,714             17,344            19,384
                                          ------------------  ----------------  ---------------       ------------   --------------
Operating income....................                 52,705           115,810          209,117            164,984           152,279
Interest expense, floor plan .......                 14,096            22,536           47,108             34,012            30,188
Interest expense, other ............                  9,395            21,586           42,244             31,200            26,989
Other income .......................                    426             1,286              107                109               120
                                          ------------------  ----------------  ---------------       ------------   --------------
Income before income taxes..........                 29,640            72,974          119,872             99,881            95,222
Provision for income taxes..........                 11,083            28,325           45,700             38,000            37,135
                                          ------------------  ----------------  ---------------       ------------   --------------
Net income..........................              $  18,557         $  44,649        $  74,172          $  61,881         $  58,087
                                           =================    ==============  ===============       ============   ==============
Diluted net income per share .......               $   0.74          $   1.27        $   1.69           $   1.40          $    1.40
                                           =================    ==============  ===============       ============   ==============
Weighted average diluted common shares
outstanding ........................                 24,970            35,248           43,826             44,257            41,511
                                           =================    ==============  ===============       ============   ==============
    Ratio of earnings to fixed
    charges (a).....................                   3.3x              3.4x             3.0x               3.2x              3.2x
Other Financial Data:
    EBITDA (b)......................              $  43,642         $ 106,259        $ 184,830          $ 148,425        $  141,595
    Capital expenditures............              $   4,335         $  21,548        $  73,171          $  57,993        $   30,909
    Ratio of EBITDA to interest expense,
    other (b).......................                   4.6x              4.9x             4.4x               4.8x              5.2x
Margin Data:

    EBITDA margin (b)...............                   2.7%              3.2%             3.1%               3.2%              3.0%
    Gross profit margin ............                  12.9%             13.6%            14.3%              14.2%             14.7%
Balance Sheet Data
(at end of period):
    Cash and cash equivalents ......              $  51,834         $  83,111        $ 109,325          $  89,813        $  103,431
    Inventories ....................                264,971           630,857           773,785           661,175           654,762
    Total assets ...................                576,103         1,501,102         1,789,248         1,654,071         1,689,314
    Notes payable-- floor plan .....                228,158           517,575           684,718           540,950           557,301
    Long-term debt (c)..............                145,790           425,894           493,309           498,951           457,032
    Stockholders' equity ...........                142,429           402,573           450,922           443,304           489,919


    ______________

   (a)      Fixed charges is defined as interest (other than interest expense
            related to notes payable-floor plan) and such portion of rent
            expense determined to be representative of the interest factor. The
            ratio of earnings to fixed charges is calculated by adding fixed
            charges to income before income taxes and minority interest and
            dividing the sum by fixed charges.

   (b)      EBITDA is defined as earnings before interest (other than interest
            expense related to notes payable-floor plan), taxes, depreciation,
            and amortization. While EBITDA should not be construed as a
            substitute for operating income or as a better measure of liquidity
            than cash flows from operating activities, which are determined in
            accordance with accounting principles generally accepted in the
            United States of America, we have included it herein to provide
            additional information with respect to our ability to meet future
            debt service, capital expenditures and working capital requirements.
            These measures may not be comparable to similarly titled measures
            reported by other companies.

   (c)      Long-term debt, including current portion, includes the payable to
            our Chairman and the payable to our affiliates, which are
            subordinated to the Notes. See Sonic's Consolidated Financial
            Statements and the related notes incorporated by reference in this
            prospectus.


                                       10



                                  RISK FACTORS

      Prospective investors should carefully consider and evaluate all of the
information set forth in this prospectus, including the risk factors set forth
below.

Failure to exchange your Series B or Series C notes may have adverse
consequences to you.

      If you do not exchange your Series B notes for Series D notes, then you
will continue to hold registered notes, but the total principal amount of Series
B notes outstanding may be reduced by the exchange offer. This may reduce the
liquidity of the Series B notes after the exchange offer. We are not obligated
to, and will not, exchange Series B notes for Series B notes unless at least
$50.0 million in aggregate principal amount of Series B notes are tendered for
exchange.

      If you do not exchange your Series C notes for Series D notes in the
exchange offer, your Series C notes will continue to be subject to the
restrictions on transfer contained in the legend on the Series C notes. In
general, the Series C notes may not be offered or sold unless they are
registered under the Securities Act. However, you may offer or sell your Series
C notes under an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. After the exchange offer is
completed, you will not be entitled to any exchange or registration rights with
respect to your Series C notes except under limited circumstances. The exchange
offer for the Series C notes is not conditioned upon the tender of a minimum
aggregate principal amount of Series B or Series C notes. Validly tendered
Series C notes will be exchanged regardless of the aggregate principal amount of
Series B notes tendered for exchange.

      Issuance of the Series D notes in exchange for the Series B and Series C
notes pursuant to the exchange offer will be made following the prior
satisfaction, or waiver, of the conditions set forth in "The Exchange Offer -
Conditions to the Exchange Offer" and only after timely receipt by the exchange
agent of Series B or Series C notes, a properly completed and duly executed
letter of transmittal and all other required documents. Therefore, holders of
Series D notes desiring to tender their Series B or Series C notes in exchange
for Series D notes should allow sufficient time to ensure timely delivery of all
required documentation. Neither we, the exchange agent nor, any other person is
under any duty to give notification of defects or irregularities with respect to
the tenders of Series D notes for exchange. Series B or Series C notes that may
be tendered in the exchange offer but which are not validly tendered will remain
outstanding following the consummation of the exchange offer.

The Series D notes and the guarantees are subordinated to our senior
indebtedness.

      The payment of the principal of, premium, if any, and interest on the
Series D notes will be subordinated to the prior payment in full of all of our
existing and future senior indebtedness. In the event of a liquidation,
dissolution, reorganization or any similar proceeding, our assets will be
available to pay obligations on the Series D notes only after senior
indebtedness has been paid in full. Therefore, there may not be sufficient
assets to pay amounts due on all or any of the Series D notes.

      In addition, we may not:

      o pay principal of, premium, if any, interest on or any other amounts
        owing in respect of the Series D notes;
      o make any deposit pursuant to defeasance provisions; or
      o purchase, redeem or otherwise retire the Series D notes, 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 unless, in either case, the default has
        been cured or waived, any the acceleration has been rescinded or the
        senior indebtedness has been repaid in full.

      Moreover, under certain circumstances, if any non-payment default exists
with respect to senior indebtedness, we may not make any payments on the Series
D notes for a specified time, unless such default is cured or waived, any
acceleration of such indebtedness has been rescinded or such indebtedness has
been repaid in full. See "Description of the Notes--Ranking."

      The Series D notes and the guarantees will be unsecured senior
subordinated obligations and, as such, will be subordinated in right of payment
with all of the other existing and future senior indebtedness incurred by us and
certain of the guarantors and pari passu in right of payment to all of the
existing and future senior subordinated indebtedness incurred by us. Certain of
the guarantees may not be so subordinated. As of September 30, 2001, after
giving effect to the sale of the Series C notes and application of the estimated
net proceeds of that offering:

      o we and the guarantors would have had $253.6 million of debt which is
        senior or secured and $125.0 million of debt ranking pari passu to the
        Series D notes or the guarantees, as the case may be;
      o we would also have had approximately $5.5 million of indebtedness
        subordinated to the Series D notes; and
      o the guarantors would also have had $557.3 million of secured floor plan
        indebtedness.


                                       11



      Our indebtedness is described in the footnotes to the unaudited financial
statements contained in our most recent quarterly report on Form 10-Q which is
incorporated by reference and under the heading "Recent Developments" appearing
elsewhere in this prospectus. The Series D notes will not be secured by any of
our assets or assets of the guarantors. Our floor plan indebtedness is secured
by vehicle inventory and proceeds from the sale of that inventory. The
indebtedness under our revolving facility is secured by:

      o our pledge of all the capital stock, membership interests and
        partnership interests of all of our dealership subsidiaries (to the
        extent that such a pledge is permitted by the applicable manufacturer);

      o guarantees by all of our subsidiaries that are, in turn, secured by a
        lien on all of the assets of these subsidiaries; and

      o a lien on all of our other assets, except for real estate owned by us or
        our subsidiaries.

      In the event of a default on the Series D notes or our bankruptcy,
liquidation or reorganization, these assets will be available to satisfy the
obligations with respect to the indebtedness secured thereby before any payment
therefrom could be made on the Series D notes. Therefore, there may not be
sufficient assets to pay amounts due on all or any of the Series D notes.

Since the total outstanding principal of the Series D notes will include the
total outstanding principal amount of the Series B and Series C notes, you will
experience an immediate dilution of your percentage of ownership of the notes
outstanding.

      If all of the outstanding Series B and Series C notes are exchanged for
Series D notes, $200.0 million aggregate principal amount of Series D notes will
be outstanding following the consummation of the exchange offer, and the Series
D notes will be deemed to be a single series of notes outstanding under the
indenture. As a result, any actions requiring the consent of each holder or the
holders of a majority in outstanding principal amount of Series D notes under
the indenture will therefore require the consent of each holder of Series D
notes or the holders of a majority in aggregate principal amount of outstanding
Series D notes, and, the current individual voting interest of each holder of
Series B or Series C notes will accordingly be diluted.

We may not be able to purchase your Series D notes upon a change of control.

      Upon the occurrence of specified change of control events, we are required
to offer to purchase each Series D holder's notes at a price of 101% of their
principal amount plus accrued interest. We may not have sufficient financial
resources to purchase all of the Series D notes that holders may tender to us
upon a change of control. In certain circumstances, our lenders also have the
right to prohibit any purchases by us of the Series D notes, in which case we
would be in default on the Series D notes.

Participants in the exchange offer must deliver a prospectus in connection with
resales of the Series D notes.

      Based on certain no-action letters issued by the staff of the Commission,
we believe that you may offer for resale, resell or otherwise transfer the
exchange notes without compliance with the registration and prospectus delivery
requirements of the Securities Act of 1933. However, in some instances described
in this prospectus under "Plan of Distribution," you will remain obligated to
comply with the registration and prospectus delivery requirements of the
Securities Act of 1933 to transfer your Series D notes. In these cases, if you
transfer any Series D note without delivering a prospectus meeting the
requirements of the Securities Act of 1933 or without an exemption from
registration of your Series D notes under the Securities Act of 1933, you may
incur liability under this act. We do not and will not assume, or indemnify you
against, this liability.

We depend upon the operations of our subsidiaries.

      The Series D notes are our obligations. As of September 30, 2001,
substantially all of our consolidated assets were held by the guarantors and
substantially all of our cash flow and net income were generated by the
guarantors. Our ability to make interest and principal payments when due to
holders of the Series D notes depends therefore upon the receipt of sufficient
funds from our subsidiaries.

Courts interpreting state or federal fraudulent transfer laws may invalidate the
guarantees.

      Our obligations under the notes will be guaranteed by the guarantors. To
the extent that a court were to find, pursuant to federal or state fraudulent
transfer laws or otherwise, that:

      o the guarantees were incurred by the guarantors with intent to hinder,
        delay or defraud any present or future creditor or the guarantors
        contemplated insolvency with a design to prefer one or more creditors to
        the exclusion in whole or in part of others; or
      o a guarantor did not receive fair consideration or reasonably equivalent
        value for issuing its guarantee and the guarantor
      o was insolvent,
      o was rendered insolvent by reason of the issuance of the guarantee,


                                       12




      o  was engaged or about to engage in a business or transaction for which
         the remaining assets of the guarantor constituted unreasonably small
         capital to carry on its business,
      o  intended to incur, or believed that it would incur, debts beyond its
         ability to pay such debts as they matured or
      o  was a defendant in an action for money damages or had a judgment for
         money damages docketed against it (in either case, if after final
         judgment, the judgment remained unsatisfied),

      the court could avoid or subordinate the guarantee in favor of the
guarantor's other creditors. Among other things, a legal challenge of a
guarantee on fraudulent conveyance grounds may focus on the benefits, if any,
realized by the guarantor as a result of our issuance of the notes. The measure
of insolvency of the guarantor for these purposes will vary depending upon the
law of the relevant jurisdiction. Generally, however, a company would be
considered insolvent:

      o  if the sum of the company's debts, including contingent liabilities, is
         greater than all of the company's property at a fair valuation,

      o  if the present fair saleable value of the company's assets is less than
         the amount that will be required to pay its probable liability on its
         existing debts as they become absolute and mature or

      o  if the company could not pay its debts as they become due.

      We cannot assure you what standards a court would apply to determine
whether a guarantor was solvent at the relevant time. To the extent that a
guarantee were to be avoided as a fraudulent conveyance or held unenforceable
for any other reason, holders of the Series D notes would cease to have any
claim in respect of the guarantor and would be creditors solely of ours and of
the guarantors whose guarantees had not been avoided or held unenforceable. In
this event, the claims of the holders of the Series D notes against the issuer
of an invalid guarantee would be subject to the prior payment in full of all
liabilities of the guarantor thereunder. There can be no assurance that, after
providing for all prior claims, there would be sufficient assets to satisfy the
claims of the holders of the Series D notes relating to the voided guarantees.

      The guarantees may be released under certain circumstances upon resale,
exchange or transfer by us of the stock of the related guarantor or all or
substantially all of the assets of the guarantor to a non-affiliate. See
"Description of Notes--Certain Covenants--Limitation on Issuances of Guarantees
of and Pledges for Indebtedness."

      To the extent that a court were to find that the issuance of the Series D
notes violated federal or state fraudulent transfer or conveyance laws, in the
manner described above with respect to the guarantors, the court could avoid or
modify our obligations to holders of the Series D notes in favor of our other
creditors. To the extent that the issuance of the Series D notes were to be
avoided as a fraudulent conveyance or held unenforceable for any other reason,
holders of the Series D notes would cease to have any claim against us and would
be creditors solely of the guarantors whose guarantees had not been avoided or
held unenforceable. In this event, the claims of the holders of the Series D
notes against us would be subject to the prior payment in full of all of our
liabilities. We cannot assure you that, after providing for all prior claims,
there would be sufficient assets to satisfy the claims of the holders of the
Series D notes.

We do not expect a public market for the Series D notes to develop after
completion of the exchange offer.

      There currently is no trading market and there can be no assurance as to
the liquidity of any market for the Series D notes that may develop, the ability
of holders of the Series D notes to sell their Series D notes, or the prices at
which holders of the Series D notes would be able to sell their Series D notes.
If markets were to exist, the Series D notes could trade at prices higher or
lower than the initial purchase prices you paid for either your series B or your
Series C notes. Although Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Banc of America Securities LLC have informed us that they currently intend to
make a market in the Series D notes, if issued, they are not obligated to do so,
and they may discontinue any market making activities they engage in at any time
without notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the Series D notes if issued. The Series D notes
will be eligible for trading in the PORTAL market. We do not intend to apply for
listing of the Series D notes, if issued, on any securities exchange or for
quotation on the National Association of Securities Dealers Automated Quotation
System. We have agreed to file this registration statement with the Commission
to an offer to exchange our Series B notes and the Series C notes for a single
class of publicly traded Series D notes. We can provide no assurance that any
holder of any Series B or Series C Notes will participate in the exchange offer.
The failure of holders of Series B and C notes to participate in the exchange
offer will have an adverse impact on the liquidity of the Series D notes

Our significant indebtedness could materially adversely affect our financial
health and prevent us from fulfilling our financial obligations.

      As of September 30, 2001, our total outstanding indebtedness was
approximately $1,008.8 million, including the following:

      o  $312.4 million under a revolving credit agreement (the "Revolving
         Facility") with Ford Motor Credit Company ("Ford Motor Credit"),
         Chrysler Financial Company, LLC ("Chrysler Financial") and Toyota Motor
         Credit Corporation ("Toyota


                                       13



         Credit") with a borrowing limit of $600 million, subject to a borrowing
         base calculated on the basis of our receivables, inventory and
         equipment and a pledge of certain additional collateral by an affiliate
         of Sonic;

      o  $368.4 million under a standardized secured inventory floor plan
         facility (the "Ford Floor Plan Facility") with Ford Motor Credit;

      o  $115.6 million under a standardized secured floor plan facility (the
         "Chrysler Floor Plan Facility") with Chrysler Financial;

      o  $11.5 million under a standardized secured floor plan facility (the
         "Toyota Floor Plan Facility") with Toyota Credit;

      o  $61.8 million under a standardized secured floor plan facility (the
         "GMAC Floor Plan Facility" and together with the Ford Floor Plan
         Facility, the Toyota Floor Plan Facility and the Chrysler Floor Plan
         Facility, the "Floor Plan Facilities") with General Motors Acceptance
         Corporation ("GMAC");

      o  $121.5 million in 11% Senior Subordinated Notes due 2008 representing
         $125.0 million in aggregate principal amount less unamortized discount
         of approximately $3.5 million; and

      o  $17.6 million of other secured debt, including $10.7 million under a
         revolving real estate acquisition and new dealership construction line
         of credit (the "Construction Loan") and a related mortgage refinancing
         facility (the "Permanent Loan" and together with the Construction Loan,
         the "Mortgage Facility") with Ford Motor Credit.

      As of September 30, 2001, we had approximately $229.2 million available
for additional borrowings under the Revolving Facility, based on a borrowing
base calculated on the basis of our receivables, inventory and equipment and
certain additional collateral pledged by an affiliate of Sonic. We also had
approximately $89.3 million available for additional borrowings 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 and other
debt instruments allow us to incur additional indebtedness, including secured
indebtedness.

      The degree to which we are leveraged could have important consequences to
the holders of our securities, including the following:

      o  our ability to obtain additional financing for acquisitions, capital
         expenditures, working capital or general corporate purposes may be
         impaired in the future;

      o  a substantial portion of our current cash flow from operations must be
         dedicated to the payment of principal and interest on our senior
         subordinated notes, borrowings under the Revolving Facility and the
         Floor Plan Facilities and other indebtedness, thereby reducing the
         funds available to us for our operations and other purposes;

      o  some of our borrowings are and will continue to be at variable rates of
         interest, which exposes us to the risk of increased interest rates;

      o  the indebtedness outstanding under our credit facilities is secured by
         a pledge of substantially all the assets of our dealerships; and

      o  we may be substantially more leveraged than some of our competitors,
         which may place us at a relative competitive disadvantage and make us
         more vulnerable to changing market conditions and regulations.

      In addition, our debt agreements contain numerous covenants that limit our
discretion with respect to business matters, including mergers or acquisitions,
paying dividends, incurring additional debt, making capital expenditures or
disposing of assets.

Our future operating results depend on our ability to integrate our operations
with recent acquisitions.

      Our future operating results depend on our ability to integrate the
operations of our recently acquired dealerships, as well as dealerships we
acquire in the future, with our existing operations. In particular, we need to
integrate our systems, procedures and structures, which can be difficult. Our
growth strategy has focused on the pursuit of strategic acquisitions that either
expand or complement our business. We acquired 19 dealerships in 1998, 72 during
1999, 11 in 2000 and 12 to date in 2001.


                                       14



We cannot assure you that we will effectively and profitably integrate the
operations of these dealerships without substantial costs, delays or operational
or financial problems, including as a result of:

      o     the difficulties of managing operations located in geographic areas
            where we have not previously operated;

      o     the management time and attention required to integrate and manage
            newly acquired dealerships;

      o     the difficulties of assimilating and retaining employees; and

      o     the challenges of keeping customers.

      These factors could have a material adverse effect on our financial
condition and results of operations.

Risks associated with acquisitions may hinder our ability to increase revenues
and earnings.

      The automobile retailing industry is considered a mature industry in which
minimal growth is expected in industry unit sales. Accordingly, our future
growth depends in large part on our ability to acquire additional dealerships,
as well as on our ability to manage expansion, control costs in our operations
and consolidate both 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:

      o     incurring significantly higher capital expenditures and operating
            expenses;

      o     failing to assimilate the operations and personnel of the acquired
            dealerships;

      o     entering new markets with which we are unfamiliar;

      o     potential undiscovered liabilities at acquired dealerships;

      o     disrupting our ongoing business;

      o     diverting our limited management resources;

      o     failing to maintain uniform standards, controls and policies;

      o     impairing relationships with employees, manufacturers and customers
            as a result of changes in management;

      o     causing increased expenses for accounting and computer systems, as
            well as integration difficulties; and

      o     failure to obtain a manufacturer's consent to the acquisition of one
            or more of its dealership franchises.

      We may not adequately anticipate all of the demands that our growth will
impose on our systems, procedures and structures, including our financial and
reporting control systems, data processing systems and management structure. If
we cannot adequately anticipate and respond to these demands, our business could
be materially harmed.

      Failure to retain qualified management personnel at any acquired
dealership may increase the risk associated with integrating the acquired
dealership.

      Installing new computer systems has disrupted existing operations in the
past as management and salespersons adjust to new technologies. We cannot assure
you that we will overcome these risks or any other problems encountered with
either our past or future acquisitions.

Automobile manufacturers exercise significant control over our operations and we
are dependent on them to operate our business.

      Each of our dealerships operates pursuant to a franchise agreement with
the applicable automobile manufacturer or manufacturer authorized distributor.
We are significantly dependent on our relationships with these manufacturers.
Without a franchise agreement, we cannot obtain new vehicles from a
manufacturer.


                                       15



      Vehicles manufactured by the following manufacturers accounted for the
indicated approximate percentage of our new vehicle revenue for the nine months
ended September 30, 2001:

                                                     Percentage of Historical
                                                     New Vehicle Revenues for
                                                      the Nine Months Ended
             Manufacturer                               September 30, 2001
             ------------                            ------------------------

             Ford                                            18.8%
             Honda                                           13.1%
             BMW                                             11.1%
             Toyota                                          11.1%
             General Motors                                  10.8%
             Chrysler                                         8.6%
             Nissan                                           5.3%
             Lexus                                            5.3%

      No other manufacturer accounted for more than five percent of our new
vehicle sales during the first nine months of 2001. A significant decline in the
sale of Ford, Honda, Chrysler, General Motors, BMW, Toyota, Nissan or Lexus new
vehicles could have a material adverse effect on our revenue and profitability.

      Manufacturers exercise a great degree of control over the operations of
our dealerships. Each of our franchise agreements provides for termination or
non-renewal for a variety of causes, including any unapproved change of
ownership or management and other material breaches of the franchise agreements.

      Manufacturers may also have a right of first refusal if we seek to sell
dealerships. We believe that we will be able to renew at expiration all of our
existing franchise agreements, other than our Oldsmobile and Plymouth franchise
agreements. DaimlerChrysler phased out the Plymouth division on October 1, 2001
and General Motors is in the process of phasing out the Oldsmobile division.
Neither of these actions will materially affect us.

o        We cannot assure you that any of our existing franchise agreements will
         be renewed or that the terms and conditions of such renewals will be
         favorable to us.

o        If a manufacturer is allowed under state franchise laws to terminate or
         decline to renew one or more of our significant franchise agreements,
         this action could have a material adverse effect on our results of
         operations.

o        Actions taken by manufacturers to exploit their superior bargaining
         position in negotiating the terms of renewals of franchise agreements
         or otherwise could also have a material adverse effect on our results
         of operations.

o        Manufacturers allocate their vehicles among dealerships generally based
         on the sales history of each dealership. Consequently, we also depend
         on the manufacturers to provide us with a desirable mix of popular new
         vehicles. These popular vehicles produce the highest profit margins and
         tend to be the most difficult to obtain from the manufacturers.

o        Our dealerships depend on the manufacturers for certain sales
         incentives, warranties and other programs that are intended to promote
         and support dealership new vehicle sales. Manufacturers have
         historically made many changes to their incentive programs during each
         year. A reduction or discontinuation of a manufacturer's incentive
         programs may materially adversely affect our profitability. Some of
         these programs include:

         o  customer rebates on new vehicles;

         o  dealer incentives on new vehicles;

         o  special financing or leasing terms;

         o  warranties on new and used vehicles; and

         o  sponsorship of used vehicle sales by authorized new vehicle dealers.


                                       16



Adverse conditions affecting one or more manufacturers may negatively impact our
profitability.

         The success of each of our dealerships depends to a great extent on the
manufacturers':

      o     financial condition;

      o     marketing;

      o     vehicle design;

      o     production capabilities;

      o     management; and

      o     labor relations.

      Nissan, Dodge (a Chrysler brand) and Volvo have had significant difficulty
in the U.S. market in the recent past. If any of our manufacturers, particularly
Ford, Honda, Chrysler, General Motors, BMW, Toyota, Nissan, or Lexus were unable
to design, manufacture, deliver and market their vehicles successfully, the
manufacturer's reputation and our ability to sell the manufacturer's vehicles
could be adversely affected.

      Events such as strikes and other labor actions by unions, or negative
publicity concerning a particular manufacturer or vehicle model, may materially
and adversely affect our results of operations. Similarly, the delivery of
vehicles from manufacturers later than scheduled, which may occur particularly
during periods when new products are being introduced, can reduce our sales.
Although we have attempted to lessen our dependence on any one manufacturer by
establishing dealer relationships with a number of different domestic and
foreign automobile manufacturers, adverse conditions affecting manufacturers,
Ford, Honda, Chrysler, General Motors, BMW, Toyota, Nissan or Lexus in
particular, could have a material adverse effect on our results of operations.
In the event of a strike, we may need to purchase inventory from other
automobile dealers at prices higher than we would be required to pay to the
affected manufacturer in order to carry an adequate level and mix of inventory.
Consequently, strikes or other adverse labor actions could materially adversely
affect our profitability.

Manufacturer stock ownership/issuance restrictions limit our ability to issue
additional equity to meet our financing needs.

      Standard automobile franchise agreements prohibit transfers of any
ownership interests of a dealership and its parent and, therefore, often do not
by their terms accommodate public trading of the capital stock of a dealership
or its parent. Our manufacturers have agreed to permit trading in Sonic's Class
A common stock. A number of manufacturers impose restrictions on the
transferability of the Class A common stock.

      o     Honda may force the sale of our Honda or Acura franchises if (1) an
            automobile manufacturer or distributor acquires securities having
            five percent or more of the voting power of Sonic's securities, (2)
            an individual or entity that has either a felony criminal record or
            a criminal record relating solely to dealings with an automobile
            manufacturer, distributor or dealership acquires securities having
            five percent or more of the voting power of Sonic's securities or
            (3) any individual or entity acquires securities having 20% or more
            of the voting power of Sonic's securities and Honda reasonably deems
            such acquisition to be detrimental to Honda's interests in any
            material respect.

      o     Ford may cause us to sell or resign from one or more of our Ford,
            Lincoln or Mercury franchises if any person or entity (other than O.
            Bruton Smith and any entity controlled by him) acquires or has a
            binding agreement to acquire securities having 50% or more of the
            voting power of Sonic's securities.

      o     General Motors and Infiniti may force the sale of their respective
            franchises if 20% of more of Sonic's voting securities are similarly
            acquired.

      o     Toyota may force the sale of one or more of Sonic's Toyota or Lexus
            dealerships if (1) an automobile manufacturer or distributor
            acquires securities, or the right to vote securities by proxy or
            voting agreement, having more than five percent of the voting power
            of Sonic's securities, (2) any individual or entity acquires
            securities, or the right to vote securities by proxy or voting
            agreement, having more than 20% of the voting power of Sonic's
            securities, (3) there is a material change in the composition of
            Sonic's Board of Directors that Toyota reasonably concludes will be
            materially incompatible with Toyota's interests or will have an
            adverse effect on Toyota's reputation or brands in the marketplace
            or the performance of Sonic or its Toyota and Lexus dealerships, (4)
            there occurs an extraordinary transaction whereby Sonic's
            stockholders immediately prior to such transaction own in the
            aggregate securities having less than a majority of



                                       17



            the voting power of Sonic or the successor entity, or (5) any
            individual or entity acquires control of Sonic, Sonic Financial
            Corporation or any Toyota or Lexus dealership owned by Sonic.

      o     Chrysler requires prior approval of any future sales that would
            result in a change in voting or managerial control of Sonic.

      o     Mercedes requires 60 days advance notice to approve any acquisition
            of 20% or more of Sonic's voting securities.

      o     Volkswagen has approved the sale of no more than 25% of the voting
            control of Sonic, and any future changes in ownership or transfers
            among Sonic's current stockholders that could affect the voting or
            managerial control of Sonic's Volkswagen franchise subsidiaries
            requires the prior approval of Volkswagen.

Other manufacturers may impose similar or more limiting restrictions.

         Our lending arrangements also require that holders of Sonic's Class B
common stock maintain voting control over Sonic. We are unable to prevent our
stockholders from transferring shares of our common stock, including transfers
by holders of the Class B common stock. If such transfer results in a change in
control of Sonic, it could result in the termination or non-renewal of one or
more of our franchise agreements and a default under our credit arrangements.
Moreover, these issuance limitations may impede our ability to raise capital
through additional equity offerings or to issue our stock as consideration for
future acquisitions.

Manufacturers' restrictions on acquisitions could limit our future growth.

      We are required to obtain the consent of the applicable manufacturer
before the acquisition of any additional dealership franchises. We cannot assure
you that manufacturers will grant such approvals, although the denial of such
approval may be subject to certain state franchise laws.

      Obtaining manufacturer consent for acquisitions could also take a
significant amount of time. Obtaining manufacturer approval for our completed
acquisitions has taken approximately three to five months. We believe that
manufacturer approvals of subsequent acquisitions from manufacturers with which
we have previously completed applications and agreements may take less time,
although we cannot provide you with assurances to that effect. In addition,
under an applicable franchise agreement or under state law, a manufacturer may
have a right of first refusal to acquire a dealership in the event we seek to
acquire that dealership franchise.

      If we experience delays in obtaining, or fail to obtain, manufacturer
approvals for dealership acquisitions, our growth strategy could be materially
adversely affected. In determining whether to approve an acquisition, the
manufacturers may consider many factors, including:

      o     our management's moral character;

      o     the business experience of the post-acquisition dealership
            management;

      o     our financial condition;

      o     our ownership structure; and

      o     manufacturer-determined consumer satisfaction index scores.

      In addition, a manufacturer may seek to limit the number of its
dealerships that we may own, our national market share of that manufacturer's
products or the number of dealerships we may own in a particular geographic
area. These restrictions may not be enforceable under state franchise laws.

      o     Our framework agreement with Ford places the following restrictions
            on our ability to acquire Ford or Lincoln Mercury dealerships:

            o   We may not acquire additional Ford or Lincoln Mercury
                dealerships unless we continue to satisfy Ford's requirement
                that 80% of our Ford dealerships meet Ford's performance
                criteria. Beyond that, we may not make an acquisition that would
                result in our owning Ford or Lincoln Mercury dealerships with
                sales exceeding five percent of the total Ford or total Lincoln
                Mercury retail sales of new vehicles in the United States for
                the preceding calendar year.


                                       18


      o     We may not acquire additional Ford or Lincoln Mercury dealerships in
            a particular state if such an acquisition would result in our owning
            Ford or Lincoln Mercury dealerships with sales exceeding 5% of the
            total Ford or total Lincoln Mercury retail sales of new vehicles in
            that state for the preceding calendar year.

      o     We may not acquire additional Ford dealerships in a Ford-defined
            market area if such an acquisition would result in our owning more
            than one Ford dealership in a market having a total of three or less
            Ford dealerships or owning more than 25% of the Ford dealerships in
            a market having a total of four or more Ford dealerships. An
            identical market area restriction applies for Lincoln Mercury
            dealerships.

o     Our framework agreement with Toyota limits the number of Toyota and Lexus
      dealerships that we may own on a national level, in each Toyota-defined
      geographic region or distributor area, and in each Toyota or Lexus-defined
      metropolitan market. Nationally, the limitations on Toyota dealerships
      owned by us are for specified time periods and are based on specified
      percentages of total Toyota unit sales in the United States. In
      Toyota-defined geographic regions or distributor areas, the limitations on
      Toyota dealerships owned by us are specified by the applicable Toyota
      regional limitations policy or distributor's policy in effect at such
      time. In Toyota-defined metropolitan markets, the limitations on Toyota
      dealerships owned by us are based on Toyota's metro markets limitation
      policy then in effect, which currently provides a limitation based on the
      total number of Toyota dealerships in the particular market. For Lexus, we
      may own no more than one Lexus dealership in any one Lexus-defined
      metropolitan market and no more than three Lexus dealerships nationally.

o     Our framework agreement with Honda limits the number of Honda and Acura
      dealerships that we may own on a national level, in each Honda and
      Acura-defined geographic zone, and in each Honda-defined metropolitan
      market. Nationally, the limitations on Honda dealerships owned by us are
      based on specified percentages of total Honda unit sales in the United
      States. In Honda-defined geographic zones, the limitations on Honda
      dealerships owned by us are based on specified percentages of total Honda
      unit sales in each of 10 Honda-defined geographic zones. In Honda-defined
      metropolitan markets, the limitations on Honda dealerships owned by us are
      specified numbers of dealerships in each market, which numerical limits
      vary based mainly on the total number of Honda dealerships in a particular
      market. For Acura, we may own no more than (A) two Acura dealerships in a
      Honda-defined metropolitan market, (B) three Acura dealerships in any one
      of six Honda-defined geographic zones and (C) five Acura dealerships
      nationally.  Honda also prohibits ownership of contiguous dealerships.

o     Mercedes restricts any company from owning Mercedes dealerships with sales
      of more than 3% of total sales of Mercedes vehicles in the U.S. during the
      previous calendar year.

o     General Motors currently limits the maximum number of General Motors
      dealerships that we may acquire to 50% of the General Motors dealerships,
      by brand line, in a General Motors-defined geographic market area having
      multiple General Motors dealers.

o     Subaru limits us to no more than two Subaru dealerships within certain
      designated market areas, four Subaru dealerships within its Mid-America
      region and 12 dealerships within Subaru's entire area of distribution.

o     BMW currently prohibits publicly held companies from owning BMW
      dealerships representing more than 10% of all BMW sales in the U.S. or
      more than 50% of BMW dealerships in a given metropolitan market.

o     Toyota, Honda and Mercedes also prohibit the coupling of a franchise with
      any other brand without their consent.

      As a condition to granting their consent to our acquisitions, a number of
manufacturers required additional restrictions. These agreements principally
restrict:

o     material changes in our company or extraordinary corporate transactions
      such as a merger, sale of a material amount of assets or change in our
      board of directors or management that could have a material adverse effect
      on the manufacturer's image or reputation or could be materially
      incompatible with the manufacturer's interests;

o     the removal of a dealership general manager without the consent of the
      manufacturer; and

o     the use of dealership facilities to sell or service new vehicles of other
      manufacturers.

      In addition, manufacturer consent to our acquisitions may impose
conditions, such as requiring facilities improvements by us at the acquired
dealership.


                                       19


      If we are unable to comply with these restrictions, we generally:

      o     must sell the assets of the dealerships to the manufacturer or to a
            third party acceptable to the manufacturer; or

      o     terminate the dealership agreements with the manufacturer.

Other manufacturers may impose other and more stringent restrictions in
connection with future acquisitions.

      As of December 10, 2001, we owned the following number of franchises for
the following manufacturers:

                Number of                                   Number of
Manufacturer    Franchises                  Manufacturer    Franchises
- ------------    ----------                  ------------    ----------

Chevrolet           13                      Lexus                4
Honda               13                      Lincoln              4
Ford                12                      Mercedes             4
BMW                 10                      Hyundai              3
Cadillac            10                      Isuzu                3
Nissan              10                      Mitsubishi           3
Toyota               9                      Kia                  2
Volvo                9                      Audi                 2
Dodge                8                      Infiniti             2
Chrysler             7                      Pontiac              2
Jeep                 6                      Porsche              2
Mercury              5                      GMC                  1
Oldsmobile           4                      Acura                1
Volkswagen           4                      Land Rover           1
                                            Subaru               1


Our failure to meet a manufacturer's consumer satisfaction requirements may
adversely affect our ability to acquire new dealerships and our profitability.

      Many manufacturers attempt to measure customers' satisfaction with their
sales and warranty service experiences through systems which vary from
manufacturer to manufacturer, but which are generally known as customer
satisfaction index, or CSI, scores. These manufacturers may use a dealership's
CSI scores as a factor in evaluating applications for additional dealership
acquisitions. The components of CSI have been modified by various manufacturers
from time to time in the past, and we cannot assure you that these components
will not be further modified or replaced by different systems in the future. To
date, we have not been materially adversely affected by these standards and have
not been denied approval of any acquisition based on low CSI scores, except for
Jaguar's refusal to approve our acquisition of a Chattanooga Jaguar franchise in
1997. However, we cannot assure you that we will be able to comply with these
standards in the future. A manufacturer may refuse to consent to an acquisition
of one of its franchises if it determines our dealerships do not comply with the
manufacturer's CSI standards. This could materially adversely affect our
acquisition strategy. In addition, we receive payments from the manufacturers
based, in part, on CSI scores, which could be materially adversely affected if
our CSI scores decline.

There are limitations on our financial resources available for acquisitions.

      We intend to finance our acquisitions with cash generated from operations,
through issuances of our stock or debt securities and through borrowings under
credit arrangements.

      o  We cannot assure you that we will be able to obtain additional
         financing by issuing stock or debt securities.

      o  Using cash to complete acquisitions could substantially limit our
         operating or financial flexibility.

      o  If we are unable to obtain financing on acceptable terms, we may be
         required to reduce the scope of our presently anticipated expansion,
         which could materially adversely affect our growth strategy.

      We estimate that as of September 30, 2001, we had approximately $229.2
million available for additional borrowings under the Revolving Facility, based
on a borrowing base calculated on the basis of our receivables, inventory and
equipment and a pledge of certain additional collateral by an affiliate of Sonic
(which borrowing base was $541.6 million of the $600.0 million facility at
September 30, 2001).

                                       20



      In addition, we are dependent to a significant extent on our ability to
finance our inventory with "floor plan financing." Floor plan financing is how a
dealership finances its purchase of new vehicles from a manufacturer. The
dealership borrows money to buy a particular vehicle from the manufacturer and
pays off the loan when it sells that particular vehicle, paying interest during
this period. We must obtain new floor plan financing or obtain consents to
assume existing floor plan financing in connection with our acquisition of
dealerships.

      Substantially all the assets of our dealerships are pledged to secure this
floor plan indebtedness. In addition, substantially all the real property and
assets of our subsidiaries that are constructing new dealerships are pledged
under our Mortgage Facility with Ford Motor Credit. These pledges may impede our
ability to borrow from other sources.

      Finally, because Ford Motor Credit is associated with Ford, any
deterioration of our relationship with one could adversely affect our
relationship with the other. The same is true of our relationships with Chrysler
and Chrysler Financial, GM and GMAC, and Toyota and Toyota Credit.

Although O. Bruton Smith, our Chairman and Chief Executive Officer, has
previously facilitated our acquisition financing, we cannot assure you that he
will be willing or able to assist in our financing needs in the future.

      Mr. Smith initially guaranteed obligations under the Revolving Facility.
Such obligations were further secured with a pledge of shares of common stock of
Speedway Motorsports, Inc. ("SMI") owned by Sonic Financial Corporation ("SFC"),
a corporation controlled by Mr. Smith having an estimated value at the time of
the pledge of approximately $50.0 million (the "Revolving Pledge"). When the
Revolving Facility's borrowing limit was increased to $75.0 million in 1997, Mr.
Smith's personal guarantee of Sonic's obligations under the Revolving Facility
was released, although the Revolving Pledge remained in place. Mr. Smith was
also required by Ford Motor Credit to lend $5.5 million (the "Subordinated Smith
Loan") to Sonic to increase our capitalization because the net proceeds from our
November 1997 initial public offering were significantly less than expected. In
August 1998, Ford Motor Credit released the Revolving Pledge. In November 1999,
Ford Motor Credit further increased the borrowing limit under the Revolving
Facility to $350.0 million subject to a borrowing base calculated on the basis
of our receivables, inventory and equipment and a continuing pledge by SFC of
five million shares of SMI common stock. Presently, the borrowing limit of the
Revolving Facility is $600.0 million, subject to a similar borrowing base,
including SFC's continuing pledge of SMI stock.

      Before our acquisition of FirstAmerica Automotive, Inc. ("FirstAmerica")
Mr. Smith guaranteed the obligations of FirstAmerica under FirstAmerica's new
acquisition line of credit with Ford Motor Credit. FirstAmerica obtained this
new financing to enable it to complete its then pending acquisitions. The
borrowing limit on this credit facility was approximately $138 million. Mr.
Smith had guaranteed approximately $107 million of this amount, which guarantee
was secured by a pledge of five million shares of SMI common stock owned by SFC.
We assumed FirstAmerica's obligations to Ford Motor Credit under our Revolving
Facility when we acquired FirstAmerica. Mr. Smith's secured guarantee in favor
of Ford Motor Credit guaranteed a portion of our obligations under the Revolving
Facility until August 2000. After August 2000, Mr. Smith did not provide a
guarantee in favor of the Revolving Facility lenders, but SFC continues to
pledge SMI stock as collateral. We cannot assure you that Mr. Smith will be
willing or able to provide similar guarantees or credit support in the future to
facilitate Sonic's future acquisitions.

Automobile retailing is a mature industry with limited growth potential in new
vehicle sales, and our acquisition strategy will affect our revenues and
earnings.

      The United States automobile dealership industry is considered a mature
industry in which minimal growth is expected in unit sales of new vehicles. As a
consequence, growth in our revenues and earnings is likely to be significantly
affected by our success in acquiring and integrating dealerships and the pace
and size of such acquisitions.

High competition in automobile retailing reduces our profit margins on vehicle
sales. Further, the use of the Internet in the car purchasing process could
materially adversely affect us.

      Automobile retailing is a highly competitive business with approximately
21,600 franchised automobile dealerships in the United States at the end of
2000. Our competition includes:

      o  Franchised automobile dealerships selling the same or similar makes of
         new and used vehicles that we offer in our markets and sometimes at
         lower prices than we offer. Some of these dealer competitors may be
         larger and have greater financial and marketing resources than we do;

      o  Other franchised dealers;



                                       21



      o     Private market buyers and sellers of used vehicles;

      o     Used vehicle dealers;

      o     Internet-based vehicle brokers that sell vehicles obtained from
            franchised dealers directly to consumers;

      o     Service center chain stores; and

      o     Independent service and repair shops.

      Our financing and insurance, or "F&I", business and other related
businesses, which provide higher contributions to our earnings than sales of new
and used vehicles, are subject to strong competition from various financial
institutions and other third parties. This competition is increasing as these
products are now being marketed and sold over the Internet.

      Gross profit margins on sales of new vehicles have been generally
declining since 1986. We do not have any cost advantage in purchasing new
vehicles from manufacturers, due to economies of scale or otherwise. We
typically rely on advertising, merchandising, sales expertise, service
reputation and dealership location to sell new vehicles. The following factors
could have a significant impact on our business:

      o     The Internet has become a significant part of the sales process in
            our industry. Customers are using the Internet to compare pricing
            for cars and related F&I services, which may further reduce margins
            for new and used cars and profits for related F&I services. In
            addition, CarsDirect.com and others are selling vehicles over the
            Internet without the benefit of having a dealership franchise,
            although they must currently source their vehicles from a franchised
            dealer. CarsDirect.com is in an alliance with United Auto Group to
            facilitate their sourcing of vehicles. Also, AutoNation, Inc. is
            selling vehicles for its new car dealerships through its
            AutoNationDirect.com web site. If Internet new vehicle sales are
            allowed to be conducted without the involvement of franchised
            dealers, our business could be materially adversely affected. In
            addition, other franchise groups have aligned themselves with
            Internet car sellers or are spending significant sums on developing
            their own Internet capabilities, which could materially adversely
            affect our business.

      o     Our revenues and profitability could be materially adversely
            affected should manufacturers decide to enter the retail market
            directly .

      o     The increased popularity of short-term vehicle leasing also has
            resulted, as these leases expire, in a large increase in the number
            of late model vehicles available in the market, which puts added
            pressure on new and used vehicle margins.

      o     Some of our competitors may be capable of operating on smaller
            gross margins than we are, and the on-line auto brokers have been
            operating at a loss.

      o     As we seek to acquire dealerships in new markets, we may face
            increasingly significant competition as we strive to gain market
            share through acquisitions or otherwise. This competition includes
            other large dealer groups and dealer groups that have publicly
            traded equity.

      Our franchise agreements do not grant us the exclusive right to sell a
manufacturer's product within a given geographic area. Our revenues or
profitability could be materially adversely affected if any of our manufacturers
award franchises to others in the same markets where we operate, although
certain state franchise laws may limit such activities by the manufacturers. A
similar adverse effect could occur if existing competing franchised dealers
increase their market share in our markets. Our gross margins may decline over
time as we expand into markets where we do not have a leading position. These
and other competitive pressures could materially adversely affect our results of
operations.

The cyclical and local nature of automobile sales may adversely affect our
profitability.

      The automobile industry is cyclical and historically has experienced
periodic downturns characterized by oversupply and weak demand. Many factors
affect the industry, including general economic conditions and consumer
confidence, fuel prices, the level of discretionary personal income,
unemployment rates, interest rates and credit availability. We are in the midst
of an industry and general economic slowdown that could materially adversely
effect our business.

      New and used vehicle sales substantially slowed immediately following the
terrorist attacks of September 11, 2001. In response, certain manufacturers,
especially of domestic brands, have introduced incentive programs, which have
contributed to a significant increase in the pace of new vehicle sales in
October and November. In addition, we have seen an increase in year over year
used vehicle sales in October and November as well as an increase in sales of
new vehicles whose manufacturers have not


                                       22



offered similar incentive programs. We are not able to determine how long the
manufacturers will continue to offer these aggressive incentive programs or how
long the overall increase in demand will continue, but expect that, absent these
incentive programs, vehicle sales may begin to slow again in December and
continue slowing into 2002. In addition, we are not able to determine the
long-term consequences the terrorist attacks and subsequent outbreaks of
hostilities will have on general economic conditions, our industry, or Sonic.

      Local economic, competitive and other conditions also affect the
performance of dealerships. Our dealerships currently are located in the
Atlanta, Baltimore, Birmingham, Charleston, Charlotte, Chattanooga, Columbia,
Columbus, Dallas, Daytona Beach, Fort Myers, Greenville/Spartanburg, Houston,
Las Vegas, Los Angeles, Mobile/Pensacola, Montgomery, Nashville, Oklahoma City,
San Diego, San Francisco, San Jose/Silicon Valley, Tampa/Clearwater, Tulsa and
Washington, D.C. markets. We intend to pursue acquisitions outside of these
markets, but our operational focus is on our current markets. As a result, our
results of operations depend substantially on general economic conditions and
consumer spending habits in the Southeast and Northern California and, to a
lesser extent, the Houston and Columbus markets. Sales in our Northern
California market represented 20.6% of our sales for the nine months ended
September 30, 2001. Our results of operations also depend on other factors, such
as tax rates and state and local regulations specific to the states in which we
currently operate. Sonic may not be able to expand geographically and any such
expansion may not adequately insulate it from the adverse effects of local or
regional economic conditions.

We can offer you no assurances that we will be able to continue executing our
acquisition strategy without the costs of future acquisitions escalating.

      Although there are many potential acquisition candidates that fit our
acquisition criteria, we cannot assure you that we will be able to consummate
any such transactions in the future or identify those candidates that would
result in the most successful combinations, or that future acquisitions will be
able to be consummated at acceptable prices and terms. In addition, increased
competition for acquisition candidates could result in fewer acquisition
opportunities for us and higher acquisition prices. The magnitude, timing,
pricing and nature of future acquisitions will depend upon various factors,
including:

      .  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;

      .  the availability of skilled employees to manage the acquired companies;
         and

      .  general economic and business conditions.

      We may be required to file applications and obtain clearances under
applicable federal antitrust laws before completing an acquisition. These
regulatory requirements may restrict or delay our acquisitions, and may increase
the cost of completing acquisitions.

The operating condition of acquired businesses cannot be determined accurately
until we assume control.

      Although we conduct what we believe to be a prudent level of investigation
regarding the operating condition of the businesses we purchase, in light of the
circumstances of each transaction, an unavoidable level of risk remains
regarding the actual operating condition of these businesses. Until we actually
assume operating control of such business assets, we may not be able to
ascertain the actual value of the acquired entity.

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 SMI.
Accordingly, Sonic competes with SMI for the management time of Mr. Smith. Under
his employment agreement with Sonic, Mr. Smith is required to devote
approximately 50% of his business time to our business. The remainder of his
business time may be devoted to other entities, including SMI.

      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


                                       23




independently verified in that regard nor are likely to be so verified in
the future. Potential conflicts of interest could arise in the future between
Sonic and its officers or directors in the enforcement, amendment or termination
of arrangements existing between them.

      Under Delaware law generally, a corporate insider is precluded from acting
on a business opportunity in his individual capacity if that opportunity is

       (1)   one which the corporation is financially able to undertake,

       (2)   is in the line of the corporation's business,

       (3)   is of practical advantage to the corporation, and

       (4)   is one in which the corporation has an interest or reasonable
             expectancy.

      Accordingly, our corporate insiders are generally prohibited from engaging
in new dealership-related business opportunities outside of Sonic unless a
majority of Sonic's disinterested directors decide that such opportunities are
not in our best interest.

      Sonic's charter contains provisions providing that transactions between
Sonic and its affiliates must be no less favorable to Sonic than would be
available in similar transactions with an unrelated third party. Moreover, any
such transactions involving aggregate payments in excess of $500,000 must be
approved by a majority of Sonic's directors and a majority of Sonic's
independent directors. If not so approved, Sonic must obtain an opinion as to
the financial fairness of the transaction to be issued by an investment banking
or appraisal firm of national standing. In addition, the terms of the Revolving
Facility and Sonic's existing senior subordinated notes restrict transactions
with affiliates in a manner similar to Sonic's charter restrictions.

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.

Seasonality of the automotive retail business adversely affects first quarter
revenues.

      Our business is seasonal, with a disproportionate amount of revenues
received generally in the second, third and fourth fiscal quarters.

Import product restrictions and foreign trade risks may impair our ability to
sell foreign vehicles profitably.

      Some of the vehicles and major components of vehicles we sell are
manufactured in foreign countries. Accordingly, we are subject to the import and
export restrictions of various jurisdictions and are dependent to some extent
upon general economic conditions in, and political relations with, a number of
foreign countries, particularly Germany, Japan and Sweden. Fluctuations in
currency exchange rates may also adversely affect our sales of vehicles produced
by foreign manufacturers. Imports into the United States may also be adversely
affected by increased transportation costs and tariffs, quotas or duties.

Governmental regulation and environmental regulation compliance costs may
adversely affect our profitability.

      We are subject to a wide range of federal, state and local laws and
regulations, such as local licensing requirements and consumer protection laws.
The violation of these laws and regulations can result in civil and criminal
penalties against us or in a cease and desist order against our operations if we
are not in compliance. Our future acquisitions may also be subject to
regulation, including antitrust reviews. We believe that we comply in all
material respects with all laws and regulations applicable to our business, but
future regulations may be more stringent and require us to incur significant
additional costs.


                                       24



      Our facilities and operations are also subject to federal, state and local
laws and regulations relating to environmental protection and human health and
safety, including those governing wastewater discharges, air emissions, the
operation and removal of underground and aboveground storage tanks, the use,
storage, treatment, transportation, release, recycling and disposal of solid and
hazardous materials and wastes and the cleanup of contaminated property or
water. We may be required by these laws to pay the full amount of the costs of
investigation and/or remediation of contaminated properties, even if we are not
at fault for disposal of the materials or if such disposal was legal at the
time. People who may be found liable under these laws and regulations include
the present or former owner or operator of a contaminated property and companies
that generated, transported, disposed of or arranged for the transportation or
disposal of hazardous substances found at the property.

      Our past and present business operations are subject to environmental laws
and regulations governing the use, storage, handling, recycling and disposal of
hazardous or toxic substances such as new and waste motor oil, oil filters,
transmission fluid, antifreeze, freon, new and waste paint and lacquer thinner,
batteries, solvents, lubricants, degreasing agents, gasoline and diesel fuels.
We are also subject to laws and regulations relating to underground storage
tanks that exist or used to exist at many of our properties. Like many of our
competitors, we have incurred, and will continue to incur, capital and operating
expenditures and other costs in complying with such laws and regulations. In
addition, soil and groundwater contamination exists at certain of our
properties. We cannot assure you that our other properties have not been or will
not become similarly contaminated. In addition, we could become subject to
potentially material new or unforeseen environmental costs or liabilities
because of our acquisitions.

      Environmental laws and regulations, including those governing air
emissions and underground storage tanks, could require compliance with new or
more stringent standards that are imposed in the future. We cannot predict what
other environmental legislation or regulations will be enacted in the future,
how existing or future laws or regulations will be administered or interpreted
or what environmental conditions may be found to exist in the future.
Consequently, we may be required to make substantial expenditures in the future.

Concentration of voting power and antitakeover provisions of our charter,
Delaware law and our dealer agreements may reduce the likelihood of any
potential change of control of Sonic.

      Sonic's common stock is divided into two classes with different voting
rights. This dual class stock ownership allows the present holders of the Class
B common stock to control Sonic. Holders of Class A common stock have one vote
per share on all matters. Holders of Class B common stock have 10 votes per
share on all matters, except that they have only one vote per share on any
transaction proposed by the Board of Directors or a Class B common stockholder
or otherwise benefiting the Class B common stockholders constituting a:

       (1)   "going private" transaction;

       (2)   disposition of substantially all of our assets;

       (3)   transfer resulting in a change in the nature of our business; or

       (4)   merger or consolidation in which current holders of common stock
             would own less than 50% of the common stock following such
             transaction.

      The holders of Class B common stock currently hold less than a majority of
Sonic's outstanding common stock, but a majority of Sonic's voting power. This
may prevent or discourage a change of control of Sonic even if such action were
favored by holders of Class A common stock.

      Sonic's charter and bylaws make it more difficult for its stockholders to
take corporate actions at stockholders' meetings. In addition, options under our
1997 Stock Option Plan become immediately exercisable on a change in control.
Also, Delaware law makes it difficult for stockholders who have recently
acquired a large interest in a company to consummate a business transaction with
the company against its directors' wishes. Finally, restrictions imposed by our
dealer agreements may impede or prevent any potential takeover bid. Generally,
our franchise agreements allow the manufacturers the right to terminate the
agreements upon a change of control of our company and impose restrictions upon
the transferability of any significant percentage of our stock to any one person
or entity who may be unqualified, as defined by the manufacturer, to own one of
its dealerships. The inability of a person or entity to qualify with one or more
of our manufacturers may prevent or seriously impede a potential takeover bid.
These agreements, corporate documents and laws, as well as provisions of our
lending arrangements creating an event of default on a change in control, may
have the effect of delaying or preventing a change in control or preventing
stockholders from realizing a premium on the sale of their shares upon an
acquisition of Sonic.

New accounting pronouncements on business combinations and goodwill could affect
future earnings.

      In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141: Business
Combinations. SFAS 141 prohibits the pooling-of-interests method of accounting
and requires the use of the purchase method of accounting for all business
combinations initiated after June 30, 2001. In addition, SFAS 141


                                       25



provides additional guidance regarding the measurement and recognition of
goodwill and other acquired intangible assets. The provisions of this standard
became effective beginning July 1, 2001. For acquisitions after this, we are
required to classify certain intangible assets, such as franchise rights granted
from automobile manufacturers, as intangible assets apart from goodwill.

      In July 2001, the FASB also issued SFAS No. 142: Goodwill and Other
Intangible Assets. Among other things, SFAS 142 no longer permits the
amortization of goodwill, but requires that the carrying amount of goodwill be
reviewed and reduced against operations if it is found to be impaired. This
review must be performed on at least an annual basis, but must also be performed
upon the occurrence of an event or circumstance that indicates a possible
reduction in value. SFAS 142 does require the amortization of intangible assets
other than goodwill over their useful economic lives, unless the useful economic
life is determined to be indefinite. These intangible assets are required to be
reviewed for impairment in accordance with SFAS 144: Accounting for Impairment
or Disposal of Long-Lived Assets. Intangible assets that are determined to have
an indefinite economic life may not be amortized and must be reviewed for
impairment in accordance with the terms of SFAS 142. The provisions of SFAS 142
become effective for us beginning January 1, 2002; however, goodwill and other
intangible assets determined to have an indefinite useful life acquired in
business combinations completed after June 30, 2001 will not be amortized. Early
adoption and retroactive application is not permitted for Sonic. While we are
currently evaluating the provisions of SFAS 142, we have not yet determined its
full impact on our consolidated financial statements. As of December 31, 2000,
the carrying amount of goodwill was $668.8 million and represented 37.4% of
total assets and 148.3% of total stockholders' equity. As of September 30, 2001,
the carrying amount of goodwill was $689.2 million and represented 40.8% of
total assets and 140.7% of total stockholders' equity.

      In August 2001, the FASB issued SFAS No. 144: Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 establishes a single
accounting model for assets to be disposed of by sale whether previously held
and used or newly acquired. SFAS 144 is effective for fiscal years beginning
after December 15, 2001. We are currently evaluating the provisions of SFAS 144
and have not yet determined the impact on our consolidated financial statements.


                                       26



                               THE EXCHANGE OFFER

Background and Reasons for the Exchange Offer

      We issued the Series B notes on December 10, 1998 in exchange for $125.0
million of Series A notes.

      On November 19, 2001, we privately placed $75.0 million of Series C notes.
Simultaneously with the sale of the Series C notes, we entered into a
registration rights agreement with the initial purchasers of the Series C
notes--Merrill Lynch, Pierce, Fenner & Smith Incorporated and Banc of America
Securities LLC. Under this registration rights agreement, we agreed to file this
registration statement regarding the exchange of all of the outstanding Series B
and Series C notes for Series D notes. The terms of the Series D notes will be
identical in all material respects to the Series B and Series C notes. We also
agreed to use our reasonable best efforts to cause this registration statement
to become effective with the Commission. The summary herein of certain
provisions of the registration rights agreement does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the registration rights agreement.

      Under the registration rights agreement we agreed, for the benefit of the
holders of the Series C notes, at our cost, to use our reasonable best efforts

       (a)   to file with the Commission this registration statement with
             respect to the exchange offer for the Series D notes on or before
             January 18, 2002,

       (b)   to cause the exchange offer registration statement to be declared
             effective under the Securities Act on or before April 3, 2002,

       (c)   to keep the exchange offer registration statement effective until
             the closing of this exchange offer, and

       (d)   to cause the exchange offer to be consummated on or before May 3,
             2002.

      Promptly after this registration statement has been declared effective, we
will offer the Series D notes in exchange for surrender of the Series B notes
and the Series C notes. We will keep the exchange offer open for not less than
30 days (or longer if required by applicable law) after the date notice of the
exchange offer is mailed to the holders of the Series B notes and the Series C
notes. For each Series B note and Series C note validly tendered to us pursuant
to the exchange offer and not withdrawn by the holder thereof, the holder of
each Series B note or Series C note will receive a Series D note having a
principal amount equal to that of the tendered Series B note or Series C note;
provided that no Series B note will be exchanged pursuant to the exchange offer
unless at least $50 million in aggregate face value of the Series B notes are
tendered and not withdrawn. We can provide no assurance that any Series B notes
will be exchanged in this exchange offer. Interest on each Series D note will
accrue from the last date on which interest was paid on the tendered Series B
note or Series C note in exchange therefor. We will not complete the exchange
offer until after our February 1, 2002 interest payment on the Series B and
Series C notes.

      If any changes in law or the applicable interpretations of the staff of
the Commission do not permit us to effect this exchange offer, or if for any
other reason this registration statement is not declared effective by April 3,
2002 the exchange offer is not consummated by May 3, 2002, or upon the request
of any of the initial purchasers, or if a holder of the Series C notes is not
permitted by applicable law to participate in the exchange offer or elects to
participate in the exchange offer but does not receive fully tradable Series D
notes pursuant to the exchange offer, we will, in lieu of effecting the
registration of the Series D notes pursuant to this registration statement and
at our cost,

       (a)   as promptly as practicable, file with the Commission a shelf
             registration statement covering resales of the Series C notes,

       (b)   use our reasonable best efforts to cause the shelf registration
             statement to be declared effective under the Securities Act on or
             before May 3, 2002 and

       (c)   use our reasonable best efforts to keep effective the shelf
             registration statement for a period of two years after its
             effective date (or for such shorter period that will terminate when
             all of the Series C notes covered by the shelf registration
             statement have been sold pursuant thereto or cease to be
             outstanding).

      If we file a shelf registration statement, we will provide to each holder
of the Series C notes copies of the prospectus which is a part of the shelf
registration statement, notify each such holder when the shelf registration
statement for the Series C notes has become effective and take certain other
actions as are required to permit unrestricted resales of the Series C notes. A
holder of Series C notes who sells Series C notes pursuant to the shelf
registration statement generally will be required to be named as a selling
security holder in the related prospectus and to deliver the prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the registration rights agreement which are applicable to such a
holder (including certain indemnification obligations).


                                       27



      In the event that (a) the exchange offer registration statement is not
filed with the Commission on or prior to January 18, 2002, (b) the exchange
offer registration statement is not declared effective on or prior to April 3,
2002, (c) the exchange offer is not consummated or a shelf registration
statement is not declared effective, in either case, on or prior to May 3, 2002
or (d) the shelf registration statement is declared effective but shall
thereafter become unusable for more than 30 days in the aggregate of any 12
consecutive month period (each such event referred to in clauses (a) through (d)
above, a "Registration Default"), the interest rate borne by the Series C notes
shall be increased by one-quarter of one percent per annum upon the occurrence
of each Registration Default, which increased rate will further increase by one
quarter of one percent each 90-day period that such additional interest
continues to accrue under any Registration Default, with an aggregate maximum
increase in the interest rate equal to one percent per annum. Following the cure
of all Registration Defaults, the accrual of additional interest will cease and
the interest rate will revert to the original rate.

      The form and terms of the Series D notes are identical in all material
respects to the form and terms of the Series B and Series C notes. The Series D
notes, like the Series B notes, will be registered under the Securities Act. The
Series C notes are not currently registered under the Securities Act. As a
result, the Series D notes issued in the exchange offer will not bear legends
restricting their transfer and will not contain the registration rights and
liquidated damage provisions contained in the Series C notes. The Series C notes
provide that, if this registration statement relating to the exchange offer had
not been filed by January 18, 2002, declared effective by April 3, 2002, and the
exchange offer is not consummated by May 3, 2002 except under limited
circumstances, we will pay liquidated damages on the Series C notes. Upon the
completion of the exchange offer, you will not be entitled to any liquidated
damages on your Series C notes or any further registration rights under the
registration rights agreement, except under limited circumstances. The exchange
offer is not extended to holders of Series B or Series C notes in any
jurisdiction where the exchange offer does not comply with the securities or
blue sky laws of that jurisdiction.

      In this section entitled "The Exchange Offer," the term "holder" means:

      o any person in whose name the Series B or Series C notes are registered
        on our books;
      o any other person who has obtained a properly completed bond power from
        the registered holder; or
      o any person whose Series B or Series C notes are held of record by DTC
        and who wants to deliver these Series B or Series C notes by book-entry
        transfer at DTC.

Terms of the Exchange Offer

      We are offering to exchange up to $200.0 million total principal amount of
Series D notes for the same aggregate principal amount of Series B and Series C
notes. The Series B and Series C notes must be tendered properly and not
withdrawn on or before expiration of the exchange offer, as described below. In
exchange for Series B and Series C notes properly tendered and accepted, we will
issue a like total principal amount of up to $200.0 million in Series D notes.

      The exchange offer and withdrawal rights expire at 5:00 p.m., New York
City time, on _______, February __, 2002. We may extend this deadline for any
reason. We refer to the last day on which tenders will be accepted, whether on
February __, 2002 or any later date to which the exchange offer may be extended,
as the "Expiration Date." You may tender all, some or none of your Series B or
Series C notes.

      The exchange offer is for the Series B notes is conditioned upon the valid
tender of at least $50.0 million in aggregate principal amount of Series B
notes. The exchange offer for the Series C notes is not conditioned upon holders
tendering a minimum principal amount of Series B or Series C notes. As of the
date of this prospectus, there is $125.0 million aggregate principal amount of
Series B notes outstanding and $75.0 million aggregate principal amount of
Series C notes outstanding.

      You do not have any appraisal or dissenters' rights in the exchange offer.
If you do not tender Series B or Series C notes or you tender Series B or Series
C notes that we do not accept, your Series B or Series C notes will remain
outstanding. Any Series B or Series C notes that remain outstanding after
completion of the exchange offer will be entitled to the benefits of the
indenture under which they were issued. The Series D notes will be entitled to
the benefits of the indenture under which they will be issued. The Series C
notes will not, however, be entitled to any further registration rights under
the registration rights agreement, except under limited circumstances. See the
section entitled "Risk Factors--Failure to exchange your Series B or Series C
notes may have adverse consequences to you" for more information regarding notes
outstanding after the exchange offer.

      After the expiration date, we will return to you as soon as reasonably
practicable any tendered Series B or Series C notes that we did not accept for
exchange.

      You will not have to pay brokerage commissions or fees or transfer taxes
for exchanging your Series B or Series C notes if you follow the instructions in
the letter of transmittal. We will pay the charges and expenses, other than
those taxes described below, in the exchange offer. See "--Fees and Expenses"
below for further information regarding fees and expenses.

      Neither we nor any of our officers or directors make any recommendation as
to whether you should tender your Series B or Series C notes in the exchange
offer. You must make your own decision after reading this prospectus and the
documents




incorporated by reference, including the discussion entitled "Risk
Factors" beginning on page 11, and consulting with your advisors based on your
own financial position and requirements.

      We have the right, in accordance with applicable law, at any time:

      o to delay the acceptance of the Series B or Series C notes;
      o to terminate the exchange offer if we determine that any of the
        conditions to the exchange offer has not occurred or has not been
        satisfied or waived;
      o to extend the expiration date of the exchange offer and keep all
        outstanding notes tendered other than those notes properly withdrawn;
        and
      o to waive any condition or amend the terms of the exchange offer.

      If we materially change the terms of the exchange offer, or if we waive a
material condition of the exchange offer, we will promptly distribute a
prospectus supplement to you disclosing the change or waiver. We also will
extend the exchange offer as required by Rule 14e-1 under the Securities
Exchange Act of 1934.

      If we exercise any of the rights listed above, we will promptly give oral
or written notice of the action to the exchange agent, and we will issue a
release to appropriate news agencies. In the case of an extension, an
announcement will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration date.

Acceptance of Series B or Series C notes for Exchange; Issuance of
Series D notes

      If all the conditions to the exchange offer are met or waived, we will
accept for exchange any and all Series B or Series C notes that are validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the
expiration date. We will issue $1,000 principal amount at maturity of registered
Series D notes in exchange for each $1,000 principal amount at maturity of
Series B or Series C notes accepted in the exchange offer. Series B and Series C
notes may be tendered only in minimum denominations of $1,000 principal amount.
As of the date of this prospectus, an aggregate of $125.0 million in principal
amount at maturity of the Series B notes are outstanding and an aggregate of
$75.0 million in principal amount at maturity of the Series C notes are
outstanding. This prospectus, together with the accompanying letter of
transmittal, is first being sent on or about January __, 2002, to the nominee of
the DTC and to others believed to have beneficial ownership in the Series B and
Series C notes.

      We will be deemed to have exchanged Series B or Series C notes validly
tendered and not withdrawn when we give oral or written notice to the exchange
agent of our acceptance. The exchange agent is an agent for us for receiving
tenders of Series B or Series C notes, letters of transmittal and related
documents. The exchange agent is also an agent for tendering holders for
receiving Series B and Series C notes, letters of transmittal and related
documents and transmitting Series D notes to validly tendering holders. If for
any reason, we:

      o delay the acceptance or exchange of any Series B or Series C notes;
      o extend the exchange offer; or
      o are unable to accept or Series D notes,

then the exchange agent may, on our behalf and subject to Rule 14e-1(c) under
the Exchange Act, retain tendered Series B and Series C notes. Notes that the
exchange agent retains may not be withdrawn, except according to the withdrawal
procedures outlined below in the section entitled "--Withdrawal Rights."

      In tendering Series B or Series C notes, you must represent and warrant in
the letter of transmittal or in an agent's message, which is described below,
that:

      o you have full power and authority to tender, exchange, sell, assign and
        transfer Series B or Series C notes;
      o we will acquire good, marketable and unencumbered title to the tendered
        Series B or Series C notes, free and clear of all liens, restrictions,
        charges and other encumbrances; and
      o the Series B or Series C notes tendered for exchange are not subject to
        any adverse claims or proxies.

      You also must represent, warrant and agree that you will, upon request,
execute and deliver any additional documents that we or the exchange agent
request to complete the exchange, sale, assignment and transfer of the Series B
or Series C notes.

Procedures for Tendering Book-Entry Interests


      The Series B and Series C notes were issued as global securities.
Beneficial interests in the global securities, held by direct or indirect
participants in DTC, are shown on, and transfers of these interests are effected
only through, records maintained in book-entry form by DTC with respect to its
participants.


                                       29




      If you hold your Series B or Series C notes in the form of book-entry
interests and you wish to tender your Series B or Series C notes for exchange
pursuant to the exchange offer, you must transmit to the exchange agent on or
prior to the expiration date either:

      o a written or facsimile copy of a properly completed and duly executed
        letter of transmittal, including all other documents required by the
        letter of transmittal, to the exchange agent at the address set forth
        on the back of cover of this prospectus; or

      o a computer-generated message transmitted by means of DTC's Automated
        Tender Offer Program system and received by the exchange agent, in
        which you acknowledge and agree to be bound by the terms of the letter
        of transmittal.

      In addition, in order to deliver Series B or Series C notes held in the
form of book-entry interests:

      o the exchange agent must receive a confirmation of the book-entry
        transfer of these notes into the exchange agent's account at DTC on
        or prior to the expiration date; or
      o you must comply with the guaranteed delivery procedures described below.


Certificated Series B and Series C Notes

      Only registered holders of certificated Series B or Series C notes may
tender those notes in the exchange offer. If your Series B or Series C notes are
certificated notes and you wish to tender those notes for exchange pursuant to
the exchange offer, you must transmit to the exchange agent on or prior to the
expiration date, a written or facsimile copy of a properly completed and duly
executed letter of transmittal, including all other required documents, to the
address set forth on the back cover of this prospectus. In addition, in order to
validly tender your certificated Series B or Series C notes:

      o the certificates representing your Series B or Series C notes must be
        received by the exchange agent on or prior to the expiration date; or
      o you must comply with the guaranteed delivery procedures described below.


Series B and Series C Notes Held Through a Broker

      If you hold your Series B or Series C notes through a broker, do not use
the letter of transmittal to direct the tender of your Series B or Series C
notes. You should contact your broker directly for instructions on how to
participate in the exchange offer. Your broker must notify the DTC and cause it
to transfer the notes into the exchange agent's account in accordance with DTC
procedures. The broker must also ensure that the exchange agent receives a
computer-generated message transmitted by means of DTC's Automated Tender Offer
Program system, in which you acknowledge and agree to be bound by the terms of
the letter of transmittal before the exchange offer expires.

Procedures Applicable to All Holders

      Delivery of required documents by whatever method you choose is at your
sole risk. Delivery is complete when the exchange agent actually receives the
items to be delivered. You should not deliver any of the required documents to
DTC or us. Delivery of documents to DTC in accordance with its procedures or to
us does not constitute delivery to the exchange agent. If delivery is by mail,
we recommend registered mail, return receipt requested, properly insured, or an
overnight delivery service. In all cases, you should allow sufficient time to
ensure timely delivery.

      If you validly tender Series B or Series C notes and you do not withdraw
the tender on or prior to the expiration date, you will have made an agreement
with us in accordance with the terms and subject to the conditions set forth in
this prospectus and in the letter of transmittal.

Signature Guarantees

      You do not need to endorse certificates for the Series B or Series C notes
or provide signature guarantees on the letter of transmittal unless:

      (1)  someone other than the registered holder tenders the certificate; or

      (2)  you complete the box entitled "Special Issuance Instructions" or
           "Special Delivery Instructions" in the letter of transmittal.

      In the case of (1) or (2) above, you must sign your Series B or Series C
note or provide a properly executed bond power. The signature on the bond power
and on the letter of transmittal must be guaranteed by an eligible institution.
An eligible institution is a member of the S.T.A.M.P. Medallion program, and
generally includes a registered national securities exchange or a member of


                                       30



the National Association of Securities Dealers, Inc., a commercial bank or
a trust company having an office or a correspondent in the United States. Most
banks, brokerage firms and financial institutions are eligible institutions.

Guaranteed Delivery Procedures

      If you wish to tender your Series B or Series C notes but your notes are
not immediately available, or time will not permit your notes or other required
documentation to reach the exchange agent on or before the expiration date, or
the procedure for book-entry transfer cannot be completed on a timely basis, you
may still tender your Series B or Series C notes if:

     o  the tender is made through an eligible institution;
     o  the exchange agent receives from the eligible institution on or before
        the expiration of the exchange offer, a properly completed and duly
        executed notice of guaranteed delivery, substantially in the form
        provided by us; and
     o  the exchange agent receives the certificates for all physically
        tendered Series B or Series C notes, in proper form for transfer, or a
        book-entry confirmation, as the case may be, and a properly completed
        letter of transmittal and all other documents required by the letter of
        transmittal, within three NYSE trading days after the date of execution
        of the notice of guaranteed delivery.

      You may deliver the notice of guaranteed delivery by hand, telegram or
mail to the exchange agent and you must include a guarantee by an eligible
institution in the form set forth in the notice.

Determination of Validity

      We will resolve all questions regarding the form of documents, validity,
eligibility, time of receipt and acceptance for exchange of any tendered Series
B or Series C notes. Our resolution of these questions as well as our
interpretation of the terms and conditions of the exchange offer, including the
letter of transmittal, is final and binding on all parties. A tender of Series B
or Series C notes is invalid until all irregularities have been cured or waived.
Neither we nor the exchange agent or any other person is under any obligation to
give notice of any irregularities in tenders, and they are not liable for
failing to give any such notice. We reserve the absolute right, in our sole and
absolute discretion, to reject any tenders determined to be in improper form or
unlawful. We also reserve the absolute right to waive any of the conditions of
the exchange offer or any condition or irregularity in the tender of Series B or
Series C by any holder. We need not waive similar conditions or irregularities
in the case of other holders.

      If any letter of transmittal, endorsement, bond power, power of attorney,
or any other document required by the letter of transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
that person must indicate that capacity when signing. In addition, unless waived
by us, the person must submit proper evidence satisfactory to us, in our sole
discretion, of his or her authority to so act.

Resales of Series D notes

      We are exchanging the Series B and Series C notes for Series D notes in
reliance upon the position of the staff of the Commission, set forth in
interpretive letters to third parties in other similar transactions. We will not
seek our own interpretive letter. As a result, we cannot assure you that the
staff will take the same position on this exchange offer as it did in
interpretive letters to other parties. Based on the staff's letters to other
parties, we believe that holders of Series D notes, other than broker-dealers,
can offer their Series D notes for resale, resell and otherwise transfer the
Series D notes without delivering a prospectus to prospective purchasers.
However, you must acquire the Series D notes in the ordinary course of business
and have no intention of engaging in a distribution of the Series D notes, as a
"distribution" is defined by the Securities Act.

      If you are an "affiliate" of us or you intend to distribute Series D
notes, within the meaning of the Securities Act, or if you are a broker-dealer
who purchased Series B or Series C notes from us to resell pursuant to Rule 144A
or any other available exemption under the Securities Act, you:

      o  cannot rely on the staff's interpretations in the above mentioned
         interpretive letters;
      o  cannot tender Series B or Series C notes in the exchange offer; and
      o  must comply with the registration and prospectus delivery requirements
         of the Securities Act to transfer the Series B or Series C notes,
         unless the sale is exempt.

      In addition, if you are a broker-dealer who acquired Series B or Series C
notes for your own account as a result of market-making or other trading
activities and you exchange the Series B or Series C notes for Series D notes,
you must deliver a prospectus with any resales of the Series D notes.


                                       31



      If you want to exchange your Series B or Series C notes for Series D
notes, you will be required to affirm that you:

      .     are not an "affiliate" of us;
      .     are acquiring the Series D notes in the ordinary course of your
            business;
      .     have no arrangement or understanding with any person to participate
            in a distribution of the Series D notes, within the meaning of the
            Securities Act; and
      .     are not a broker-dealer, are not engaged in, and do not intend to
            engage in, a distribution of the Series D notes, within the meaning
            of the Securities Act.

      In addition, we may require you to provide information regarding the
number of "beneficial owners" of the Series B or Series C notes within the
meaning of Rule 13d-3 under the Exchange Act. Each broker-dealer that receives
Series D notes for its own account must acknowledge that it acquired the Series
B or Series C notes for its own account as the result of market-making
activities or other trading activities. Each broker-dealer must further agree
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of Series D notes. By making this acknowledgment
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" under the Securities Act. Based on the staff's position
in interpretive letters issued to third parties, we believe that broker-dealers
who acquired Series B or Series C notes for their own accounts as a result of
market-making activities or other trading activities may fulfill their
prospectus delivery requirements with respect to the Series D notes with a
prospectus meeting the requirements of the Securities Act. Accordingly, a
broker-dealer may use this prospectus to satisfy such requirements. We have
agreed that a broker-dealer may use this prospectus for a period ending 180 days
after the expiration date of the exchange offer. You should read the section
entitled "Plan of Distribution" for further information about the use of this
prospectus by broker-dealers. A broker-dealer intending to use this prospectus
in the resale of Series D notes must notify us, on or prior to the expiration
date, that it is a participating broker-dealer. This notice may be given in the
letter of transmittal or may be delivered to the exchange agent. Any
participating broker-dealer who is an "affiliate" of us may not rely on the
staff's interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act when reselling Series D
notes.

      Each participating broker-dealer exchanging Series B or Series C notes for
Series D notes agrees that, upon receipt of notice from us:

       (a)   that any statement contained or incorporated by reference in this
             prospectus makes the prospectus untrue in any material respect;
       (b)   that this prospectus omits to state a material fact necessary to
             make the statements contained or incorporated by reference in
             this  prospectus, in light of the circumstances under which they
             were made, not misleading; or
       (c)   of the occurrence of other events specified in the registration
             rights agreement,

      the participating broker-dealer will suspend the sale of Series D notes.
Each participating broker-dealer agrees not to resell the Series D notes until:

       (1)   we have amended or supplemented this prospectus to correct the
             misstatement or omission and we furnish copies of the amended or
             supplemented prospectus to the participating broker-dealer; or
       (2)   we give notice that the sale of the Series D notes may be resumed.

      If we give notice suspending the sale of Series D notes, it shall extend
the 180-day period during which this prospectus may be used by a participating
broker-dealer by the number of days between the date we give notice of
suspension and the date participating broker-dealers receive copies of the
amended or supplemented prospectus or the date we give notice resuming the sale
of Series D notes.

Withdrawal Rights

   You can withdraw tenders of Series B or Series C notes at any time on or
before the expiration date.

      For a withdrawal to be effective, you must deliver a written, telegraphic,
telex or facsimile transmission of a notice of withdrawal or an agent's message
to the appropriate exchange agent on or before the expiration date. The notice
of withdrawal must specify the name of the person tendering the Series B or
Series C notes to be withdrawn, the total principal amount of Series B or Series
C notes withdrawn and the name of the registered holder of the Series B or
Series C notes if different from the name of the person tendering the Series B
or Series C notes. If you delivered Series B or Series C notes to the exchange
agent, you must submit the serial numbers of the Series B or Series C notes to
be withdrawn, and the signature on the notice of withdrawal must be guaranteed
by an eligible institution, except in the case of Series B or Series C notes
tendered for the account of an eligible institution. If you tendered Series B or
Series C notes as a book-entry transfer, the notice of withdrawal must specify
the name and number of the account at DTC to be credited with the withdrawal of
Series B or Series C notes. You must deliver the notice of withdrawal to the
exchange agent by written, telegraphic, telex or facsimile transmission, or by
an agent's message. You may


                                       32



not rescind withdrawals of tender. Series B or Series C notes properly withdrawn
may again be tendered at any time on or before the expiration date.

      We will determine all questions regarding the validity, form and
eligibility of withdrawal notices. Our determination will be final and binding
on all parties. Neither we nor the exchange agent or any other person is under
any obligation to give notice of any irregularities in withdrawals, and they are
not liable for failing to give any such notice. Withdrawn Series B or Series C
notes will be returned to you after withdrawal as soon as reasonably
practicable.

Interest on Series D notes

      The Series D notes will bear interest at a rate of 11% per annum. Interest
is payable semi-annually on February 1 and August 1 of each year. Holders of
Series D notes will receive interest from the date of initial issuance of the
Series D notes, plus an amount equal to the accrued but unpaid interest on the
Series B or Series C notes exchanged for the Series D notes. Interest on the
Series B or Series C notes accepted for exchange will cease to accrue upon
issuance of the Series D notes.

Extension of Tender Period; Termination; Amendment

      We expressly reserve the right, in our sole discretion, for any reason,
including the non-satisfaction of any of the conditions for completion described
below, to extend the period of time during which the exchange offer is open or
to amend the terms of the exchange offer in any respect. In any of these cases,
we will make a public announcement of the extension or amendment promptly.

      If we materially change the terms of or information concerning the
exchange offer, we will extend the exchange offer. The Commission has stated
that, as a general rule, it believes that an offer should remain open for a
minimum of five business days from the date that notice of the material change
is first given. The length of time the exchange offer must remain open will
depend on the particular facts and circumstances.

      If any of the conditions indicated in the next section have not been met,
we reserve the right, in our sole discretion, so long as Series B or Series C
notes have not been accepted for exchange, to delay the acceptance of any Series
B or Series C notes or to terminate the exchange offer and not accept for
exchange any Series B or Series C notes.

      If we extend the exchange offer, are delayed in accepting any Series B or
Series C notes or are unable to accept for exchange any Series B or Series C
notes under the exchange offer for any reason, then, without affecting our
rights under the exchange offer, the exchange agent may, on our behalf, retain
all Series B or Series C notes tendered. These notes may not be withdrawn except
as provided in the section entitled "Withdrawal Rights" on page 35. Our
reservation of the right to delay acceptance of any Series B or Series C notes
is subject to applicable law, which requires that we pay the consideration
offered or return the Series B or Series C notes deposited promptly after the
termination or withdrawal of the exchange offer.

      We will issue a press release or other public announcement no later than
9:00 a.m., New York City time, on the next business day following any extension,
amendment, non-acceptance or termination of the previously scheduled expiration
date.

Conditions to the Exchange Offer

      We may not accept Series B notes for exchange unless at least $50.0
million in aggregate principal amount of Series B notes are validly tendered.
The exchange offer for the Series C notes is not subject to this condition. We
may not accept Series B or Series C notes for exchange and may terminate or not
complete the exchange offer at any time prior to the expiration of the exchange
offer if:

       .     the staff of the Commission no longer allows the Series D notes to
             be offered for resale, resold and otherwise transferred by holders
             without compliance with the registration and prospectus delivery
             provisions of the Securities Act;
       .     a governmental body passes any law, statute, rule or regulation
             which prohibits or prevents the exchange offer;
       .     the Commission or any state securities authority issues a stop
             order suspending the effectiveness of the registration statement or
             initiates or threatens to initiate a proceeding to suspend the
             effectiveness of the registration statement; or
       .     we are unable to obtain any governmental approval that is necessary
             to complete the exchange offer.


                                       33



      If we reasonably believe that any of the above conditions has occurred, we
may:

       .     terminate the exchange offer and as promptly as practicable return
             all tendered Series B or Series C notes;

       .     extend the exchange offer;

       .     waive the unsatisfied condition and, subject to any requirement to
             extend the period of time during which the exchange offer is open,
             complete the exchange offer; or

       .     amend the terms of the exchange offer in any respect.

      These conditions are solely for our benefit. We may assert these
conditions with respect to all or any portion of the exchange offer regardless
of the circumstances giving rise to them. We may waive any condition in whole or
in part at any time in our discretion. Our failure to exercise our rights under
any of the above conditions does not represent a waiver of these rights. Each
right is an ongoing right that may be asserted at any time. All conditions must
be satisfied or waived prior to the expiration of the exchange offer. Any
determination by us concerning the conditions described above will be final and
binding on all parties.

Exchange Agent

      We appointed U.S. Bank Trust National Association as exchange agent for
the exchange offer. You should direct questions and requests for assistance,
requests for additional copies of this prospectus or of the letter of
transmittal and requests for a notice of guaranteed delivery to the following
address for the exchange agent:

                      U.S. Bank Trust National Association
                             U.S. Bank Trust Center
                              180 East Fifth Street
                            St. Paul, Minnesota 55101
                            Attn: Specialized Finance Group
                           (800) 934-6802 (telephone)
                           (651) 244-1537 (facsimile)

      If you deliver letters of transmittal or any other required documents to
an address or facsimile number other than those listed above, your tender is
invalid.

Fees and Expenses

      We will pay the exchange agent reasonable and customary fees for its
services and reasonable out-of-pocket expenses. We will also pay brokerage
houses and other custodians, nominees and fiduciaries their reasonable
out-of-pocket expenses for sending copies of this prospectus and related
documents to holders of Series B or Series C notes, and for handling or
tendering for their customers.

      We will pay the transfer taxes for the exchange of the Series B or Series
C notes in the exchange offer. If, however, Series D notes are delivered to or
issued in the name of a person other than the registered holder, or if a
transfer tax is imposed for any reason other than for the exchange of Series B
or Series C notes in the exchange offer, then the tendering holder will pay the
transfer taxes. If a tendering holder does not submit satisfactory evidence of
payment of taxes or exemption from taxes with the letter of transmittal, the
taxes will be billed directly to the tendering holder.

      We will not make any payment to brokers, dealers or other nominees
soliciting acceptances in the exchange offer.

Accounting Treatment

      The Series D notes will be recorded at the same carrying value as the
Series B or Series C notes. Accordingly, we will not recognize any gain or loss
on the exchange for accounting purposes.


                                       34



                      SELECTED CONSOLIDATED FINANCIAL DATA

      The selected consolidated income statement data for the years ended
December 31, 1998, 1999 and 2000 and the selected consolidated balance sheet
data as of December 31, 1999 and 2000 are derived from Sonic's audited financial
statements which are incorporated by reference. The selected consolidated income
statement data for the years ended December 31, 1996 and 1997 and the selected
consolidated balance sheet data as of December 31, 1996, 1997 and 1998 are
derived from Sonic's audited consolidated financial statements, none of which
are included in or incorporated by reference in this prospectus. The selected
consolidated balance sheet data as of September 30, 2000 is derived from Sonic's
unaudited consolidated financial statements, which are not included in or
incorporated by reference in this prospectus. The selected consolidated income
statement data for the nine months ended September 30, 2000 and 2001 and the
selected consolidated balance sheet data as of September 30, 2001 are derived
from Sonic's unaudited consolidated financial statements which are incorporated
by reference in this prospectus. In the opinion of management, these unaudited
financial consolidated statements reflect all adjustments necessary for a fair
presentation of Sonic's results of operations and financial condition. All such
adjustments are of a normal recurring nature. The results for interim periods
are not necessarily indicative of the results to be expected for the entire
fiscal year. In accordance with accounting principles generally accepted in the
United States of America, the selected consolidated financial data has been
retroactively restated to reflect Sonic's two-for-one common stock split that
occurred on January 29, 1999. This selected consolidated financial data should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and related notes incorporated by reference herein.

      We have accounted for all of our dealership acquisitions using the
purchase method of accounting and, as a result, we do not include in our
financial statements the results of operations of these dealerships prior to the
date they were acquired by us. The selected consolidated financial data of Sonic
discussed below reflect the results of operations and financial positions of
each of our dealerships acquired prior to September 30, 2001. As a result of the
effects of our acquisitions and other potential factors in the future, the
historical consolidated financial information described in selected consolidated
financial data is not necessarily indicative of the results of operations and
financial position of Sonic in the future or the results of operations and
financial position that would have resulted had such acquisitions occurred at
the beginning of the periods presented in the selected consolidated financial
data.



                                       35





                                                                                                             Nine Months Ended
                                                                      Year Ended December 31,                   September 30,
                                                ---------------------------------------------------------    ------------------
                                                  1996       1997        1998         1999        2000        2000        2001
                                                  ----       ----        ----         ----        ----        ----        ----
                                                                                                  
Income Statement Data                           (dollars and shares in thousands except per share amounts)
Revenues:

   New vehicles                                  $233,979   $343,941    $962,939   $1,968,514  $3,522,049  $2,682,696  $2,770,064
   Used vehicles                                   68,054     85,132     324,740      684,560   1,249,188     962,392     936,990
   Wholesale vehicles                              25,641     38,785     119,351      250,794     430,513     323,231     319,416
                                                 --------   --------   ---------    ---------   ---------   ---------   ---------
      Total vehicles                              327,674    467,858   1,407,030    2,903,868   5,201,750   3,968,319   4,026,470

   Parts, service, and collision repair            42,075     57,537     162,660      364,184     687,975     513,920     581,153
   Finance and insurance                            7,118     10,606      34,011       82,771     162,751     125,362     139,802
                                                 --------   --------   ---------    ---------   ---------   ---------   ---------
      Total revenues                              376,867    536,001   1,603,701    3,350,823   6,052,476   4,607,601   4,747,425

Cost of sales                                     332,122    473,003   1,396,259    2,896,400   5,187,289   3,951,528   4,048,753
                                                 --------   --------   ---------    ---------   ---------   ---------   ---------
Gross profit                                       44,745     62,998     207,442      454,423     865,187     656,073     698,672
Selling, general and administrative expenses       32,602     46,770     150,130      326,914     633,356     473,745     527,009
Depreciation and amortization                       1,076      1,322       4,607       11,699      22,714      17,344      19,384
                                                  -------     ------      ------     --------     -------     -------     -------
Operating income                                   11,067     14,906      52,705      115,810     209,117     164,984     152,279
Other income and expense:
   Interest expense, floor plan                     5,968      8,007      14,096       22,536      47,109      34,012      30,188
   Interest expense, other                            433      1,199       9,395       21,586      42,243      31,200      26,989
   Other income                                       355        298         426        1,286         107         109         120
                                                  -------    -------     -------      -------     -------     -------     -------
      Total other expense, net                      6,046      8,908      23,065       42,836      89,245      65,103      57,057
                                                  -------    -------     -------      -------     -------     -------     -------

Income before income taxes and minority interest    5,021      5,998      29,640       72,974     119,872      99,881      95,222
Provision for income taxes                          1,924      2,249      11,083       28,325      45,700      38,000      37,135
                                                ---------  ---------   ---------    ---------   ---------   ---------    --------
Income before minority interest                     3,097      3,749      18,557       44,649      74,172      61,881      58,087
Minority interest in earnings of subsidiary           114         47          --           --          --          --          --
                                                 --------   --------   ---------   ----------  ----------  ----------   ---------
Net income                                      $   2,983  $   3,702   $  18,557   $   44,649  $   74,172   $  61,881   $  58,087
                                                 ========   ========    ========    =========   =========    ========    ========
Diluted net income per share                          N/A  $    0.27   $    0.74   $     1.27  $     1.69   $    1.40   $    1.40
Weighted average number of diluted shares
outstanding                                           N/A     13,898      24,970       35,248      43,826      44,257      41,511
                                                            ========    ========     ========   =========    ========    ========

Ratio of earnings to fixed charges (a)
Consolidated Balance Sheet Data:                     7.3x       4.1x        3.3x         3.4x        3.0x        3.2x        3.2x
Cash and cash equivalents                       $   6,679  $  18,304   $  51,834   $   83,111  $  109,325   $  89,813  $  103,431
Inventories                                        71,550    156,514     264,971      630,857     773,785     661,175     654,762
Total assets                                      110,976    291,450     576,103    1,501,102   1,789,248  1,654,0710   1,689,314
Notes payable-floor plan                           63,893    133,236     228,158      517,575     684,718     540,950     557,301
Long-term debt (b)                                  6,719     49,653     145,790      425,894     493,309     498,951     457,032
Total liabilities                                  84,367    207,085     433,674    1,098,529   1,338,326   1,210,767   1,199,395
Minority interest                                     314        ---         ---          ---         ---          --          --
Stockholders' equity                               26,295     84,365     142,429      402,573     450,922     443,304     489,919

- ----------------------------

      (a)         Fixed charges is defined as interest (other than interest
                  expense related to notes payable-floor plan) and such portion
                  of rent expense determined to be representative of the
                  interest factor (33%). The ratio of earnings to fixed charges
                  is calculated by adding fixed charges to income before income
                  taxes and minority interest and dividing the sum by fixed
                  charges.

      (b)         Long-term debt includes current maturities of long-term debt,
                  the payable to our affiliates and the payable to Sonic's
                  Chairman. See Sonic's Consolidated Financial Statements and
                  related notes incorporated by reference in this prospectus.


                                       36



                              DESCRIPTION OF NOTES

      The Series D notes will be issued under an Indenture (the "Indenture"),
dated as of November 19, 2001, among Sonic, the Guarantors and U.S. Bank Trust
National Association (the "Trustee"). The Series C notes were issued under the
same Indenture. The Series B notes were issued under an indenture, dated as of
July 1, 1998, among Sonic, the Guarantors and U.S. Bank Trust National
Association. The terms of the Series B, Series C and Series D notes include
those stated in their respective indentures and those made a part of their
respective indentures by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Parenthetical references to "Section" mean
the applicable section of the Indenture. For definitions of certain capitalized
terms used in this Description of Notes, see "-Certain Definitions."

      The following is a summary of the material provisions of the Indenture
governing the Series D notes and does not purport to be complete or to describe
all of the provisions of the Indenture that may be important to you. Where we
refer to particular provisions of the Indenture, including the definitions of
certain terms, such references are qualified in their entirety by reference to
the provisions of the Indenture and those terms made a part of the Indenture by
reference to the Trust Indenture Act. A copy of the Indenture is an exhibit to
the registration statement of which this prospectus is a part. In this
description, the word "company" refers only to Sonic Automotive, Inc. and not to
its subsidiaries, and the word "Note" refers only to the Series D notes.

      The form and terms of the Series B notes and the Series D notes are
identical in all material respects. The form and terms of the Series C and
Series D notes are identical, except that:

       .     the Series D notes have been registered under the Securities Act
             and, therefore, will not bear legends restricting transfers; and

       .     holders of Series D notes will not be, and upon consummation of the
             exchange offer, holders of the Series C notes will no longer be,
             entitled to rights under the registration rights agreement, except
             in limited circumstances described elsewhere in this prospectus.

Principal, Maturity and Interest

      The Indenture provides that up to $200.0 million in aggregate principal
amount of notes may be outstanding at any one time. There is an aggregate of
$125.0 million of Series B notes and $75.0 million of Series C notes currently
outstanding. The Series B and Series C notes will be cancelled once they are
exchanged for Series D notes. Consequently, if all of the Series B and Series C
notes participate in the exchange offer, there will be an aggregate of $200.0
million of Series D notes outstanding following the exchange offer.

      The Series D notes will mature on August 1, 2008, and will be unsecured
senior subordinated obligations of the Company. As described in "Exchange Offer"
we have agreed to exchange all of our $125.0 million outstanding Series B notes
and all of our $75.0 million of outstanding Series C notes for $200 million of
Series D notes. The exchange offer will not be completed until after our
February 1, 2002 interest payment on the Series B and Series C notes. Each Note
will bear interest at the rate of 11% per annum from the date of its issuance or
from the most recent interest payment date to which interest has been paid,
payable semiannually in arrears on February 1 and August 1 in each year,
commencing August 1, 2002, to the person in whose name the Note (or any
predecessor Note) is registered at the close of business on the January 15 or
July 15 next preceding such interest payment date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months. (Sections 202,
301 and 309) For U.S. federal income tax purposes, you may elect to amortize the
excess of your purchase price for a Note over the Note's principal amount using
a constant yield method and treat the amortized portion of such excess allocable
to a taxable year as a reduction to interest income on the Note included in the
taxable year. Any election to amortize such excess generally will be applicable
to all notes you hold at the beginning of the first taxable year to which the
election applies and to notes you thereafter acquire, and is irrevocable without
the consent of the Internal Revenue Service. We encourage you to consult your
own tax advisor concerning the foregoing.

Issuance and Methods of Receiving Payments on the Series D notes

      Principal of, premium, if any, and interest on the Series D notes will be
payable, and the Series D notes will be exchangeable and transferable, at the
office or agency of the Company in The City of New York maintained for such
purposes (which initially will be the corporate trust office of the Trustee);
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the person entitled thereto as shown on the security
register. (Sections 301, 305 and 1002) The Series D notes will be issued only in
fully registered form without coupons, in denominations of $1,000 and any
integral multiple thereof. (Section 302) No service charge will be made for any
registration of transfer, exchange or redemption of Series D notes, except in
certain circumstances for any tax or other governmental charge that may be
imposed in connection therewith. (Section 305)


                                       37



Subsidiary Guarantees

      Payment of the Series D notes will be guaranteed by the Guarantors jointly
and severally, fully and unconditionally, on a senior subordinated basis. The
Guarantors are comprised of all of the direct and indirect Restricted
Subsidiaries of the Company on the Issue Date. Substantially all of the
Company's operations are conducted through its subsidiaries. In addition, if any
Restricted Subsidiary of the Company becomes a guarantor or obligor in respect
of any other Indebtedness of the Company or any of the Restricted Subsidiaries,
the Company shall cause such Restricted Subsidiary to enter into a supplemental
indenture pursuant to which such Restricted Subsidiary shall agree to guarantee
the Company's obligations under the Series D notes. If the Company defaults in
payment of the principal of, premium, if any, or interest on the Series D notes,
each of the Guarantors will be unconditionally, jointly and severally obligated
to duly and punctually pay the same. Certain of the Subsidiary Guarantees may
not be so subordinated.

      The obligations of each Guarantor under its Guarantee are limited to the
maximum amount which, after (1) giving effect to all other contingent and fixed
liabilities of such Guarantor, and (2) giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under the Indenture, will result in the obligations of
such Guarantor under its Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Guarantor that makes a
payment or distribution under its Guarantee shall be entitled to a contribution
from any other Guarantor in a pro rata amount based on the net assets of each
Guarantor determined in accordance with GAAP.

      Notwithstanding the foregoing, in certain circumstances a Guarantee of a
Guarantor may be released pursuant to the provisions of subsection (c) under
"-- Certain Covenants -- Limitation on Issuances of Guarantees of and Pledges
for Indebtedness Restricted Subsidiaries." The Company also may, at any time,
cause a Restricted Subsidiary to become a Guarantor by executing and delivering
a supplemental indenture providing for the guarantee of payment of the Series D
notes by such Restricted Subsidiary on the basis provided in the Indenture.

Optional Redemption

      The Series D notes will be subject to redemption at any time on or after
August 1, 2003, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice, in amounts of $1,000 or an integral
multiple thereof, at the following redemption prices (expressed as percentages
of the principal amount), if redeemed during the 12-month period beginning
August 1 of the years indicated below:

                                     Redemption
      Year                             Price
      2003                           105.500%
      2004                           103.667%
      2005                           101.833%

and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the redemption date (subject to the
rights of holders of record on relevant record dates to receive interest due on
an interest payment date).

      If less than all of the Series D notes are to be redeemed, the Trustee
shall select the Series D notes or portions of them to be redeemed in compliance
with the requirements of the principal national security exchange, if any, on
which the Series D notes are listed. If the Series D notes are not so listed,
the Trustee shall select them on a pro rata basis, by lot or by any other method
the Trustee shall deem fair and reasonable; provided, that Series D notes
redeemed in part shall be redeemed only in integral multiples of $1,000 (subject
to the procedures of The Depository Trust Company or any other Depositary).
(Sections 203, 1101, 1104, 1105 and 1107)

Sinking Fund

      The Series D notes will not be entitled to the benefit of any sinking
fund.

Purchase of Series D notes Upon a Change of Control

   General

      If a Change of Control shall occur at any time, then each holder of Series
D notes shall have the right to require that the Company purchase such holder's
Series D notes in whole or in part in integral multiples of $1,000, at a
purchase price (the


                                       38



"Change of Control Purchase Price") in cash in an amount equal to 101% of the
principal amount of such Series D notes, plus accrued and unpaid interest,
if any, to the date of purchase (the "Change of Control Purchase Date"),
pursuant to the offer described below (the "Change of Control Offer") and in
accordance with the other procedures set forth in the Indenture.

   Procedure

      Within 30 days of any Change of Control, the Company shall notify the
Trustee and give written notice of the Change of Control to each holder of
Series D notes, by first-class mail, postage prepaid, at his address appearing
in the security register. The notice will state, among other things,

       (1)   that a Change of Control has occurred and the date of the event;

       (2)   the circumstances and relevant facts regarding the Change of
             Control (including, but not limited to, information with respect to
             pro forma historical income, cash flow and capitalization after
             giving effect to such Change of Control);

       (3)   the purchase price and the purchase date which shall be fixed by
             the Company on a business day no earlier than 30 days nor later
             than 60 days from the date such notice is mailed, or such later
             date as is necessary to comply with requirements under the Exchange
             Act;

       (4)   that any Note not tendered will continue to accrue interest;

       (5)   that, unless the Company defaults in the payment of the Change of
             Control Purchase Price, any Series D notes accepted for payment
             pursuant to the Change of Control Offer shall cease to accrue
             interest after the Change of Control Purchase Date; and

       (6)   certain other procedures that a holder of Series D notes must
             follow to accept a Change of Control Offer or to withdraw such
             acceptance. (Section 1014)

   Stipulations

      If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient or be able to obtain financing to
pay the Change of Control Purchase Price for all or any of the Series D notes
that might be delivered by holders of the Series D notes seeking to accept the
Change of Control Offer. See "--Ranking." The failure of the Company to make or
consummate the Change of Control Offer or pay the Change of Control Purchase
Price when due will give the Trustee and the holders of the Series D notes the
rights described under "--Events of Default." The Series B notes have a similar
repurchase requirement upon a Change of Control.

      In addition to the obligations of the Company under the Indenture with
respect to the Series D notes in the event of a Change of Control, all of the
Company's Indebtedness under our floor plan facilities, the revolving facility
and the construction/mortgage facility also contain an event of default upon a
Change of Control as defined therein which obligates the Company to repay
amounts outstanding under such indebtedness upon an acceleration of the
Indebtedness issued thereunder. In addition, a Change of Control could result in
a termination or nonrenewal of one or more of the Company's franchise agreements
or its agreements with the Manufacturers.

      The term "all or substantially all" as used in the definition of "Change
of Control" has not been interpreted under New York law, the governing law of
the Indenture, to represent a specific quantitative test. As a consequence, in
the event the holders of the Series D notes elected to exercise their rights
under the Indenture and the Company elected to contest such election, there
could be no assurance as to how a court interpreting New York law would
interpret the phrase.

      The existence of a holder's right to require the Company to repurchase the
holder's Series D notes upon a Change of Control may deter a third party from
acquiring the Company in a transaction which constitutes a Change of Control.

      The provisions of the Indenture will not afford holders of the Series D
notes the right to require the Company to repurchase the Series D notes in the
event of a highly leveraged transaction or certain transactions with the
Company's management or its Affiliates, including a reorganization,
restructuring, merger or similar transaction (including, in certain
circumstances, an acquisition of the Company by management or its affiliates)
involving the Company that may adversely affect holders of the Series D notes,
if such transaction is a transaction defined as a Change of Control. A
transaction involving the Company's management or its Affiliates, or a
transaction involving a recapitalization of the Company, will result in a Change
of Control if it is the type of transaction specified by such definition.

      The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws or
regulations in connection with a Change of Control Offer.


                                       39



Ranking

   General

      The payment of the principal of, premium, if any, and interest on, the
Series D notes will be subordinated, as set forth in the Indenture, in right of
payment, to the prior payment in full of all Senior Indebtedness. The Series D
notes will be senior subordinated indebtedness of the Company ranking pari passu
with all other existing and future senior subordinated indebtedness of the
Company and senior to all existing and future Subordinated Indebtedness of the
Company.

   Payment Stoppages

      Upon the occurrence of any default in the payment of any Designated Senior
Indebtedness beyond any applicable grace period and after the receipt by the
Trustee from a representative of holders of any Designated Senior Indebtedness
(collectively, a "Senior Representative") of written notice of such default, no
payment (other than payments previously made or set aside pursuant to the
provisions described under "--Defeasance or Covenant Defeasance of Indenture")
or distribution of any assets of the Company or any Subsidiary of any kind or
character (excluding certain permitted equity interests or subordinated
securities) may be made on account of the principal of, premium, if any, or
interest on, the Series D notes or on account of the purchase, redemption,
defeasance or other acquisition of or in respect of, the Series D notes unless
and until such default shall have been cured or waived or shall have ceased to
exist or such Designated Senior Indebtedness shall have been discharged or paid
in full after which the Company shall resume making any and all required
payments in respect of the Series D notes, including any missed payments.

      Upon the occurrence and during the continuance of any non-payment default
with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may then be accelerated immediately (a "Non-payment Default")
and after the receipt by the Trustee and the Company from a Senior
Representative of written notice of such Non-payment Default, no payment (other
than payments previously made or set aside pursuant to the provisions described
under "--Defeasance or Covenant Defeasance of Indenture") or distribution of any
assets of the Company of any kind of character (excluding certain permitted
equity interests or subordinated securities) may be made by the Company or any
Subsidiary on account of the principal of, premium, if any, or interest on, the
Series D notes or on account of the purchase, redemption, defeasance or other
acquisition of, or in respect of, the Series D notes for the period specified
below (the "Payment Blockage Period").

      The Payment Blockage Period shall commence upon the receipt of notice of
the Non-payment Default by the Trustee and the Company from a Senior
Representative and shall end on the earliest of:

       (i)   the 179th day after such commencement;

       (ii)  the date on which such Non-payment Default (and all other
             Non-payment Defaults as to which notice is given after such Payment
             Blockage Period is initiated) is cured, waived or ceases to exist
             or on which such Designated Senior Indebtedness is discharged or
             paid in full; or

       (iii) the date on which such Payment Blockage Period (and all Non-payment
             Defaults as to which notice is given after such Payment Blockage
             Period is initiated) shall have been terminated by written notice
             to the Company or the Trustee from the Senior Representative
             initiating such Payment Blockage Period.

      After the occurrence of any of the dates set forth in clauses (i), (ii) or
(iii), the Company will promptly resume making any and all required payments in
respect of the Series D notes, including any missed payments. In no event will a
Payment Blockage Period extend beyond 179 days from the date of the receipt by
the Company and the Trustee of the notice initiating such Payment Blockage
Period (such 179-day period referred to as the "Initial Period"). Any number of
notices of Non-payment Defaults may be given during the Initial Period; provided
that during any period of 365 consecutive days only one Payment Blockage Period,
during which payment of principal of, premium, if any, or interest on, the
Series D notes may not be made, may commence and the duration of such period may
not exceed 179 days. No Non-payment Default with respect to Designated Senior
Indebtedness that existed or was continuing on the date of the commencement of
any Payment Blockage Period will be, or can be, made the basis for the
commencement of a second Payment Blockage Period, whether or not within a period
of 365 consecutive days, unless such default has been cured or waived for a
period of not less than 90 consecutive days.

      If the Company fails to make any payment on the Series D notes when due or
within any applicable grace period, whether or not on account of the payment
blockage provisions referred to above, such failure would constitute an Event of
Default under the Indenture and would enable the holders of the Series D notes
to accelerate the maturity thereof. See "-- Events of Default."

      The Indenture will provide that in the event of any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relative to the
Company or its assets, or liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary, or whether or not involving
insolvency or bankruptcy, or any assignment for the benefit of creditors or
other marshaling of assets or liabilities of the Company, all Senior
Indebtedness must be paid in full before any payment or distribution, excluding
distributions of certain


                                       40



permitted equity interests or subordinated securities, is made on account
of the principal of, premium, if any, or interest on the Series D notes or on
account of the purchase, redemption, defeasance or other acquisition of or in
respect of the Series D notes (other than payments previously made pursuant to
the provisions described under "--Defeasance or Covenant Defeasance of
Indenture").

   Liquidation/Insolvency

      By reason of such subordination, in the event of liquidation or
insolvency, creditors of the Company who are holders of Senior Indebtedness may
recover more, ratably, than the holders of the Series D notes. Funds which would
be otherwise payable to the holders of the Series D notes will be paid to the
holders of the Senior Indebtedness to the extent necessary to pay the Senior
Indebtedness in full and the Company may be unable to meet its obligations fully
with respect to the Series D notes.

   Guarantees

      Each Guarantee of a Guarantor will be an unsecured senior subordinated
obligation of such Guarantor, ranking pari passu with, or senior in right of
payment to, all other existing and future Indebtedness of such Guarantor that is
expressly subordinated to Senior Guarantor Indebtedness. The Indebtedness
evidenced by the Guarantees will be subordinated to Senior Guarantor
Indebtedness to substantially the same extent as the Series D notes are
subordinated to Senior Indebtedness and during any period when payment on the
Series D notes is blocked by Designated Senior Indebtedness, payment on the
Guarantees is similarly blocked. However, certain of the Subsidiary Guarantors
may not be so subordinated.

   Related Definitions

      "Senior Indebtedness" means the principal of, premium, if any, and
interest (including interest, to the extent allowable, accruing after the filing
of a petition initiating any proceeding under any state, federal or foreign
bankruptcy law) on any Indebtedness of the Company (other than as otherwise
provided in this definition), whether outstanding on July 31, 1998 or thereafter
created, incurred or assumed, and whether at any time owing, actually or
contingent, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Series D notes. Notwithstanding the foregoing, "Senior
Indebtedness" shall (x) include the Floor Plan Facility and the Revolving
Facility to the extent the Company is a party to them and (y) not include

       (i)   Indebtedness evidenced by the Series D notes, the Series B notes or
             the Series C notes;

       (ii)  Indebtedness that is subordinate or junior in right of payment to
             any Indebtedness of the Company;

       (iii) Indebtedness which when incurred and without respect to any
             election under Section 1111(b) of Title 11 United States Code, is
             without recourse to the Company;

       (iv)  Indebtedness which is represented by Redeemable Capital Stock;

       (v)   any liability for foreign, federal, state, local or other taxes
             owed or owing by the Company to the extent such liability
             constitutes Indebtedness;

       (vi)  Indebtedness of the Company to a Subsidiary or any other Affiliate
             of the Company or any of such Affiliate's Subsidiaries;

       (vii) to the extent it might constitute Indebtedness, amounts owing for
             goods, materials or services purchased in the ordinary course of
             business or consisting of trade accounts payable owed or owing by
             the Company, and amounts owed by the Company for compensation to
             employees or services rendered to the Company;

       (viii) that portion of any Indebtedness which at the time of issuance is
             issued in violation of the Indenture; and

       (ix)  Indebtedness evidenced by any guarantee of any Subordinated
             Indebtedness or Pari Passu Indebtedness.

      "Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the Floor Plan Facility or the Revolving Facility and (ii) any other Senior
Indebtedness which at the time of determination has an aggregate principal
amount outstanding of at least $25 million and which is specifically designated
in the instrument evidencing such Senior Indebtedness or the agreement under
which such Senior Indebtedness arises as "Designated Senior Indebtedness" by the
Company.

      "Senior Guarantor Indebtedness" means the principal of, premium, if any,
and interest (including interest, to the extent allowable, accruing after the
filing of a petition initiating any proceeding under any state, federal or
foreign bankruptcy law) on any Indebtedness of any Guarantor (other than as
otherwise provided in this definition), whether outstanding on July 31, 1998 or


                                       41



thereafter created, incurred or assumed, and whether at any time owing, actually
or contingent, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to any Guarantee. Notwithstanding the foregoing, "Senior
Guarantor Indebtedness" shall (x) include the Floor Plan Facility and the
Revolving Facility to the extent any Guarantor is a party thereto and (y) not
include

            (i) Indebtedness evidenced by the Guarantees or the Guarantees with
       respect to the Series B notes and Series C notes;

            (ii) Indebtedness that is subordinated or junior in right of payment
       to any Indebtedness of any Guarantor;

            (iii) Indebtedness which when incurred and without respect to any
       election under Section 1111(b) of Title 11 United States Code, is without
       recourse to any Guarantor;

            (iv) Indebtedness which is represented by Redeemable Capital Stock;

            (v) any liability for foreign, federal, state, local or other taxes
       owed or owing by any Guarantor to the extent such liability constitutes
       Indebtedness;

            (vi) Indebtedness of any Guarantor to a Subsidiary or any other
       Affiliate of the Company or any of such Affiliate's Subsidiaries;

            (vii) to the extent it might constitute Indebtedness, amounts owing
       for goods, materials or services purchased in the ordinary course of
       business or consisting of trade accounts payable owed or owing by such
       Guarantor, and amounts owed by such Guarantor for compensation to
       employees or services rendered to such Guarantor;

            (viii) that portion of any Indebtedness which at the time of
       issuance is issued in violation of the Indenture; and

            (ix) Indebtedness evidenced by any guarantee of any Subordinated
       Indebtedness or Pari Passu Indebtedness.

   Limitation on Future Indebtedness

      The Indenture will limit, but not prohibit, the incurrence by the Company
and its Subsidiaries of additional Indebtedness. It will prohibit the incurrence
by the Company of Indebtedness that is subordinated in right of payment to any
Senior Indebtedness of the Company and senior in right of payment to the Series
B, Series C or Series D notes.

Certain Covenants

      The Indenture contains, among others, the following covenants:

      Limitation on Indebtedness. The Company will not, and will not cause or
permit any of its Restricted Subsidiaries to, create, issue, incur, assume,
guarantee or otherwise in any manner become directly or indirectly liable for
the payment of or otherwise incur, contingently or otherwise (collectively,
"incur"), any Indebtedness (including any Acquired Indebtedness), unless such
Indebtedness is incurred by the Company or any Guarantor or constitutes Acquired
Indebtedness of a Restricted Subsidiary and, in each case, the Company's
Consolidated Fixed Charge Coverage Ratio for the most recent four full fiscal
quarters for which financial statements are available immediately preceding the
incurrence of such Indebtedness taken as one period is at least equal to or
greater than 2.00:1. (Section 1008)

      Notwithstanding the foregoing, the Company and, to the extent specifically
set forth below, the Restricted Subsidiaries may incur each and all of the
following (collectively, the "Permitted Indebtedness"):

        (i)    Indebtedness of the Company and the Guarantors under the
               Revolving Facility, including any refinancing (as defined below)
               thereof, in an aggregate principal amount at any one time
               outstanding, not to exceed the greater of (a) $75 million or (b)
               20% of the Company's Consolidated Tangible Assets, in any case
               under the Revolving Facility (including any refinancing thereof)
               or in respect of letters of credit thereunder;

        (ii)   Indebtedness of the Company and the Guarantors under any
               Inventory Facility;

        (iii)  Indebtedness of the Company pursuant to the Series B and Series C
               notes and Indebtedness of any Guarantor pursuant to a Guarantee
               of the Series B and Series C notes;


                                       42



        (iv)   Indebtedness of the Company or any Restricted Subsidiary
               outstanding on July 31 1998, listed on a schedule to the B
               Indenture and not otherwise referred to in this definition of
               "Permitted Indebtedness";

        (v)    Indebtedness of the Company owing to a Restricted Subsidiary;
               provided that any Indebtedness of the Company owing to a
               Restricted Subsidiary that is not a Guarantor is made pursuant to
               an intercompany note in the form attached to the Indenture and is
               unsecured and is subordinated in right of payment from and after
               such time as the Series D notes shall become due and payable
               (whether at Stated Maturity, acceleration or otherwise) to the
               payment and performance of the Company's obligations under the
               Series D notes; provided, further, that any disposition, pledge
               or transfer of any such Indebtedness to a Person (other than a
               disposition, pledge or transfer to a Restricted Subsidiary) shall
               be deemed to be an incurrence of such Indebtedness by the Company
               or other obligor not permitted by this clause (v);

        (vi)   Indebtedness of a Wholly Owned Restricted Subsidiary owing to the
               Company or another Wholly Owned Restricted Subsidiary; provided
               that any such Indebtedness is made pursuant to an intercompany
               note in the form attached to the Indenture; provided, further,
               that (a) any disposition, pledge or transfer of any such
               Indebtedness to a Person (other than a disposition, pledge or
               transfer to the Company or a Wholly Owned Restricted Subsidiary)
               shall be deemed to be an incurrence of such Indebtedness by the
               obligor not permitted by this clause (vi), and (b) any
               transaction pursuant to which any Wholly Owned Restricted
               Subsidiary, which has Indebtedness owing to the Company or any
               other Wholly Owned Restricted Subsidiary, ceases to be a Wholly
               Owned Restricted Subsidiary shall be deemed to be the incurrence
               of Indebtedness by such Wholly Owned Restricted Subsidiary that
               is not permitted by this clause (vi);

        (vii)  guarantees of any Restricted Subsidiary made in accordance with
               the provisions of "-- Limitation on Issuances of Guarantees of
               and Pledges for Indebtedness";

        (viii) obligations of the Company or any Guarantor entered into in the
               ordinary course of business (a) pursuant to Interest Rate
               Agreements designed to protect the Company or any Restricted
               Subsidiary against fluctuations in interest rates in respect of
               Indebtedness of the Company or any Restricted Subsidiary as long
               as such obligations do not exceed the aggregate principal amount
               of such Indebtedness then outstanding, (b) under any Currency
               Hedging Agreements, relating to (i) Indebtedness of the Company
               or any Restricted Subsidiary and/or (ii) obligations to purchase
               or sell assets or properties, in each case, incurred in the
               ordinary course of business of the Company or any Restricted
               Subsidiary; provided, however, that such Currency Hedging
               Agreements do not increase the Indebtedness or other obligations
               of the Company or any Restricted Subsidiary outstanding other
               than as a result of fluctuations in foreign currency exchange
               rates or by reason of fees, indemnities and compensation payable
               thereunder or (c) under any Commodity Price Protection Agreements
               which do not increase the amount of Indebtedness or other
               obligations of the Company or any Restricted Subsidiary
               outstanding other than as a result of fluctuations in commodity
               prices or by reason of fees, indemnities and compensation payable
               thereunder;

        (ix)   Indebtedness of the Company or any Restricted Subsidiary
               represented by Capital Lease Obligations or Purchase Money
               Obligations or other Indebtedness incurred or assumed in
               connection with the acquisition or development of real or
               personal, movable or immovable, property in each case incurred
               for the purpose of financing or refinancing all or any part of
               the purchase price or cost of construction or improvement of
               property used in the business of the Company, in an aggregate
               principal amount pursuant to this clause (ix) not to exceed $20
               million outstanding at any time; provided that the principal
               amount of any Indebtedness permitted under this clause (ix) did
               not in each case at the time of incurrence exceed the Fair Market
               Value, as determined by the Company in good faith, of the
               acquired or constructed asset or improvement so financed;

        (x)    obligations arising from agreements by the Company or a
               Restricted Subsidiary to provide for indemnification, customary
               purchase price closing adjustments, earn-outs or other similar
               obligations, in each case, incurred in connection with the
               acquisition or disposition of any business or assets of a
               Restricted Subsidiary;

        (xi)   Indebtedness evidenced by letters of credit in the ordinary
               course of business to support the Company's or any Restricted
               Subsidiary's insurance or self-insurance obligations for workers'
               compensation and other similar insurance coverages;

        (xii)  any renewals, extensions, substitutions, refundings, refinancings
               or replacements (collectively, a "refinancing") of any
               Indebtedness described in clauses (iii) and (iv) of this
               definition of "Permitted Indebtedness," including any successive
               refinancings so long as the borrower under such refinancing is
               the Company or, if not the Company, the same as the borrower of
               the Indebtedness being refinanced and the aggregate principal
               amount of Indebtedness represented thereby (or if such
               Indebtedness provides for an


                                       43




               amount less than the principal amount thereof to be due and
               payable upon a declaration of acceleration of the maturity
               thereof, the original issue price of such Indebtedness plus any
               accreted value attributable thereto since the original issuance
               of such Indebtedness) does not exceed the initial principal
               amount of such Indebtedness plus the lesser of (I) the stated
               amount of any premium or other payment required to be paid in
               connection with such a refinancing pursuant to the terms of the
               Indebtedness being refinanced or (II) the amount of premium or
               other payment actually paid at such time to refinance the
               Indebtedness, plus, in either case, the amount of expenses of the
               Company incurred in connection with such refinancing and (A) in
               the case of any refinancing of Indebtedness that is Subordinated
               Indebtedness, such new Indebtedness is made subordinated to the
               Series D notes at least to the same extent as the Indebtedness
               being refinanced and (B) in the case of Pari Passu Indebtedness
               or Subordinated Indebtedness, as the case may be, such
               refinancing does not reduce the Average Life to Stated Maturity
               or the Stated Maturity of such Indebtedness; and

        (xiii) Indebtedness of the Company and its Restricted Subsidiaries or
               any Guarantor in addition to that described in clauses (i)
               through (xii) above, and any renewals, extensions, substitutions,
               refinancings or replacements of such Indebtedness, so long as the
               aggregate principal amount of all such Indebtedness shall not
               exceed $10 million outstanding at any one time in the aggregate.

      For purposes of determining compliance with this "Limitation on
Indebtedness" covenant, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness permitted by this
covenant, the Company in its sole discretion shall classify such item of
Indebtedness and only be required to include the amount of such Indebtedness as
one of such types.

      Limitation on Restricted Payments. (a)The Company will not, and will not
cause or permit any Restricted Subsidiary to, directly or indirectly:

        (i)    declare or pay any dividend on, or make any distribution to
               holders of, any shares of the Company's Capital Stock (other than
               dividends or distributions payable solely in shares of its
               Qualified Capital Stock or in options, warrants or other rights
               to acquire shares of such Qualified Capital Stock);

        (ii)   purchase, redeem, defease or otherwise acquire or retire for
               value, directly or indirectly, the Company's Capital Stock or any
               Capital Stock of any Affiliate of the Company, including any
               Subsidiary of the Company (other than Capital Stock of any Wholly
               Owned Restricted Subsidiary of the Company), or options, warrants
               or other rights to acquire such Capital Stock;

        (iii)  make any principal payment on, or repurchase, redeem, defease,
               retire or otherwise acquire for value, prior to any scheduled
               principal payment, sinking fund payment or maturity, any
               Subordinated Indebtedness;

        (iv)   declare or pay any dividend or distribution on any Capital Stock
               of any Restricted Subsidiary to any Person (other than:

                        (a) to the Company or any of its Wholly Owned Restricted
                    Subsidiaries; or

                        (b)dividends and distributions made by a Restricted
                    Subsidiary:

                             (1) organized as a partnership, limited liability
                         company or similar pass-through entity to the holders
                         of its Capital Stock in amounts sufficient to satisfy
                         the tax liabilities arising from their ownership of
                         such Capital Stock; or

                             (2) on a pro rata basis to all stockholders of such
                         Restricted Subsidiary); or

        (v)    make any Investment in any Person (other than any Permitted
               Investments)

(any of the foregoing actions described in clauses (i) through (v), other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted Payments") (the amount of any such Restricted Payment, if other than
cash, shall be the Fair Market Value of the assets proposed to be transferred,
as determined by the board of directors of the Company, whose determination
shall be conclusive and evidenced by a board resolution), unless

               (1) immediately before and immediately after giving effect to
          such proposed Restricted Payment on a pro forma basis, no Default or
          Event of Default shall have occurred and be continuing and such
          Restricted Payment shall not be an event which is, or after notice or
          lapse of time or both, would be, an "event of default" under the terms
          of any Indebtedness of the Company or its Restricted Subsidiaries;

               (2) immediately before and immediately after giving effect to
          such Restricted Payment on a pro forma basis, the Company could incur
          $1.00 of additional Indebtedness (other than Permitted Indebtedness)
          under the provisions described under "-- Limitation on Indebtedness;"
          and


                                       44



               (3) after giving effect to the proposed Restricted Payment, the
          aggregate amount of all such Restricted Payments declared or made
          after July 31, 1998 and all Designation Amounts does not exceed the
          sum of:

                    (A) $5 million;

                    (B) 50% of the aggregate Consolidated Net Income of the
               Company accrued on a cumulative basis during the period beginning
               on the first day of the Company's fiscal quarter during which
               July 31, 1998 fell and ending on the last day of the Company's
               last fiscal quarter during which such date fell ending prior to
               the date of the Restricted Payment, or, if such aggregate
               cumulative Consolidated Net Income shall be a loss, minus 100% of
               such loss;

                    (C) the aggregate Net Cash Proceeds received after July 31,
               1998 by the Company either (x) as capital contributions in the
               form of common equity to the Company or (y) from the issuance or
               sale (other than to any of its Subsidiaries) of Qualified Capital
               Stock of the Company or any options, warrants or rights to
               purchase such Qualified Capital Stock of the Company (except, in
               each case, to the extent such proceeds are used to purchase,
               redeem or otherwise retire Capital Stock or Subordinated
               Indebtedness as set forth below in clause (ii) or (iii) of
               paragraph (b) below) (and excluding the Net Cash Proceeds from
               the issuance of Qualified Capital Stock financed, directly or
               indirectly, using funds borrowed from the Company or any
               Subsidiary until and to the extent such borrowing is repaid);

                    (D) the aggregate Net Cash Proceeds received after July 31,
               1998, by the Company (other than from any of its Subsidiaries)
               upon the exercise of any options, warrants or rights to purchase
               Qualified Capital Stock of the Company (and excluding the Net
               Cash Proceeds from the exercise of any options, warrants or
               rights to purchase Qualified Capital Stock financed, directly or
               indirectly, using funds borrowed from the Company or any
               Subsidiary until and to the extent such borrowing is repaid);

                    (E) the aggregate Net Cash Proceeds received after July 31,
               1998, by the Company from the conversion or exchange, if any, of
               debt securities or Redeemable Capital Stock of the Company or its
               Restricted Subsidiaries into or for Qualified Capital Stock of
               the Company plus, to the extent such debt securities or
               Redeemable Capital Stock were issued after July 31, 1998, upon
               the conversion or exchange of such debt securities or Redeemable
               Capital Stock, the aggregate of Net Cash Proceeds from their
               original issuance (and excluding the Net Cash Proceeds from the
               conversion or exchange of debt securities or Redeemable Capital
               Stock financed, directly or indirectly, using funds borrowed from
               the Company or any Subsidiary until and to the extent such
               borrowing is repaid); and

                    (F)(a)  in the case of the disposition or repayment of any
               Investment constituting a Restricted Payment made after July 31,
               1998, an amount (to the extent not included in Consolidated Net
               Income) equal to the lesser of the return of capital with respect
               to such Investment and the initial amount of such Investment, in
               either case, less the cost of the disposition of such Investment
               and net of taxes, and (b) in the case of the designation of an
               Unrestricted Subsidiary as a Restricted Subsidiary (as long as
               the designation of such Subsidiary as an Unrestricted Subsidiary
               was deemed a Restricted Payment), the Fair Market Value of the
               Company's interest in such Subsidiary provided that such amount
               shall not in any case exceed the amount of the Restricted Payment
               deemed made at the time the Subsidiary was designated as an
               Unrestricted Subsidiary.

                       (b)  Notwithstanding the foregoing, and in the case of
               clauses (ii) through (iv) below, so long as no Default or Event
               of Default is continuing or would arise therefrom, the foregoing
               provisions shall not prohibit the following actions (each of
               clauses (i) through (iv) and (viii) being referred to as a
               "Permitted Payment"):

               (i) the payment of any dividend within 60 days after the date of
          declaration thereof, if at such date of declaration such payment was
          permitted by the provisions of paragraph (a) of this Section and such
          payment shall have been deemed to have been paid on such date of
          declaration and shall not have been deemed a "Permitted Payment" for
          purposes of the calculation required by paragraph (a) of this Section;


               (ii) the repurchase, redemption, or other acquisition or
          retirement for value of any shares of any class of Capital Stock of
          the Company in exchange for, including any such exchange pursuant to
          the exercise of a conversion right or privilege in connection with
          which cash is paid in lieu of the issuance of fractional shares or
          scrip, or out of the Net Cash Proceeds of a substantially concurrent
          issuance and sale for cash (other than to a Subsidiary) of, other
          shares of Qualified Capital Stock of the Company; provided that the
          Net


                                       45



          Cash Proceeds from the issuance of such shares of Qualified Capital
          Stock are excluded from clause (3)(C) of paragraph (a) of this
          Section;

               (iii) the repurchase, redemption, defeasance, retirement or
          acquisition for value or payment of principal of any Subordinated
          Indebtedness or Redeemable Capital Stock in exchange for, or in an
          amount not in excess of the Net Cash Proceeds of, a substantially
          concurrent issuance and sale for cash (other than to any Subsidiary of
          the Company) of any Qualified Capital Stock of the Company, provided
          that the Net Cash Proceeds from the issuance of such shares of
          Qualified Capital Stock are excluded from clause (3)(C) of paragraph
          (a) of this Section;

               (iv) the repurchase, redemption, defeasance, retirement,
          refinancing, acquisition for value or payment of principal of any
          Subordinated Indebtedness (other than Redeemable Capital Stock) (a
          "refinancing") through the substantially concurrent issuance of new
          Subordinated Indebtedness of the Company, provided that any such new
          Subordinated Indebtedness

                    (1) shall be in a principal amount that does not exceed the
               principal amount so refinanced (or, if such Subordinated
               Indebtedness provides for an amount less than the principal
               amount thereof to be due and payable upon a declaration of
               acceleration thereof, then such lesser amount as of the date of
               determination), plus the lesser of (I) the stated amount of any
               premium or other payment required to be paid in connection with
               such a refinancing pursuant to the terms of the Indebtedness
               being refinanced or (II) the amount of premium or other payment
               actually paid at such time to refinance the Indebtedness, plus,
               in either case, the amount of expenses of the Company incurred in
               connection with such refinancing;

                    (2) has an Average Life to Stated Maturity greater than the
               remaining Average Life to Stated Maturity of the Series D notes;

                    (3) has a Stated Maturity for its final scheduled principal
               payment later than the Stated Maturity for the final scheduled
               principal payment of the Series D notes; and

                    (4) is expressly subordinated in right of payment to the
               Series D notes at least to the same extent as the Subordinated
               Indebtedness to be refinanced;

               (v) the purchase, redemption, or other acquisition or retirement
          for value of any class of Capital Stock of the Company from employees,
          former employees, directors or former directors of the Company or any
          Subsidiary pursuant to the terms of the agreements pursuant to which
          such Capital Stock was acquired in an amount not to exceed $1.0
          million in the aggregate in any calendar year;

               (vi) the repurchase, redemption or other acquisition or
          retirement for value of Capital Stock of the Company issued pursuant
          to acquisitions by the Company to the extent required by or needed to
          comply with the requirements of any of the Manufacturers with which
          the Company or a Restricted Subsidiary is a party to a franchise
          agreement;

               (vii) the repurchase, redemption, defeasance, retirement or
          acquisition for value or payment of principal on the Smith
          Subordinated Loan; and

               (viii) the payment of the contingent purchase price of an
          acquisition to the extent such payment would be deemed a Restricted
          Payment. (Section 1009)

      Limitation on Transactions with Affiliates. The Company will not, and will
not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of assets,
property or services) with or for the benefit of any Affiliate of the Company
(other than the Company or a Wholly Owned Restricted Subsidiary) unless such
transaction or series of related transactions is entered into in good faith and
in writing and

               (a) such transaction or series of related transactions is on
          terms that are no less favorable to the Company or such Restricted
          Subsidiary, as the case may be, than those that would be available in
          a comparable transaction in arm's-length dealings with an unrelated
          third party;

               (b) with respect to any transaction or series of related
          transactions involving aggregate value in excess of $500,000 the
          Company delivers either an officers' certificate to the Trustee
          certifying that such transaction or series of related transactions
          complies with clause (a) above or such transaction or series of
          related transactions is approved by a majority of the Disinterested
          Directors of the board of directors of the Company, or in the event
          there is only one Disinterested Director, by such Disinterested
          Director; and



                                       46



               (c) with respect to any transaction or series of related
          transactions involving aggregate value in excess of $1 million, either
          (i) such transaction or series of related transactions has been
          approved by a majority of the Disinterested Directors of the board of
          directors of the Company, or in the event there is only one
          Disinterested Director, by such Disinterested Director, or (ii) the
          Company delivers to the Trustee a written opinion of an investment
          banking firm of national standing or other recognized independent
          expert with experience appraising the terms and conditions of the type
          of transaction or series of related transactions for which an opinion
          is required stating that the transaction or series of related
          transactions is fair to the Company or such Restricted Subsidiary from
          a financial point of view;

    provided, however, that this provision shall not apply to:

                    (i) compensation and employee benefit arrangements with any
               officer or director of the Company, including under any stock
               option or stock incentive plans, entered into in the ordinary
               course of business;

                    (ii) any transaction permitted as a Restricted Payment
               pursuant to the covenant described in "--Limitation on Restricted
               Payments";

                    (iii) the payment of customary fees to directors of the
               Company and its Restricted Subsidiaries;

                    (iv) any transaction with any officer or member of the Board
               of Directors of the Company involving indemnification
               arrangements; and

                    (v) loans or advances to officers of the Company in the
               ordinary course of business not to exceed $1 million in any
               calendar year. (Section 1010)

      Limitation on Liens. The Company will not, and will not cause or permit
any Restricted Subsidiary to, directly or indirectly, (1) create, incur or
affirm any Lien of any kind securing any Pari Passu Indebtedness or Subordinated
Indebtedness, including any assumption, guarantee or other liability with
respect thereto by any Restricted Subsidiary, upon any property or assets
(including any intercompany notes) of the Company or any Restricted Subsidiary
owned on July 31, 1998 or acquired after July 31, 1998, or (2) assign or convey
any right to receive any income or profits from such liens, unless the Series D
notes or a Guarantee in the case of Liens of a Guarantor are directly secured
equally and ratably with (or, in the case of Subordinated Indebtedness, prior or
senior thereto, with the same relative priority as the Series D notes shall have
with respect to such Subordinated Indebtedness) the obligation or liability
secured by such Lien except for Liens:

               (A) securing any Indebtedness which became Indebtedness pursuant
          to a transaction permitted under "--Consolidation, Merger, Sale of
          Assets" or securing Acquired Indebtedness which was created prior to
          (and not created in connection with, or in contemplation of) the
          incurrence of such Pari Passu Indebtedness or Subordinated
          Indebtedness (including any assumption, guarantee or other liability
          with respect thereto by any Restricted Subsidiary) and which
          Indebtedness is permitted under the provisions of "-- Limitation on
          Indebtedness"; or

               (B) securing any Indebtedness incurred in connection with any
          refinancing, renewal, substitutions or replacements of any such
          Indebtedness described in clause (A), so long as the aggregate
          principal amount of Indebtedness represented thereby (or if such
          Indebtedness provides for an amount less than the principal amount
          thereof to be due and payable upon a declaration of acceleration of
          the maturity thereof, the original issue price of such Indebtedness
          plus any accreted value attributable thereto since the original
          issuance of such Indebtedness) is not increased by such refinancing by
          an amount greater than the lesser of:

                    (i) the stated amount of any premium or other payment
               required to be paid in connection with such a refinancing
               pursuant to the terms of the Indebtedness being refinanced; or

                    (ii) the amount of premium or other payment actually paid at
               such time to refinance the Indebtedness, plus, in either case,
               the amount of expenses of the Company incurred in connection with
               such refinancing,

      provided, however, that in the case of clauses (A) and (B), any such Lien
only extends to the assets that were subject to such Lien securing such
Indebtedness prior to the related acquisition by the Company or its Restricted
Subsidiaries. Notwithstanding the foregoing, any Lien securing the Series D
notes granted pursuant to this covenant shall be automatically and
unconditionally released and discharged upon the release by the holders of the
Pari Passu Indebtedness or Subordinated Indebtedness described above of their
Lien on the property or assets of the Company or any Restricted Subsidiary
(including any deemed release upon payment in full of all obligations under such
Indebtedness), at such time as the holders of all such Pari Passu Indebtedness
or


                                       47



Subordinated Indebtedness also release their Lien on the property or assets of
the Company or such Restricted Subsidiary, or upon any sale, exchange or
transfer to any Person not an Affiliate of the Company of the property or assets
secured by such Lien, or of all of the Capital Stock held by the Company or any
Restricted Subsidiary in, or all or substantially all the assets of, any
Restricted Subsidiary creating such Lien. (Section 1011)

      Limitation on Sale of Assets. (a) The Company will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly,
consummate an Asset Sale unless (i) at least 80% of the consideration from such
Asset Sale consists of:

               (A) cash or Cash Equivalents,

               (B) the assumption of Senior Indebtedness or Senior Guarantor
          Indebtedness by the party acquiring the assets from the Company of any
          Restricted Subsidiary,

               (C) Replacement Assets or

               (D) a combination of any of the foregoing; and

        (ii) the Company or such Restricted Subsidiary receives consideration at
the time of such Asset Sale at least equal to the Fair Market Value of the
shares or assets subject to such Asset Sale (as determined by the board of
directors of the Company and evidenced in a board resolution); provided that any
notes or other obligations received by the Company or any such Restricted
Subsidiary from any transferee of assets from the Company or such Restricted
Subsidiary that are converted by the Company or such Restricted Subsidiary into
cash at Fair Market Value within 30 days after receipt shall be deemed to be
cash for purposes of this provision.

        (b) If:

               (A) all or a portion of the Net Cash Proceeds of any Asset Sale
          are not required to be applied to repay permanently any Senior
          Indebtedness or Senior Guarantor Indebtedness then outstanding as
          required by the terms thereof; or

               (B) the Company determines not to apply such Net Cash Proceeds to
          the permanent prepayment of such Senior Indebtedness or Senior
          Guarantor Indebtedness; or

               (C) if no such Senior Indebtedness or Senior Guarantor
          Indebtedness is then outstanding, then the Company or a Restricted
          Subsidiary may within 365 days of the Asset Sale invest the Net Cash
          Proceeds in Replacement Assets. The amount of such Net Cash Proceeds
          not used or invested within 365 days of the Asset Sale as set forth in
          this paragraph constitutes "Excess Proceeds."

        (c) When the aggregate amount of Excess Proceeds exceeds $10 million or
   more, the Company will apply the Excess Proceeds to the repayment of the
   Series D notes and any other Pari Passu Indebtedness outstanding with similar
   provisions requiring the Company to make an offer to purchase such
   Indebtedness with the proceeds from any Asset Sale as follows:

               (A) the Company will make an offer to purchase (an "Offer") from
          all holders of the Series D notes in accordance with the procedures
          set forth in the Indenture in the maximum principal amount (expressed
          as a multiple of $1,000) of Series D notes that may be purchased out
          of an amount (the "Note Amount") equal to the product of such Excess
          Proceeds multiplied by a fraction, the numerator of which is the
          outstanding principal amount of the Series D notes, and the
          denominator of which is the sum of the outstanding principal amount of
          the Series D notes and such Pari Passu Indebtedness (subject to
          proration in the event such amount is less than the aggregate Offered
          Price (as defined herein) of all Series D notes tendered); and


               (B) to the extent required by such Pari Passu Indebtedness to
          permanently reduce the principal amount of such Pari Passu
          Indebtedness, the Company will make an offer to purchase or otherwise
          repurchase or redeem Pari Passu Indebtedness (a "Pari Passu Offer") in
          an amount (the "Pari Passu Debt Amount") equal to the excess of the
          Excess Proceeds over the Note Amount. However, in no event will the
          Company be required to make a Pari Passu Offer in a Pari Passu Debt
          Amount exceeding the principal amount of such Pari Passu Indebtedness
          plus the amount of any premium required to be paid to repurchase such
          Pari Passu Indebtedness. The offer price for the Series D notes will
          be payable in cash in an amount equal to 100% of the principal amount
          of the Series D notes plus accrued and unpaid interest, if any, to the
          date (the "Offer Date") such Offer is consummated (the "Offered
          Price"), in accordance with the procedures set forth in the Indenture.
          To the extent that the aggregate Offered Price of the Series D notes
          tendered pursuant to the Offer is less than the Note Amount relating
          thereto or the aggregate amount of Pari Passu Indebtedness that is
          purchased in a Pari Passu Offer is less than the Pari Passu Debt


                                       48



               Amount, the Company may use any remaining Excess Proceeds for
               general corporate purposes. If the aggregate principal amount of
               Series D notes and Pari Passu Indebtedness surrendered by holders
               thereof exceeds the amount of Excess Proceeds, the Trustee shall
               select the Series D notes to be purchased on a pro rata basis.
               Upon the completion of the purchase of all the Series D notes
               tendered pursuant to an Offer and the completion of a Pari Passu
               Offer, the amount of Excess Proceeds, if any, shall be reset at
               zero.

        (d) If the Company becomes obligated to make an Offer pursuant to clause
  (c) above, the Series D notes and the Pari Passu Indebtedness shall be
  purchased by the Company, at the option of the holders thereof, in whole or in
  part in integral multiples of $1,000, on a date that is not earlier than 30
  days and not later than 60 days from the date the notice of the Offer is given
  to holders, or such later date as may be necessary for the Company to comply
  with the requirements under the Exchange Act.

        (e) The Indenture will provide that the Company will comply with the
  applicable tender offer rules, including Rule 14e-1 under the Exchange Act,
  and any other applicable securities laws or regulations in connection with an
  Offer. (Section 1012)

      Limitation on Issuances of Guarantees of and Pledges for Indebtedness. (a)
The Company will not cause or permit any Restricted Subsidiary, other than a
Guarantor, directly or indirectly, to secure the payment of any Senior
Indebtedness of the Company and the Company will not, and will not permit any
Restricted Subsidiary to, pledge any intercompany notes representing obligations
of any Restricted Subsidiary (other than a Guarantor) to secure the payment of
any Senior Indebtedness unless in each case such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to the Indenture
providing for a guarantee of payment of the Series D notes by such Restricted
Subsidiary. The guarantee shall be on the same terms as the guarantee of the
Senior Indebtedness (if a guarantee of Senior Indebtedness is granted by any
such Restricted Subsidiary) except that the guarantee of the Series D notes need
not be secured and shall be subordinated to the claims against such Restricted
Subsidiary in respect of Senior Indebtedness to the same extent as the Series D
notes are subordinated to Senior Indebtedness of the Company under the
Indenture.

        (b) The Company will not cause or permit any Restricted Subsidiary
(which is not a Guarantor), directly or indirectly, to guarantee, assume or in
any other manner become liable with respect to any Indebtedness of the Company
or any Restricted Subsidiary unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture to the Indenture providing for a
Guarantee of the Series D notes on the same terms as the guarantee of such
Indebtedness except that

           (A) such guarantee need not be secured unless required pursuant to
"--Limitation on Liens,"

           (B) if such Indebtedness is by its terms Senior Indebtedness, any
such assumption, guarantee or other liability of such Restricted Subsidiary with
respect to such Indebtedness shall be senior to such Restricted Subsidiary's
Guarantee of the Series D notes to the same extent as such Senior Indebtedness
is senior to the Series D notes and

           (C) if such Indebtedness is by its terms expressly subordinated to
the Series D notes, any such assumption, guarantee or other liability of such
Restricted Subsidiary with respect to such Indebtedness shall be subordinated to
such Restricted Subsidiary's Guarantee of the Series D notes at least to the
same extent as such Indebtedness is subordinated to the Series D notes.

        (c) Notwithstanding the foregoing, any Guarantee by a Restricted
Subsidiary of the Series D notes shall provide by its terms that it (and all
Liens securing the same) shall be automatically and unconditionally released and
discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary, which transaction
is in compliance with the terms of the Indenture and pursuant to which
transaction such Subsidiary is released from all guarantees, if any, by it of
other Indebtedness of the Company or any Restricted Subsidiaries or (ii) the
release by the holders of the Indebtedness of the Company of their security
interest or their guarantee by such Restricted Subsidiary (including any deemed
release upon payment in full of all obligations under such Indebtedness), at
such time as (A) no other Indebtedness of the Company has been secured or
guaranteed by such Restricted Subsidiary, as the case may be, or (B) the holders
of all such other Indebtedness which is secured or guaranteed by such Restricted
Subsidiary also release their security interest in or guarantee by such
Restricted Subsidiary (including any deemed release upon payment in full of all
obligations under such Indebtedness). (Section 1013)

       Limitation on Senior Subordinated Indebtedness. The Company will not, and
will not permit or cause any Guarantor to, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise in any manner become directly or
indirectly liable for or with respect to or otherwise permit to exist any
Indebtedness that is subordinate in right of payment to any Indebtedness of the
Company or such Guarantor, as the case may be, unless such Indebtedness is also
pari passu with the Series D notes or the Guarantee of such Guarantor or
subordinated in right of payment to the Series D notes or such Guarantee at
least to the same extent as the Series D notes or such Guarantee are
subordinated in right of payment to Senior Indebtedness or Senior Indebtedness
of such Guarantor, as the case may be, as set forth in the Indenture. (Section
1017)


                                       49



      Limitation on Subsidiary Preferred Stock.   The Company will not permit

     (a) any Restricted Subsidiary of the Company to issue, sell or transfer any
Preferred Stock, except for (i) Preferred Stock issued or sold to, held by or
transferred to the Company or a Wholly Owned Restricted Subsidiary, and (ii)
Preferred Stock issued by a Person prior to the time

         (A) such Person becomes a Restricted Subsidiary,

         (B) such Person merges with or into a Restricted Subsidiary or

         (C) a Restricted Subsidiary merges with or into such Person;

      provided that such Preferred Stock was not issued or incurred by such
Person in anticipation of the type of transaction contemplated by subclause (A),
(B) or (C) or

     (b) any Person (other than the Company or a Wholly Owned Restricted
Subsidiary) to acquire Preferred Stock of any Restricted Subsidiary from the
Company or any Restricted Subsidiary, except, in the case of clause (a) or (b),
upon the acquisition of all the outstanding Capital Stock of such Restricted
Subsidiary in accordance with the terms of the Indenture. (Section 1015)

      Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to

     (i)  pay dividends or make any other distribution on its Capital Stock or
          any other interest or participation in or measured by its profits,

     (ii) pay any Indebtedness owed to the Company or any other Restricted
          Subsidiary,

     (iii) make any Investment in the Company or any other Restricted Subsidiary
          or

     (iv) transfer any of its properties or assets to the Company or any other
          Restricted Subsidiary, except for:

     (a) any encumbrance or restriction pursuant to an agreement in effect on
July 31, 1998;

     (b) any encumbrance or restriction, with respect to a Restricted Subsidiary
that was not a Restricted Subsidiary of the Company on July 31, 1998, in
existence at the time such Person becomes a Restricted Subsidiary of the Company
and not incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary, provided that such encumbrances and
restrictions are not applicable to the Company or any Restricted Subsidiary or
the properties or assets of the Company or any Restricted Subsidiary other than
such Subsidiary which is becoming a Restricted Subsidiary;

     (c) customary provisions contained in an agreement that has been entered
into for the sale or other disposition of all or substantially all of the
Capital Stock or assets of a Restricted Subsidiary; provided however that the
restrictions are applicable only to such Restricted Subsidiary or assets;

     (d) any encumbrance or restriction existing under or by reason of
applicable law;

     (e) customary provisions restricting subletting or assignment of any lease
governing any leasehold interest of any Restricted Subsidiary;

     (f) covenants in franchise agreements with Manufacturers customary for
franchise agreements in the automobile retailing industry;

     (g) any encumbrance or restriction contained in any Purchase Money
Obligations for property to the extent such restriction or encumbrance restricts
the transfer of such property;

     (h) any encumbrances or restrictions in security agreements securing
Indebtedness (other than Subordinated Indebtedness) of a Guarantor (including
any Inventory Facility (to the extent that such Liens are otherwise incurred in
accordance with "-- Limitation on Liens") that restrict the transfer of property
subject to such agreements, provided that any such encumbrance or restriction is
released to the extent the underlying Lien is released or the related
Indebtedness is repaid; and


     (i) any encumbrance or restriction existing under any agreement that
extends, renews, refinances or replaces the agreements containing the
encumbrances or restrictions in the foregoing clauses (a) and (b), or in this
clause (i), provided that


                                       50



     the terms and conditions of any such encumbrances or restrictions are no
     more restrictive in any material respect than those under or pursuant to
     the agreement evidencing the Indebtedness so extended, renewed, refinanced
     or replaced. (Section 1016)

     Limitation on Unrestricted Subsidiaries. The Company may designate after
the Issue Date any Subsidiary as an "Unrestricted Subsidiary" under the
Indenture (a "Designation") only if:

     (a) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation;

     (b) the Company would be permitted to make an Investment (other than a
Permitted Investment) at the time of Designation (assuming the effectiveness of
such Designation) pursuant to the first paragraph of "-- Limitation on
Restricted Payments" above in an amount (the "Designation Amount") equal to the
greater of (1) the net book value of the Company's interest in such Subsidiary
calculated in accordance with GAAP or (2) the Fair Market Value of the Company's
interest in such Subsidiary as determined in good faith by the Company's board
of directors;

     (c) the Company would be permitted under the Indenture to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
covenant described under "-- Limitation on Indebtedness" at the time of such
Designation (assuming the effectiveness of such Designation);

     (d) such Unrestricted Subsidiary does not own any Capital Stock in any
Restricted Subsidiary of the Company which is not simultaneously being
designated an Unrestricted Subsidiary;

     (e) such Unrestricted Subsidiary is not liable, directly or indirectly,
with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness, provided that an Unrestricted Subsidiary may provide a Guarantee
for the Series D notes; and

     (f) such Unrestricted Subsidiary is not a party to any agreement, contract,
arrangement or understanding at such time with the Company or any Restricted
Subsidiary unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company or, in the event such condition is not satisfied, the
value of such agreement, contract, arrangement or understanding to such
Unrestricted Subsidiary shall be deemed a Restricted Payment.

      In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment pursuant to the covenant
"-- Limitation on Restricted Payments" for all purposes of the Indenture in the
Designation Amount.

     The Indenture will also provide that the Company shall not and shall not
cause or permit any Restricted Subsidiary to at any time (x) provide credit
support for, or subject any of its property or assets, other than the Capital
Stock of any Unrestricted Subsidiary, to the satisfaction of, any Indebtedness
of any Unrestricted Subsidiary, including any undertaking, agreement or
instrument evidencing such Indebtedness, (other than Permitted Investments in
Unrestricted Subsidiaries) or (y) be directly or indirectly liable for any
Indebtedness of any Unrestricted Subsidiary. For purposes of the foregoing, the
Designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall
be deemed to be the Designation of all of the Subsidiaries of such Subsidiary.

      The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation") if:

        (a)  no Default shall have occurred and be continuing at the time of and
             after giving effect to such Revocation;

        (b)  all Liens and Indebtedness of such Unrestricted Subsidiary
             outstanding immediately following such Revocation would, if
             incurred at such time, have been permitted to be incurred for all
             purposes of the Indenture; and

        (c)  unless such redesignated Subsidiary shall not have any Indebtedness
             outstanding (other than Indebtedness that would be Permitted
             Indebtedness), immediately after giving effect to such proposed
             Revocation, and after giving pro forma effect to the incurrence of
             any such Indebtedness of such redesignated Subsidiary as if such
             Indebtedness was incurred on the date of the Revocation, the
             Company could incur $1.00 of additional Indebtedness (other than
             Permitted Indebtedness) pursuant to the covenant described under
             "--Limitation on Indebtedness."

      All Designations and Revocations must be evidenced by a resolution of the
board of directors of the Company delivered to the Trustee certifying compliance
with the foregoing provisions. (Section 1018)

      Provision of Financial Statements. Whether or not the Company is subject
to Section 13(a) or 15(d) of the Exchange Act, the Company and each Guarantor
(to the extent such Guarantor would be required if subject to Section 13(a) or
15(d) of the Exchange Act) will, to the extent permitted under the Exchange Act,
file with the Commission the annual reports, quarterly reports and other
documents which the Company and such Guarantor would have been required to file
with the Commission pursuant to Sections 13(a) or 15(d) if the Company or such
Guarantor were so subject. The documents are to be filed with the Commission on
or prior to the date (the "Required Filing Date") by which the Company and such
Guarantor would have been


                                       51



required so to file such documents if the Company and such Guarantor were
so subject. The Company will also in any event (x) within 15 days of each
Required Filing Date

       (i)   transmit by mail to all holders, as their names and addresses
             appear in the security register, without cost to such holders; and

       (ii)  file with the Trustee copies of the annual reports, quarterly
             reports and other documents which the Company and such Guarantor
             would have been required to file with the Commission pursuant to
             Sections 13(a) or 15(d) of the Exchange Act if the Company and such
             Guarantor were subject to either of such Sections; and

     (y) if filing such documents by the Company and such Guarantor with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective holder at the Company's cost.

     If any Guarantor's financial statements would be required to be included in
the financial statements filed or delivered pursuant to the Indenture if the
Company were subject to Section 13(a) or 15(d) of the Exchange Act, the Company
shall include such Guarantor's financial statements in any filing or delivery
pursuant to the Indenture. The Indenture also provides that, so long as any of
the Series C notes remain outstanding, the Company will make available to any
prospective purchaser of Series C notes or beneficial owner of Series C notes in
connection with any sale thereof the information required by Rule 144A(d)(4)
under the Securities Act, until such time as the Company has either exchanged
the Series C notes for Series D notes or until such time as the holders thereof
have disposed of such Series C notes pursuant to an effective registration
statement under the Securities Act. (Section 1019)

     Additional Covenants. The Indenture also contains covenants with respect to
the following matters:

       (i)   payment of principal, premium and interest;

       (ii)  maintenance of an office or agency in The City of New York;

       (iii) arrangements regarding the handling of money held in trust;

       (iv)  maintenance of corporate existence;

       (v)   payment of taxes and other claims;

       (vi)  maintenance of properties; and

       (vii) maintenance of insurance.


Consolidation, Merger, Sale of Assets

   The Company

     The Company will not, in a single transaction or through a series of
related transactions, (1) consolidate with or merge with or into any other
Person; (2) sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any Person or group of
Persons; or (3) permit any of its Restricted Subsidiaries to enter into any such
transaction or series of related transactions if such transaction or series of
related transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Company and its Restricted Subsidiaries on a
Consolidated basis to any other Person or group of Persons, unless at the time
and after giving effect thereto:

       (i)   either (a) the Company will be the continuing corporation (in the
             case of a consolidation or merger involving the Company) or (b) the
             Person (if other than the Company) formed by such consolidation or
             into which the Company is merged or the Person which acquires by
             sale, assignment, conveyance, transfer, lease or disposition all or
             substantially all of the properties and assets of the Company and
             its Restricted Subsidiaries on a Consolidated basis (the "Surviving
             Entity") will be a corporation duly organized and validly existing
             under the laws of the United States of America, any state thereof
             or the District of Columbia and such Person expressly assumes, by a
             supplemental indenture, in a form reasonably satisfactory to the
             Trustee, all the obligations of the Company under the Series D
             notes, the Indenture and the Registration Rights Agreement (as that
             term is defined under "Exchange Offer; Registration Rights"), as
             the case may be, and the Series D notes, the Indenture and the
             Registration Rights Agreement will remain in full force and effect
             as so supplemented;

       (ii)  the Indenture and the Registration Rights Agreement will remain in
             full force and effect as so supplemented;


                                       52



       (iii) immediately before and immediately after giving effect to such
             transaction on a pro forma basis (and treating any Indebtedness not
             previously an obligation of the Company or any of its Restricted
             Subsidiaries which becomes the obligation of the Company or any of
             its Restricted Subsidiaries as a result of such transaction as
             having been incurred at the time of such transaction), no Default
             or Event of Default will have occurred and be continuing;

       (iv)  immediately before and immediately after giving effect to such
             transaction on a pro forma basis (on the assumption that the
             transaction occurred on the first day of the four-quarter period
             for which financial statements are available ending immediately
             prior to the consummation of such transaction with the appropriate
             adjustments with respect to the transaction being included in such
             pro forma calculation), the Company (or the Surviving Entity if the
             Company is not the continuing obligor under the Indenture) could
             incur $1.00 of additional Indebtedness (other than Permitted
             Indebtedness) under the provisions of "-- Certain Covenants --
             Limitation on Indebtedness;"

       (v)   at the time of the transaction, each Guarantor, if any, unless it
             is the other party to the transactions described above, will have
             by supplemental indenture confirmed that its Guarantee shall apply
             to such Person's obligations under the Indenture and under the
             Series D notes;

       (vi)  at the time of the transaction if any of the property or assets of
             the Company or any of its Restricted Subsidiaries would thereupon
             become subject to any Lien, the provisions of "-- Certain Covenants
             -- Limitation on Liens" are complied with; and

       (vii) at the time of the transaction the Company or the Surviving Entity
             will have delivered, or caused to be delivered, to the Trustee, in
             form and substance reasonably satisfactory to the Trustee, an
             officers' certificate and an opinion of counsel, each to the effect
             that such consolidation, merger, transfer, sale, assignment,
             conveyance, transfer, lease or other transaction and the
             supplemental indenture in respect thereof comply with the Indenture
             and that all conditions precedent therein provided for relating to
             such transaction have been complied with. (Section 801)

   The Guarantors

      Each Guarantor will not, and the Company will not permit a Guarantor to,
in a single transaction or through a series of related transactions, (1)
consolidate with or merge with or into any other Person (other than the Company
or any Guarantor); (2) sell, assign, convey, transfer, lease or otherwise
dispose of all or substantially all of its properties and assets on a
Consolidated basis to any Person or group of Persons (other than the Company or
any Guarantor); or (3) permit any of its Restricted Subsidiaries to enter into
any such transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of the Guarantor and its Restricted Subsidiaries on a Consolidated basis
to any other Person or group of Persons (other than the Company or any
Guarantor), unless at the time and after giving effect thereto:

       (i)   either (a) the Guarantor will be the continuing corporation, in the
             case of a consolidation or merger involving the Guarantor or (b)
             the Person (if other than the Guarantor) formed by such
             consolidation or into which such Guarantor is merged or the Person
             which acquires by sale, assignment, conveyance, transfer, lease or
             disposition all or substantially all of the properties and assets
             of the Guarantor and its Restricted Subsidiaries on a Consolidated
             basis (the "Surviving Guarantor Entity") is duly organized and
             validly existing under the laws of the United States of America,
             any state thereof or the District of Columbia and such Person
             expressly assumes, by a supplemental indenture, in a form
             reasonably satisfactory to the Trustee, all the obligations of such
             Guarantor under its Guarantee of the Series D notes, the Indenture
             and the Registration Rights Agreement and such Guarantee, Indenture
             and Registration Rights Agreement will remain in full force and
             effect;

       (ii)  immediately before and immediately after giving effect to such
             transaction on a pro forma basis, no Default or Event of Default
             will have occurred and be continuing; and

       (iii) at the time of the transaction such Guarantor or the Surviving
             Guarantor Entity will have delivered, or caused to be delivered, to
             the Trustee, in form and substance reasonably satisfactory to the
             Trustee, an officers' certificate and an opinion of counsel, each
             to the effect that such consolidation, merger, transfer, sale,
             assignment, conveyance, lease or other transaction and the
             supplemental indenture in respect thereof comply with the Indenture
             and that all conditions precedent therein provided for relating to
             such transaction have been complied with.

      However, the foregoing limitations do not apply to any Guarantor whose
Guarantee of the Series D notes is unconditionally released and discharged in
accordance with paragraph (c) under the provisions of " -- Certain Covenants --
Limitation on Issuances of Guarantees of and Pledges for Indebtedness."
(Section 801)

      In the event of any transaction (other than a transfer by lease or a sale
of substantially all of the assets of the Company or a Guarantor that results in
the sale, assignment, conveyance, transfer or other disposition of assets
constituting or accounting for less than 95% of the consolidated assets,
revenues or Consolidated Net Income (Loss) of the Company or such Guarantor, as
the


                                       53



case may be) described in and complying with the conditions listed in the two
immediately preceding subsections in which the Company or any Guarantor, as
the case may be, is not the continuing corporation, the successor Person formed
or remaining or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company or such
Guarantor, as the case may be, under the Indenture, the Series D notes and/or
the related Guarantees, as the case may be, and the Company or any Guarantor, as
the case may be, shall be discharged from all obligations and covenants under
the Indenture and the Series D notes or its Guarantee, as the case may be.
(Section 802)

Events of Default

      An Event of Default will occur under the Indenture if:

      (1) there shall be a default in the payment of any interest on any Note
when it becomes due and payable, and such default shall continue for a period of
30 days, whether or not prohibited by the subordination provisions of the
Indenture;

      (2) there shall be a default in the payment of the principal of (or
premium, if any, on) any Note at its Maturity (upon acceleration, optional or
mandatory redemption if any, required repurchase or otherwise), whether or not
prohibited by the subordination provisions of the Indenture;

      (3) (a) there shall be a default in the performance, or breach, of any
covenant or agreement of the Company or any Guarantor under the Indenture or any
Guarantee (other than a default in the performance, or breach, of a covenant or
agreement which is specifically dealt with in clause (1), (2) or in clause (b),
(c) or (d) of this clause (3)) and such default or breach shall continue for a
period of 60 days after written notice (30 days in the case of a default in the
covenants described under "-- Certain Covenants -- Limitation on Indebtedness"
or "-- Limitation on Restricted Payments") has been given, by certified mail,
(x) to the Company by the Trustee or (y) to the Company and the Trustee by the
holders of at least 25% in aggregate principal amount of the outstanding Series
D notes;

       (b)   there shall be a default in the performance or breach of the
             provisions described in "--Consolidation, Merger, Sale of Assets";

       (c)   the Company shall have failed to consummate an Offer in accordance
             with the provisions of "--Certain Covenants-- Limitation on Sale of
             Assets"; or

       (d)   the Company shall have failed to consummate a Change of Control
             Offer in accordance with the provisions of "--Purchase of Series D
             notes Upon a Change of Control";

      (4) one or more defaults, individually or in the aggregate, shall have
occurred under any of the agreements, indentures or instruments under which the
Company or any Restricted Subsidiary then has outstanding Indebtedness in excess
of $20 million in principal amount, individually or in the aggregate, and either
(a) such default results from the failure to pay such Indebtedness at its stated
final maturity or (b) such default or defaults resulted in the acceleration of
the maturity of such Indebtedness;

      (5) any Guarantee shall for any reason cease to be, or shall for any
reason be asserted in writing by any Guarantor or the Company not to be, in full
force and effect and enforceable in accordance with its terms, except to the
extent contemplated by the Indenture and any such Guarantee;

      (6) one or more final judgments, orders or decrees (not subject to appeal)
of any court or regulatory or administrative agency for the payment of money in
excess of $20 million, either individually or in the aggregate (exclusive of any
portion of any such payment covered by insurance, if and to the extent the
insurer has acknowledged in writing its liability therefor), shall be rendered
against the Company, any Guarantor or any Subsidiary or any of their respective
properties and shall not be discharged or fully binded and there shall have been
a period of 60 consecutive days during which a stay of enforcement of such
judgment or order, by reason of an appeal or otherwise, shall not be in effect;

      (7) any holder or holders of at least $20 million in aggregate principal
amount of Indebtedness of the Company, any Guarantor or any Restricted
Subsidiary after a default under such Indebtedness shall notify the Trustee of
the intended sale or disposition of any assets of the Company, any Guarantor or
any Subsidiary that have been pledged to or for the benefit of such holder or
holders to secure such Indebtedness or shall commence proceedings, or take any
action, including by way of set-off, to retain in satisfaction of such
Indebtedness or to collect on, seize, dispose of or apply in satisfaction of
Indebtedness, assets of the Company, any Guarantor or any Restricted Subsidiary,
including funds on deposit or held pursuant to lock-box and other similar
arrangements;

      (8) there shall have been the entry by a court of competent jurisdiction
of (a) a decree or order for relief in respect of the Company or any Significant
Restricted Subsidiary in an involuntary case or proceeding under any applicable
Bankruptcy Law or (b) a decree or order:


                                       54



       (i)   adjudging the Company or any Significant Restricted Subsidiary
             bankrupt or insolvent;

       (ii)  seeking reorganization, arrangement, adjustment or composition of
             or in respect of the Company or any Significant Restricted
             Subsidiary under any applicable federal or state law;

       (iii) appointing a custodian, receiver, liquidator, assignee, trustee,
             sequestrator (or other similar official) of the Company or any
             Significant Restricted Subsidiary or of any substantial part of
             their respective properties; or

       (iv)  ordering the winding up or liquidation of their respective affairs,
             and any such decree or order for relief shall continue to be in
             effect, or any such other decree or order shall be unstayed and in
             effect, for a period of 60 consecutive days; or

      (9) (a) the Company or any Significant Restricted Subsidiary commences a
voluntary case or proceeding under any Applicable Bankruptcy Law or any other
case or proceeding to be adjudicated bankrupt or insolvent,

     (b) the Company or any Significant Restricted Subsidiary consents to the
entry of a decree or order for relief in respect of the Company or such
Significant Restricted Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law or to the commencement of any bankruptcy or insolvency
case or proceeding against it,

     (c) the Company or any Significant Restricted Subsidiary files a petition
or answer or consent seeking reorganization or relief under any applicable
federal or state law,

     (d) the Company or any Significant Restricted Subsidiary

       (i)   Consents to the filing of such petition or the appointment of, or
             taking possession by, a custodian, Receiver, liquidator, assignee,
             trustee, sequestrator or similar official of the Company or such
             Significant Restricted Subsidiary or of any substantial part of
             their respective properties,

       (ii)  makes an assignment for the benefit of creditors or

       (iii) admits in writing its inability to pay its debts generally as they
             become due or

     (e) the Company or any Significant Restricted Subsidiary takes any
corporate action in furtherance of any such actions in this paragraph (9).
(Section 501)

   Result of Events of Default

      If an Event of Default (other than as specified in clauses (8) and (9) of
the prior paragraph) shall occur and be continuing with respect to the
Indenture, the Trustee or the holders of not less than 25% in aggregate
principal amount of the Series D notes then outstanding may, and the Trustee at
the request of such holders shall, declare all unpaid principal of, premium, if
any, and accrued interest on all Series D notes to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by the holders of the Series D notes). Upon any such declaration, such
principal, premium, if any, and interest shall become due and payable
immediately. If an Event of Default specified in clause (8) or (9) of the prior
paragraph occurs and is continuing, then all the Series D notes shall ipso facto
become and be due and payable immediately in an amount equal to the principal
amount of the Series D notes, together with accrued and unpaid interest, if any,
to the date the Series D notes become due and payable, without any declaration
or other act on the part of the Trustee or any holder. Thereupon, the Trustee
may, at its discretion, proceed to protect and enforce the rights of the holders
of Series D notes by appropriate judicial proceedings.

      After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of Series D notes outstanding by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if:

     (a) the Company has paid or deposited with the Trustee a sum sufficient to
pay

        (i)   all sums paid or advanced by the Trustee under the Indenture and
              the reasonable compensation, expenses, disbursements and advances
              of the Trustee, its agents and counsel,

        (ii)  all overdue interest on all Series D notes then outstanding;

        (iii) the principal of and premium, if any, on any Series D notes then
              outstanding which have become due otherwise than by such
              declaration of acceleration and interest thereon at the rate borne
              by the Series D notes and

        (iv)  to the extent that payment of such interest is lawful, interest
              upon overdue interest at the rate borne by the Series D notes;


                                       55



      (b) the rescission would not conflict with any judgment or decree of
a court of competent jurisdiction, and

      (c) all Events of Default, other than the non-payment of principal of,
premium, if any, and interest on the Series D notes which have become due solely
by such declaration of acceleration, have been cured or waived as provided in
the Indenture. No such rescission shall affect any subsequent default or impair
any right consequent thereon. (Section 502)

   Waiver of Default by Noteholders

      The holders of not less than a majority in aggregate principal amount of
the Series D notes outstanding may on behalf of the holders of all outstanding
Series D notes waive any past default under the Indenture and its consequences,
except a default (i) in the payment of the principal of, premium, if any, or
interest on any Note, which may only be waived with the consent of each holder
of Series D notes affected or (ii) in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each Note affected by such modification or amendment. (Section 513)

   Legal Rights of Noteholders

      No holder of any of the Series D notes has any right to institute any
proceedings with respect to the Series D notes, the Indenture or any remedy
thereunder, unless

       (1)   the holders of at least 25% in aggregate principal amount of the
             outstanding Series D notes have made written request, and offered
             reasonable indemnity, to the Trustee to institute such proceeding
             as Trustee under the Series D notes and the Indenture;

       (2)   the Trustee has failed to institute such proceeding within 15 days
             after receipt of such notice; and

       (3)   the Trustee, within such 15-day period, has not received directions
             inconsistent with such written request by holders of a majority in
             aggregate principal amount of the outstanding Series D notes.

      Such limitations do not, however, apply to a suit instituted by a holder
of a Note for the enforcement of the payment of the principal of, premium, if
any, or interest on such Note on or after the respective due dates expressed in
such Note.

   Notice to and Action of Trustees

      The Company is required to notify the Trustee within five business days of
the occurrence of any Default. The Company is required to deliver to the
Trustee, on or before a date not more than 60 days after the end of each fiscal
quarter and not more than 120 days after the end of each fiscal year, a written
statement as to compliance with the Indenture, including whether or not any
Default has occurred. (Section 1020) The Trustee is under no obligation to
exercise any of the rights or powers vested in it by the Indenture at the
request or direction of any of the holders of the Series D notes unless such
holders offer to the Trustee security or indemnity satisfactory to the Trustee
against the costs, expenses and liabilities which might be incurred thereby.
(Section 603)

      The Trust Indenture Act contains limitations on the rights of the Trustee,
should it become a creditor of the Company or any Guarantor, if any, to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions, provided that if it acquires any
conflicting interest it must eliminate such conflict upon the occurrence of an
Event of Default or else resign.

Defeasance or Covenant Defeasance of Indenture

      The Company may, at its option and at any time, elect to have the
obligations of the Company, any Guarantor and any other obligor upon the Series
D notes discharged with respect to the outstanding Series D notes
("defeasance"). Such defeasance means that the Company, any such Guarantor and
any other obligor under the Indenture shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Series D
notes, except for

       (i)   the rights of holders of such outstanding Series D notes to receive
             payments in respect of the principal of, premium, if any, and
             interest on such Series D notes when such payments are due,

       (ii)  the Company's obligations with respect to the Series D notes
             concerning issuing temporary Series D notes, registration of Series
             D notes, mutilated, destroyed, lost or stolen Series D notes, and
             the maintenance of an office or agency for payment and money for
             security payments held in trust,

       (iii) the rights, powers, trusts, duties and immunities of the Trustee
             and

       (iv)  the defeasance provisions of the Indenture.

      In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company and any Guarantor released with respect to
certain covenants that are described in the Indenture ("covenant defeasance")
and thereafter any omission


                                       56



to comply with such obligations shall not constitute a Default or an Event of
Default with respect to the Series D notes. In the event covenant defeasance
occurs, certain events (not including non-payment, bankruptcy and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the Series D notes. (Sections 401, 402 and 403)

      In order to exercise either defeasance or covenant defeasance,

      (i)      the Company must irrevocably deposit with the Trustee, in trust,
               for the benefit of the holders of the Series D notes, cash in
               United States dollars, U.S. Government Obligations (as defined in
               the Indenture), or a combination thereof, in such amounts as will
               be sufficient, in the opinion of a nationally recognized firm of
               independent public accountants or a nationally recognized
               investment banking firm, to pay and discharge the principal of,
               premium, if any, and interest on the outstanding Series D notes
               on the Stated Maturity (or on any date after August 1, 2003 (such
               date being referred to as the "Defeasance Redemption Date"), if
               at or prior to electing either defeasance or covenant defeasance,
               the Company has delivered to the Trustee an irrevocable notice to
               redeem all of the outstanding Series D notes on the Defeasance
               Redemption Date);

      (ii)     in the case of defeasance, the Company shall have delivered to
               the Trustee an opinion of independent counsel in the United
               States stating that (A) the Company has received from, or there
               has been published by, the Internal Revenue Service a ruling or
               (B) since July 1, 1998, there has been a change in the applicable
               federal income tax law, in either case to the effect that, and
               based thereon such opinion of independent counsel in the United
               States shall confirm that, the holders of the outstanding Series
               D notes will not recognize income, gain or loss for federal
               income tax purposes as a result of such defeasance and will be
               subject to federal income tax on the same amounts, in the same
               manner and at the same times as would have been the case if such
               defeasance had not occurred;

      (iii)    in the case of covenant defeasance, the Company shall have
               delivered to the Trustee an opinion of independent counsel in the
               United States to the effect that the holders of the outstanding
               Series D notes will not recognize income, gain or loss for
               federal income tax purposes as a result of such covenant
               defeasance and will be subject to federal income tax on the same
               amounts, in the same manner and at the same times as would have
               been the case if such covenant defeasance had not occurred;

      (iv)     no Default or Event of Default shall have occurred and be
               continuing on the date of such deposit or insofar as clauses (8)
               or (9) under the first paragraph under "-- Events of Default" are
               concerned, at any time during the period ending on the 91st day
               after the date of deposit (other than a Default which results
               from the borrowing of amounts to finance the defeasance and which
               borrowing does not result in a breach or violation of, or
               constitute a default, under any other material agreement or
               instrument to which the Company or any Restricted Subsidiary is a
               party or to which it is bound);

      (v)      such defeasance or covenant defeasance shall not cause the
               Trustee for the Series D notes to have a conflicting interest as
               defined in the Indenture in violation of and for purposes of the
               Trust Indenture Act with respect to any other securities of the
               Company or any Guarantor;

      (vi)     such defeasance or covenant defeasance shall not result in a
               breach or violation of, or constitute a Default under, the
               Indenture or any other material agreement or instrument to which
               the Company, any Guarantor or any Restricted Subsidiary is a
               party or by which it is bound;

      (vii)    such defeasance or covenant defeasance shall not result in the
               trust arising from such deposit constituting an investment
               company within the meaning of the Investment Company Act of 1940,
               as amended, unless such trust shall be registered under such Act
               or exempt from registration thereunder;

      (viii)   the Company will have delivered to the Trustee an opinion of
               independent counsel in the United States to the effect that
               (assuming that no holder of any Series D notes would be
               considered an insider of the Company under any applicable
               bankruptcy or insolvency law) after the 91st day following the
               deposit, the trust funds will not be subject to the effect of any
               applicable bankruptcy, insolvency, reorganization or similar laws
               affecting creditors' rights generally;

      (ix)     the Company shall have delivered to the Trustee an officers'
               certificate stating that the deposit was not made by the Company
               with the intent of preferring the holders of the Series D notes
               or any Guarantee over the other creditors of the Company or any
               Guarantor with the intent of defeating, hindering, delaying or
               defrauding creditors of the Company, any Guarantor or others;

      (x)      no event or condition shall exist that would prevent the Company
               from making payments of the principal of, premium, if any, and
               interest on the Series D notes on the date of such deposit or at
               any time ending on the 91st day after the date of such deposit;
               and


                                       57



      (xi)     the Company will have delivered to the Trustee an officers'
               certificate and an opinion of independent counsel, each stating
               that all conditions precedent provided for relating to either the
               defeasance or the covenant defeasance, as the case may be, have
               been complied with.(Section 404)


Satisfaction and Discharge

      The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Series D notes as expressly provided for in the Indenture) as to all outstanding
Series D notes under the Indenture when

      (a)      either (i) all such Series D notes theretofore authenticated and
               delivered (except lost, stolen or destroyed Series D notes which
               have been replaced or paid or Series D notes whose payment has
               been deposited in trust or segregated and held in trust by the
               Company and thereafter repaid to the Company or discharged from
               such trust as provided for in the Indenture) have been delivered
               to the Trustee for cancellation or (ii) all Series D notes not
               theretofore delivered to the Trustee for cancellation

              (x)    have become due and payable,

              (y)    will become due and payable at their Stated Maturity within
                     one year, or

              (z)    are to be called for redemption within one year under
                     arrangements reasonably satisfactory to the Trustee for the
                     giving of notice of redemption by the Trustee in the name,
                     and at the expense, of the Company; and the Company or any
                     Guarantor has irrevocably deposited or caused to be
                     deposited with the Trustee as trust funds in trust an
                     amount in United States dollars sufficient to pay and
                     discharge the entire Indebtedness on the Series D notes not
                     theretofore delivered to the Trustee for cancellation,
                     including the principal of, premium, if any, and accrued
                     interest on such Series D notes at such Maturity, Stated
                     Maturity or redemption date;

      (b)      the Company or any Guarantor has paid or caused to be paid all
               other sums payable under the Indenture by the Company and any
               Guarantor; and

      (c)      the Company has delivered to the Trustee an officers' certificate
               and an opinion of independent counsel in form and substance
               reasonably satisfactory to the Trustee each stating that (i) all
               conditions precedent under the Indenture relating to the
               satisfaction and discharge of such Indenture have been complied
               with and (ii) such satisfaction and discharge will not result in
               a breach or violation of, or constitute a default under, the
               Indenture or any other material agreement or instrument to which
               the Company, any Guarantor or any Restricted Subsidiary is a
               party or by which the Company, any Guarantor or any Restricted
               Subsidiary is bound. (Section 1201)

Modifications and Amendments

   With Noteholder Consent

      Modifications and amendments of the Indenture may be made by the Company,
each Guarantor, if any, and the Trustee with the consent of the holders of at
least a majority in aggregate principal amount of the Series D notes then
outstanding; provided, however, that no such modification or amendment may,
without the consent of the holder of each outstanding Note affected thereby:

            (i) change the Stated Maturity of the principal of, or any
      installment of interest on, or change to an earlier date any redemption
      date of, or waive a default in the payment of the principal of, premium,
      if any, or interest on, any such Note or reduce the principal amount
      thereof or the rate of interest thereon or any premium payable upon the
      redemption thereof, or change the coin or currency in which the principal
      of any such Note or any premium or the interest thereon is payable, or
      impair the right to institute suit for the enforcement of any such payment
      on or after the Stated Maturity thereof (or, in the case of redemption, on
      or after the redemption date);

            (ii) amend, change or modify the obligation of the Company to make
      and consummate an Offer with respect to any Asset Sale or Asset Sales in
      accordance with "--Certain Covenants -- Limitation on Sale of Assets" or
      the obligation of the Company to make and consummate a Change of Control
      Offer in the event of a Change of Control in accordance with "--Purchase
      of Series D notes Upon a Change of Control," including, in each case,
      amending, changing or modifying any definitions relating thereto, but only
      to the extent such definitions relate thereto;

            (iii) reduce the percentage in principal amount of such outstanding
      Series D notes, the consent of whose holders is required for any such
      supplemental indenture, or the consent of whose holders is required for
      any waiver or compliance with certain provisions of the Indenture;


                                       58



            (iv) modify any of the provisions relating to supplemental
      indentures requiring the consent of holders or relating to the waiver of
      past defaults or relating to the waiver of certain covenants, except to
      increase the percentage of such outstanding Series D notes required for
      any such actions or to provide that certain other provisions of the
      Indenture cannot be modified or waived without the consent of the holder
      of each such Note affected thereby;

            (v) except as otherwise permitted under "--Consolidation, Merger,
      Sale of Assets," consent to the assignment or transfer by the Company or
      any Guarantor of any of its rights and obligations under the Indenture; or

            (vi) amend or modify any of the provisions of the Indenture in any
      manner which subordinates the Series D notes issued under the Indenture in
      right of payment to any other Indebtedness of the Company or which
      subordinates any Guarantee in right of payment to any other Indebtedness
      of the Guarantor issuing such Guarantee. (Section 902)

   Without Noteholder Consent

      Notwithstanding the foregoing, without the consent of any holders of the
Series D notes, the Company, any Guarantor, any other obligor under the Series D
notes and the Trustee may modify or amend the Indenture:

      (a)     to evidence the succession of another Person to the Company or a
              Guarantor or any other obligor upon the Series D notes, and the
              assumption by any such successor of the covenants of the Company
              or such Guarantor or obligor in the Indenture and in the Series D
              notes and in any Guarantee in accordance with "-- Consolidation,
              Merger, Sale of Assets;"

      (b)     to add to the covenants of the Company, any Guarantor or any other
              obligor upon the Series D notes for the benefit of the holders of
              the Series D notes or to surrender any right or power conferred
              upon the Company or any Guarantor or any other obligor upon the
              Series D notes, as applicable, in the Indenture, in the Series D
              notes or in any Guarantee;

      (c)     to cure any ambiguity, or to correct or supplement any provision
              in the Indenture or in any supplemental indenture, the Series D
              notes or any Guarantee which may be defective or inconsistent with
              any other provision in the Indenture, the Series D notes or any
              Guarantee or to make any other provisions with respect to matters
              or questions arising under the Indenture, the Series D notes or
              any Guarantee; provided that, in each case, such provisions shall
              not adversely affect the interest of the holders of the Series D
              notes;

      (d)     to comply with the requirements of the Commission in order to
              effect or maintain the qualification of the Indenture under the
              Trust Indenture Act;

      (e)     to add a Guarantor under the Indenture;

      (f)     to evidence and provide the acceptance of the appointment of a
              successor Trustee under the Indenture; or

      (g)     to mortgage, pledge, hypothecate or grant a security interest in
              favor of the Trustee for the benefit of the holders of the Series
              D notes as additional security for the payment and performance of
              the Company's and any Guarantor's obligations under the Indenture,
              in any property, or assets, including any of which are required to
              be mortgaged, pledged or hypothecated, or in which a security
              interest is required to be granted to the Trustee pursuant to the
              Indenture or otherwise. (Section 901)

      The holders of a majority in aggregate principal amount of the Series D
notes outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture. (Section 1021)

Governing Law

      The Indenture, the Series D notes and any Guarantee will be governed by,
and construed in accordance with, the laws of the State of New York, without
giving effect to the conflicts of law principles thereof.

Concerning the Trustee

      The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
as Trustee with such conflict or resign as Trustee. (Sections 608 and 611)

      The holders of a majority in principal amount of the then outstanding
Series D notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions.


                                       59



The Indenture provides that in case an Event of Default occurs, which has not
been cured, the Trustee will be required, in the exercise of its power, to use
the degree of care of a prudent man in the conduct of his own affairs. Subject
to such provisions, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request of any holder of Series
D notes unless such holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense. (Sections
512, 601 and 603)

Certain Definitions

      "Acquired Indebtedness" means Indebtedness of a Person:

      (i)     existing at the time such Person becomes a Restricted Subsidiary
              or

      (ii)    assumed in connection with the acquisition of assets from such
              Person, in each case, other than Indebtedness incurred in
              connection with, or in contemplation of, such Person becoming a
              Restricted Subsidiary or such acquisition, as the case may be.

Acquired Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes a
Restricted Subsidiary, as the case may be.

      "Affiliate" means, with respect to any specified Person:

      (i)     any other Person directly or indirectly controlling or controlled
              by or under direct or indirect common control with such specified
              Person;

      (ii)    any other Person that owns, directly or indirectly, five percent
              or more of such specified Person's Capital Stock or any officer or
              director of any such specified Person or other Person or, with
              respect to any natural Person, any person having a relationship
              with such Person by blood, marriage or adoption not more remote
              than first cousin; or

      (iii)   any other Person, five percent or more of the Voting Stock of
              which is beneficially owned or held directly or indirectly by such
              specified Person.

For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.

      "Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition, including, without limitation, by way of merger,
consolidation or sale and leaseback transaction (collectively, a "transfer"),
directly or indirectly, in one or a series of related transactions, of:

      (i)     any Capital Stock of any Restricted Subsidiary (other than
              directors' qualifying shares and transfers of Capital Stock
              required by a Manufacturer to the extent the Company does not
              receive cash or Cash Equivalents for such Capital Stock);

      (ii)    all or substantially all of the properties and assets of any
              division or line of business of the Company or any Restricted
              Subsidiary; or

      (iii)   any other properties or assets of the Company or any Restricted
              Subsidiary other than in the ordinary course of business.

      For the purposes of this definition, the term "Asset Sale" shall not
include any transfer of properties and assets:

            (A)      that is governed by the provisions described under
                     "--Consolidation, Merger, Sale of Assets,"

            (B)      that is by the Company to any Wholly Owned Restricted
                     Subsidiary, or by any Restricted Subsidiary to the Company
                     or any Wholly Owned Restricted Subsidiary in accordance
                     with the terms of the Indenture,

            (C)      that is of obsolete equipment,

            (D)      that consists of defaulted receivables for collection or
                     any sale, transfer or other disposition of defaulted
                     receivables for collection, or


                                       60



            (E)      the Fair Market Value of which in the aggregate does not
                     exceed $2.5 million in any transaction or series of related
                     transactions.

      "Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by (ii)
the sum of all such principal payments.

      "B Indenture" means the Indenture, dated as of July 1,1998, among the
Company, the Trustee and the other parties thereto providing for the issuance of
the Series B notes in aggregate principal amount of $125 million as such
indenture has been and may be amended from time to time.

      "Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law or foreign law
relating to bankruptcy, insolvency, receivership, winding up, liquidation,
reorganization or relief of debtors or any amendment to, succession to or change
in any such law.

      "Capital Lease Obligation" of any Person means any obligation of such
Person and its Subsidiaries on a Consolidated basis under any capital lease of
real or personal property which, in accordance with GAAP, is required to be
recorded as a capitalized lease obligation.

      "Capital Stock" of any Person means any and all shares, interests,
participations, or other equivalents, however designated, of such Person's
capital stock or other equity interests whether now outstanding or issued after
the Issue Date, partnership interests (whether general or limited), any other
interest or participation that confers on a Person that right to receive a share
of the profits and losses of, or distributions of assets of (other than a
distribution in respect of Indebtedness), the issuing Person and any rights
(other than debt securities convertible into Capital Stock), warrants or options
exchangeable for or convertible into such Capital Stock.

      "Cash Equivalents" means

      (i)     marketable direct obligations, maturing not more than one year
              after the date of acquisition, issued by the United States of
              America, or an instrumentality or agency thereof, and guaranteed
              fully as to principal, premium, if any, and interest by the United
              States of America,

      (ii)    any certificate of deposit, maturing not more than one year after
              the date of acquisition, issued by a commercial banking
              institution that is a member of the Federal Reserve System and
              that has combined capital and surplus and undivided profits of not
              less than $500 million, whose debt has a rating, at the time as of
              which any investment therein is made, of "P-1" (or higher)
              according to Moody's Investors Service, Inc. ("Moody's") or any
              successor rating agency or "A-1" (or higher) according to Standard
              Poor's Rating Group, a division of McGraw Hill, Inc. ("S&P"), or
              any successor rating agency,

      (iii)   commercial paper, maturing not more than 180 days after the date
              of acquisition, issued by a corporation (other than an Affiliate
              or Subsidiary of the Company) organized and existing under the
              laws of the United States of America with a rating, at the time as
              of which any investment therein is made, of "P-1" (or higher)
              according to Moody's or "A-1" (or higher) according to S&P and

      (iv)    any money market deposit accounts issued or offered by a domestic
              commercial bank having capital and surplus in excess of $500
              million; provided that the short term debt of such commercial bank
              has a rating, at the time of Investment, of "P-1" (or higher)
              according to Moody's or "A-1" (or higher) according to S&P.

      "Change of Control" means the occurrence of any of the following events:

      (i)     any "person" or "group" (as such terms are used in Sections 13(d)
              and 14(d) of the Exchange Act), other than Permitted Holders, is
              or becomes the "beneficial owner" (as defined in Rules 13d-3 and
              13d-5 under the Exchange Act, except that a Person shall be deemed
              to have beneficial ownership of all shares that such Person has
              the right to acquire, whether such right is exercisable
              immediately or only after the passage of time), directly or
              indirectly, of more than 35% of the total outstanding Voting Stock
              of the Company;

      (ii)    during any period of two consecutive years, individuals who at the
              beginning of such period constituted the board of directors of the
              Company (together with any new directors whose election to such
              board or whose nomination for election by the stockholders of the
              Company was approved by a vote of 66 2/3% of the directors then
              still in office who were either directors at the beginning of such
              period or whose election or nomination for election was previously
              so approved), cease for any reason to constitute a majority of
              such board of directors then in office;


                                       61



      (iii)   the Company consolidates with or merges with or into any Person or
              sells, assigns, conveys, transfers, leases or otherwise disposes
              of all or substantially all of its assets to any Person, or any
              Person consolidates with or merges into or with the Company, in
              any such event pursuant to a transaction in which the outstanding
              Voting Stock of the Company is converted into or exchanged for
              cash, securities or other property, other than any such
              transaction where:

                        (A)      the outstanding Voting Stock of the Company is
                                 changed into or exchanged for (x) Voting Stock
                                 of the surviving corporation which is not
                                 Redeemable Capital Stock or (y) cash,
                                 securities and other property (other than
                                 Capital Stock of the surviving corporation) in
                                 an amount which could be paid by the Company as
                                 a Restricted Payment as described under "--
                                 Certain Covenants -- Limitation on Restricted
                                 Payments" (and such amount shall be treated as
                                 a Restricted Payment subject to the provisions
                                 in the Indenture described under "-- Certain
                                 Covenants -- Limitation on Restricted
                                 Payments"); and

                        (B)      immediately after such transaction, no "person"
                                 or "group," other than Permitted Holders, is
                                 the beneficial owner (as defined in Rules 13d-3
                                 and 13d-5 under the Exchange Act, except that a
                                 person shall be deemed to have beneficial
                                 ownership of all securities that such person
                                 has the right to acquire, whether such right is
                                 exercisable immediately or only after the
                                 passage of time), directly or indirectly, more
                                 than 35% of the total outstanding Voting Stock
                                 of the surviving corporation; or

      (iv)    the Company is liquidated or dissolved or adopts a plan of
              liquidation or dissolution other than in a transaction which
              complies with the provisions described under "-- Consolidation,
              Merger, Sale of Assets."

For purposes of this definition, any transfer of an equity interest of an entity
that was formed for the purpose of acquiring voting stock of the Company will be
deemed to be a transfer of such portion of such voting stock as corresponds to
the portion of the equity of such entity that has been so transferred.

      "Class A Common Stock" means the Company's Class A common stock, par value
$.01 per share, or any successor common stock thereto.

      "Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the Securities Act, Exchange Act and Trust
Indenture Act then the body performing such duties at such time.

      "Commodity Price Protection Agreement" means any forward contract,
commodity swap, commodity option or other similar financial agreement or
arrangement relating to, or the value which is dependent upon, fluctuations in
commodity prices.

      "Company" means Sonic Automotive, Inc., a corporation incorporated under
the laws of Delaware, until a successor Person shall have become such pursuant
to the applicable provisions of the Indenture, and thereafter "Company" shall
mean such successor Person.

      "Consolidated Fixed Charge Coverage Ratio" of any Person means, for any
period, the ratio of:

      (a)      the sum of Consolidated Net Income (Loss), and in each case to
               the extent deducted in computing Consolidated Net Income (Loss)
               for such period, Consolidated Interest Expense, Consolidated
               Income Tax Expense and Consolidated Non-cash Charges for such
               period, of such Person and its Restricted Subsidiaries on a
               Consolidated basis, all determined in accordance with GAAP, less
               all noncash items increasing Consolidated Net Income for such
               period and less all cash payments during such period relating to
               noncash charges that were added back to Consolidated Net Income
               in determining the Consolidated Fixed Charge Coverage Ratio in
               any prior period to

      (b)      the sum of Consolidated Interest Expense for such period and cash
               and noncash dividends paid on any Preferred Stock of such Person
               during such period, in each case after giving pro forma effect to

                  (i)     the incurrence of the Indebtedness giving rise to the
                          need to make such calculation and (if applicable) the
                          application of the net proceeds therefrom, including
                          to refinance other Indebtedness, as if such
                          Indebtedness was incurred, and the application of such
                          proceeds occurred, on the first day of such period;

                  (ii)    the incurrence, repayment or retirement of any other
                          Indebtedness by the Company and its Restricted
                          Subsidiaries since the first day of such period as if
                          such Indebtedness was incurred, repaid or retired at
                          the beginning of such period (except that, in making
                          such computation, the amount of Indebtedness under any
                          revolving credit facility shall be computed based upon
                          the average daily balance of such Indebtedness during
                          such period);



                                       62



                  (iii)   in the case of Acquired Indebtedness or any
                          acquisition occurring at the time of the incurrence of
                          such Indebtedness, the related acquisition, assuming
                          such acquisition had been consummated on the first day
                          of such period; and

                  (iv)    any acquisition or disposition by the Company and its
                          Restricted Subsidiaries of any company or any business
                          or any assets out of the ordinary course of business,
                          whether by merger, stock purchase or sale or asset
                          purchase or sale, or any related repayment of
                          Indebtedness, in each case since the first day of such
                          period, assuming such acquisition or disposition had
                          been consummated on the first day of such period;

                        provided that

                  (i)     in making such computation, the Consolidated Interest
                          Expense attributable to interest on any Indebtedness
                          computed on a pro forma basis and (A) bearing a
                          floating interest rate shall be computed as if the
                          rate in effect on the date of computation had been the
                          applicable rate for the entire period and (B) which
                          was not outstanding during the period for which the
                          computation is being made but which bears, at the
                          option of such Person, a fixed or floating rate of
                          interest, shall be computed by applying at the option
                          of such Person either the fixed or floating rate and

                  (ii)    in making such computation, the Consolidated Interest
                          Expense of such Person attributable to interest on any
                          Indebtedness under a revolving credit facility
                          computed on a pro forma basis shall be computed based
                          upon the average daily balance of such Indebtedness
                          during the applicable period.

      "Consolidated Income Tax Expense" of any Person means, for any period, the
provision for federal, state, local and foreign income taxes of such Person and
its Consolidated Restricted Subsidiaries for such period as determined in
accordance with GAAP.

      "Consolidated Interest Expense" of any Person means, without duplication,
 for any period, the sum of

      (a)      the interest expense of such Person and its Restricted
               Subsidiaries for such period, on a Consolidated basis (other than
               interest expense under any Inventory Facility), including,
               without limitation,

                  (i)     amortization of debt discount,

                  (ii)    the net costs associated with Interest Rate
                          Agreements, Currency Hedging Agreements and Commodity
                          Price Protection Agreements (including amortization of
                          discounts),

                  (iii)   the interest portion of any deferred payment
                          obligation,

                  (iv)    all commissions, discounts and other fees and charges
                          owed with respect to letters of credit and bankers
                          acceptance financing and

                  (v)     accrued interest, plus

      (b)      (i) the interest component of the Capital Lease Obligations paid,
               accrued and/or scheduled to be paid or accrued by such Person and
               its Restricted Subsidiaries during such period and (ii) all
               capitalized interest of such Person and its Restricted
               Subsidiaries; plus

      (c)      the interest expense under any Guaranteed Debt of such Person and
               any Restricted Subsidiary to the extent not included under clause
               (a)(iv) above, whether or not paid by such Person or its
               Restricted Subsidiaries.

      "Consolidated Net Income (Loss)" of any Person means, for any period, the
Consolidated net income (or loss) of such Person and its Restricted Subsidiaries
for such period on a Consolidated basis as determined in accordance with GAAP,
adjusted, to the extent included in calculating such net income (or loss), by
excluding, without duplication,

                  (i)      all extraordinary gains or losses net of taxes (less
                           all fees and expenses relating thereto),

                  (ii)     the portion of net income (or loss) of such Person
                           and its Restricted Subsidiaries on a Consolidated
                           basis allocable to minority interests in
                           unconsolidated Persons or Unrestricted Subsidiaries
                           to the extent that cash dividends or distributions
                           have not actually been received by such Person or
                           one of its Consolidated Restricted Subsidiaries,


                                       63



       (iii) net income (or loss) of any Person combined with such Person or any
             of its Restricted Subsidiaries on a "pooling of interests" basis
             attributable to any period prior to the date of combination,

       (iv)  any gain or loss, net of taxes, realized upon the termination of
             any employee pension benefit plan,

       (v)   gains or losses, net of taxes (less all fees and expenses relating
             thereto), in respect of dispositions of assets other than in the
             ordinary course of business,

       (vi)  the net income of any Restricted Subsidiary to the extent that the
             declaration of dividends or similar distributions by that
             Restricted Subsidiary of that income is not at the time permitted,
             directly or indirectly, by operation of the terms of its charter or
             any agreement, instrument, judgment, decree, order, statute, rule
             or governmental regulation applicable to that Restricted Subsidiary
             or its stockholders,

       (vii) any restoration to net income of any contingency reserve, except to
             the extent provision for such reserve was made out of income
             accrued at any time following July 31, 1998, or

       (viii) any net gain arising from the acquisition of any securities or
              extinguishment, under GAAP, of any Indebtedness of such Person.

      "Consolidated Non-cash Charges" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such Person
and its subsidiaries on a Consolidated basis for such period, as determined in
accordance with GAAP, excluding any non-cash charge which requires an accrual or
reserve for cash charges for any future period.

      "Consolidated Tangible Assets" of any Person means (a) all amounts that
would be shown as assets on a Consolidated balance sheet of such Person and its
Restricted Subsidiaries prepared in accordance with GAAP, less (b) the amount
thereof constituting goodwill and other intangible assets as calculated in
accordance with GAAP.

      "Consolidation" means, with respect to any Person, the consolidation of
the accounts of such Person and each of its subsidiaries if and to the extent
the accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP. The term
"Consolidated" shall have a similar meaning.

      "Currency Hedging Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
foreign exchange contracts, currency swap agreements or other similar agreements
or arrangements designed to protect against the fluctuations in currency values.

      "Default" means any event which is, or after notice or passage of any time
or both would be, an Event of Default.

      "Disinterested Director" means, with respect to any transaction or series
of related transactions, a member of the board of directors of the Company who
does not have any material direct or indirect financial interest in or with
respect to such transaction or series of transactions.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations promulgated by the
Commission thereunder.

      "Series D notes" means the 11% Senior Subordinated Notes due 2008, Series
D issued in the Exchange Offer.

      "Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length free market transaction between
an informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. Fair Market Value shall be determined
by the board of directors of the Company acting in good faith and shall be
evidenced by a resolution of the board of directors.

      "Floor Plan Facility" means an agreement from Ford Motor Credit Company,
or any other bank or asset-based lender pursuant to which the Company or any
Restricted Subsidiary incurs Indebtedness all of the net proceeds of which are
used to purchase, finance or refinance vehicles and/or vehicle parts and
supplies to be sold in the ordinary course of business of the Company and its
Restricted Subsidiaries and which may not be secured except by a Lien that does
not extend to or cover any property other than the property of the dealership(s)
which use the proceeds of the Floor Plan Facility.

      "Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
(i) for the purpose of determining compliance with the covenants contained in
the Indenture were in effect as of July 31,1998 and (ii) for purposes of
complying with the reporting requirements contained in the Indenture are in
effect from time to time.

      "Guarantee" means the guarantee by any Guarantor of the Company's
Indenture Obligations.


                                       64



      "Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of Indebtedness
guaranteed directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement:

       (i)   to pay or purchase such Indebtedness or to advance or supply funds
             for the payment or purchase of such Indebtedness,

       (ii)  to purchase, sell or lease (as lessee or lessor) property, or to
             purchase or sell services, primarily for the purpose of enabling
             the debtor to make payment of such Indebtedness or to assure the
             holder of such Indebtedness against loss,

       (iii) to supply funds to, or in any other manner invest in, the debtor
             (including any agreement to pay for property or services without
             requiring that such property be received or such services be
             rendered),

       (iv)  to maintain working capital or equity capital of the debtor, or
             otherwise to maintain the net worth, solvency or other financial
             condition of the debtor or to cause such debtor to achieve certain
             levels of financial performance or

       (v)   otherwise to assure a creditor against loss;

provided that the term "guarantee" shall not include endorsements for collection
or deposit, in either case in the ordinary course of business.

      "Guarantor" means any Subsidiary which is a guarantor of the Series D
notes, including any Person that is required to execute a guarantee of the
Series D notes pursuant to " -- Certain Covenants -- Limitation on Liens" or
"--Limitation on Issuance of Guarantees of and Pledges for Indebtedness"
covenant until a successor replaces such party pursuant to the applicable
provisions of the Indenture and, thereafter, shall mean such successor.

      "Indebtedness" means, with respect to any Person, without duplication,

       (i)   all indebtedness of such Person for borrowed money or for the
             deferred purchase price of property or services, excluding any
             trade payables and other accrued current liabilities arising in the
             ordinary course of business, but including, without limitation, all
             obligations, contingent or otherwise, of such Person in connection
             with any letters of credit issued under letter of credit
             facilities, acceptance facilities or other similar facilities,

       (ii)  all obligations of such Person evidenced by bonds, notes,
             debentures or other similar instruments,

       (iii) all indebtedness created or arising under any conditional sale or
             other title retention agreement with respect to property acquired
             by such Person (even if the rights and remedies of the seller or
             lender under such agreement in the event of default are limited to
             repossession or sale of such property), but excluding trade
             payables arising in the ordinary course of business,

       (iv)  all obligations of such Person under Interest Rate Agreements,
             Currency Hedging Agreements or Commodity Price Protection
             Agreements of such Person,

       (v)   all Capital Lease Obligations of such Person,

       (vi)  all Indebtedness referred to in clauses (i) through (v) above of
             other Persons and all dividends of other Persons, the payment of
             which is secured by (or for which the holder of such Indebtedness
             has an existing right, contingent or otherwise, to be secured by)
             any Lien, upon or with respect to property, including, without
             limitation, accounts and contract rights owned by such Person, even
             though such Person has not assumed or become liable for the payment
             of such Indebtedness,

       (vii) all Guaranteed Debt of such Person,

       (viii) all Redeemable Capital Stock issued by such Person valued at the
             greater of its voluntary or involuntary maximum fixed repurchase
             price plus accrued and unpaid dividends,

       (ix)  Preferred Stock of any Restricted Subsidiary of the Company which
             is not a Guarantor and

       (x)   any amendment, supplement, modification, deferral, renewal,
             extension, refunding or refinancing of any liability of the types
             referred to in clauses (i) through (ix) above.

      For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable


                                       65



Capital Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to the Indenture, and if such price is based
upon, or measured by, the Fair Market Value of such Redeemable Capital Stock,
such Fair Market Value to be determined in good faith by the board of directors
of the issuer of such Redeemable Capital Stock.

      "Indenture Obligations" means the obligations of the Company and any other
obligor under the Indenture or under the Series D notes, including any
Guarantor, to pay principal of, premium, if any, and interest when due and
payable, and all other amounts due or to become due under or in connection with
the Indenture, the Series D notes and the performance of all other obligations
to the Trustee and the holders under the Indenture and the Series D notes,
according to the respective terms thereof.

      "Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest rate
protection agreements (including, without limitation, interest rate swaps, caps,
floors, collars and similar agreements) and/or other types of interest rate
hedging agreements from time to time.

      "Inventory Facility" means any Floor Plan Facility or any other agreement,
including pursuant to a commercial paper program, pursuant to which the Company
or any Restricted Subsidiary incurs Indebtedness, the net proceeds of which are
used to purchase, finance or refinance vehicles and/or vehicle parts and
supplies to be sold in the ordinary course of business of the Company and its
Restricted Subsidiaries and which may not be secured except by a Lien that does
not extend to or cover any property other than the property of the dealership(s)
which use the proceeds of the Inventory Facility.

      "Investment" means, with respect to any Person, directly or indirectly,
any advance, loan, including guarantees, or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase, acquisition or ownership by such Person of any Capital Stock, bonds,
notes, debentures or other securities issued or owned by any other Person and
all other items that would be classified as investments on a balance sheet
prepared in accordance with GAAP.

      "Issue Date" means the original issue date of the Series D notes under the
Indenture.

      "Lien" means any mortgage or deed of trust, charge, pledge, lien
(statutory or otherwise), privilege, security interest, assignment, deposit,
arrangement, easement, hypothecation, claim, preference, priority or other
encumbrance upon or with respect to any property of any kind (including any
conditional sale, capital lease or other title retention agreement, any leases
in the nature thereof, and any agreement to give any security interest), real or
personal, movable or immovable, now owned or hereafter acquired. A Person will
be deemed to own subject to a Lien any property which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, Capitalized Lease Obligation or other title retention agreement.

      "Manufacturer" means a vehicle manufacturer which is a party to a
dealership franchise agreement with the Company or any Restricted Subsidiary.

      "Maturity" means, when used with respect to the Series D notes, the date
on which the principal of the Series D notes becomes due and payable as therein
provided or as provided in the Indenture, whether at Stated Maturity, the Offer
Date or the redemption date and whether by declaration of acceleration, Offer in
respect of Excess Proceeds, Change of Control Offer in respect of a Change of
Control, call for redemption or otherwise.

      "Net Cash Proceeds" means

      (a)     with respect to any Asset Sale by any Person, the proceeds from
              that sale (without duplication in respect of all Asset Sales) in
              the form of cash or Temporary Cash Investments including payments
              in respect of deferred payment obligations when received in the
              form of, or stock or other assets when disposed of for, cash or
              Temporary Cash Investments (except to the extent that such
              obligations are financed or sold with recourse to the Company or
              any Restricted Subsidiary) net of

              (i)    brokerage commissions and other reasonable fees and
                     expenses (including fees and expenses of counsel and
                     investment bankers) related to such Asset Sale,

              (ii)   provisions for all taxes payable as a result of such Asset
                     Sale,

              (iii)  payments made to retire Indebtedness where payment of such
                     Indebtedness is secured by the assets or properties the
                     subject of such Asset Sale,

              (iv)   amounts required to be paid to any Person (other than the
                     Company or any Restricted Subsidiary) owning a beneficial
                     interest in the assets subject to the Asset Sale and

              (v)    appropriate amounts to be provided by the Company or any
                     Restricted Subsidiary, as the case may be, as a reserve, in
                     accordance with GAAP, against any liabilities associated
                     with such Asset Sale and retained by the


                                       66



                      Company or any Restricted Subsidiary, as the case may be,
                      after such Asset Sale, including, without limitation,
                      pension and other post-employment benefit liabilities,
                      liabilities related to environmental matters and
                      liabilities under any indemnification obligations
                      associated with such Asset Sale, all as reflected in an
                      officers' certificate delivered to the Trustee and

      (b)     with respect to any issuance or sale of Capital Stock or options,
              warrants or rights to purchase Capital Stock, or debt securities
              or Capital Stock that have been converted into or exchanged for
              Capital Stock as referred to under "-- Certain Covenants --
              Limitation on Restricted Payments," the proceeds of such issuance
              or sale in the form of cash or Temporary Cash Investments
              including payments in respect of deferred payment obligations when
              received in the form of, or stock or other assets when disposed of
              for, cash or Temporary Cash Investments (except to the extent that
              such obligations are financed or sold with recourse to the Company
              or any Restricted Subsidiary), net of attorney's fees,
              accountant's fees and brokerage, consultation, underwriting and
              other fees and expenses actually incurred in connection with such
              issuance or sale and net of taxes paid or payable as a result
              thereof.

      "Pari Passu Indebtedness" means (a) any Indebtedness of the Company that
is pari passu in right of payment to the Series D notes, including without
limitation, the Series B notes, and (b) with respect to any Guarantee,
Indebtedness which ranks pari passu in right of payment to such Guarantee,
including, without limitation, the Guarantees with respect to the Series B
notes.

      "Permitted Holders" means:

       (i)   Mr. O. Bruton Smith or Mr. William S. Egan and their respective
             guardians, conservators, committees, or attorneys-in-fact;

       (ii)  lineal descendants of Mr. Smith or Mr. Egan (in either case, a
             "Descendant") and their respective guardians, conservators,
             committees or attorneys-in-fact; and

       (iii) each "Family Controlled Entity," as defined herein. 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 a Permitted Holder;

               (c)   any partnership if at least 80% of the value of the
                     partnership interests are owned by a Permitted Holder;

               (d)   any limited liability or similar company if at least 80% of
                     the value of the company is owned by a Permitted Holder;
                     and

               (e)   any trusts created for the benefit of any of the persons
                     listed in clauses (i) or (ii) of this definition.

      "Permitted Investment" means:

       (i)   Investments in any Wholly Owned Restricted Subsidiary or any Person
             which, as a result of such Investment, (a) becomes a Wholly Owned
             Restricted Subsidiary or (b) is merged or consolidated with or
             into, or transfers or conveys substantially all of its assets to,
             or is liquidated into, the Company or any Wholly Owned Restricted
             Subsidiary;

       (ii)  Indebtedness of the Company or a Restricted Subsidiary described
             under clauses (v), (vi) and (vii) of the definition of "Permitted
             Indebtedness;"

       (iii) Investments in any of the Series B, Series C or Series D notes, as
             the case may be; provided, however, that the aggregate amount of
             such Investments shall not exceed $125 million;

       (iv)  Temporary Cash Investments;

       (v)   Investments acquired by the Company or any Restricted Subsidiary in
             connection with an Asset Sale permitted under "--Certain Covenants
             -- Limitation on Sale of Assets" to the extent such Investments are
             non-cash proceeds as permitted under such covenant;

       (vi)  any Investment to the extent the consideration therefor consists of
             Qualified Capital Stock of the Company or any Restricted
             Subsidiary;


                                       67



      (vii)   Investments representing Capital Stock or obligations issued to
              the Company or any Restricted Subsidiary in the ordinary course of
              the good faith settlement of claims against any other Person by
              reason of a composition or readjustment of debt or a
              reorganization of any debtor or any Restricted Subsidiary;

      (viii)  prepaid expenses advanced to employees in the ordinary course of
              business or other loans or advances to employees in the ordinary
              course of business not to exceed $1 million in the aggregate at
              any one time outstanding;

      (ix)    Investments in existence on July 31, 1998; and

      (x)     in addition to the Investments described in clauses (i) through
              (ix) above, Investments in an amount not to exceed $10 million in
              the aggregate at any one time outstanding.

In connection with any assets or property contributed or transferred to any
Person as an Investment, such property and assets shall be equal to the Fair
Market Value at the time of Investment.

      "Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

      "Preferred Stock" means, with respect to any Person, any Capital Stock of
any class or classes, however designated, which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over the
Capital Stock of any other class in such Person.

      "Purchase Money Obligation" means any Indebtedness secured by a Lien on
assets related to the business of the Company and any additions and accessions
thereto, which are purchased by the Company at any time after July 31, 1998;
provided that

      (i)        the security agreement or conditional sales or other title
                 retention contract pursuant to which the Lien on such assets is
                 created (collectively a "Purchase Money Security Agreement")
                 shall be entered into within 90 days after the purchase or
                 substantial completion of the construction of such assets and
                 shall at all times be confined solely to the assets so
                 purchased or acquired, any additions and accessions thereto and
                 any proceeds therefrom,

      (ii)       at no time shall the aggregate principal amount of the
                 outstanding Indebtedness secured thereby be increased, except
                 in connection with the purchase of additions and accessions
                 thereto and except in respect of fees and other obligations in
                 respect of such Indebtedness and

      (iii)      (A) the aggregate outstanding principal amount of Indebtedness
                 secured thereby (determined on a per asset basis in the case of
                 any additions and accessions) shall not at the time such
                 Purchase Money Security Agreement is entered into exceed 100%
                 of the purchase price to the Company of the assets subject
                 thereto or

                 (B) the Indebtedness secured thereby shall be with recourse
                 solely to the assets so purchased or acquired, any additions
                 and accessions thereto and any proceeds therefrom.

         "Qualified Capital Stock" of any Person means any and all Capital Stock
of such Person other than Redeemable Capital Stock.

         "Redeemable Capital Stock" means any Capital Stock that, either by its
terms or by the terms of any security into which it is convertible or
exchangeable or otherwise,

               (1)   is or upon the happening of an event or passage of time
                     would be, required to be redeemed prior to the final Stated
                     Maturity of the principal of the Series D notes,

               (2)   is redeemable at the option of the holder thereof at any
                     time prior to such final Stated Maturity (other than upon a
                     change of control of the Company in circumstances where the
                     holders of the Series D notes would have similar rights),
                     or

               (3)   is convertible into or exchangeable for debt securities at
                     any time prior to any such Stated Maturity at the option of
                     the holder thereof.

      "Replacement Assets" means properties and assets (other than cash or any
Capital Stock or other security) that will be used in a business of the Company
or its Restricted Subsidiaries existing on July 31, 1998 or in business
reasonably related thereto.

      "Restricted Subsidiary" means any Subsidiary of the Company that has not
been designated by the board of directors of the Company by a board resolution
delivered to the Trustee as an Unrestricted Subsidiary pursuant to and in
compliance with the covenant described under "-- Certain Covenants -- Limitation
on Unrestricted Subsidiaries."


                                       68



      "Revolving Facility" means the Credit Agreement among the Company, the
Guarantors and Ford Motor Credit Company, dated as of December 15, 1997, as such
agreement, in whole or in part, may have been or may be amended, renewed,
extended, substituted, refinanced, restructured, replaced, supplemented or
otherwise modified from time to time, including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplementations or other modifications of the foregoing.

      "Securities Act" means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations promulgated by the Commission
thereunder.

      "Significant Restricted Subsidiary" means, at any particular time, any
Restricted Subsidiary that, together with the Restricted Subsidiaries of such
Restricted Subsidiary (i) accounted for more than five percent of the
Consolidated revenues of the Company and its Restricted Subsidiaries for their
most recently completed fiscal year or (ii) is or are the owner(s) of more than
five percent of the Consolidated assets of the Company and its Restricted
Subsidiaries as at the end of such fiscal year, all as calculated in accordance
with GAAP and as shown on the Consolidated financial statements of the Company
and its Restricted Subsidiaries for such fiscal year.

      "Smith Subordinated Loan" means the subordinated loan from O. Bruton Smith
to the Company in the principal amount of $5.5 million in existence on the Issue
Date.

      "Stated Maturity" means, when used with respect to any Indebtedness or any
installment of interest thereon, the dates specified in such Indebtedness as the
fixed date on which the principal of such Indebtedness or such installment of
interest, as the case may be, is due and payable.

      "Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor subordinated in right of payment to the Series D notes or the
Guarantee of such Guarantor, as the case may be.

      "Subsidiary" of a Person means:

               (i)   any corporation more than 50% of the outstanding voting
                     power of the Voting Stock of which is owned or controlled,
                     directly or indirectly, by such Person or by one or more
                     other Subsidiaries of such Person, or by such Person and
                     one or more other Subsidiaries of such Person,

               (ii)  any limited partnership of which such Person or any
                     Subsidiary of such Person is a general partner, or

               (iii) any other Person in which such Person, or one or more other
                     Subsidiaries of such Person, or such Person and one or more
                     other Subsidiaries, directly or indirectly, has more than
                     50% of the outstanding partnership or similar interests or
                     has the power, by contract or otherwise, to direct or cause
                     the direction of the policies, management and affairs
                     thereof.

      "Temporary Cash Investments" means:

               (i)   any evidence of Indebtedness, maturing not more than one
                     year after the date of acquisition, issued by the United
                     States of America, or an instrumentality or agency thereof,
                     and guaranteed fully as to principal, premium, if any, and
                     interest by the United States of America;

               (ii)  any certificate of deposit, maturing not more than one year
                     after the date of acquisition, issued by, or time deposit
                     of, a commercial banking institution that is a member of
                     the Federal Reserve System and that has combined capital
                     and surplus and undivided profits of not less than $500
                     million, whose debt has a rating, at the time as of which
                     any investment therein is made, of "P-1" (or higher)
                     according to Moody's or any successor rating agency or
                     "A-1" (or higher) according to S&P or any successor rating
                     agency;

               (iii) commercial paper, maturing not more than one year after the
                     date of acquisition, issued by a corporation (other than an
                     Affiliate or Subsidiary of the Company) organized and
                     existing under the laws of the United States of America
                     with a rating, at the time as of which any investment
                     therein is made, of "P-1" (or higher) according to Moody's
                     or "A-1" (or higher) according to S&P and

               (iv)  any money market deposit accounts issued or offered by a
                     domestic commercial bank having capital and surplus in
                     excess of $500 million; provided that the short term debt
                     of such commercial bank has a rating, at the time of
                     Investment, of "P-1" (or higher) according to Moody's or
                     "A-1" (or higher) according to S&P.

      "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
or any successor statute.



                                       69



      "Unrestricted Subsidiary" means any Subsidiary of the Company (other than
a Guarantor) designated as such pursuant to and in compliance with the covenant
described under "-- Certain Covenants -- Limitation on Unrestricted
Subsidiaries."

      "Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary
means Indebtedness of such Unrestricted Subsidiary

               (i)   as to which neither the Company nor any Restricted
                     Subsidiary is directly or indirectly liable (by virtue of
                     the Company or any such Subsidiary being the primary
                     obligor on, guarantor of, or otherwise liable in any
                     respect to, such Indebtedness), except Guaranteed Debt of
                     the Company or any Restricted Subsidiary to any Affiliate,
                     in which case (unless the incurrence of such Guaranteed
                     Debt resulted in a Restricted Payment at the time of
                     incurrence) the Company shall be deemed to have made a
                     Restricted Payment equal to the principal amount of any
                     such Indebtedness to the extent guaranteed at the time such
                     Affiliate is designated an Unrestricted Subsidiary and

               (ii)  which, upon the occurrence of a default with respect
                     thereto, does not result in, or permit any holder of any
                     Indebtedness of the Company or any Subsidiary to declare, a
                     default on such Indebtedness of the Company or any
                     Subsidiary or cause the payment thereof to be accelerated
                     or payable prior to its Stated Maturity; provided that
                     notwithstanding the foregoing any Unrestricted Subsidiary
                     may guarantee the Series D notes.

      "Voting Stock" means Capital Stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of such Person (irrespective of whether or not at the time Capital
Stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).

      "Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares and shares of
Capital Stock of a Restricted Subsidiary which a Manufacturer requires to be
held by another Person and which Capital Stock, together with any related
contractual arrangements, has no significant economic value with respect to
distributions of profits or losses in ordinary circumstances) is owned by the
Company or another Wholly Owned Restricted Subsidiary (other than directors'
qualifying shares).

Book-Entry Delivery and Form

      The Series D notes will be issued only in fully registered form, without
interest coupons, in denominations of $1,000 and integral multiples thereof. The
Series D notes will not be issued in bearer form.

   Global Notes

      The Series D notes initially will be represented by one or more Series D
notes in registered, global form without interest coupons (collectively, the
"Global Note"). The Global Notes will be deposited upon issuance with the
Trustee as custodian for The Depository Trust Company ("DTC"), in New York, New
York, and registered in the name of DTC or its nominee, in each case for credit
to an account of a direct or indirect participant in DTC as described below.

      Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. In addition, transfer of beneficial interests in the Global Notes will
be subject to the applicable rules and procedures of DTC and its direct or
indirect participants, which may change from time to time. Beneficial interests
in the Global Notes may not be exchanged for Series D notes in certificated form
except in the limited circumstances described below. See "-- Exchanges of
Book-Entry Notes for Certificated Notes."

      Initially, the Trustee will act as Paying Agent and Registrar. The Series
D notes may be presented for registration of transfer and exchange at the
offices of the Registrar.

   Exchange of Book-Entry Notes for Certificated Notes

         A beneficial interest in a Global Note may not be exchanged for a Note
in certificated form unless:

               (i)   DTC (x) notifies the Company that it is unwilling or unable
                     to continue as depositary for the Global Note or (y) has
                     ceased to be a clearing agency registered under the
                     Exchange Act, and in either case the Company thereupon
                     fails to appoint a successor depositary;

               (ii)  the Company, at its option, notifies the Trustee in writing
                     that it elects to cause the issuance of the Series D notes
                     in certificated form; or

               (iii) there shall have occurred and be continuing an Event of
                     Default or any event which after notice or lapse of time or
                     both would be an Event of Default with respect to the
                     Series D notes.



                                       70



      In all cases, certificated Notes delivered in exchange for any Global Note
or beneficial interests in such Global Note will be registered in the names, and
issued in any approved denominations, requested by or on behalf of the
depositary, in accordance with its customary procedures. Any certificated Note
issued in exchange for an interest in a Global Note will bear the legend
restricting transfers that is borne by such Global Note. Any such exchange will
be effected through the DWAC system and an appropriate adjustment will be made
in the records of the registrar of the Series D notes to reflect a decrease in
the principal amount of the relevant Global Note.

   Certain Book-Entry Procedures for Global Notes

      The following description of the operations and procedures of DTC are
provided solely as a matter of convenience. These operations and procedures are
solely within the control of the DTC settlement system and are subject to
changes by them. The Company takes no responsibility for these operations and
procedures and urges investors to contact the system or their participants
directly to discuss these matters.

      DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the initial purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interests in, and transfers of ownership interests
in, each security held by or on behalf of DTC are recorded on the records of the
Participants and Indirect Participants.

      DTC has also advised the Company that, pursuant to procedures established
by it:

            (1) upon deposit of the Global Notes, DTC will credit the accounts
      of Participants designated by the initial purchasers with portions of the
      principal amount of the Global Notes; and

            (2) ownership of these interests in the Global Notes will be shown
      on, and the transfer of ownership thereof will be effected only through,
      records maintained by DTC (with respect to the Participants) or by the
      Participants and the Indirect Participants (with respect to other owners
      of beneficial interest in the Global Notes).

      Investors in the Global Notes who are Participants in DTC's system may
hold their interests therein directly through DTC. Investors in the Global Notes
who are not Participants may hold their interests therein indirectly through
organizations which are Participants in such system. All interests in a Global
Note may be subject to the procedures and requirements of DTC. The laws of some
states require that certain Persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Note to such Persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in turn act on behalf
of Indirect Participants, the ability of a Person having beneficial interests in
a Global Note to pledge such interests to Persons that do not participate in the
DTC system, or otherwise take actions in respect of such interests, may be
affected by the lack of a physical certificate evidencing such interests.

      Except as described below, owners of interests in the Global Notes will
not have Series D notes registered in their names, will not receive physical
delivery of Series D notes in certificated form and will not be considered the
registered owners or "Holders" thereof under the Indenture for any purpose.

      Payments in respect of the principal of, and interest and premium on a
Global Note registered in the name of DTC or its nominee will be payable to DTC
in its capacity as the registered Holder under the Indenture. Under the terms of
the Indenture, the Company and the Trustee will treat the Persons in whose names
the notes, including the Global Notes, are registered as the owners thereof for
the purpose of receiving payments and for all other purposes. Consequently,
neither the Company, the Guarantors, the Trustee nor any agent of the Company,
the Guarantors or the Trustee has or will have any responsibility or liability
for:

            (1) any aspect of DTC's records or any Participant's or Indirect
      Participant's records relating to or payments made on account of
      beneficial ownership interests in the Global Notes or for maintaining,
      supervising or reviewing any of DTC's records or any Participant's or
      Indirect Participant's records relating to the beneficial ownership
      interests in the Global Notes; or

            (2)   any other matter relating to the actions and practices of DTC
      or any of its Participants or Indirect Participants.

      DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will not receive
payment on such payment date. Each relevant Participant is credited with an



                                       71



amount proportionate to its beneficial ownership of an interest in the
principal amount of the relevant security as shown on the records of DTC.
Payments by the Participants and the Indirect Participants to the beneficial
owners of Series D notes will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Trustee, the Company
or the Guarantors. None of the Company, the Guarantors nor the Trustee will be
liable for any delay by DTC or any of its Participants in identifying the
beneficial owners of the notes; and the Company, the Guarantors and the Trustee
may conclusively rely on and will be protected in relying on instructions from
DTC or its nominee for all purposes.

      Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.

      DTC has advised the Company that it will take any action permitted to be
taken by a holder of Series D notes only at the direction of one or more
Participants to whose account DTC has credited the interests in the Global Notes
and only in respect of such portion of the aggregate principal amount of the
notes as to which such Participant or Participants has or have given such
direction. However, if there is an Event of Default under the Series D notes,
DTC reserves the right to exchange the Global Notes for legended notes in
certificated form, and to distribute such notes to its Participants.

      Although DTC has agreed to the foregoing procedures to facilitate
transfers of interests in the Global Notes among participants in DTC, it is
under no obligation to perform or to continue to perform such procedures, and
may discontinue such procedures at any time. None of the Company, the
Guarantors, the Trustee or any of their respective agents will have any
responsibility for the performance by DTC or its respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.

Same Date Settlement and Payment

      The Company will make payments in respect of the Series D notes
represented by the Global Notes (including principal, premium, if any and
interest) by wire transfer of immediately available funds to the accounts
specified by the Global Note Holder. The Company will make all payments of
principal, interest and premium, with respect to Certificated Notes by wire
transfer of immediately available funds to the accounts specified by the holders
thereof or, if no such account is specified, by mailing a check to each such
holder's registered address. The Series D notes represented by the Global Notes
are expected to be eligible to trade in the PORTAL market and to trade in DTC's
Same-Day Funds Settlement System, and any permitted secondary market trading
activity in such notes will, therefore, be required by DTC to be settled in
immediately available funds. The Company expects that secondary trading in any
Certificated Notes will also be settled in immediately available funds.


                                       72



            MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

         The following is a general summary of the material U.S. federal income
tax consequences associated with the exchange of Series B or Series C notes for
Series D notes issued in the exchange offer. The discussion is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
judicial authorities, published positions of the Internal Revenue Service (the
"IRS") and other applicable authorities, all as in effect on the date hereof and
all of which are subject to change or differing interpretations (possibly with
retroactive effect). The discussion does not address all of the tax consequences
that may be relevant to a particular holder or to certain holders subject to
special treatment under U.S. federal income tax laws (including, but not limited
to, certain financial institutions, partnerships or other pass-through entities,
insurance companies, broker-dealers and persons holding their notes as part of a
"straddle," "hedge," or "conversion transaction"). This discussion is limited to
persons that hold their Series B, Series C or Series D notes as capital assets.
We have not sought, and do not intend to seek, a ruling from the IRS regarding
the matters discussed herein. Our counsel has not rendered any legal opinion
regarding any tax consequences relating to us or to an investor in the Series D
notes.

         The exchange of Series B or Series C notes for Series D notes issued in
the exchange offer should not be treated as an "exchange" for U.S. federal
income tax purposes because the Series D notes issued in the exchange offer
should not be considered to differ materially in kind or extent from the Series
B or Series C notes. Rather, the Series D notes issued in the exchange offer
received by a holder should be treated as a continuation of the Series B or
Series C notes in the hands of such holder. As a result there should be no U.S.
federal income tax consequences to holders exchanging Series B or Series C notes
for Series D notes issued in the exchange offer, and any exchanging holder of
Series B or Series C notes should have the same tax basis and holding period in,
and income in respect of, the Series D notes as such holder had in the Series B
or Series C notes immediately prior to the exchange.

         Perspective holders of the Series D notes being issued in the exchange
offer are urged to consult their tax advisors concerning the particular tax
consequences of exchanging such holders' Series B or Series C notes for the
Series D notes being issued in the exchange offer, including the applicability
and effect of any state, local or foreign income and other tax laws.

                              PLAN OF DISTRIBUTION

         Each broker-dealer that receives Series D notes for its own account for
Series B or Series C notes pursuant to this exchange offer, must acknowledge
that it will deliver a prospectus in connection with any resale of Series D
notes. This prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of Series D notes
received in exchange for Series B or Series C notes where the Series B or Series
C notes we acquired as a result of market-making activities or other trading
activities. We have agreed that, for a period of 180 days after the expiration
date, we will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resales. In addition, we
agreed for a period of 180 days from November 8, 2001, the date of the offering
memorandum distributed in connection with the sale of the Series C notes, not to
directly or indirectly offer, sell, grant any options to purchase or otherwise
dispose of any debt securities other than in connection with this exchange
offer, except for borrowings under our existing floor plan facilities,
construction/mortgage facility and revolving facility.

         We will not receive any proceeds from any sale of Series D notes by
broker-dealers. Series D notes received by broker-dealers for their own account
pursuant to this exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Series D notes or a combination of these methods
of resale, at market prices prevailing at the time of resale, at prices related
to prevailing market prices or at negotiated prices. Any resale may be made
directly to purchasers or to or through broker or dealers who receive
compensation in the form of commissions or concessions from a broker-dealer
and/or the purchasers of Series D notes. Any broker-dealer that resells Series D
notes that were received by it for its own account pursuant to this exchange
offer and any broker or dealer that participates in a distribution of the Series
D notes may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, and any profit on any such resale of Series D notes and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act of 1933. The letter of
transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act of 1933.

                                  LEGAL MATTERS

      The validity of the Series D notes being offered hereby will be passed
upon for Sonic by Moore & Van Allen PLLC, Charlotte, North Carolina.


                                       73



                                     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, 2000 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.


                                       74



================================================================================

                                  [SONIC LOGO]

                    Offer to Exchange All of Our Outstanding
           Registered 11% Senior Subordinated Notes Due 2008, Series B
                                       And
          Unregistered 11% Senior Subordinated Notes Due 2008, Series C
                                       For
           Registered 11% Senior Subordinated Notes Due 2008, Series D

                        --------------------------------

                                   PROSPECTUS

                        --------------------------------

      All certificates for Series B or Series C notes being tendered, executed
Letters of Transmittal and any other required documents should be sent to the
Exchange Agent at the address below or tendered pursuant to DTC's Automated
Tender Offer Program.

      All questions and requests for assistance and requests for additional
copies of the prospectus, the Letter of Transmittal and any other required
documents should be directed to the Exchange Agent.

                  The Exchange Agent for the Exchange Offer is:

                      U.S. Bank Trust National Association
                             U.S. Bank Trust Center
                              180 East Fifth Street

                            St. Paul, Minnesota 55101
                            Attn: Specialized Finance Group
                           (800) 934-6802 (telephone)
                           (651) 244-1537 (facsimile)

                You should confirm deliveries sent by facsimile.

      (Originals of all documents submitted by facsimile should be sent promptly
by registered or certified mail, or by hand delivery or overnight courier)

                           ____________________, 2002

================================================================================



                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of directors and officers.

            The Company's Bylaws effectively provide that the Company 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, the Company'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 action, 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 interests 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
that 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 of 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.

            The Company maintains insurance against liabilities under the
Securities Act of 1933 for the benefit of its officers and directors.

            Section 4(b) of the Registration Rights Agreement (filed as Exhibit
4.1 to this Registration Statement) provides that the holders of the Series B
and Series C Notes covered by this Registration Statement severally and not
jointly will indemnify and hold harmless the Company, the Guarantors, and their
respective officers, directors, partners, employees, representatives and agents
from and against any loss, liability, claim, damage or expense caused by any
untrue statement or omission, or alleged untrue statement or omission, in the
Registration Statement, in the Prospectus or in any amendment or supplement
thereto, in each case to the extent that the statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by the holders of the Series B and Series C Notes covered by this
Registration Statement expressly for use therein, provided, however, that no
such holder of the Series B and Series C Notes shall be liable for any claims
hereunder in excess of the amount of net proceeds received by such holder of the
Series B and Series C Notes from the sale of Registrable Securities pursuant to
such Registration Statement.

Item 21. Exhibits and Financial Statement Schedules.

Exhibit No.                                Description
- -----------                                -----------

4.1   Specimen Certificate representing Class A Common Stock (incorporated by
      reference to Exhibit 4.1 to the Registration Statement on Form S-1 (Reg.
      No. 333-33295) (the "Form S-1")).

4.2   Form of 11% Senior Subordinated Note due 2008, Series B (incorporated by
      reference to Exhibit 4.3 to Sonic's Registration Statement on Form S-4
      (Reg. No. 333-64397 and 333-64397-001 through 333-64397-044) (the "Form
      S-4")).


                                       II-1




4.3   Indenture dated as of July 1, 1998 among Sonic, as issuer, the
      subsidiaries of Sonic named therein, as guarantors, and U.S. Bank Trust
      National Association, as trustee (the "Trustee"), relating to the 11%
      Senior Subordinated Notes due 2008 (incorporated by reference to Exhibit
      4.2 to the Form S-4).

4.4   First Supplemental Indenture dated as of December 31, 1999 among Sonic, as
      issuer, the subsidiaries of Sonic named therein, as guarantors and
      additional guarantors, and the Trustee, relating to the 11% Senior
      Subordinated Notes due 2008 (incorporated by reference to Exhibit 4.2a to
      the 1999 Form 10-K).

4.5   Second Supplemental Indenture dated as of September 15, 2000 among Sonic,
      as issuer, the subsidiaries of Sonic named therein, as guarantors and
      additional guarantors, and the Trustee, relating to the 11% Senior
      Subordinated Notes due 2008 (incorporated by reference to Exhibit 4.4 to
      Sonic's Quarterly Report on Form 10-Q for the quarter ended September 30,
      2000 (the "September 30, 2000 Form 10-Q")).

4.6   Third Supplemental Indenture dated as of March 31, 2001 among Sonic, as
      issuer, the subsidiaries of Sonic named therein, as guarantors and
      additional guarantors, and the Trustee, relating to the 11% Senior
      Subordinated Notes due 2008 (incorporated by reference to Exhibit 4.6 to
      Sonic's Quarterly Report on Form 10-Q for the quarter ended June 30,
      2001).

4.7   Fourth Supplemental Indenture dated as of November 19, 2001 among Sonic,
      as issuer, the subsidiaries of Sonic named therein, as guarantors and
      additional guarantors, and the Trustee, relating to the 11% Senior
      Subordinated Notes due 2008.

4.8   Registration Rights Agreement dated as of June 30, 1997 among Sonic, O.
      Bruton Smith, Bryan Scott Smith, William S. Egan and Sonic Financial
      Corporation (incorporated by reference to Exhibit 4.2 to the Form S-1).

4.9   Form of 11% Senior Subordinated Note due 2008, Series D.

4.10  Indenture dated as of November 19, 2001 among Sonic, as issuer, the
      subsidiaries of Sonic named therein, as guarantors, and U.S. Bank Trust
      National Association, as trustee (the "Trustee"), relating to the 11%
      Senior Subordinated Notes due 2008.

4.11  Registration Rights Agreement dated as of November 19, 2001 among Sonic,
      the Guarantors named therein and Merrill Lynch & Co., Merrill Lynch,
      Pierce, Fenner & Smith Incorporated and Banc of America Securities LLC.

4.12  Purchase Agreement dated as of November 8, 2001 between Sonic Automotive,
      Inc., the Guarantors named therein and Merrill Lynch & Co., Merrill Lynch,
      Pierce, Fenner & Smith, Incorporated and Banc of America Securities LLC.

4.13  Subordination Agreement dated as of November 19, 2001 between O. Bruton
      Smith and U.S. Bank Trust National Association.

5.1** Opinion of Moore & Van Allen PLLC regarding the validity of the securities
      being registered.

23.1  Consent of Deloitte & Touche LLP.

23.2  Consent of Moore & Van Allen PLLC (included in Exhibit 5.1).

24.1  Power of Attorney (included on signature page hereto).

25.1  Form T-1 Statement of Eligibility and Qualification under the Trust
      Indenture Act of 1939 of U.S. Bank Trust National Association.

99.1  Form of Letter of Transmittal.

99.2   Notice of Guaranteed Delivery.


** To be filed by amendment.


                                       II-2



Item 22. Undertakings.

            Each of the undersigned Registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
such Registrant'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 the
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.

            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,
each of the Registrants has 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 such 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, such Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

            Each of the undersigned Registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.

            Each of the undersigned Registrants hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.


                                       II-3



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                             SONIC AUTOMOTIVE, INC.


                             By:            /s/ Theodore M. Wright
                                 ---------------------------------------------
                                   Theodore M. Wright
                                   Vice President, Treasurer and
                                   Chief Financial Officer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of Registrant, by his
execution hereof, hereby constitutes and appoints B. Scott Smith, Theodore M.
Wright and Stephen K. Coss, and each of them with full power of substitution, as
his or her true and lawful attorneys-in-fact and agents, to do any and all acts
and things for him or her, and in his or her name, place and stead, to execute
and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any additional registration statement pursuant to
Rule 462(b) under the Securities Act of 1933, and file the same, together with
all exhibits and schedules thereto and all other documents in connection
therewith, with the Commission and with such state securities authorities as may
be appropriate, granting unto said attorneys-in-fact, and each of them, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, and hereby ratifying
and confirming all the acts of said attorneys-in-fact and agents, or any of
them, which they may lawfully do in the premises or cause to be done by virtue
hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



                Signature                               Title                    Date
                                                                           

      /s/ O. Bruton Smith        Chairman, Chief Executive Officer and           December 14, 2001
- ------------------------------   Director (principal executive
      O. Bruton Smith            officer)


      /s/ Thomas A. Price        Vice Chairman and Director                      December 14, 2001
- ------------------------------
      Thomas A. Price

      /s/ B. Scott Smith         President, Chief Operating Officer              December 14, 2001
- ------------------------------   and Director
      B. Scott Smith



      /s/ Theodore M. Wright     Chief Financial Officer (principal              December 14, 2001
- ------------------------------   financial and accounting officer),
      Theodore M. Wright         Vice President, Treasurer and
                                 Director


      /s/ Jeffrey C. Rachor      Executive Vice President of Retail              December 14, 2001
- ------------------------------   Operations and Director
      Jeffrey C. Rachor


      /s/ William R. Brooks      Director                                        December 14, 2001
- ------------------------------
      William R. Brooks


      /s/ William P. Benton      Director                                        December 14, 2001
- ------------------------------
      William P. Benton



                                       II-4



     /s/ William I. Belk         Director                  December 14, 2001
- -----------------------------
     William I. Belk

     /s/ H. Robert Heller        Director                  December 14, 2001
- -----------------------------
     H. Robert Heller

     /s/ Maryann N. Keller       Director                  December 14, 2001
- -----------------------------
     Maryann N. Keller


                                       II-5



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                 AUTOBAHN, 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.
                                 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 - CLASSIC DODGE, INC.
                                 Sonic - Coast Cadillac, Inc.
                                 SONIC - FORT MILL CHRYSLER JEEP, INC.

                                       II-6



                                SONIC - FORT MILL DODGE, INC.
                                SONIC - GLOVER, INC.
                                SONIC - HARBOR CITY H, INC.
                                SONIC - MANHATTAN FAIRFAX, INC.
                                SONIC - MANHATTAN WALDORF, INC.
                                SONIC - MONTGOMERY FLM, INC.
                                SONIC - NEWSOME CHEVROLET WORLD, INC.
                                SONIC - NEWSOME OF FLORENCE, INC.
                                SONIC - NORTH CHARLESTON, INC.
                                SONIC - NORTH CHARLESTON DODGE, INC.
                                SONIC - RIVERSIDE, INC.
                                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 and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



         Signature                               Title                Date
         ---------                               -----                ----
                                                               
    /s/ O. Bruton Smith        President and Director (principal      December 14, 2001
- ----------------------------   executive officer)
    O. Bruton Smith

    /s/ B. Scott Smith         Vice President and Director            December 14, 2001
- ----------------------------
    B. Scott Smith

    /s/ Theodore M. Wright     Vice President, Treasurer, and         December 14, 2001
- ----------------------------   Director
    Theodore M. Wright


                                       II-7



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                   FIRSTAMERICA AUTOMOTIVE, INC.

                                   By:        /s/ Theodore M. Wright
                                       ---------------------------------------
                                         Theodore M. Wright
                                         Vice President and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



        Signature                                Title                   Date
        ---------                                -----                   ----
                                                                   
   /s/ O. Bruton Smith         Chairman, Chief Executive Officer         December 14, 2001
- ---------------------------    and Director (principal executive
   O. Bruton Smith             officer)


   /s/ B. Scott Smith          President and Director                    December 14, 2001
- ----------------------------
   B. Scott Smith

   /s/ Theodore M. Wright      Vice President, Treasurer, and            December 14, 2001
- ---------------------------    Director
   Theodore M. Wright


                                       II-8



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                               FREEDOM FORD, INC.
                               SONIC AUTOMOTIVE - BONDESEN, INC.
                               SONIC AUTOMOTIVE - CLEARWATER, INC.
                               SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER,
                                  INC.
                               SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC.
                               SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC.
                               SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC.
                               SONIC AUTOMOTIVE - 21699 U.S. HWY 19 N., INC.
                               SONIC AUTOMOTIVE - 241 RIDGEWOOD AVE., HH, INC.
                               SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC.
                               SONIC - FM, INC.
                               SONIC - FM NISSAN, INC.
                               SONIC - FM VW, INC.
                               SONIC - FREELAND, INC.
                               SONIC - LLOYD NISSAN, INC.
                               SONIC - LLOYD PONTIAC - CADILLAC, INC.
                               SONIC - SHOTTENKIRK, INC.


                               By:          /s/ Theodore M. Wright
                                   --------------------------------------------
                                     Theodore M. Wright
                                     Vice President and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



               Signature                        Title                           Date
               ---------                        -----                           ----
                                                                          
     /s/ O. Bruton Smith         Director                                       December 14, 2001
- -----------------------------
     O. Bruton Smith

     /s/ B. Scott Smith          President and Director (principal              December 14, 2001
- -----------------------------    executive officer)
     B. Scott Smith


     /s/ Theodore M. Wright      Vice President, Treasurer, and                 December 14, 2001
- -----------------------------    Director
     Theodore M. Wright



                                       II-9



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                               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
                                     On behalf of itself and the following
                                     entities as sole member of
                                     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 FLORIDA-1, LLC
                                     SRE FLORIDA-2, LLC
                                     SRE FLORIDA-3, LLC
                                     SRE NEVADA-1, LLC
                                     SRE NEVADA-2, LLC
                                     SRE NEVADA-3, LLC
                                     SRE SOUTH CAROLINA-2, LLC
                                     SRE TENNESSEE-1, LLC
                                     SRE TENNESSEE-2, LLC
                                     SRE TENNESSEE-3, LLC
                                     SRE VIRGINIA-1, LLC
                               By: Sonic Automotive, Inc., sole member

                               By:         /s/ Theodore M. Wright
                                   --------------------------------------
                                    Theodore M. Wright
                                    Vice President and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned managers and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.


                                       II-10



            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



       Signature                               Title                        Date
       ---------                               -----                        ----
                                                                      
   /s/ O. Bruton Smith           President and Manager (principal           December 14, 2001
- ---------------------------      executive officer)
   O. Bruton Smith

   /s/ B. Scott Smith            Vice President and Manager                 December 14, 2001
- ---------------------------
   B. Scott Smith

   /s/ Theodore M. Wright        Vice President, Treasurer, and             December 14, 2001
- ---------------------------      Manager
   Theodore M. Wright



                                       II-11



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                  SONIC AUTOMOTIVE - 1720 MASON AVE., DB, LLC
                                  SONIC - FM AUTOMOTIVE, LLC
                                  By: Sonic Automotive, Inc., sole member

                                  By:   /s/ Theodore M. Wright
                                      ---------------------------------------
                                          Theodore M. Wright
                                          Vice President and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned managers and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



         Signature                     Title                               Date
         ---------                     -----                               ----
                                                                     
    /s/ O. Bruton Smith         Manager                                    December 14, 2001
- ----------------------------
    O. Bruton Smith

    /s/ B. Scott Smith          President and Manager  (principal          December 14, 2001
- ----------------------------    executive officer)
    B. Scott Smith


    /s/ Theodore M. Wright      Vice President, Treasurer, and             December 14, 2001
- ----------------------------    Manager
    Theodore M. Wright



                                       II-12



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                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.
                                            On behalf of itself and the
                                            following entities as a Member
                                            SONIC AUTOMOTIVE - 5260
                                              PEACHTREE INDUSTRIAL BLVD.,
                                              LLC
                                            SONIC AUTOMOTIVE - 5585
                                              PEACHTREE INDUSTRIAL BLVD.,
                                              LLC
                                      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 and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



         Signature                              Title                      Date
                                                                    
    /s/ O. Bruton Smith           President (principal executive           December 14, 2001
- ----------------------------      officer)
    O. Bruton Smith

    /s/ B. Scott Smith            Vice President and Director
- ----------------------------
    B. Scott Smith

    /s/ Theodore M. Wright        Vice President, Treasurer, and           December 14, 2001
- ----------------------------      Director
    Theodore M. Wright

                                  Assistant Secretary, Assistant           December 14, 2001
- ---------------------------       Treasurer and Director
    Peggy McFarland




                                       II-13



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                               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 - 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 - PARK PLACE A, L.P.
                                     SONIC - READING, L.P.
                                     SONIC - RICHARDSON F, L.P.
                                     SONIC - SAM WHITE NISSAN, L.P.
                                     SRE TEXAS-1, L.P.
                                     SRE TEXAS-2, L.P.
                                     SRE TEXAS-3, L.P.
                                     On behalf of the following entities as a
                                     Member:
                                     SONIC - LS, LLC
                                            On behalf of itself and the
                                            following entity as General
                                            Partner:
                                            SONIC - LS CHEVROLET, L.P.

                                By:       /s/ Theodore M. Wright
                                   -------------------------------------------
                                     Theodore M. Wright
                                     Vice President and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.


                                       II-14



            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



         Signature                                 Title              Date
         ---------                                 -----              ----
                                                               
   /s/ O. Bruton Smith          President (principal executive        December 14, 2001
- ---------------------------     officer)
   O. Bruton Smith

   /s/ B. Scott Smith           Vice President and Director           December 14, 2001
- ---------------------------
   B. Scott Smith

   /s/ Theodore M. Wright       Vice President, Treasurer, and        December 14, 2001
- ---------------------------     Director
   Theodore M. Wright

                                Assistant Secretary, Assistant        December 14, 2001
- --------------------------      Treasurer and Director
   Roger A. Elswick




                                       II-15



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                SONIC - VOLVO LV, LLC
                                      On behalf of itself and the following
                                      entity as a Member
                                      SONIC AUTOMOTIVE SERVICING
                                        COMPANY, LLC

                                By:       /s/ Theodore M. Wright
                                   ------------------------------------------
                                     Theodore M. Wright
                                     Vice President and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned managers and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



        Signature                           Title                           Date
        ---------                           -----                           ----
                                                                      
   /s/ O. Bruton Smith          Chief Executive Officer (principal          December 14, 2001
- ---------------------------     executive officer)
   O. Bruton Smith


   /s/ B. Scott Smith           President and Manager                       December 14, 2001
- ---------------------------
   B. Scott Smith

   /s/ Theodore M. Wright       Vice President, Treasurer and               December 14, 2001
- ---------------------------     Manager
   Theodore M. Wright

   /s/ Jeffrey C. Rachor        Manager                                     December 14, 2001
- ---------------------------
   Jeffrey C. Rachor



                                       II-16



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                 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 and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned managers and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



         Signature                                 Title                    Date
         ---------                                 -----                    ----
                                                                     
                                 Chief Executive Officer (principal         December 14, 2001
    /s/ O. Bruton Smith          executive officer)
- ----------------------------
    O. Bruton Smith

    /s/ B. Scott Smith           President and Manager                      December 14, 2001
- ----------------------------
    B. Scott Smith

    /s/ Theodore M. Wright       Vice President, Treasurer and              December 14, 2001
- ----------------------------     Manager
    Theodore M. Wright

    /s/ Jeffrey C. Rachor        Manager                                    December 14, 2001
- ----------------------------
    Jeffrey C. Rachor



                                       II-17



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                 SONIC AUTOMOTIVE OF TENNESSEE, INC.
                                       On behalf of itself and the following
                                       entities as Member:
                                       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 - SUPERIOR OLDSMOBILE, LLC
                                       TOWN AND COUNTRY CHRYSLER-
                                         PLYMOUTH-JEEP, LLC
                                       TOWN AND COUNTRY DODGE OF
                                         CHATTANOOGA, LLC
                                       TOWN AND COUNTRY FORD OF
                                         CLEVELAND, LLC
                                       TOWN AND COUNTRY JAGUAR, LLC

                            By:           /s/ Theodore M. Wright
                                ---------------------------------------------
                                   Theodore M. Wright
                                   Vice President and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



         Signature                                    Title                    Date
         ---------                                    -----                    ----
                                                                        
    /s/ B. Scott Smith              President, Chief Executive Officer         December 14, 2001
- ----------------------------        and Director (principal executive
    B. Scott Smith                  officer)

    /s/ Theodore M. Wright          Vice President, Treasurer and              December 14, 2001
- ----------------------------        Director
    Theodore M. Wright

    /s/ Jeffrey C. Rachor           Director                                   December 14, 2001
- ----------------------------
    Jeffrey C. Rachor



                                       II-18



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                  SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC.


                                  By:         /s/ Theodore M. Wright
                                      ----------------------------------------
                                         Theodore M. Wright
                                         Vice President and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



          Signature                                 Title                 Date
          ---------                                 -----                 ----
                                                                   
     /s/ B. Scott Smith           President and Director (principal       December 14, 2001
- -----------------------------     executive officer)
     B. Scott Smith


     /s/ Theodore M. Wright       Vice President, Treasurer and           December 14, 2001
- -----------------------------     Director
     Theodore M. Wright

     /s/ Jeffrey C. Rachor        Director                                December 14, 2001
- -----------------------------
     Jeffrey C. Rachor



                                       II-19



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                  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 and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



         Signature                            Title                         Date
         ---------                            -----                         ----
                                                                      
                                                                            December 14, 2001
     /s/ O. Bruton Smith          President and Director (principal
- -----------------------------     executive officer)
     O. Bruton Smith


     /s/ B. Scott Smith           Vice President and Director               December 14, 2001
- -----------------------------
     B. Scott Smith



     /s/ Theodore M. Wright       Vice President, Treasurer,                December 14, 2001
- -----------------------------     and Director
     Theodore M. Wright

     /s/ Thomas A. Price          Vice President and Director               December 14, 2001
- -----------------------------
     Thomas A. Price



                                       II-20



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                  FAA LAS VEGAS H, INC.

                                  By:       /s/ Theodore M. Wright
                                      ---------------------------------------
                                        Theodore M. Wright
                                        Vice President and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



           Signature                                  Title                  Date
           ---------                                  -----                  ----
                                                                       
     /s/ O. Bruton Smith           Chairman, Chief Executive Officer         December 14, 2001
- -----------------------------      and Director (principal
     O. Bruton Smith               executive officer)


     /s/ Theodore M. Wright        Vice President, Treasurer, and            December 14, 2001
- -----------------------------      Director
     Theodore M. Wright

                                   Assistant Secretary, Assistant            December 14, 2001
- -----------------------------      Treasurer and Director
     David Plummer



                                       II-21



                                   SIGNATURES

            Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                                SONIC AUTOMOTIVE OF NEVADA, INC.
                                      On behalf of itself and the following
                                      entities as Member:
                                      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 - SUPERIOR OLDSMOBILE, LLC
                                      TOWN AND COUNTRY CHRYSLER-
                                        PLYMOUTH-JEEP, LLC
                                      TOWN AND COUNTRY DODGE OF
                                        CHATTANOOGA, LLC
                                      TOWN AND COUNTRY FORD OF
                                        CLEVELAND, LLC
                                      TOWN AND COUNTRY JAGUAR, LLC

                               By:          /s/ Theodore M. Wright
                                ----------------------------------------------
                                     Theodore M. Wright
                                     Vice President and Treasurer

                                POWER OF ATTORNEY

            Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

            Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



        Signature                           Title                              Date
        ---------                           -----                              ----
                                                                         
   /s/ O. Bruton Smith          Chief Executive Officer and                    December 14, 2001
- ---------------------------     Director (principal executive officer)
   O. Bruton Smith


   /s/ Theodore M. Wright       Vice President, Treasurer, and                 December 14, 2001
- ---------------------------     Director
   Theodore M. Wright

                                Assistant Secretary, Assistant                 December 14, 2001
- ---------------------------     Treasurer and Director
   David Plummer



                                       II-22




                                   SIGNATURES

         Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                           SONIC RESOURCES, INC.

                           By:         /s/ Theodore M. Wright
                               ---------------------------------------
                                    Theodore M. Wright
                                    Vice President and Treasurer


                                POWER OF ATTORNEY

         Each of the undersigned directors and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



               Signature                                 Title                                  Date
               ---------                                 -----                                  ----
                                                                                          
         /s/ B. Scott Smith              President and Director (principal                      December 14, 2001
- --------------------------------         executive officer)
         B. Scott Smith


         /s/ Theodore M. Wright          Vice President, Treasurer, and                         December 14, 2001
- -------------------------------          Director
         Theodore M. Wright


                                         Assistant Secretary, Assistant                         December 14, 2001
- -------------------------------          Treasurer and Director
         David Plummer



                                       II-23



                                   SIGNATURES

         Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Charlotte, state of North
Carolina, on December 14, 2001.

                           SONIC AUTOMOTIVE F&I, LLC
                           SONIC AUTOMOTIVE WEST, LLC


                           By:               /s/ Theodore M. Wright
                               ----------------------------------------
                                    Theodore M. Wright
                                    Vice President and Treasurer

                                POWER OF ATTORNEY

         Each of the undersigned managers and officers of the above named
Registrants, by his execution hereof, hereby constitutes and appoints B. Scott
Smith, Theodore M. Wright and Stephen K. Coss, and each of them, with full power
of substitution, as his or her true and lawful attorneys-in-fact and agents, to
do any and all acts and things for him or her, and in his or her name, place and
stead, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and file the
same, together with all exhibits and schedules thereto and all other documents
in connection therewith, with the Commission and with such state securities
authorities as may be appropriate, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all intents and purposes as the undersigned might or could do in person, and
hereby ratifying and confirming all the acts of said attorneys-in-fact and
agents, or any of them, which they may lawfully do in the premises or cause to
be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:



               Signature                                 Title                                  Date
               ---------                                 -----                                  ----
                                                                                          
         /s/ O. Bruton Smith             Chief Executive Officer (principal                     December 14, 2001
- -------------------------------          executive officer)
         O. Bruton Smith

         /s/ Theodore M. Wright          Vice President, Treasurer, and                         December 14, 2001
- -------------------------------          Manager
         Theodore M. Wright

         /s/ Gail M. Syfert              Assistant Secretary, Assistant                         December 14, 2001
- -------------------------------          Treasurer and Manager
         Gail M. Syfert

                                         Assistant Secretary, Assistant                         December 14, 2001
- -------------------------------          Treasurer and Manager
         David Plummer



                                       II-24




                                  EXHIBIT INDEX

Exhibit No.                          Description
- -----------                          -----------

4.1               Specimen Certificate representing Class A Common Stock
                  (incorporated by reference to Exhibit 4.1 to the Registration
                  Statement on Form S-1 (Reg. No. 333-33295) (the "Form S-1")).

4.2               Form of 11% Senior Subordinated Note due 2008, Series B
                  (incorporated by reference to Exhibit 4.3 to Sonic's
                  Registration Statement on Form S-4 (Reg. No. 333-64397 and
                  333-64397-001 through 333-64397-044) (the "Form S-4")).

4.3               Indenture dated as of July 1, 1998 among Sonic, as issuer, the
                  subsidiaries of Sonic named therein, as guarantors, and U.S.
                  Bank Trust National Association, as trustee (the "Trustee"),
                  relating to the 11% Senior Subordinated Notes due 2008
                  (incorporated by reference to Exhibit 4.2 to the Form S-4).

4.4               First Supplemental Indenture dated as of December 31, 1999
                  among Sonic, as issuer, the subsidiaries of Sonic named
                  therein, as guarantors and additional guarantors, and the
                  Trustee, relating to the 11% Senior Subordinated Notes due
                  2008 (incorporated by reference to Exhibit 4.2a to the 1999
                  Form 10-K).

4.5               Second Supplemental Indenture dated as of September 15, 2000
                  among Sonic, as issuer, the subsidiaries of Sonic named
                  therein, as guarantors and additional guarantors, and the
                  Trustee, relating to the 11% Senior Subordinated Notes due
                  2008 (incorporated by reference to Exhibit 4.4 to Sonic's
                  Quarterly Report on Form 10-Q for the quarter ended September
                  30, 2000 (the "September 30, 2000 Form 10-Q")).

4.6               Third Supplemental Indenture dated as of March 31, 2001 among
                  Sonic, as issuer, the subsidiaries of Sonic named therein, as
                  guarantors and additional guarantors, and the Trustee,
                  relating to the 11% Senior Subordinated Notes due 2008
                  (incorporated by reference to Exhibit 4.6 to Sonic's Quarterly
                  Report on Form 10-Q for the quarter ended June 30, 2001).

4.7               Fourth Supplemental Indenture dated as of November 19, 2001
                  among Sonic, as issuer, the subsidiaries of Sonic named
                  therein, as guarantors and additional guarantors, and the
                  Trustee, relating to the 11% Senior Subordinated Notes due
                  2008.

4.8               Registration Rights Agreement dated as of June 30, 1997 among
                  Sonic, O. Bruton Smith, Bryan Scott Smith, William S. Egan and
                  Sonic Financial Corporation (incorporated by reference to
                  Exhibit 4.2 to the Form S-1).

4.9               Form of 11% Senior Subordinated Note due 2008, Series D.

4.10              Indenture dated as of November 19, 2001 among Sonic, as
                  issuer, the subsidiaries of Sonic named therein, as
                  guarantors, and U.S. Bank Trust National Association, as
                  trustee (the "Trustee"), relating to the 11% Senior
                  Subordinated Notes due 2008.

4.11              Registration Rights Agreement dated as of November 19, 2001
                  among Sonic, the Guarantors named therein and Merrill Lynch &
                  Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated and
                  Banc of America LLC.

4.12              Purchase Agreement dated as of November 8, 2001 between Sonic
                  Automotive, Inc., the Guarantors named therein and Merrill
                  Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith,
                  Incorporated and Banc of America Securities LLC.

4.13              Subordination Agreement dated as of November 19, 2001 between
                  O. Bruton Smith and U.S. Bank Trust National Association.

5.1**             Opinion of Moore & Van Allen PLLC regarding the validity of
                  the securities being registered.

23.1              Consent of Deloitte & Touche LLP.)



23.2              Consent of Moore & Van Allen PLLC (included in Exhibit 5.1).

24.1              Power of Attorney (included on signature page hereto).

25.1              Form T-1 Statement of Eligibility and Qualification under the
                  Trust Indenture Act of 1939 of U.S. Bank Trust National
                  Association.

99.1              Form of Letter of Transmittal.

99.2              Notice of Guaranteed Delivery.

** To be filed by amendment

EX-4.7

                                                                     Exhibit 4.7

                          FOURTH SUPPLEMENTAL INDENTURE

            This FOURTH SUPPLEMENTAL INDENTURE dated as of November 19, 2001
(this "Supplemental Indenture") is by and among:

              SONIC - HOUSTON V, L.P., a Texas limited partnership
                   SONIC RESOURCES, INC., a Nevada corporation
              SONIC - HARBOR CITY H, INC., a California corporation
              SONIC - WEST COVINA T, INC., a California corporation
              SONIC - BUENA PARK H, INC., a California corporation
           SONIC - WEST RENO CHEVROLET, INC., an Oklahoma corporation
         LAWRENCE MARSHALL CHEVROLET, L.P., a Texas limited partnership
     LAWRENCE MARSHALL CHEVROLET, LLC, a Delaware limited liability company
                SONIC - BETHANY H, INC., an Oklahoma corporation

(hereinafter referred to collectively as the "Guaranteeing Subsidiaries"), SONIC
AUTOMOTIVE, INC., a Delaware corporation, (the "Company"), the other Guarantors
(as listed on the signature page of the Indenture referred to below) (the
"Guarantors") and U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee under the
Indenture referred to below (the "Trustee").

                                   WITNESSETH

            WHEREAS, the Company and the Guarantors have heretofore executed and
delivered to the Trustee an Indenture dated as of July 1, 1998, as supplemented
by (i) the First Supplemental Indenture dated as of December 31, 1999, (ii) the
Second Supplemental Indenture dated as of September 15, 2000, and (iii) the
Third Supplemental Indenture dated as of March 31, 2001, among the parties
listed on the signature pages hereto, (as supplemented, the "Indenture")
providing for the issuance in an aggregate principal amount of up to
$125,000,000 of the Company's 11% Senior Subordinated Notes due 2008 (the
"Notes"); and

            WHEREAS, the Indenture provides that under certain circumstances
each of the Guaranteeing Subsidiaries shall execute and deliver to the Trustee a
supplemental indenture pursuant to which each of the Guaranteeing Subsidiaries
shall guarantee all of the Indenture Obligations under the Notes and the
Indenture on the terms and conditions set forth herein (the "Note Guarantee");
and

            WHEREAS, each Guaranteeing Subsidiary is a wholly-owned direct or
indirect subsidiary of the Company; and

            WHEREAS, pursuant to Section 901(e) of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture to add the
Guaranteeing Subsidiaries pursuant to the requirements of Section 1013 of the
Indenture; and

            NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, each of
the Guaranteeing


1



Subsidiaries and the Trustee mutually covenant and agree for the equal and
ratable benefit of the Holders of the Notes as follows:

            Section 1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.

            Section 2. Agreement to Guarantee. Each of the Guaranteeing
Subsidiaries hereby agrees as follows (notwithstanding anything to the contrary
in this Supplemental Indenture, such agreements of the Guaranteeing Subsidiaries
shall be construed as identical to those agreements made by the Guarantors under
the Indenture, and the obligations and rights of the Guaranteeing Subsidiaries
hereunder shall be no more and no less than those of the Guarantors under the
Indenture):

            (a) Guaranteeing Subsidiaries' Guarantee. Along with the Guarantors
named in the Indenture and in accordance with Article Thirteen of the Indenture
and this Section 2, to guarantee absolutely, fully, unconditionally and
irrevocably, jointly and severally with each other and with each other Person
that may become a Guarantor under the Indenture, to the Trustee and the Holders,
as if the Guaranteeing Subsidiaries were the principal debtor, the punctual
payment and performance when due of all Indenture Obligations (which for
purposes of this Guarantee shall also be deemed to include all commissions,
fees, charges, costs and other expenses (including reasonable legal fees and
disbursements of one counsel) arising out of or incurred by the Trustee or the
Holders in connection with the enforcement of this Guarantee).

            (b) Continuing Guarantee; No Right of Set-Off; Independent
Obligations.

                        (i) This Guarantee by the Guaranteeing Subsidiaries
shall be a continuing guarantee of the payment and performance of all Indenture
Obligations and shall remain in full force and effect until the payment in full
of all of the Indenture Obligations and shall apply to and secure any ultimate
balance due or remaining unpaid to the Trustee or the Holders. This Guarantee by
the Guaranteeing Subsidiaries shall not be considered as wholly or partially
satisfied by the payment or liquidation at any time or from time to time of any
sum of money for the time being due or remaining unpaid to the Trustee or the
Holders. Each Guaranteeing Subsidiary, jointly and severally, covenants and
agrees to comply with all obligations, covenants, agreements and provisions
applicable to it in the Indenture as if named as a Guarantor therein including
those set forth in Article Eight of the Indenture. Without limiting the
generality of the foregoing, each Guaranteeing Subsidiaries' liability shall
extend to all amounts which constitute part of the Indenture Obligations and
would be owed by the Company under the Indenture and the Securities but for the
fact that they are unenforceable, reduced, limited, impaired, suspended or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Company.

                        (ii) Each Guaranteeing Subsidiary, jointly and
severally, hereby guarantees that the Indenture Obligations will be paid to the
Trustee without set-off or counterclaim or other reduction whatsoever (whether
for taxes, withholding or otherwise) in lawful currency of the United States of
America.

                        (iii) Each Guaranteeing Subsidiary, jointly and
severally, guarantees that the Indenture Obligations shall be paid strictly in
accordance with their terms regardless of any law,


2



regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the holders of the Securities.

                        (iv) Each Guaranteeing Subsidiary's liability to pay or
perform or cause the performance of the Indenture Obligations under this
Guarantee shall arise forthwith after demand for payment or performance by the
Trustee has been given to the Guarantors in the manner prescribed in Section 106
of the Indenture.

                        (v) Except as provided in the Indenture, the provisions
of Article Thirteen of the Indenture and this Section 2 cover all agreements
between the parties hereto relative to this Guarantee and none of the parties
shall be bound by any representation, warranty or promise made by any Person
relative thereto or hereto, which is not embodied therein or herein; and it is
specifically acknowledged and agreed that this Guarantee has been delivered by
each Guaranteeing Subsidiary free of any conditions whatsoever and that no
representations, warranties or promises have been made to any Guaranteeing
Subsidiary affecting its liabilities hereunder, and that the Trustee shall not
be bound by any representations, warranties or promises now or at any time
hereafter made by the Company to any Guaranteeing Subsidiary.

                        (vi) This Guarantee is a guarantee of payment,
performance and compliance and not of collectibility and is in no way
conditioned or contingent upon any attempt to collect from or enforce
performance or compliance by the Company or upon any event or condition
whatsoever.

                        (vii) The obligations of the Guaranteeing Subsidiaries
set forth herein constitute the full recourse obligations of the Guaranteeing
Subsidiaries enforceable against them to the full extent of all their assets and
properties.

                        (viii) This Guarantee shall be subordinated to the
claims against the Guarantor to the same extent as the Securities are
subordinated to Senior Indebtedness.

            (c) Guarantee Absolute. The obligations of the Guaranteeing
Subsidiaries hereunder are independent of the obligations of the Company under
the Securities and the Indenture and a separate action or actions may be brought
and prosecuted against any Guaranteeing Subsidiary whether or not an action or
proceeding is brought against the Company and whether or not the Company is
joined in any such action or proceeding. The liability of the Guaranteeing
Subsidiaries hereunder is irrevocable, absolute and unconditional and (to the
extent permitted by law) the liability and obligations of the Guaranteeing
Subsidiaries hereunder shall not be released, discharged, mitigated, waived,
impaired or affected in whole or in part by:

                        (i)         any defect or lack of validity or
                                    enforceability in respect of any
                                    Indebtedness or other obligation of the
                                    Company or any other Person under the
                                    Indenture or the Securities, or any
                                    agreement or instrument relating to any of
                                    the foregoing;

                        (ii)        any grants of time, renewals, extensions,
                                    indulgences, releases, discharges or
                                    modifications which the Trustee or the
                                    Holders may extend to, or make with, the
                                    Company, any Guarantor, any Guaranteeing
                                    Subsidiary or any other Person, or any
                                    change in the time, manner or place of
                                    payment of, or


3



                                    in any other term of, all or any of the
                                    Indenture Obligations, or any other
                                    amendment or waiver of, or any consent to or
                                    departure from, the Indenture or the
                                    Securities, including any increase or
                                    decrease in the Indenture Obligations;

                        (iii)       the taking of security from the Company, any
                                    Guarantor, any Guaranteeing Subsidiary or
                                    any other Person, and the release, discharge
                                    or alteration of, or other dealing with,
                                    such security;

                        (iv)        the occurrence of any change in the laws,
                                    rules, regulations or ordinances of any
                                    jurisdiction by any present or future action
                                    of any governmental authority or court
                                    amending, varying, reducing or otherwise
                                    affecting, or purporting to amend, vary,
                                    reduce or otherwise affect, any of the
                                    Indenture Obligations and the obligations of
                                    any Guaranteeing Subsidiary hereunder;

                        (v)         the abstention from taking security from the
                                    Company, any Guarantor, any Guaranteeing
                                    Subsidiary or any other Person or from
                                    perfecting, continuing to keep perfected or
                                    taking advantage of any security;

                        (vi)        any loss, diminution of value or lack of
                                    enforceability of any security received from
                                    the Company, any Guarantor, any Guaranteeing
                                    Subsidiary or any other Person, and
                                    including any other guarantees received by
                                    the Trustee;

                        (vii)       any other dealings with the Company, any
                                    Guarantor, any Guaranteeing Subsidiary or
                                    any other Person, or with any security;

                        (viii)      the Trustee's or the Holders' acceptance of
                                    compositions from the Company, any Guarantor
                                    or any Guaranteeing Subsidiary;

                        (ix)        the application by the Holders or the
                                    Trustee of all monies at any time and from
                                    time to time received from the Company, any
                                    Guarantor, any Guaranteeing Subsidiary or
                                    any other Person on account of any
                                    indebtedness and liabilities owing by the
                                    Company, any Guarantor or any Guaranteeing
                                    Subsidiary to the Trustee or the Holders, in
                                    such manner as the Trustee or the Holders
                                    deems best and the changing of such
                                    application in whole or in part and at any
                                    time or from time to time, or any manner of
                                    application of collateral, or proceeds
                                    thereof, to all or any of the Indenture
                                    Obligations, or the manner of sale of any
                                    collateral;

                        (x)         the release or discharge of the Company, any
                                    Guarantor or any Guaranteeing Subsidiary of
                                    the Securities or of any Person liable
                                    directly as surety or otherwise by operation
                                    of law or otherwise for the Securities,
                                    other than an express release in writing
                                    given by the Trustee, on behalf of the
                                    Holders, of the liability and obligations of
                                    any Guaranteeing Subsidiary hereunder;


4



                        (xi)        any change in the name, business, capital
                                    structure or governing instrument of the
                                    Company, any Guarantor or any Guaranteeing
                                    Subsidiary or any refinancing or
                                    restructuring of any of the Indenture
                                    Obligations;

                        (xii)       the sale of the Company's, any Guarantor's
                                    or any Guaranteeing Subsidiary's business or
                                    any part thereof,

                        (xiii)      subject to Section 1314 of the Indenture,
                                    any merger or consolidation, arrangement or
                                    reorganization of the Company, any Guarantor
                                    or any Guaranteeing Subsidiary, any Person
                                    resulting from the merger or consolidation
                                    of the Company, any Guarantor or any
                                    Guaranteeing Subsidiary with any other
                                    Person or any other successor to such Person
                                    or merged or consolidated Person or any
                                    other change in the corporate existence,
                                    structure or ownership of the Company, any
                                    Guarantor or any Guaranteeing Subsidiary or
                                    any change in the corporate relationship
                                    among the Company, any Guarantor and any
                                    Guaranteeing Subsidiary, or any termination
                                    of such relationship;

                        (xiv)       the insolvency, bankruptcy, liquidation,
                                    winding-up, dissolution, receivership,
                                    arrangement, readjustment, assignment for
                                    the benefit of creditors or distribution of
                                    the assets of the Company or its assets or
                                    any resulting discharge of any obligations
                                    of the Company (whether voluntary or
                                    involuntary) or of any Guarantor (whether
                                    voluntary or involuntary) or any
                                    Guaranteeing Subsidiary (whether voluntary
                                    or involuntary) or the loss of corporate
                                    existence;

                        (xv)        subject to Section 1314 of the Indenture,
                                    any arrangement or plan of reorganization
                                    affecting the Company, any Guarantor or any
                                    Guaranteeing Subsidiary;

                        (xvi)       any failure, omission or delay on the part
                                    of the Company to conform or comply with any
                                    term of the Indenture;

                        (xvii)      any limitation on the liability or
                                    obligations of the Company or any other
                                    Person under the Indenture, or any
                                    discharge, termination, cancellation,
                                    distribution, irregularity, invalidity or
                                    unenforceability in whole or in part of the
                                    Indenture;

                        (xviii)     any other circumstance (including any
                                    statute of limitations) that might otherwise
                                    constitute a defense available to, or
                                    discharge of, the Company, any Guarantor or
                                    any Guaranteeing Subsidiary; or

                        (xix)       any modification, compromise, settlement or
                                    release by the Trustee, or by operation of
                                    law or otherwise, of the Indenture
                                    Obligations or the liability of the Company
                                    or any other obligor under the Securities,
                                    in whole or in part, and any refusal of
                                    payment by the Trustee, in whole or in part,
                                    from any other obligor or other guarantor in
                                    connection with any of the


5



                                    Indenture Obligations, whether or not with
                                    notice to, or further assent by, or any
                                    reservation of rights against, each of the
                                    Guarantors and the Guaranteeing
                                    Subsidiaries.

            (d) Right to Demand Full Performance. In the event of any demand for
payment or performance by the Trustee from any Guaranteeing Subsidiary
hereunder, the Trustee or the Holders shall have the right to demand its full
claim and to receive all dividends or other payments in respect thereof until
the Indenture Obligations have been paid in full, and the Guaranteeing
Subsidiaries shall continue to be jointly and severally liable hereunder for any
balance which may be owing to the Trustee or the Holders by the Company under
the Indenture and the Securities. The retention by the Trustee or the Holders of
any security, prior to the realization by the Trustee or the Holders of its
rights to such security upon foreclosure thereon, shall not, as between the
Trustee and any Guaranteeing Subsidiary, be considered as a purchase of such
security, or as payment, satisfaction or reduction of the Indenture Obligations
due to the Trustee or the Holders by the Company or any part thereof. Each
Guaranteeing Subsidiary, promptly after demand, will reimburse the Trustee and
the Holders for all costs and expenses of collecting such amount under, or
enforcing this Guarantee, including, without limitation, the reasonable fees and
expenses of counsel.

            (e) Waivers.

                        (i) Each Guaranteeing Subsidiary hereby expressly waives
(to the extent permitted by law) notice of the acceptance of this Guarantee and
notice of the existence, renewal, extension or the nonperformance, non-payment,
or non-observance on the part of the Company of any of the terms, covenants,
conditions and provisions of the Indenture or the Securities or any other notice
whatsoever to or upon the Company, any Guarantor or such Guaranteeing Subsidiary
with respect to the Indenture Obligations, whether by statute, rule of law or
otherwise. Each Guaranteeing Subsidiary hereby acknowledges communication to it
of the terms of this Supplemental Indenture, the Indenture and the Securities
and all of the provisions herein and therein contained and consents to and
approves the same. Each Guaranteeing Subsidiary hereby expressly waives (to the
extent permitted by law) diligence, presentment, protest and demand for payment
with respect to (a) any notice of sale, transfer or other disposition of any
right, title to or interest in the Securities by the Holders or in the
Indenture, (b) any release of any Guaranteeing Subsidiary from its obligations
hereunder resulting from any loss by it of its rights of subrogation hereunder
and (c) any other circumstances whatsoever that might otherwise constitute a
legal or equitable discharge, release or defense of a guarantor or surety or
that might otherwise limit recourse against such Guaranteeing Subsidiary.

                        (ii) Without prejudice to any of the rights or recourses
which the Trustee or the Holders may have against the Company, each Guaranteeing
Subsidiary hereby expressly waives (to the extent permitted by law) any right to
require the Trustee or the Holders to:

                                    (a)         enforce, assert, exercise,
                                                initiate or exhaust any rights,
                                                remedies or recourse against the
                                                Company, any Guarantor, any
                                                Guaranteeing Subsidiary or any
                                                other Person under the Indenture
                                                or otherwise;

                                    (b)         value, realize upon, or dispose
                                                of any security of the Company
                                                or any other Person held by the
                                                Trustee or the Holders;


6



                                    (c)         initiate or exhaust any other
                                                remedy which the Trustee or the
                                                Holders may have in law or
                                                equity; or

                                    (d)         mitigate the damages resulting
                                                from any default under the
                                                Indenture;

before requiring or becoming entitled to demand payment from such Guaranteeing
Subsidiary under this Guarantee.

            (f) The Guaranteeing Subsidiaries Remain Obligated in Event the
Company Is No Longer Obligated to Discharge Indenture Obligations. It is the
express intention of the Trustee and the Guaranteeing Subsidiaries that if for
any reason the Company has no legal existence, is or becomes under no legal
obligation to discharge the Indenture Obligations owing to the Trustee or the
Holders by the Company or if any of the Indenture Obligations owing by the
Company to the Trustee or the Holders becomes irrecoverable from the Company by
operation of law or for any reason whatsoever, this Guarantee and the covenants,
agreements and obligations of the Guaranteeing Subsidiaries contained in this
Section Two shall nevertheless be binding upon the Guaranteeing Subsidiaries, as
principal debtor, until such time as all such Indenture Obligations have been
paid in full to the Trustee and all Indenture Obligations owing to the Trustee
or the Holders by the Company have been discharged, or such earlier time as
Section 402 of the Indenture shall apply to the Securities and the Guarantors
and the Guaranteeing Subsidiaries shall be responsible for the payment thereof
to the Trustee or the Holders upon demand.

            (g) Fraudulent Conveyance, Contribution, Subrogation.

                        (i) Each Guaranteeing Subsidiary, and by its acceptance
of the Indenture each Holder, hereby confirms that it is the intention of all
such parties that the Guarantee by such Guaranteeing Subsidiary pursuant to its
Guarantee not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law. To effectuate the foregoing
intention, the Holders and such Guaranteeing Subsidiary hereby irrevocably agree
that the obligations of such Guaranteeing Subsidiary under its Guarantee shall
be limited to the maximum amount which, after giving effect to all other
contingent and fixed liabilities of such Guaranteeing Subsidiary, and after
giving effect to any collections from or payments made by or on behalf of any
other Guarantor or Guaranteeing Subsidiary in respect of the obligations of such
other Guarantor or Guaranteeing Subsidiary under its Guarantee or pursuant to
its contribution obligations hereunder and under the Indenture, will result in
the obligations of such Guaranteeing Subsidiary under its Guarantee not
constituting such fraudulent transfer or conveyance.

                        (ii) Each Guaranteeing Subsidiary that makes a payment
or distribution under its Guarantee shall be entitled to a contribution from
each other Guaranteeing Subsidiary, if any, in a pro rata amount based on the
net assets of each Guarantor and Guaranteeing Subsidiary, determined in
accordance with GAAP.

                        (iii) Each Guaranteeing Subsidiary hereby waives all
rights of subrogation or contribution, whether arising by contract or operation
of law (including, without limitation, any such right arising under federal
bankruptcy law) or otherwise by reason of any payment by it pursuant to the
provisions of this Section Two until payment in full of all Indenture
Obligations.


7



            (h) Guarantee Is in Addition to Other Security. This Guarantee shall
be in addition to and not in substitution for any other guarantees or other
security which the Trustee may now or hereafter hold in respect of the Indenture
Obligations owing to the Trustee or the Holders by the Company and (except as
may be required by law) the Trustee shall be under no obligation to marshal in
favor of each of the Guaranteeing Subsidiaries any other guarantees or other
security or any moneys or other assets which the Trustee may be entitled to
receive or upon which the Trustee or the Holders may have a claim.

            (i) Release of Security Interests. Without limiting the generality
of the foregoing and except as otherwise provided herein and in the Indenture,
each Guaranteeing Subsidiary hereby consents and agrees, to the fullest extent
permitted by applicable law, that the rights of the Trustee hereunder, and the
liability of the Guaranteeing Subsidiaries hereunder, shall not be affected by
any and all releases for any purpose of any collateral, if any, from the Liens
and security interests created by any collateral document and that this
Guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Indenture Obligations is rescinded or
must otherwise be returned by the Trustee upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had not
been made.

            (j) No Bar to Further Actions. Except as provided by law, no action
or proceeding brought or instituted under this Section 2, Article Thirteen of
the Indenture and this Guarantee and no recovery or judgment in pursuance
thereof shall be a bar or defense to any further action or proceeding which may
be brought under Section Two, Article Thirteen of the Indenture and this
Guarantee by reason of any further default or defaults under Section Two,
Article Thirteen of the Indenture and this Guarantee or in the payment of any of
the Indenture Obligations owing by the Company.

            (k) Failure to Exercise Rights Shall Not Operate as a Waiver, No
Suspension of Remedies.

                        (i) No failure to exercise and no delay in exercising,
on the part of the Trustee or the Holders, any right, power, privilege or remedy
under this Section 2, Article Thirteen of the Indenture and this Guarantee shall
operate as a waiver thereof, nor shall any single or partial exercise of any
rights, power, privilege or remedy preclude any other or further exercise
thereof, or the exercise of any other rights, powers, privileges or remedies.
The rights and remedies herein provided for are cumulative and not exclusive of
any rights or remedies provided in law or equity.

                        (ii) Nothing contained in this Section 2 shall limit the
right of the Trustee or the Holders to take any action to accelerate the
maturity of the Securities pursuant to Article Five of the Indenture or to
pursue any rights or remedies hereunder or under applicable law.

            (l) Trustee's Duties; Notice to Trustee.

                        (i) Any provision in this Section 2 or elsewhere in the
Indenture allowing the Trustee to request any information or to take any action
authorized by, or on behalf of any Guaranteeing Subsidiary, shall be permissive
and shall not be obligatory on the Trustee except as the Holders may direct in
accordance with the provisions of the Indenture or where the failure of


8



the Trustee to request any such information or to take any such action arises
from the Trustee's negligence, bad faith or willful misconduct.

                        (ii) The Trustee shall not be required to inquire into
the existence, powers or capacities of the Company, any Guarantor, any
Guaranteeing Subsidiary or the officers, directors or agents acting or
purporting to act on their respective behalf.

            (m) Successors and Assigns. All terms, agreements and conditions of
this Section 2 shall extend to and be binding upon each Guaranteeing Subsidiary
and its successors and permitted assigns and shall enure to the benefit of and
may be enforced by the Trustee and its successors and assigns, provided,
however, that the Guaranteeing Subsidiaries may not assign any of their rights
or obligations hereunder other than in accordance with Article Eight of the
Indenture.

            (n) Release of Guarantee.

                        (i) Concurrently with the payment in full of all of the
Indenture Obligations, the Guarantors shall be released from and relieved of
their obligations under this Section 2. Upon the delivery by the Company to the
Trustee of an Officers' Certificate and, if requested by the Trustee, an Opinion
of Counsel to the effect that the transaction giving rise to the release of this
Guarantee was made by the Company in accordance with the provisions of the
Indenture and the Securities, the Trustee shall execute any documents reasonably
required in order to evidence the release of the Guaranteeing Subsidiaries from
their obligations under this Guarantee. If any of the Indenture Obligations are
revived and reinstated after the termination of this Guarantee, then all of the
obligations of the Guaranteeing Subsidiaries under this Guarantee shall be
revived and reinstated as if this Guarantee had not been terminated until such
time as the Indenture Obligations are paid in full, and each Guaranteeing
Subsidiary shall enter into an amendment to this Guarantee, reasonably
satisfactory to the Trustee, evidencing such revival and reinstatement.

                        (ii) This Guarantee shall terminate with respect to each
Guaranteeing Subsidiary and shall be automatically and unconditionally released
and discharged as provided in Section 1013(c) of the Indenture.

            (o) Execution and Delivery of Guarantee. Each of the Guaranteeing
Subsidiaries agrees that their Guarantee hereunder shall remain in full force
and effect notwithstanding any failure to endorse on each Note a notation of
their Guarantee. Pursuant to Section 1315(b) of the Indenture, each Guaranteeing
Subsidiary agrees to be subject to the provisions (including the representations
and warranties) of the Indenture as of the date of this Supplemental Indenture
as if named as a Guarantor therein.

            Section 3. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF
NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

            Section 4. Counterparts. The parties may sign any number of copies
of this Supplemental Indenture. Each signed copy shall be an original, but all
of them together represent the same agreement.


9



            Section 5. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.

            Section 6. The Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiaries and the
Company.

            IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the 19th day of November,
2001.

                               THE COMPANY:
                               ------------

                               SONIC AUTOMOTIVE, INC.

                               By: /s/ Theodore M. Wright
                                   ---------------------------------------------
                               Name:  Theodore M. Wright
                               Title: Vice President

                               Attest: /s/ Stephen K. Coss
                                       -----------------------------------------
                               Name:  Stephen K. Coss
                               Title: Secretary

                               GUARANTEEING SUBSIDIARIES:
                               --------------------------

                               SONIC RESOURCES, INC.
                               SONIC - HARBOR CITY H, INC.
                               SONIC - WEST COVINA T, INC.
                               SONIC - BUENA PARK H, INC.
                               SONIC - WEST RENO CHEVROLET, INC.
                               SONIC - BETHANY H, INC.

                               By:  /s/ Theodore M. Wright
                                   ---------------------------------------------
                               Name:  Theodore M. Wright
                               Title: Vice President

                               Attest: /s/ Stephen K. Coss
                                       -----------------------------------------
                               Name:  Stephen K. Coss
                               Title: Secretary



                               [signatures continued on following page]


10



                     SONIC - HOUSTON V, L.P.

                     Sonic of Texas, Inc., general partner

                     By: /s/ Theodore M. Wright
                         -------------------------------------------------------
                     Name:  Theodore M. Wright
                     Title: Vice President

                     Attest: /s/ Stephen K. Coss
                             ---------------------------------------------------
                     Name:  Stephen K. Coss
                     Title: Secretary

                     LAWRENCE MARSHALL CHEVROLET, L.P.

                     Lawrence Marshall Chevrolet, LLC, general partner

                     By: /s/ Theodore M. Wright
                         -------------------------------------------------------
                     Name:   Theodore M. Wright
                     Titlte: Vice President and Manager

                     Attest: /s/ Stephen K. Coss
                             --------------------------------------------------
                     Name:   Stephen K. Coss
                     Title:  Secretary

                     LAWRENCE MARSHALL CHEVROLET, LLC

                     By: /s/ Theodore M. Wright
                         -------------------------------------------------------
                     Name:   Theodore M. Wright
                     Title:  Vice President and Manager

                     Attest: /s/ Stephen K. Coss
                             ---------------------------------------------------
                     Name:   Stephen K. Coss
                     Title:  Secretary



                    [signatures continued on following page]


11



                  GUARANTORS:
                  -----------

                  AUTOBAHN, 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 CAPITOL N, INC.
                  FAA CONCORD H, INC.
                  FAA CONCORD N, INC.
                  FAA CONCORD T, 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 POWAY T, INC.
                  FAA SAN BRUNO, INC.
                  FAA SANTA MONICA V, INC.
                  FAA SERRAMONTE H, INC.
                  FAA SERRAMONTE L, INC.
                  FAA SERRAMONTE, INC.
                  FAA STEVENS CREEK, INC.
                  FAA TORRANCE CPJ, INC.
                  FORT MILL CHRYSLER-PLYMOUTH-DODGE INC.
                  FORT MILL FORD, INC.
                  FRANCISCAN MOTORS, INC.
                  FRONTIER OLDSMOBILE-CADILLAC, INC.
                  HMC FINANCE ALABAMA, INC.
                  KRAMER MOTORS INCORPORATED
                  L DEALERSHIP GROUP, INC. (f/k/a Lucas Dealership Group, Inc.)
                  MARCUS DAVID CORPORATION


                  [signatures continued on following page]


12



             RIVERSIDE NISSAN, INC.
             ROYAL MOTOR COMPANY, INC.
             SANTA CLARA IMPORTED CARS, INC.
             SMART NISSAN, INC.
             SONIC - CAPITAL CHEVROLET, INC. (f/k/a Bill Swad Chevrolet, Inc.)
             SONIC - CLASSIC DODGE, INC.
             SONIC - COAST CADILLAC, INC. ( f/k/a FAA Woodland Hills VW, Inc.)
             SONIC - GLOVER, INC.
             SONIC - MANHATTAN FAIRFAX, INC.
             SONIC - MANHATTAN WALDORF, INC.
             SONIC - MONTGOMERY FLM, INC.
             SONIC - NEWSOME CHEVROLET WORLD, INC.
             SONIC - NEWSOME OF FLORENCE, INC.
             SONIC - NORTH CHARLESTON DODGE, INC.
             SONIC - NORTH CHARLESTON, INC.
             SONIC - RIVERSIDE AUTO FACTORY, INC.
             SONIC - RIVERSIDE, INC.
             SONIC - ROCKVILLE IMPORTS, INC.
             SONIC - ROCKVILLE MOTORS, INC.
             SONIC - STEVENS CREEK B, INC. (f/k/a Don Lucas International, Inc.)
             SONIC - WILLIAMS BUICK, INC.
             SONIC - WILLIAMS CADILLAC, INC.
             SONIC - WILLIAMS IMPORTS, 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.
             SONIC AUTOMOTIVE - 4000 WEST BROAD STREET,
                   COLUMBUS, INC.
             SONIC AUTOMOTIVE 2424 LAURENS RD., GREENVILLE,
                   INC.
             SONIC AUTOMOTIVE 2752 LAURENS RD., GREENVILLE,
                   INC.
             SONIC AUTOMOTIVE OF GEORGIA, INC.
             SONIC OF TEXAS, INC.
             SPEEDWAY CHEVROLET, INC.
             STEVENS CREEK CADILLAC, INC.
             TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF
                   ROCK HILL, INC.


             [signatures continued on following page]


13



                       TOWN AND COUNTRY FORD, INCORPORATED
                       TRANSCAR LEASING, INC.
                       VILLAGE IMPORTED CARS, INC.
                       WINDWARD, INC.

                       By: /s/ Theodore M. Wright
                           -----------------------------------------------------
                       Name:  Theodore M. Wright
                       Title: Vice President

                       Attest: /s/ Stephen K. Coss
                               -------------------------------------------------
                       Name:  Stephen K. Coss
                       Title: Secretary

                       FAA LAS VEGAS H, INC.
                       FIRSTAMERICA AUTOMOTIVE, INC.
                       FREEDOM FORD, INC.
                       SONIC AUTOMOTIVE - BONDESEN, INC.
                       SONIC AUTOMOTIVE - CLEARWATER, INC.
                       SONIC AUTOMOTIVE COLLISION CENTER OF
                             CLEARWATER, INC.
                       SONIC AUTOMOTIVE OF NEVADA, INC.
                       SONIC AUTOMOTIVE OF TENNESSEE, 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 - 3741 S. NOVA RD., PO, INC.
                       SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC.
                       SONIC - FM , INC.
                       SONIC - FM NISSAN, INC.
                       SONIC - FM VW, INC.
                       SONIC - FREELAND, INC.
                       SONIC - LLOYD NISSAN, INC.
                       SONIC - LLOYD PONTIAC-CADILLAC, INC.
                       SONIC - SHOTTENKIRK, INC.

                       By: /s/ Theodore M. Wright
                           -----------------------------------------------------
                       Name:  Theodore M. Wright
                       Title: Vice President

                       Attest: /s/ Stephen K. Coss
                               -------------------------------------------------
                       Name:  Stephen K. Coss
                       Title: Secretary



                    [signatures continued on following page]


14



                             SONIC - 2185 CHAPMAN RD., CHATTANOOGA, LLC
                             SONIC - SUPERIOR OLDSMOBILE, LLC
                             SONIC AUTOMOTIVE - 2490 SOUTH LEE HIGHWAY, LLC
                             SONIC AUTOMOTIVE - 5260 PEACHTREE INDUSTRIAL
                                   BLVD., LLC
                             SONIC AUTOMOTIVE - 5585 PEACHTREE INDUSTRIAL
                                   BLVD., LLC
                             SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE, LLC
                             SONIC AUTOMOTIVE OF CHATTANOOGA, LLC
                             SONIC AUTOMOTIVE OF NASHVILLE, LLC
                             SRE TENNESSEE - 1, LLC
                             SRE TENNESSEE - 2, LLC
                             SRE TENNESSEE - 3, LLC
                             TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC
                             TOWN AND COUNTRY DODGE OF CHATTANOOGA, LLC
                             TOWN AND COUNTRY FORD OF CLEVELAND, LLC
                             TOWN AND COUNTRY JAGUAR, LLC

                             By: /s/ Theodore M. Wright
                                 -----------------------------------------------
                             Name:  Theodore M. Wright
                             Title: Vice President and Governor

                             Attest: /s/ Stephen K. Coss
                                     -------------------------------------------
                             Name:  Stephen K. Coss
                             Title: Secretary

                             SONIC AUTOMOTIVE - 1720 MASON AVE., DB, LLC
                             SONIC - FM AUTOMOTIVE, LLC

                             By: /s/ Theodore M. Wright
                                 -----------------------------------------------
                             Name:  Theodore M. Wright
                             Title: President and Manager

                             Attest: /s/ Stephen K. Coss
                                     -------------------------------------------
                             Name:  Stephen K. Coss
                             Title: Secretary



                    [signatures continued on following page]


15



               SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE , NC, LLC
               SONIC CHRYSLER-PLYMOUTH-JEEP, LLC
               SONIC DODGE, LLC
               SONIC - WILLIAMS MOTORS, LLC

               By: /s/ Theodore M. Wright
                   -------------------------------------------------------------
               Name:  Theodore M. Wright
               Title: Vice President and Manager

               Attest: /s/ Stephen K. Coss
                       ---------------------------------------------------------
               Name:  Stephen K. Coss
               Title: Secretary

               SONIC DEVELOPMENT, LLC (f/k/a Sonic - Fitzgerald Chevrolet, LLC)
               SONIC - INTEGRITY DODGE LV, LLC
               SONIC - LAS VEGAS C EAST, LLC
               SONIC - LAS VEGAS C WEST, LLC
               SONIC - VOLVO LV, LLC
               SONIC AUTOMOTIVE F&I, LLC
               SONIC AUTOMOTIVE SERVICING COMPANY, LLC
               SONIC AUTOMOTIVE WEST, LLC
               SRE ALABAMA - 2, LLC
               SRE ALABAMA -3, LLC
               SRE FLORIDA - 1, LLC
               SRE FLORIDA - 2, LLC
               SRE FLORIDA - 3, LLC
               SRE HOLDING, LLC
               SRE NEVADA - 1, LLC
               SRE NEVADA - 2, LLC
               SRE NEVADA - 3, LLC
               SRE SOUTH CAROLINA - 2, LLC
               SRE VIRGINIA - 1, LLC
               SREALESTATE ARIZONA - 2, LLC
               SREALESTATE ARIZONA - 3, LLC
               SREALESTATE ARIZONA - 4, LLC
               SREALESTATE ARIZONA -1, LLC

               By: /s/ Theodore M. Wright
                   -------------------------------------------------------------
               Name:  Theodore M. Wright
               Title: Vice President and Manager

               Attest: /s/ Stephen K. Coss
                       ---------------------------------------------------------
               Name:  Stephen K. Coss
               Title: Secretary


               [signatures continued on following page]


16



            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.

            Sonic Automotive of Georgia, Inc., their general partner

            By: /s/ Theodore M. Wright
                ----------------------------------------------------------------
            Name:  Theodore M. Wright
            Title: Vice President

            Attest: /s/ Stephen K. Coss
                    ------------------------------------------------------------
            Name:  Stephen K. Coss
            Title: Secretary

            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 - CAMP FORD, L.P.
            SONIC - CARROLLTON V, L.P.
            SONIC - LUTE RILEY, L.P.
            SONIC - READING, L.P.
            SONIC - RICHARDSON F, L.P.
            SONIC - SAM WHITE NISSAN, L.P.
            SONIC - FORT WORTH T, L.P.
            SONIC - PARK PLACE A, L.P. (f/k/a Sonic - Dallas Auto Factory, L.P.)
            SRE TEXAS - 1, L.P.
            SRE TEXAS - 2, L.P.
            SRE TEXAS - 3, L.P.

            Sonic of Texas, Inc., their general partner

            By: /s/ Theodore M. Wright
                ----------------------------------------------------------------
            Name:  Theodore M. Wright
            Title: Vice President

            Attest: /s/ Stephen K. Coss
                    ------------------------------------------------------------
            Name:  Stephen K. Coss
            Title: Secretary


            [signatures continued on following page]


17



                                        TRUSTEE:
                                        --------

                                        U.S. BANK TRUST NATIONAL ASSOCIATION,
                                                    as Trustee.

                                        By: /s/ Lori-Anne Rosenberg `
                                            ------------------------------------
                                        Authorized Signatory

18

EX-4.9

                                                                     Exhibit 4.9

                  THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
                  SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
                  PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
                  TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
                  THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
                  EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AS SET FORTH
                  BELOW.

                  BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
                  IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
                  144A UNDER THE SECURITIES ACT ("RULE 144A")) OR (B) IT IS NOT
                  A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
                  TRANSACTION, (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
                  SUCH SECURITY PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
                  LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
                  WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
                  OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)
                  ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
                  STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
                  SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
                  FOR RESALE PURSUANT TO RULE 144A INSIDE THE UNITED STATES, TO
                  A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
                  BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN
                  ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
                  TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
                  RELIANCE ON RULE 144A, (D) OUTSIDE THE UNITED STATES PURSUANT
                  TO OFFERS AND SALES TO NON-U.S. PERSONS IN AN OFFSHORE
                  TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE
                  SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
                  FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
                  SUBJECT TO THE COMPANY'S AND




                  THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
                  (I) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF
                  AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
                  SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE
                  FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
                  THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
                  COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. AS
                  USED HEREIN, THE TERMS "UNITED STATES," "OFFSHORE
                  TRANSACTION," AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS
                  GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

                  [Legend if Security is a Global Security]

                  THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
                  INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
                  NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
                  SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
                  BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
                  OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
                  NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
                  SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
                  RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE
                  INDENTURE.

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
                  REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
                  CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
                  REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
                  CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
                  IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
                  REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
                  OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
                  REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE






                  HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
                  INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
                  INTEREST HEREIN.

                  THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER
                  AND TO THE EXTENT SET FORTH IN ARTICLE FOURTEEN OF THE
                  INDENTURE TO THE OBLIGATIONS (INCLUDING INTEREST) OWED BY THE
                  COMPANY AND CERTAIN OF ITS SUBSIDIARIES TO ALL SENIOR
                  INDEBTEDNESS; AND EACH HOLDER HEREOF BY ITS ACCEPTANCE HEREOF,
                  SHALL BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AS SET
                  FORTH IN SAID ARTICLE FOURTEEN OF THE INDENTURE."






                             SONIC AUTOMOTIVE, INC.

                                _________________

                 11% SENIOR SUBORDINATED NOTE DUE 2008, SERIES C

                                                             CUSIP NO. 83545GAC6

No. 1                                                        $75,000,000



         Sonic Automotive, Inc., a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
___________ or registered assigns, the principal sum of $75,000,000 United
States dollars, or such other principal amount (which, when taken together with
the principal amounts of all other Outstanding Securities, shall not exceed
$75,000,000 less the principal amount of Securities redeemed by the Company in
accordance with the Indenture) as may be set forth on the Security Register on
Appendix A hereto in accordance with the Indenture, on August 1, 2008, at the
office or agency of the Company referred to below, and to pay interest thereon
from November 19, 2001, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semiannually on February 1and
August 1 in each year, commencing February 1, 2002 at the rate of 11% per annum,
subject to adjustments as described in the second following paragraph, in United
States dollars, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year comprised of twelve
30-day months.

         The Holder of this Series C Security is entitled to the benefits of the
Registration Rights Agreement among the Company, the Guarantors and the Initial
Purchasers, dated November 19, 2001, pursuant to which, subject to the terms and
conditions thereof, the Company and the Guarantors are obligated to consummate
the Exchange Offer pursuant to which the Holder of this Security (and related
Guarantees) shall have the right to exchange this Security (and related
Guarantees) for 11% Senior Subordinated Notes due 2008, Series D and related
Guarantees (herein called the "Series D Securities") in like principal amount as
provided therein. The Series C Securities and the Series D Securities are
together (including related Guarantees) referred to as the "Securities." The
Series C Securities rank pari passu in right of payment with the Series D
Securities. Pursuant to the Registration Rights Agreement, the holders of the
Company's $125,000,000 11% Senior Subordinated Notes due 2008, Series B (the
"Series B Notes") will also be offered the opportunity to exchange their Series
B Notes for Series D Securities.

         In the event that (a) the Exchange Offer Registration Statement is not
filed with the Commission on or prior to the 60th calendar day following the
date of original




issue of the Series C Securities, (b) the Exchange Offer Registration Statement
has not been declared effective on or prior to the 135th calendar day following
the date of original issue of the Series C Securities, (c) the Exchange Offer is
not consummated or a Shelf Registration Statement is not declared effective, in
either case, on or prior to the 165th calendar day following the date of
original issue of the Series C Securities or (d) the Shelf Registration
Statement is declared effective but shall thereafter become unusable for more
than 30 days in the aggregate (each such event referred to in clauses (a)
through (d) above, a "Registration Default"), the interest rate borne by the
Series C Securities shall be increased by one-quarter of one percent per annum
upon the occurrence of each Registration Default, which rate (as increased
aforesaid) will increase by an additional one quarter of one percent each 90-day
period that such additional interest continues to accrue under any such
circumstance, with an aggregate maximum increase in the interest rate equal to
one percent (1%) per annum. The Shelf Registration Statement will be required to
remain effective until the second anniversary of the Series C Securities.
Following the cure of all Registration Defaults, the accrual of additional
interest will cease and the interest rate will revert to the original rate.

         The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or any Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the January 15 or July 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Any such interest not so
punctually paid, or duly provided for, and interest on such defaulted interest
at the interest rate borne by the Series C Securities, to the extent lawful,
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may either be paid to the Person in whose name this Security (or any
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by this Indenture not inconsistent with the requirements of such exchange, all
as more fully provided in this Indenture.

         Payment of the principal of, premium, if any, and interest on, this
Security, and exchange or transfer of the Security, will be made at the office
or agency of the Company in The City of New York maintained for that purpose
(which initially will be a corporate trust office of the Trustee located at 100
Wall Street, 20th Floor, New York, New York, 10005), or at such other office or
agency as may be maintained for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the



address of the Person entitled thereto as such address shall appear on the
Security Register.

               Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

               This Security is entitled to the benefits of the Guarantees by
the Guarantors of the punctual payment when due and performance of the Indenture
Obligations made in favor of the Trustee for the benefit of the Holders.
Reference is made to Article Thirteen of the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations under the
Guarantees of the Guarantors.

               Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.

               IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual or facsimile signature of its authorized officers.

                                          Sonic Automotive, Inc.


                                          By: __________________________________
                                          Name:
                                          Title:

Attest:
_________________________________________
Name:
Title:






                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

               This is one of the 11% Senior Subordinated Notes due 2008, Series
C referred to in the within-mentioned Indenture.


                                   U.S Bank Trust National Association,
                                      as Trustee



                                   By: _________________________________
                                       Authorized Signer

Dated:




                       OPTION OF HOLDER TO ELECT PURCHASE

               If you wish to have this Security purchased by the Company
pursuant to Section 1012 or Section 1014, as applicable, of the Indenture, check
the Box: [ ].

               If you wish to have a portion of this Security purchased by the
Company pursuant to Section 1012 or Section 1014 as applicable, of the
Indenture, state the amount (in original principal amount):




                                $_______________



Date:   _________________________   Your Signature:   __________________________

(Sign exactly as your name appears on the other side of this Security)


Signature Guarantee: __________________________________________________





[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]

               (b) The form of the face of any Series D Securities authenticated
and delivered hereunder shall be substantially as follows:

               [Legend if Security is a Global Security]

               THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
               INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
               OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR
               DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
               TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR
               TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS
               OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
               MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS
               306 AND 307 OF THE INDENTURE.

               UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
               REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK
               CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION
               OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH CERTIFICATE ISSUED
               IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
               IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
               PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
               REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
               PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
               PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
               & CO., HAS AN INTEREST HEREIN.

               THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER
               AND TO THE EXTENT SET FORTH IN ARTICLE FOURTEEN OF THE INDENTURE
               TO THE OBLIGATIONS (INCLUDING





               INTEREST) OWED BY THE COMPANY AND CERTAIN OF ITS SUBSIDIARIES TO
               ALL SENIOR INDEBTEDNESS; AND EACH HOLDER HEREOF BY ITS ACCEPTANCE
               HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AS
               SET FORTH IN SAID ARTICLE FOURTEEN OF THE INDENTURE."






                             Sonic Automotive, Inc.

                               ------------------

                 11% SENIOR SUBORDINATED NOTE DUE 2008, SERIES D

                                                            CUSIP NO.

No. __________                                              $____________



               Sonic Automotive, Inc., a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to or
registered assigns, the principal sum of United States dollars on August 1,
2008, at the office or agency of the Company referred to below, and to pay
interest thereon from November 19, 2001, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semiannually
on February 1 and August 1 in each year, commencing August 1, 2002 at the rate
of 11% per annum, in United States dollars, until the principal hereof is paid
or duly provided for; provided that to the extent interest has not been paid or
duly provided for with respect to the Series C Security or the 11% Senior
Subordinated Notes due 2008, Series B and related Guarantees (herein called the
"Series B Securities") exchanged for this Series D Security, interest on this
Series D Security shall accrue from the most recent Interest Payment Date to
which interest on the Series C Security or Series B Security which was exchanged
for this Series D Security has been paid or duly provided for, or if no interest
has been paid on the Series C Security, it shall accrue interest from November
19, 2001 with respect to Series C Securities exchanged for Series D Securities.
Interest shall be computed on the basis of a 360-day year comprised of twelve
30-day months.

               This Series D Security was issued pursuant to the Exchange Offer
pursuant to which the 11% Senior Subordinated Notes due 2008, Series C and
related Guarantees (herein called the "Series C Securities") and the Series B
Securities in like principal amount were exchanged for the Series D Securities
and related Guarantees. The Series D Securities rank pari passu in right of
payment with the Series C Securities and the Series B Securities.

               In addition, for any period in which a Series C Security
exchanged for this Series D Security was outstanding, in the event that (a) the
Exchange Offer Registration Statement is not filed with the Commission on or
prior to the 60th calendar day following the date of original issue of the
Series C Security, (b) the Exchange Offer Registration Statement has not been
declared effective on or prior to the 135th calendar day following the date
after the original issue of the Series C Security, (c) the Exchange Offer is not
consummated or a Shelf Registration Statement is not declared effective, in
either case,





on or prior to the 135th calendar day following the date of original issue of
the Series C Security or (d) the Shelf Registration Statement is declared
effective but shall thereafter become unusable for more than 30 days in the
aggregate (each such event referred to in clauses (a) through (d) above, a
"Registration Default"), the interest rate borne by the Series C Securities
shall be increased by one-quarter of one percent per annum upon the occurrence
of each Registration Default, which rate (as increased as aforesaid) will
increase by an additional one quarter of one percent each 90-day period that
such additional interest continues to accrue under any such circumstance, with
an aggregate maximum increase in the interest rate equal to one percent (1%) per
annum. The Shelf Registration Statement will be required to remain effective
until the second anniversary of the issuance of the Series C Securities.
Following the cure of all Registration Defaults the accrual of additional
interest will cease and the interest rate will revert to the original rate;
provided that, to the extent interest at such increased interest rate has been
paid or duly provided for with respect to the Series C Security, interest at
such increased interest rate, if any, on this Series D Security shall accrue
from the most recent Interest Payment Date to which such interest on the Series
C Security has been paid or duly provided for; provided, however, that, if after
any such reduction in interest rate, a different event specified in clause (a),
(b), (c) or (d) above occurs, the interest rate shall again be increased
pursuant to the foregoing provisions.

               The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security (or any Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the January 15 or July 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid, or duly provided for, and interest on such
defaulted interest at the interest rate borne by the Series D Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may either be paid to the Person in whose name this Security
(or any Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in this Indenture.

               Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of the Security, will be made at the
office or agency of the Company in The City of New York maintained for such
purpose (which initially will be a corporate trust office of the Trustee located
at 100 Wall Street, 20th Floor, New York, New York, 10005, or at such other
office or agency as may be maintained for such purpose, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that




payment of interest may be made at the option of the Company by check mailed to
the address of the Person entitled thereto as such address shall appear on the
Security Register.

               Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

               This Security is entitled to the benefits of the Guarantees by
the Guarantors of the punctual payment when due and performance of the Indenture
Obligations made in favor of the Trustee for the benefit of the Holders.
Reference is made to Article Thirteen of the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations under the
Guarantees of the Guarantors.

               Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.

               IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual or facsimile signature of its authorized officers.

                                   Sonic Automotive, Inc.


                                   By: _________________________________________
                                   Title:_______________________________________


Attest:


___________________________________
          Authorized Officer





                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

                  This is one of the 11% Senior Subordinated Notes due 2008,
Series D referred to in the within-mentioned Indenture.

                              U.S. Bank Trust National Association,
                                 as Trustee



                              By:  _________________________________________
                                   Authorized Signer

Dated:



                       OPTION OF HOLDER TO ELECT PURCHASE

               If you wish to have this Security purchased by the Company
pursuant to Section 1012 or Section 1014, as applicable, of the Indenture, check
the Box: [   ].





               If you wish to have a portion of this Security purchased by the
Company pursuant to Section 1012 or Section 1014 as applicable, of the
Indenture, state the amount (in original principal amount):




                                $ ______________



Date:  _____________________________   Your Signature:    ______________________

(Sign exactly as your name appears on the other side of this Security)




Signature Guarantee: _______________________________________


[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
Section 203.  Form of Reverse of Securities.
              -----------------------------

               (a)  The form of the reverse of the Series C Securities shall be
substantially as follows:



                             Sonic Automotive, Inc.
                 11% Senior Subordinated Note due 2008, Series C

               This Security is one of a duly authorized issue of Securities of
the Company designated as its 11% Senior Subordinated Notes due 2008, Series C
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $75,000,000,
issued under and subject to the terms of an indenture (herein called the
"Indenture") dated as of November 19, 2001, among the Company, the Guarantors
and U.S. Bank Trust National Association, as trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Guarantors, the
Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.





               The Securities are subject to redemption at any time on or after
August 1, 2003, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice, in amounts of $1,000 or an integral
multiple thereof, at the following redemption prices (expressed as percentages
of the principal amount), if redeemed during the 12-month period beginning
August 1 of the years indicated below:

                                                    Redemption
                          Year                         Price
                          ----                     ------------
                          2003....................   105.50%
                          2004....................   103.667%
                          2005....................   101.833%

and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant record dates to receive interest due on
an Interest Payment Date).

               If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities or portions thereof to be redeemed pro rata,
by lot or by any other method the Trustee shall deem fair and reasonable.

               Upon the occurrence of a Change of Control, each Holder may
require the Company to purchase such Holder's Securities in whole or in part in
integral multiples of $1,000, at a purchase price in cash in an amount equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase, pursuant to a Change of Control Offer in accordance
with the procedures set forth in the Indenture.

               Under certain circumstances, in the event the Net Cash Proceeds
received by the Company from any Asset Sale, which proceeds are not used to
repay permanently any Senior Indebtedness or Senior Guarantor Indebtedness or
invested in Replacement Assets or exceeds a specified amount the Company will be
required to apply such proceeds to the repayment of the Securities and certain
Indebtedness ranking pari passu in right of payment to the Securities.

               In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.

               In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.





               If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.

               The Indenture contains provisions for defeasance at any time of
(a) the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance with certain conditions set forth therein.

               The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders and certain amendments
which require the consent of all the Holders) as therein provided, the amendment
thereof and the modification of the rights and obligations of the Company and
the Guarantors and the rights of the Holders under the Indenture and the
Securities and the Guarantees at any time by the Company and the Trustee with
the consent of the Holders of at least a majority in aggregate principal amount
of the Securities at the time Outstanding. The Indenture also contains
provisions permitting the Holders of at least a majority in aggregate principal
amount of the Securities (100% of the Holders in certain circumstances) at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company and the Guarantors with certain provisions of the
Indenture and the Securities and the Guarantees and certain past Defaults under
the Indenture and the Securities and the Guarantees and their consequences. Any
such consent or waiver by or on behalf of the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Security.

               No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event such
Guarantor or such other obligor is obligated to make payments in respect of the
Securities), which is absolute and unconditional, to pay the principal of,
premium, if any, and interest on, this Security at the times, place, and rate,
and in the coin or currency, herein prescribed.

               As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or its attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.




               Certificated Securities shall be transferred to all beneficial
holders in exchange for their beneficial interests in the Rule 144A Global
Securities or the Regulation S Global Securities, if any, if (x) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such Global Security and a successor Depositary is not appointed by the
Company within 90 days or (y) there shall have occurred and be continuing an
Event of Default and the Security Registrar has received a request from the
Depositary. Upon any such issuance, the Trustee is required to register such
certificated Securities in the name of, and cause the same to be delivered to,
such Person or Persons (or the nominee of any thereof). All such certificated
Securities would be required to include the Private Placement Legend.

               Securities in certificated form are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, the Securities are exchangeable for a like aggregate principal amount
of Securities of a differing authorized denomination, as requested by the Holder
surrendering the same.

               At any time when the Company is not subject to Sections 13 or
15(d) of the Exchange Act, upon the written request of a Holder of a Series C
Security, the Company will promptly furnish or cause to be furnished such
information as is specified pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto) to such Holder or to a prospective
purchaser of such Security who such Holder informs the Company is reasonably
believed to be a "Qualified Institutional Buyer" within the meaning of Rule 144A
under the Securities Act, as the case may be, in order to permit compliance by
such Holder with Rule 144A under the Securities Act.

               No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

               Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary.

               THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.

               All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.






               [The Transferee Certificate, in the form of Appendix I hereto,
will be attached to the Series C Security.]

               (b) The form of the reverse of the Series D Securities shall be
substantially as follows:




                             Sonic Automotive, Inc.
                 11% Senior Subordinated Note due 2008, Series D

               This Security is one of a duly authorized issue of Securities of
the Company designated as its 11% Senior Subordinated Notes due 2008, Series D
(herein called the "Securities") limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $200,000,000 (less
the principal amount of Series B Securities outstanding), issued under and
subject to the terms of an indenture (herein called the "Indenture") dated as of
November 19, 2001 among the Company, the Guarantors and U.S. Bank Trust National
Association, as trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties, obligations and immunities thereunder of
the Company, the Guarantors, the Trustee and the Holders of the Securities, and
of the terms upon which the Securities are, and are to be, authenticated and
delivered.




               The Series D Securities are subject to redemption at any time on
or after August 1, 2003, at the option of the Company, in whole or in part, on
not less than 30 nor more than 60 days' prior notice, in amounts of $1,000 or an
integral multiple thereof, at the following redemption prices (expressed as
percentages of the principal amount), if redeemed during the 12-month period
beginning August 1 of the years indicated below:

                                                        Redemption
                       Year                                Price
                       ----                             -----------
                       2003...........................   105.50%
                       2004...........................   103.667%
                       2005...........................   101.833%

and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant record dates to receive interest due on
an Interest Payment Date).


               If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities or portions thereof to be redeemed pro rata,
by lot or by any other method the Trustee shall deem fair and reasonable.

               Upon the occurrence of a Change of Control, each Holder may
require the Company to purchase such Holder's Securities in whole or in part in
integral multiples of $1,000, at a purchase price in cash in an amount equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase, pursuant to Change of Control Offer and in accordance
with the procedures set forth in the Indenture.

               Under certain circumstances, in the event the Net Cash Proceeds
received by the Company from any Asset Sale, which proceeds are not used to
repay permanently any Senior Indebtedness or Senior Guarantor Indebtedness or
invested in Replacement Assets or exceeds a specified amount, the Company will
be required to apply such proceeds to the repayment of the Securities and
certain Indebtedness ranking pari passu in right of payment to the Securities.

               In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.

               In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.




               If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.

               The Indenture contains provisions for defeasance at any time of
(a) the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance with certain conditions set forth therein.

               The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders and certain amendments
which required the consent of all of the Holders) as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders under the Indenture and
the Securities and the Guarantees at any time by the Company and the Trustee
with the consent of the Holders of at least a majority in aggregate principal
amount of the Securities at the time Outstanding. The Indenture also contains
provisions permitting the Holders of at least a majority in aggregate principal
amount of the Securities (100% of the Holders in certain circumstances) at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company and the Guarantors with certain provisions of the
Indenture and the Securities and the Guarantees and certain past Defaults under
the Indenture and the Securities and the Guarantees and their consequences. Any
such consent or waiver by or on behalf of the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Security.

               No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event such
Guarantor or such other obligor is obligated to make payments in respect of the
Securities), which is absolute and unconditional, to pay the principal of, and
premium, if any, and interest on, this Security at the times, place, and rate,
and in the coin or currency, herein prescribed.

               As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or its attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.




                  Certificated Securities shall be transferred to all beneficial
holders in exchange for their beneficial interests in the Rule 144A Global
Securities or the Regulation S Global Securities if (x) the Depositary notifies
the Company that it is unwilling or unable to continue as Depositary for such
Global Security and a successor Depositary is not appointed by the Company
within 90 days or (y) there shall have occurred and be continuing an Event of
Default and the Security Registrar has received a request from the Depositary.
Upon any such issuance, the Trustee is required to register such certificated
Securities in the name of, and cause the same to be delivered to, such Person or
Persons (or the nominee of any thereof).

                  Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a differing authorized denomination,
as requested by the Holder surrendering the same.

                  No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

                  Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary.

                  THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.

                  All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.

                  [The Transferee Certificate, in the form of Appendix II
hereto, will be attached to the Series D Security.]
Section 204.      Form of Guarantee.
                  -----------------

                  The form of Guarantee shall be set forth on the Securities
substantially as follows:



                                    GUARANTEE

         For value received, each of the undersigned hereby absolutely, fully
and unconditionally and irrevocably guarantees, jointly and severally with each
other Guarantor, to the holder of this Security the payment of principal of,
premium, if any, and interest on this Security upon which these Guarantees are
endorsed in the amounts and at the time when due and payable whether by
declaration thereof, or otherwise, and interest on the overdue principal and
interest, if any, of this Security, if lawful, and the payment or performance of
all other obligations of the Company under the Indenture or the Securities, to
the holder of this Security and the Trustee, all in accordance with and subject
to the terms and limitations of this Security and Article Thirteen of the
Indenture. This Guarantee will not become effective until the Trustee duly
executes the certificate of authentication on this Security. These Guarantees
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to conflict of law principles thereof.

Dated:

         AUTOBAHN, INC. (a California corporation)
         CAPITOL CHEVROLET AND IMPORTS, INC. (an Alabama corporation)
         COBB PONTIAC CADILLAC, INC. (an Alabama corporation)
         FA SERVICE CORPORATION (a California corporation)
         FAA AUTO FACTORY, INC. (a California corporation)
         FAA BEVERLY HILLS, INC. (a California corporation)
         FAA CAPITOL F, INC. (a California corporation)
         FAA CAPITOL N, INC. (a California corporation)
         FAA CONCORD H, INC. (a California corporation)
         FAA CONCORD N, INC. (a California corporation)
         FAA CONCORD T, INC. (a California corporation)
         FAA DUBLIN N, INC. (a California corporation)
         FAA DUBLIN VWD, INC. (a California corporation)
         FAA HOLDING CORP. (a California corporation)
         FAA LAS VEGAS H, INC. (a Nevada corporation)
         FAA MARIN D, INC. (a California corporation)
         FAA MARIN F, INC. (a California corporation)
         FAA MARIN LR, INC. (a California corporation)
         FAA POWAY D, INC. (a California corporation)
         FAA POWAY G, INC. (a California corporation)
         FAA POWAY H, INC. (a California corporation)
         FAA POWAY T, INC. (a California corporation)
         FAA SAN BRUNO, INC. (a California corporation)
         FAA SANTA MONICA V, INC. (a California corporation)
         FAA SERRAMONTE H, INC. (a California corporation)
         FAA SERRAMONTE L, INC. (a California corporation)
         FAA SERRAMONTE, INC. (a California corporation)
         FAA STEVENS CREEK, INC. (a California corporation)
         FAA TORRANCE CPJ, INC. (a California corporation)
         FIRSTAMERICA AUTOMOTIVE, INC. (a Delaware corporation)
         FORT MILL CHRYSLER-PLYMOUTH-DODGE INC. (a South Carolina corporation)
         FORT MILL FORD, INC. (a South Carolina corporation)
         FRANCISCAN MOTORS, INC. (a California corporation)
         FREEDOM FORD, INC. (a Florida corporation)
         FRONTIER OLDSMOBILE-CADILLAC, INC. (a North Carolina corporation)
         HMC FINANCE ALABAMA, INC. (an Alabama corporation)
         KRAMER MOTORS INCORPORATED (a California corporation)



        LAWRENCE MARSHALL CHEVROLET, LLC (a Delaware limited liability company)
        LAWRENCE MARSHALL CHEVROLET, L.P. (a Texas limited partnership)
        L DEALERSHIP GROUP, INC. (a Texas corporation)
        MARCUS DAVID CORPORATION (a North Carolina corporation)
        PHILPOTT MOTORS, LTD. (a Texas limited partnership)
        RIVERSIDE NISSAN, INC. (an  Oklahoma corporation)
        ROYAL MOTOR COMPANY, INC. (an Alabama corporation)
        SANTA CLARA IMPORTED CARS, INC. (a California corporation)
        SMART NISSAN, INC. (a California corporation)
        SONIC AUTOMOTIVE - BONDESEN, INC. (a Florida corporation)
        SONIC AUTOMOTIVE OF CHATTANOOGA, LLC (a Tennessee limited liability
            company)
        SONIC AUTOMOTIVE-CLEARWATER, INC. (a Florida corporation)
        SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER, INC. (a Florida
            corporation)
        SONIC AUTOMOTIVE F&I, LLC (a Nevada limited liability company)
        SONIC AUTOMOTIVE OF GEORGIA, INC. (a Georgia corporation)
        SONIC AUTOMOTIVE OF NASHVILLE, LLC (a Tennessee limited liability
            company)
        SONIC AUTOMOTIVE OF NEVADA, INC. (a Nevada corporation)
        SONIC AUTOMOTIVE SERVICING COMPANY, LLC (a Nevada limited liability
            company)
        SONIC AUTOMOTIVE OF TENNESSEE, INC. (a Tennessee corporation)
        SONIC AUTOMOTIVE OF TEXAS, L.P. (a Texas limited partnership)
        SONIC AUTOMOTIVE WEST, LLC (a Nevada limited liability company)
        SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC. (a Florida corporation)
        SONIC AUTOMOTIVE-1400 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio
            corporation)
        SONIC AUTOMOTIVE-1455 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio
            corporation)
        SONIC AUTOMOTIVE-1495 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio
            corporation)
        SONIC AUTOMOTIVE-1500 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio
            corporation)
        SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC. (a Florida corporation)
        SONIC AUTOMOTIVE - 1720 MASON AVE., DB, LLC (a Florida limited
            liability company)
        SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC. (a Florida corporation)
        SONIC AUTOMOTIVE - 21699 U.S. HWY 19 N., INC. (a Florida corporation)
        SONIC AUTOMOTIVE - 241 RIDGEWOOD AVE., HH, INC. (a Florida corporation)
        SONIC AUTOMOTIVE 2424 LAURENS RD., GREENVILLE, INC. (a South Carolina
            corporation)
        SONIC AUTOMOTIVE - 2490 SOUTH LEE HIGHWAY, LLC (a Tennessee limited
            liability company),
        SONIC AUTOMOTIVE 2752 LAURENS RD., GREENVILLE, INC. (a South Carolina
            corporation)
        SONIC AUTOMOTIVE - 3401 N. MAIN, TX, L.P. (a Texas limited partnership)
        SONIC AUTOMOTIVE-3700 WEST BROAD STREET, COLUMBUS, INC. (an Ohio
            corporation)
        SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC. (a Florida corporation)
        SONIC AUTOMOTIVE-4000 WEST BROAD STREET, COLUMBUS, INC. (an Ohio
            corporation)
        SONIC AUTOMOTIVE - 4701 I-10 EAST, TX, L.P. (a Texas limited
            partnership)
        SONIC AUTOMOTIVE - 5221 I-10 EAST, TX, L.P. (a Texas limited
            partnership)
        SONIC AUTOMOTIVE  5260 PEACHTREE INDUSTRIAL BLVD., LLC (a Georgia
            limited liability company)
        SONIC AUTOMOTIVE-5585 PEACHTREE INDUSTRIAL BLVD., LLC (a Georgia
            limited liability company),
        SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC. (a Florida corporation)
        SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE, LLC (a Tennessee limited
            liability company)
        SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE, NC, LLC (a North Carolina
            limited liability company)
        SONIC - BETHANY H, INC. (an Oklahoma corporation)
        SONIC - 2185 CHAPMAN RD., CHATTANOOGA, LLC (a Tennessee limited
            liability company)
        SONIC - BUENA PARK H, INC. (a California corporation)
        SONIC - CAMP FORD, L.P. (a Texas limited partnership)




           SONIC - CAPITAL CHEVROLET, INC. (an Ohio corporation)
           SONIC - CARROLLTON V, L.P. (a Texas limited partnership)
           SONIC CHRYSLER-PLYMOUTH-JEEP, LLC (a North Carolina limited liability
              company)
           SONIC - CLASSIC DODGE, INC. (an Alabama corporation)
           SONIC - COAST CADILLAC, INC. (a California corporation)
           SONIC DODGE, LLC (a North Carolina limited liability company)
           SONIC DEVELOPMENT, LLC (a North Carolina limited liability company)
           SONIC - FM AUTOMOTIVE, LLC (a Florida limited liability company)
           SONIC - FM , INC. (a Florida corporation)
           SONIC - FM NISSAN, INC. (a Florida corporation)
           SONIC - FM VW, INC. (a Florida corporation)
           SONIC - FORT WORTH T, L.P. (a Texas limited partnership)
           SONIC - FREELAND, INC. (a Florida corporation)
           SONIC - GLOBAL IMPORTS, L.P. (a Georgia limited partnership)
           SONIC-GLOVER, INC. (an Oklahoma corporation)
           SONIC - HARBOR CITY H, INC. (a California corporation)
           SONIC - HOUSTON V, L.P. (a Texas limited partnership)
           SONIC - INTEGRITY DODGE LV, LLC (a Nevada limited liability company)
           SONIC - LAS VEGAS C EAST, LLC (a Nevada limited liability company)
           SONIC - LAS VEGAS C WEST, LLC (a Nevada limited liability company)
           SONIC - LLOYD NISSAN, INC. (a Florida corporation)
           SONIC - LLOYD PONTIAC - CADILLAC, INC. (a Florida corporation)
           SONIC - LUTE RILEY, L. P. (a Texas limited partnership)
           SONIC - MANHATTAN FAIRFAX, INC. (a Virginia corporation)
           SONIC - MANHATTAN WALDORF, INC. (a Maryland corporation)
           SONIC-MONTGOMERY FLM, INC. (an Alabama corporation)
           SONIC - NEWSOME CHEVROLET WORLD, INC. (a South Carolina corporation)
           SONIC - NEWSOME OF FLORENCE, INC. (a South Carolina corporation)
           SONIC - NORTH CHARLESTON, INC. (a South Carolina corporation)
           SONIC - NORTH CHARLESTON DODGE, INC. (a South Carolina corporation)
           SONIC - PARK PLACE A, L.P. (a Texas limited partnership) (formerly
           Sonic - Dallas Auto Factory, L.P.)
           SONIC PEACHTREE INDUSTRIAL BLVD., L.P. (a Georgia limited
              partnership)
           SONIC - READING, L.P. (a Texas limited partnership)
           SONIC RESOURCES, INC. (a Nevada corporation)
           SONIC - RICHARDSON F, L.P. (a Texas limited partnership)
           SONIC-RIVERSIDE, INC. (an Oklahoma corporation)
           SONIC - RIVERSIDE AUTO FACTORY, INC. (an Oklahoma corporation)
           SONIC - ROCKVILLE IMPORTS, INC. (a Maryland corporation)
           SONIC - ROCKVILLE MOTORS, INC. (a Maryland corporation)
           SONIC - SAM WHITE NISSAN, L.P. (a Texas limited partnership)
           SONIC - SHOTTENKIRK, INC. (a Florida corporation)
           SONIC - STEVENS CREEK B, INC. (a California corporation) (formerly
              known as Don Lucas International, Inc.)
           SONIC - SUPERIOR OLDSMOBILE, LLC  (a Tennessee limited liability
              company)
           SONIC OF TEXAS, INC. (a Texas corporation)
           SONIC-VOLVO LV, LLC (a Nevada limited liability company)
           SONIC - WEST COVINA T, INC. (a California corporation)
           SONIC - WEST RENO CHEVROLET, INC. (an Oklahoma corporation)
           SONIC - WILLIAMS BUICK, INC. (an Alabama corporation)
           SONIC - WILLIAMS CADILLAC, INC. (an Alabama corporation)
           SONIC - WILLIAMS IMPORTS, INC. (an Alabama corporation)
           SONIC - WILLIAMS MOTORS, LLC (an Alabama limited liability company)
           SPEEDWAY CHEVROLET, INC. (an Oklahoma corporation)




           SRE ALABAMA - 2, LLC (an Alabama limited liability company)
           SRE ALABAMA - 3, LLC (an Alabama limited liability company)
           SREALESTATE ARIZONA - 1, LLC (an Arizona limited liability company)
           SREALESTATE ARIZONA - 2, LLC (an Arizona limited liability company)
           SREALESTATE ARIZONA - 3, LLC (an Arizona limited liability company)
           SREALESTATE ARIZONA - 4, LLC (an Arizona limited liability company)
           SRE FLORIDA - 1, LLC (a Florida limited liability company)
           SRE FLORIDA - 2, LLC (a Florida limited liability company)
           SRE FLORIDA - 3, LLC (a Florida limited liability company)
           SRE GEORGIA - 1, L.P. (a Georgia limited liability partnership)
           SRE GEORGIA - 2, L.P. (a Georgia limited liability partnership)
           SRE GEORGIA - 3, L.P. (a Georgia limited liability partnership)
           SRE HOLDING, LLC (a North Carolina limited liability company)
           SRE NEVADA - 1, LLC (a Nevada limited liability company)
           SRE NEVADA - 2, LLC (a Nevada limited liability company)
           SRE NEVADA - 3, LLC (a Nevada limited liability company)
           SRE SOUTH CAROLINA - 2, LLC (a South Carolina limited liability
              company)
           SRE TENNESSEE - 1, LLC (a Tennessee limited liability company)
           SRE TENNESSEE - 2, LLC (a Tennessee limited liability company)
           SRE TENNESSEE - 3, LLC (a Tennessee limited liability company)
           SRE TEXAS - 1, L.P. (a Texas limited partnership)
           SRE TEXAS - 2, L.P. (a Texas limited partnership)
           SRE TEXAS - 3, L.P. (a Texas limited partnership)
           SRE VIRGINIA - 1, LLC (a Virginia limited liability company)
           STEVENS CREEK CADILLAC, INC. (a California corporation)
           TRANSCAR LEASING, INC. (a California corporation)
           TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC (a Tennessee limited
              liability company)
           TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF ROCK HILL, INC. (a South
              Carolina corporation)
           TOWN AND COUNTRY DODGE OF CHATTANOOGA, LLC ( a Tennessee limited
              liability company)
           TOWN AND COUNTRY FORD, INCORPORATED (a North Carolina corporation)
           TOWN AND COUNTRY FORD OF CLEVELAND, LLC (a Tennessee limited
              liability company)
           TOWN AND COUNTRY JAGUAR, LLC (a Tennessee limited liability company)
           VILLAGE IMPORTED CARS, INC. (a Maryland corporation) and
           WINDWARD, INC. (a Hawaii corporation)

                                    By:________________________
                                       Name:
                                       Title:

Attest:  ________________________
          Name:
          Title:

EX-4.10

                                                                   Exhibit 4.10

         SONIC AUTOMOTIVE, INC. (A Delaware Corporation), as Issuer,

                AUTOBAHN, INC. (a California corporation),
        CAPITOL CHEVROLET AND IMPORTS, INC. (an Alabama corporation),
            COBB PONTIAC CADILLAC, INC. (an Alabama corporation),
             FA SERVICE CORPORATION (a California corporation),
              FAA AUTO FACTORY, INC. (a California corporation),
              FAA BEVERLY HILLS, INC. (a California corporation),
                FAA CAPITOL F, INC. (a California corporation),
                FAA CAPITOL N, INC. (a California corporation),
                FAA CONCORD H, INC. (a California corporation),
                FAA CONCORD N, INC. (a California corporation),
                FAA CONCORD T, INC. (a California corporation),
                 FAA DUBLIN N, INC. (a California corporation),
                FAA DUBLIN VWD, INC. (a California corporation),
                   FAA HOLDING CORP. (a California corporation),
                   FAA LAS VEGAS H, INC. (a Nevada corporation),
                   FAA MARIN D, INC. (a California corporation),
                   FAA MARIN F, INC. (a California corporation),
                  FAA MARIN LR, INC. (a California corporation),
                   FAA POWAY D, INC. (a California corporation),
                   FAA POWAY G, INC. (a California corporation),
                   FAA POWAY H, INC. (a California corporation),
                   FAA POWAY T, INC. (a California corporation),
                 FAA SAN BRUNO, INC. (a California corporation),
               FAA SANTA MONICA V, INC. (a California corporation),
                FAA SERRAMONTE H, INC. (a California corporation),
                FAA SERRAMONTE L, INC. (a California corporation),
                 FAA SERRAMONTE, INC. (a California corporation),
                FAA STEVENS CREEK, INC. (a California corporation),
                FAA TORRANCE CPJ, INC. (a California corporation),
              FIRSTAMERICA AUTOMOTIVE, INC. (a Delaware corporation),
      FORT MILL CHRYSLER-PLYMOUTH-DODGE INC. (a South Carolina corporation),
               FORT MILL FORD, INC. (a South Carolina corporation),
                FRANCISCAN MOTORS, INC. (a California corporation),
                    FREEDOM FORD, INC. (a Florida corporation),
        FRONTIER OLDSMOBILE-CADILLAC, INC. (a North Carolina corporation),
               HMC FINANCE ALABAMA, INC. (an Alabama corporation),
              KRAMER MOTORS INCORPORATED (a California corporation),
    LAWRENCE MARSHALL CHEVROLET, LLC (a Delaware limited liability company),
       LAWRENCE MARSHALL CHEVROLET, L.P. (a Texas limited partnership),
                 L DEALERSHIP GROUP, INC. (a Texas corporation),
           MARCUS DAVID CORPORATION (a North Carolina corporation),
               PHILPOTT MOTORS, LTD. (a Texas limited partnership),
                RIVERSIDE NISSAN, INC. (an Oklahoma corporation),
               ROYAL MOTOR COMPANY, INC. (an Alabama corporation),
          SANTA CLARA IMPORTED CARS, INC. (a California corporation),
                SMART NISSAN, INC. (a California corporation),
           SONIC AUTOMOTIVE - BONDESEN, INC. (a Florida corporation),
SONIC AUTOMOTIVE OF CHATTANOOGA, LLC (a Tennessee limited liability company),
            SONIC AUTOMOTIVE-CLEARWATER, INC. (a Florida corporation),
SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER, INC. (a Florida corporation),
        SONIC AUTOMOTIVE F&I, LLC (a Nevada limited liability company),
            SONIC AUTOMOTIVE OF GEORGIA, INC. (a Georgia corporation),
SONIC AUTOMOTIVE OF NASHVILLE, LLC (a Tennessee limited liability company),
             SONIC AUTOMOTIVE OF NEVADA, INC. (a Nevada corporation),



 SONIC AUTOMOTIVE SERVICING COMPANY, LLC (a Nevada limited liability company),
      SONIC AUTOMOTIVE OF TENNESSEE, INC. (a Tennessee corporation),
      SONIC AUTOMOTIVE OF TEXAS, L.P. (a Texas limited partnership),
     SONIC AUTOMOTIVE WEST, LLC (a Nevada limited liability company),
 SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC. (a Florida corporation),
SONIC AUTOMOTIVE-1400 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation),
SONIC AUTOMOTIVE-1455 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation),
SONIC AUTOMOTIVE-1495 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation),
SONIC AUTOMOTIVE-1500 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation),
   SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC. (a Florida corporation),
SONIC AUTOMOTIVE - 1720 MASON AVE., DB,LLC(a Florida limited liability company),
 SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC. (a Florida corporation),
    SONIC AUTOMOTIVE - 21699 U.S. HWY 19 N., INC. (a Florida corporation),
  SONIC AUTOMOTIVE - 241 RIDGEWOOD AVE., HH, INC. (a Florida corporation),
SONIC AUTOMOTIVE 2424 LAURENS RD.,GREENVILLE,INC.(a South Carolina corporation),
                 SONIC AUTOMOTIVE - 2490 SOUTH LEE HIGHWAY, LLC
                    (a Tennessee limited liability company),
SONIC AUTOMOTIVE 2752 LAURENS RD.,GREENVILLE, INC.(a South Carolina corporation)
    SONIC AUTOMOTIVE - 3401 N. MAIN, TX, L.P. (a Texas limited partnership),
SONIC AUTOMOTIVE-3700 WEST BROAD STREET, COLUMBUS, INC. (an Ohio corporation),
   SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC. (a Florida corporation),
SONIC AUTOMOTIVE-4000 WEST BROAD STREET, COLUMBUS, INC. (an Ohio corporation),
  SONIC AUTOMOTIVE - 4701 I-10 EAST, TX, L.P. (a Texas limited partnership),
  SONIC AUTOMOTIVE - 5221 I-10 EAST, TX, L.P. (a Texas limited partnership),
              SONIC AUTOMOTIVE 5260 PEACHTREE INDUSTRIAL BLVD.,LLC
                     (a Georgia limited liability company),
              SONIC AUTOMOTIVE-5585 PEACHTREE INDUSTRIAL BLVD., LLC
                     (a Georgia limited liability company),
    SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC. (a Florida corporation),
                 SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE,LLC
                    (a Tennessee limited liability company),
                SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE, NC, LLC
                 (a North Carolina limited liability company),
            SONIC - BETHANY H, INC. (an Oklahoma corporation),
SONIC-2185 CHAPMAN RD.,CHATTANOOGA, LLC(a Tennessee limited liability company),
          SONIC - BUENA PARK H, INC. (a California corporation),
          SONIC - CAMP FORD, L.P. (a Texas limited partnership),
          SONIC - CAPITAL CHEVROLET, INC. (an Ohio corporation),
        SONIC - CARROLLTON V, L.P. (a Texas limited partnership),
SONIC CHRYSLER-PLYMOUTH-JEEP, LLC (a North Carolina limited liability company),
          SONIC - CLASSIC DODGE, INC. (an Alabama corporation),
         SONIC - COAST CADILLAC, INC. (a California corporation),
             SONIC DODGE, LLC (a North Carolina limited liability company),
SONIC DEVELOPMENT, LLC (a North Carolina limited liability company),
     SONIC - FM AUTOMOTIVE, LLC (a Florida limited liability company),
             SONIC - FM , INC. (a Florida corporation),
           SONIC - FM NISSAN, INC. (a Florida corporation),
             SONIC - FM VW, INC. (a Florida corporation),
      SONIC - FORT WORTH T, L.P. (a Texas limited partnership),
             SONIC - FREELAND, INC. (a Florida corporation),
     SONIC - GLOBAL IMPORTS, L.P. (a Georgia limited partnership),
            SONIC-GLOVER, INC. (an Oklahoma corporation),
       SONIC - HARBOR CITY H, INC. (a California corporation),
       SONIC - HOUSTON V, L.P. (a Texas limited partnership),
  SONIC - INTEGRITY DODGE LV, LLC (a Nevada limited liability company),
SONIC - LAS VEGAS C EAST, LLC (a Nevada limited liability company),
SONIC - LAS VEGAS C WEST, LLC (a Nevada limited liability company),
           SONIC - LLOYD NISSAN, INC. (a Florida corporation),
    SONIC - LLOYD PONTIAC - CADILLAC, INC. (a Florida corporation),
          SONIC - LUTE RILEY, L. P. (a Texas limited partnership),
         SONIC - MANHATTAN FAIRFAX, INC. (a Virginia corporation),



            SONIC - MANHATTAN WALDORF, INC. (a Maryland corporation),
              SONIC-MONTGOMERY FLM, INC. (an Alabama corporation),
      SONIC - NEWSOME CHEVROLET WORLD, INC. (a South Carolina corporation),
        SONIC - NEWSOME OF FLORENCE, INC. (a South Carolina corporation),
         SONIC - NORTH CHARLESTON, INC. (a South Carolina corporation),
      SONIC - NORTH CHARLESTON DODGE, INC. (a South Carolina corporation),
            SONIC - PARK PLACE A, L.P. (a Texas limited partnership)
                   (formerly Sonic-Dallas Auto Factory, L.P.),
     SONIC PEACHTREE INDUSTRIAL BLVD., L.P. (a Georgia limited partnership),
              SONIC - READING, L.P. (a Texas limited partnership),
                  SONIC RESOURCES, INC. (a Nevada corporation),
            SONIC - RICHARDSON F, L.P. (a Texas limited partnership),
                SONIC-RIVERSIDE, INC. (an Oklahoma corporation),
         SONIC - RIVERSIDE AUTO FACTORY, INC. (an Oklahoma corporation),
            SONIC - ROCKVILLE IMPORTS, INC. (a Maryland corporation),
            SONIC - ROCKVILLE MOTORS, INC. (a Maryland corporation),
          SONIC - SAM WHITE NISSAN, L.P. (a Texas limited partnership),
               SONIC - SHOTTENKIRK, INC. (a Florida corporation),
            SONIC - STEVENS CREEK B, INC. (a California corporation)
               (formerly known as Don Lucas International, Inc.),
    SONIC - SUPERIOR OLDSMOBILE, LLC (a Tennessee limited liability company)
                   SONIC OF TEXAS, INC. (a Texas corporation),
            SONIC-VOLVO LV, LLC (a Nevada limited liability company),
             SONIC - WEST COVINA T, INC. (a California corporation),
          SONIC - WEST RENO CHEVROLET, INC. (an Oklahoma corporation),
             SONIC - WILLIAMS BUICK, INC. (an Alabama corporation),
            SONIC - WILLIAMS CADILLAC, INC. (an Alabama corporation),
            SONIC - WILLIAMS IMPORTS, INC. (an Alabama corporation),
      SONIC - WILLIAMS MOTORS, LLC (an Alabama limited liability company),
               SPEEDWAY CHEVROLET, INC. (an Oklahoma corporation),
          SRE ALABAMA - 2, LLC (an Alabama limited liability company),
          SRE ALABAMA - 3, LLC (an Alabama limited liability company),
      SREALESTATE ARIZONA - 1, LLC (an Arizona limited liability company),
      SREALESTATE ARIZONA - 2, LLC (an Arizona limited liability company),
      SREALESTATE ARIZONA - 3, LLC (an Arizona limited liability company),
      SREALESTATE ARIZONA - 4, LLC (an Arizona limited liability company),
           SRE FLORIDA - 1, LLC (a Florida limited liability company),
          SRE FLORIDA - 2, LLC (a Florida limited liability company),
          SRE FLORIDA - 3, LLC (a Florida limited liability company),
        SRE GEORGIA - 1, L.P. (a Georgia limited liability partnership),
        SRE GEORGIA - 2, L.P. (a Georgia limited liability partnership),
        SRE GEORGIA - 3, L.P. (a Georgia limited liability partnership),
          SREHOLDING, LLC (a North Carolina limited liability company),
            SRE NEVADA - 1, LLC (a Nevada limited liability company),
           SRE NEVADA - 2, LLC (a Nevada limited liability company),
            SRE NEVADA - 3, LLC (a Nevada limited liability company),
   SRE SOUTH CAROLINA - 2, LLC (a South Carolina limited liability company),
         SRE TENNESSEE - 1, LLC (a Tennessee limited liability company),
        SRE TENNESSEE - 2, LLC (a Tennessee limited liability company),
        SRE TENNESSEE - 3, LLC (a Tennessee limited liability company),
               SRE TEXAS - 1, L.P. (a Texas limited partnership),
               SRE TEXAS - 2, L.P. (a Texas limited partnership),
               SRE TEXAS - 3, L.P. (a Texas limited partnership),
          SRE VIRGINIA - 1, LLC (a Virginia limited liability company),
            STEVENS CREEK CADILLAC, INC. (a California corporation),
               TRANSCAR LEASING, INC. (a California corporation),
                  TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC
                    (a Tennessee limited liability company),
           TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF ROCK HILL, INC.
                         (a South Carolina corporation),



TOWN AND COUNTRY DODGE OF CHATTANOOGA,LLC(a Tennessee limited liability company)
       TOWN AND COUNTRY FORD, INCORPORATED (a North Carolina corporation),
 TOWN AND COUNTRY FORD OF CLEVELAND,LLC (a Tennessee limited liability company),
      TOWN AND COUNTRY JAGUAR,LLC (a Tennessee limited liability company),
            VILLAGE IMPORTED CARS, INC. (a Maryland corporation), and
              WINDWARD, INC. (a Hawaii corporation) as Guarantors,

                                       and

                U.S. Bank Trust National Association, as Trustee

                                    ----------
                                    INDENTURE

                          Dated as of November 19, 2001
                                    ----------

                     11% Senior Subordinated Notes due 2008




                      Reconciliation and tie between Trust
                             Indenture Act of 1939,
            as amended, and Indenture, dated as of November 19, 2001

    Trust Indenture                                       Indenture
      Act Section                                          Section
    ---------------                                       ---------

ss.310        (a)(1) ....................................... 609
              (a)(2) ....................................... 609
              (b) .......................................... 608, 610
ss.311        (a) .......................................... 613
ss.312        (a) .......................................... 701
              (b) .......................................... 702
              (c) .......................................... 702
ss.313        (a) .......................................... 703
              (b)(2) ....................................... 703
              (c) .......................................... 703, 704
ss.314        (a) .......................................... 704
              (a)(4) ....................................... 1018
              (c)(1) ....................................... 103
              (c)(2) ....................................... 103
              (e) .......................................... 103
ss.315        (a) .......................................... 601(b)
              (b) .......................................... 602
              (c) .......................................... 601(a)
              (d) .......................................... 601(c), 603
              (e) .......................................... 514
ss.316        (a)(last sentence) ........................... 101 ("Outstanding")
              (a)(1)(A) .................................... 512
              (a)(1)(B) .................................... 513
              (b) .......................................... 508
              (c) .......................................... 105(e)
ss.317        (a)(1) ....................................... 503(b)
              (a)(2) ....................................... 504
              (b) .......................................... 1003
ss.318        (a) .......................................... 108




- --------------------------------------------------------

Note: This reconciliation and tie shall not, for any purpose, be deemed to be
      a part of this Indenture.


                                      -1-


                               TABLE OF CONTENTS

                                                                         PAGE
                                                                         ----
PARTIES ...............................................................   1

RECITALS ..............................................................   1

ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION ...   2
 Section 101.  Definitons .............................................   2
               ----------
              "Acquired Indebtedness" .................................   2
              "Affiliate" .............................................   2
              "Applicable Procedures" .................................   3
              "Asset Sale" ............................................   3
              "Average Life to Stated Maturity" .......................   3
              "B Indenture" ...........................................   4
              "Bankruptcy Law" ........................................   4
              "Board of Directors".....................................   4
              "Board Resolution" ......................................   4
              "Book-Entry Security" ...................................   4
              "Business Day" ..........................................   4
              "Capital Lease Obligation" ..............................   5
              "Capital Stock" .........................................   5
              "Cash Equivalents" ......................................   5
              "Change of Control" .....................................   5
              "Class A Common Stock" ..................................   6
              "Clearstream" ...........................................   6
              "Code" ..................................................   7
              "Commission" ............................................   7
              "Commodity Price Protection Agreement" ..................   7
              "Company" ...............................................   7
              "Company Request" or "Company Order" ....................   7
              "Consolidated Fixed Charge Coverage Ratio" ..............   7
              "Consolidated Income Tax Expense" .......................   8
              "Consolidated Interest Expense"..........................   8
              "Consolidated Net Income (Loss)" ........................   9
              "Consolidated Non-cash Charges" .........................   9
              "Consolidated Tangible Assets" ..........................  10
              "Consolidation" .........................................  10
              "Corporate Trust Office" ................................  10
              "Currency Hedging Agreements" ...........................  10
              "Default" ...............................................  10
              "Depositary" ............................................  10
              "Designated Senior Indebtedness" ........................  10
              "Disinterested Director" ................................  11
              "Euroclear" .............................................  11

                                      -i-


                                                                         PAGE
                                                                         ----
"Event of Default" .....................................................  11
"Exchange Act" .........................................................  11
"Exchange Offer" .......................................................  11
"Exchange Offer Registration Statement" ................................  11
"Fair Market Value" ....................................................  11
"Floor Plan Facility" ..................................................  12
"Generally Accepted Accounting Principles" or
"GAAP" .................................................................  12
"Global Securities" ..................................................... 12
"Guarantee" ............................................................  12
"Guaranteed Debt" ......................................................  12
"Guarantor" ............................................................  13
"Holder" ...............................................................  13
"Indebtedness" .........................................................  13
"Indenture" ............................................................  14
"Indenture Obligations" ................................................  14
"Initial Purchasers" .................................................... 14
"Interest Payment Date" ................................................. 14
"Interest Rate Agreements" .............................................. 14
"Inventory Facility" ...................................................  14
"Investment" ...........................................................  15
"Issue Date" ...........................................................  15
"Lien" .................................................................  15
"Manufacturer" .........................................................  15
"Maturity" .............................................................  15
"Moody's" ..............................................................  16
"Net Cash Proceeds" ....................................................  16
"Non-U.S. Person" ......................................................  16
"Officers' Certificate" ................................................  17
"Opinion of Counsel" ...................................................  17
"Opinion of Independent Counsel" .......................................  17
"Outstanding" ..........................................................  17
"Pari Passu Indebtedness" ..............................................  18
"Paying Agent" .........................................................  18
"Permitted Holders" ....................................................  18
"Permitted Investment" .................................................  19
"Person" ...............................................................  19
"Predecessor Security" .................................................  19
"Preferred Stock" ......................................................  20
"Prospectus" ...........................................................  20
"Purchase Money Obligation" ............................................  20
"QIB" ..................................................................  21
"Qualified Capital Stock" ..............................................  21
"Redeemable Capital Stock" .............................................  21
"Redeemable Date" ......................................................  21
"Redeemable Price" .....................................................  21
"Registration Rights Agreement" ........................................  21


                                      -ii-


                                                                           PAGE
                                                                           ----

"Registration Statement" ................................................  21
"Regular Record Date" ...................................................  22
"Regulation S" ..........................................................  22
"Regulation S Global Securities" ........................................  22
"Responsible Officer" ...................................................  22
"Replacement Assets" ....................................................  22
"Restricted Subsidiary" .................................................  22
"Revolving Facility" ....................................................  22
"Rule 144A" .............................................................  23
"Rule 144A Global Securities" ...........................................  23
"S&P" ...................................................................  23
"Securities Act" ........................................................  23
"Senior Guarantor Indebtedness" .........................................  23
"Senior Indebtedness" ...................................................  24
"Senior Representative" .................................................  24
"Series D Global Securities" ............................................  25
"Shelf Registration Statement" ..........................................  25
"Significant Restricted Subsidiary" .....................................  25
"Smith Subordinated Loan" ...............................................  25
"Special Record Date" ...................................................  25
"Stated Maturity" .......................................................  25
"Subordinated Indebtedness" .............................................  26
"Subsidiary" ............................................................  26
"Successor Security" ....................................................  26
"Temporary Cash Investments" ............................................  26
"Trustee" ...............................................................  27
"Trust Indenture Act" ...................................................  27
"Unrestricted Subsidiary" ...............................................  27
"Unrestricted Subsidiary Indebtedness" ..................................  27
"Voting Stock" ..........................................................  27
"Wholly Owned Restricted Subsidiary" ....................................  28
Section 102.  Other Definitions .........................................  28
Section 103.  Compliance Certificates and Opinions ......................  29
Section 104.  Form of Documents Delivered to Trustee ....................  29
Section 105.  Acts of Holders ...........................................  30
Section 106.  Notices, etc., to the Trustee, the Company
 and any Guarantor ......................................................  32
Section 107.  Notice to Holders; Waiver .................................. 32
Section 108.  Conflict with Trust Indenture Act .......................... 33
Section 109.  Effect of Headings and Table of Contents ................... 33
Section 110.  Successors and Assigns ..................................... 33
Section 111.  Separability Clause ........................................ 33
Section 112.  Benefits of Indenture ...................................... 33

SECTION 113. GOVERNING LAW. .............................................. 34
Section 114.  Legal Holidays ............................................. 34
Section 115.  Independence of Covenants .................................. 34

                                     -iii-


                                                                        PAGE
                                                                        ----
    Section 116.  Schedules and Exhibits .................................  34
    Section 117.  Counterparts ...........................................  34

ARTICLE TWO SECURITY FORMS ...............................................  35
    Section 201.  Forms Generally ........................................  35
    Section 202.  Form of Face of Security ...............................  36
    Section 203.  Form of Reverse of Securities ..........................  49
    Section 204.  Form of Guarantee ......................................  56

ARTICLE THREE THE SECURITIES .............................................  60
    Section 301.  Title and Terms ........................................  60
    Section 302.  Denominations ..........................................  61
    Section 303.  Execution, Authentication, Delivery and Dating .........  61
    Section 304.  Temporary Securities ....................................  63
    Section 305.  Registration, Registration of Transfer and Exchange ....  63
    Section 306.  Book Entry Provisions for Global Securities ............  65
    Section 307.  Special Transfer and Exchange Provisions ...............  67
    Section 308.  Mutilated, Destroyed, Lost or Stolen Securities .........  70
    Section 309.  Payment of Interest; Interest Rights Preserved .........  70
    Section 310.  CUSIP Numbers ..........................................  72
    Section 311.  Persons Deemed Owners ..................................  72
    Section 312.  Cancellation ...........................................  72
    Section 313.  Computation of Interest ................................  73

ARTICLE FOUR DEFEASANCE AND COVENANT DEFEASANCE ..........................  73
    Section 401.  Company's Option to Effect Defeasance or
      Covenant Defeasance ................................................  73
    Section 402.  Defeasance and Discharge ...............................  73
    Section 403.  Covenant Defeasance ....................................  74
    Section 404.  Conditions to Defeasance or Covenant Defeasance ........  74
    Section 405.  Deposited Money and U.S. Government Obligations
      to Be Held in Trust; Other Miscellaneous Provisions ................  76
    Section 406.  Reinstatement ..........................................  77

ARTICLE FIVE REMEDIES ...................................................  78
    Section 501.  Events of Default ......................................  78
    Section 502.  Acceleration of Maturity; Rescission and Annulment .....  80
    Section 503.  Collection of Indebtedness and Suits for
      Enforcement by Trustee .............................................  81
    Section 504.  Trustee May File Proofs of Claim .......................  82
    Section 505.  Trustee May Enforce Claims without Possession
      of Securities ......................................................  83
    Section 506.  Application of Money Collected .........................  83
    Section 507.  Limitation on Suits ....................................  83
    Section 508.  Unconditional Right of Holders to Receive
      Principal, Premium and Interest ....................................  84
    Section 509.  Restoration of Rights and Remedies .....................  84
    Section 510.  Rights and Remedies Cumulative .........................  85
    Section 511.  Delay or Omission Not Waiver ...........................  85
    Section 512.  Control by Holders .....................................  85



                                   -iv-



                                                                         PAGE
                                                                         ----

    Section 513.  Waiver of Past Defaults ................................  85
    Section 514.  Undertaking for Costs ..................................  86
    Section 515.  Waiver of Stay, Extension or Usury Laws ................  86
    Section 516.  Remedies Subject to Applicable Law .....................  87

ARTICLE SIX THE TRUSTEE ..................................................  87
    Section 601.  Duties of Trustee ......................................  87
    Section 602.  Notice of Defaults .....................................  88
    Section 603.  Certain Rights of Trustee ..............................  88
    Section 604.  Trustee Not Responsible for Recitals, Dispositions
      of Securities or Application of Proceeds Thereof ...................  90
    Section 605.  Trustee and Agents May Hold Securities;
      Collections; etc. ..................................................  90
    Section 606.  Money Held in Trust ....................................  91
    Section 607.  Compensation and Indemnification of Trustee and Its
      Prior Claim ........................................................  91
    Section 608.  Conflicting Interests ..................................  92
    Section 609.  Trustee Eligibility ....................................  92
    Section 610.  Resignation and Removal; Appointment of Successor
      Trustee ............................................................  92
    Section 611.  Acceptance of Appointment by Successor .................  94
    Section 612.  Merger, Conversion, Consolidation or Succession to
      Business ...........................................................  95
    Section 613.  Preferential Collection of Claims Against Company ......  95

ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY ..........  96
    Section 701.  Company to Furnish Trustee Names and Addresses of
      Holders ............................................................  96
    Section 702.  Disclosure of Names and Addresses of Holders ...........  96
    Section 703.  Reports by Trustee .....................................  96
    Section 704.  Reports by Company and Guarantors ......................  97

ARTICLE EIGHT  CONSOLIDATION, MERGER, SALE OF ASSETS .....................  98
    Section 801.  Company and Guarantors May Consolidate, etc., Only
      on Certain Terms ...................................................  98
    Section 802.  Successor Substituted .................................. 100

ARTICLE NINE  SUPPLEMENTAL INDENTURES .................................... 101
    Section 901.  Supplemental Indentures and Agreements without
      Consent of Holders ................................................. 101
    Section 902.  Supplemental Indentures and Agreements with Consent
      of Holders ......................................................... 102
    Section 903.  Execution of Supplemental Indentures and Agreements .... 103
    Section 904.  Effect of Supplemental Indentures ...................... 104
    Section 905.  Conformity with Trust Indenture Act .................... 104
    Section 906.  Reference in Securities to Supplemental Indentures ....  104
    Section 907.  Notice of Supplemental Indentures ...................... 104


                                      -v-




                                                                         PAGE
                                                                         ----
ARTICLE TEN COVENANTS....................................................104
Section 1001.    Payment of Principal, Premium and Interest..............104
Section 1002.    Maintenance of Office or Agency.........................105
Section 1003.    Money for Security Payments to Be Held in Trust.........105
Section 1004.    Corporate Existence.....................................107
Section 1005.    Payment of Taxes and Other Claims.......................107
Section 1006.    Maintenance of Properties...............................107
Section 1007.    Maintenance of Insurance................................108
Section 1008.    Limitation on Indebtedness..............................108
Section 1009.    Limitation on Restricted Payments.......................111
Section 1010.    Limitation on Transactions with Affiliates..............115
Section 1011.    Limitation on Liens.....................................116
Section 1012.    Limitation on Sale of Assets............................117
Section 1013.    Limitation on Issuances of Guarantees of and Pledges
                  for Indebtedness.......................................122
Section 1014.    Purchase of Securities upon a Change of Control.........123
Section 1015.    Limitation on Subsidiary Preferred Stock................127
Section 1016.    Limitation on Dividends and Other Payment Restrictions
                  Affecting Subsidairies.................................127
Section 1017.    Limitation on Senior Subordinated Indebtedness..........128
Section 1018.    Limitations on Unrestricted Subsidiaries................128
Section 1019.    Provision of Financial Statements.......................130
Section 1020.    Statement by Officers as to Default.....................131
Section 1021.    Waiver of Certain Covenants.............................131

ARTICLE ELEVEN REDEMPTION OF SECURITIES..................................132
Section 1101.    Rights of Redemption....................................132
Section 1102.    Applicability of Article................................132
Section 1103.    Election to Redeem; Notice to Trustee...................132
Section 1104.    Selection by Trustee of Securities to Be Redeemed.......132
Section 1105.    Notice of Redemption....................................133
Section 1106.    Deposit of Redemption Price.............................134
Section 1107.    Securities Payable on Redemption Date...................134
Section 1108.    Securities Redeemed or Purchased in Part................134

ARTICLE TWELVE SATISFACTION AND DISCHARGE................................135
Section 1201.    Satisfaction and Discharge of Indenture.................135
Section 1202.    Application of Trust Money..............................136

ARTICLE THIRTEEN GUARANTEES..............................................136
Section 1301.    Guarantors' Guarantee...................................136
Section 1302.    Continuing Guarantee; No Right of Set-Off; Independent
                  Obligation.............................................137
Section 1303.    Guarantee Absolute......................................138
Section 1304.    Right to Demand Full Performance........................141
Section 1305.    Waivers.................................................141
Section 1306.    The Guarantors Remain Obligated in Event the Company
                  Is No Longer Obligated to Discharge Indenture
                  Obligations............................................142
Section 1307.    Fraudulent Conveyance; Contribution; Subrogation........142

                                  -vi-



                                                                         PAGE
                                                                         ----

Section 1308.    Guarantee Is in Addition to Other Security...............143
Section 1309.    Release of Security Interests............................143
Section 1310.    No Bar to Further Actions................................143
Section 1311.    Failure to Exercise Rights Shall Not Operate as a
                  Waiver; No Suspension of Remedies.......................144
Section 1312.    Trustee's Duties; Notice to Trustee......................144
Section 1313.    Successors and Assigns...................................144
Section 1314.    Release of Guarantee.....................................145
Section 1315.    Execution of Guarantee...................................145

ARTICLE FOURTEEN SUBORDINATION OF SECURITIES..............................146
Section 1401.    Securities Subordinate to Senior Indebtedness............146
Section 1402.    Payment Over of Proceeds Upon Dissolution, etc...........146
Section 1403.    Suspension of Payment When Designated Senior
                  Indebtedness in Default.................................148
Section 1404.    Payment Permitted if No Default..........................149
Section 1405.    Subrogation to Rights of Holders of Senior Indebtedness..149
Section 1406.    Provisions Solely to Define Relative Rights..............150
Section 1407.    Trustee to Effectuate Subordination......................150
Section 1408.    No Waiver of Subordination Provisions....................151
Section 1409.    Notice to Trustee........................................151
Section 1410.    Reliance on Judicial Orders or Certificates..............152
Section 1411.    Rights of Trustee as a Holder of Senior Indebtedness;
                  Preservation of Trustee's Rights........................153
Section 1412.    Article Applicable to Paying Agents......................153
Section 1413.    No Suspension of Remedies................................153
Section 1414.    Trustee's Relation to Senior Indebtedness................153

TESTIMONIUM

SIGNATURES AND SEALS

ACKNOWLEDGMENTS

ANNEX A         Form of Intercompany Note

SCHEDULE I      Existing Indebtedness

EXHIBIT A       Regulation S Certificate

EXHIBIT B       Restricted Security Certificate

EXHIBIT C       Unrestricted Security Certificate

APPENDIX I      Form of Transferee Certificate for Series C Securities

APPENDIX II     Form of Transferee Certificate for Series D Securities

                                      -vii-



     INDENTURE, dated as of November 19, 2001, between Sonic Automotive, Inc., a
Delaware corporation (the "Company"), the guarantors set forth on the signature
pages hereto (each a "Guarantor" and collectively, the "Guarantors") and U.S.
Bank Trust National Association, as Trustee (the "Trustee").

                RECITALS OF THE COMPANY AND THE GUARANTORS

     The Company has duly authorized the creation of an issue of (i) 11% Senior
Subordinated Notes due 2008, Series C (the "Series C Securities") and (ii) 11%
Senior Subordinated Notes due 2008, Series D (the "Series D Securities" and,
together with the Series C Securities, the "Securities") of substantially the
tenor and amount hereinafter set forth, and to provide therefor the Company has
duly authorized the execution and delivery of this Indenture and the Securities;

     Each Guarantor has duly authorized the issuance of a Guarantee of the
Securities, of substantially the tenor hereinafter set forth, and to provide
therefor, each Guarantor has duly authorized the execution and delivery of this
Indenture and its Guarantee;

     This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act that are required to be part of and to govern indentures
qualified under the Trust Indenture Act;

     All acts and things necessary have been done to make (i) the Securities,
when duly issued and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company, (ii) the Guarantees, when
executed by each of the Guarantors and delivered hereunder, the valid obligation
of each of the Guarantors and (iii) this Indenture a valid agreement of the
Company and each of the Guarantors in accordance with the terms of this
Indenture;

                  NOW, THEREFORE, THIS INDENTURE WITNESSETH:

     For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:

                                      -1-



                                   ARTICLE ONE

            DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

           Section 101.      Definitions.
                             -----------

                  For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:

                  (a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;

                  (b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;

                  (c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;

                  (d) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;

                  (e) all references to $, US$, dollars or United States dollars
shall refer to the lawful currency of the United States of America; and

                  (f) all references herein to particular Sections or Articles
refer to this Indenture unless otherwise so indicated.

                  Certain terms used principally in Article Four are defined in
Article Four.

                  "Acquired Indebtedness" means Indebtedness of a Person (i)
existing at the time such Person becomes a Restricted Subsidiary or (ii) assumed
in connection with the acquisition of assets from such Person, in each case,
other than Indebtedness incurred in connection with, or in contemplation of,
such Person becoming a Restricted Subsidiary or such acquisition, as the case
may be. Acquired Indebtedness shall be deemed to be incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Restricted Subsidiary, as the case may be.

                  "Affiliate" means, with respect to any specified Person: (i)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person; (ii) any other
Person that owns, directly or indirectly, 5% or more of such specified Person's
Capital Stock or any officer or director of any such specified Person or other
Person or, with respect to any natural Person, any person having a relationship
with such Person by blood, marriage or adoption not more remote

                                      -2-



than first cousin; or (iii) any other Person 5% or more of the Voting Stock of
which is beneficially owned or held directly or indirectly by such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

                  "Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, Euroclear and
Clearstream, in each case to the extent applicable to such transaction and as in
effect at the time of such transfer or transaction.

                  "Asset Sale" means any sale, issuance, conveyance, transfer,
lease or other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback Transaction) (collectively, a "transfer"),
directly or indirectly, in one or a series of related transactions, of: (i) any
Capital Stock of any Restricted Subsidiary (other than directors' qualifying
shares and transfers of Capital Stock required by a Manufacturer to the extent
the Company does not receive cash or Cash Equivalents for such Capital Stock);
(ii) all or substantially all of the properties and assets of any division or
line of business of the Company or any Restricted Subsidiary; or (iii) any other
properties or assets of the Company or any Restricted Subsidiary other than in
the ordinary course of business. For the purposes of this definition, the term
"Asset Sale" shall not include any transfer of properties and assets (A) that is
governed by the provisions described under Article Eight hereof, (B) that is by
the Company to any Wholly Owned Restricted Subsidiary, or by any Restricted
Subsidiary to the Company or any Wholly Owned Restricted Subsidiary in
accordance with the terms of this Indenture, (C) that is of obsolete equipment,
(D) that consists of defaulted receivables for collection or any sale, transfer
or other disposition of defaulted receivables for collection, or (E) the Fair
Market Value of which in the aggregate does not exceed $2.5 million in any
transaction or series of related transactions.

                  "Average Life to Stated Maturity" means, as of the date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date of
determination to the date or dates of each successive scheduled principal
payment of such Indebtedness multiplied by (b) the amount of each such principal
payment; by (ii) the sum of all such principal payments.

                  "B Indenture" means the Indenture, dated as of July 1, 1998,
among the Company, the Trustee and the other parties thereto providing for the
issuance of the Series B Securities in aggregate principal amount of
$125,000,000, as such agreement has been and may be amended or supplemented from
time to time.

                  "Bankruptcy Law" means Title 11, United States Bankruptcy Code
of 1978, as amended, or any similar United States federal or state law relating
to

                                      -3-



bankruptcy, insolvency, receivership, winding up, liquidation, reorganization
or relief of debtors or any amendment to, succession to or change in any such
law.

                  "Board of Directors" means the board of directors of the
Company or any Guarantor, as the case may be, or any duly authorized committee
of such board.

                  "Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company or any Guarantor, as the
case may be, to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.

                  "Book-Entry Security" means any Global Securities bearing the
legend specified in Section 202 evidencing all or part of a series of
Securities, authenticated and delivered to the Depositary for such series or its
nominee, and registered in the name of such Depositary or nominee.

                  "Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions or trust companies
in The City of New York or the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law, regulation or executive
order to close.

                  "Capital Lease Obligation" of any Person means any obligation
of such Person and its Subsidiaries on a Consolidated basis under any capital
lease of real or personal property which, in accordance with GAAP, has been
recorded as a capitalized lease obligation.

                  "Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock or other equity interests whether now outstanding or
issued after the date hereof, partnership interests (whether general or
limited), any other interest or participation that confers on a Person that
right to receive a share of the profits and losses of, or distributions of
assets of (other than a distribution in respect of Indebtedness), the issuing
Person and any rights (other than debt securities convertible into Capital
Stock), warrants or options exchangeable for or convertible into such Capital
Stock.

                  "Cash Equivalents" means (i) marketable direct obligations,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof, and
guaranteed fully as to principal, premium, if any, and interest by the United
States of America, (ii) any certificate of deposit, maturing not more than one
year after the date of acquisition, issued by a commercial banking institution
that is a member of the Federal Reserve System and that has combined capital and
surplus and undivided profits of not less than $500 million, whose debt has a
rating, at the time as of which any investment therein is made, of "P-1" (or
higher) according to Moody's or any successor rating agency or "A-1" (or higher)
according to S&P or any successor rating agency, (iii) commercial paper,
maturing not more than 180 days after the

                                      -4-



date of acquisition, issued by a corporation (other than an Affiliate or
Subsidiary of the Company) organized and existing under the laws of the United
States of America with a rating, at the time as of which any investment therein
is made, of "P-1" (or higher) according to Moody's or "A-1" (or higher)
according to S&P and (iv) any money market deposit accounts issued or offered by
a domestic commercial bank having capital and surplus in excess of $500 million;
provided that the short term debt of such commercial bank has a rating, at the
time of Investment, of "P-1" (or higher) according to Moody's or "A-1" (or
higher) according to S&P.

                  "Change of Control" means the occurrence of any of the
following events: (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, is
or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person shall be deemed to have beneficial ownership
of all shares that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total outstanding Voting Stock of the
Company; (ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such board or whose
nomination for election by the stockholders of the Company was approved by a
vote of 66 2/3% of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for election was
previously so approved), cease for any reason to constitute a majority of such
Board of Directors then in office; (iii) the Company consolidates with or merges
with or into any Person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any Person, or
any Person consolidates with or merges into or with the Company, in any such
event pursuant to a transaction in which the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where (A) the outstanding Voting Stock of the
Company is changed into or exchanged for (x) Voting Stock of the surviving
corporation which is not Redeemable Capital Stock or (y) cash, securities and
other property (other than Capital Stock of the surviving corporation) in an
amount which could be paid by the Company as a Restricted Payment as described
in Section 1009 herein (and such amount shall be treated as a Restricted Payment
subject to the provisions in this Indenture described in Section 1009 herein)
and (B) immediately after such transaction, no "person" or "group," other than
Permitted Holders, is the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be deemed to have beneficial
ownership of all securities that such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, more than 35% of the total outstanding Voting Stock of
the surviving corporation; or (iv) the Company is liquidated or dissolved or
adopts a plan of liquidation or dissolution other than in a transaction which
complies with the provisions described under Article Eight herein. For purposes
of this definition, any transfer of an equity interest of an entity that was
formed for the purpose of acquiring

                                      -5-



voting stock of the Company will be deemed to be a transfer of such portion of
such voting stock as corresponds to the portion of the equity of such entity
that has been so transferred.

                  "Class A Common Stock" means the Company's Class A Common
Stock, par value $.01 per share, or any successor common stock thereto.

                  "Clearstream" means Clearstream Banking, societe anonyme (or
any successor securities clearing agency).

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Securities Act, Exchange Act
and Trust Indenture Act then the body performing such duties at such time.

                  "Commodity Price Protection Agreement" means any forward
contract, commodity swap, commodity option or other similar financial agreement
or arrangement relating to, or the value which is dependent upon, fluctuations
in commodity prices.

                  "Company" means Sonic Automotive, Inc., a corporation
incorporated under the laws of Delaware, until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.

                  "Company Request" or "Company Order" means a written request
or order signed in the name of the Company by any one of its Chairman of the
Board, its President, its Chief Executive Officer, its Chief Financial Officer
or a Vice President (regardless of Vice Presidential designation), and by any
one of its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.

                  "Consolidated Fixed Charge Coverage Ratio" of any Person
means, for any period, the ratio of (a) the sum of Consolidated Net Income
(Loss), and in each case to the extent deducted in computing Consolidated Net
Income (Loss) for such period, Consolidated Interest Expense, Consolidated
Income Tax Expense and Consolidated Non-cash Charges for such period, of such
Person and its Restricted Subsidiaries on a Consolidated basis, all determined
in accordance with GAAP, less all noncash items increasing Consolidated Net
Income for such period and less all cash payments during such period relating to
noncash charges that were added back to Consolidated Net Income in determining
the Consolidated Fixed Charge Coverage Ratio in any prior period to (b) the sum
of Consolidated Interest Expense for such period and cash and noncash dividends
paid on any Preferred Stock of such Person during such period, in each case
after giving pro forma effect to (i) the incurrence of the Indebtedness giving
rise to the

                                      -6-



need to make such calculation and (if applicable) the application of the net
proceeds therefrom, including to refinance other Indebtedness, as if such
Indebtedness was incurred, and the application of such proceeds occurred, on the
first day of such period; (ii) the incurrence, repayment or retirement of any
other Indebtedness by the Company and its Restricted Subsidiaries since the
first day of such period as if such Indebtedness was incurred, repaid or retired
at the beginning of such period (except that, in making such computation, the
amount of Indebtedness under any revolving credit facility shall be computed
based upon the average daily balance of such Indebtedness during such period);
(iii) in the case of Acquired Indebtedness or any acquisition occurring at the
time of the incurrence of such Indebtedness, the related acquisition, assuming
such acquisition had been consummated on the first day of such period; and (iv)
any acquisition or disposition by the Company and its Restricted Subsidiaries of
any company or any business or any assets out of the ordinary course of
business, whether by merger, stock purchase or sale or asset purchase or sale,
or any related repayment of Indebtedness, in each case since the first day of
such period, assuming such acquisition or disposition had been consummated on
the first day of such period; provided that (i) in making such computation, the
Consolidated Interest Expense attributable to interest on any Indebtedness
computed on a pro forma basis and (A) bearing a floating interest rate shall be
computed as if the rate in effect on the date of computation had been the
applicable rate for the entire period and (B) which was not outstanding during
the period for which the computation is being made but which bears, at the
option of such Person, a fixed or floating rate of interest, shall be computed
by applying at the option of such Person either the fixed or floating rate and
(ii) in making such computation, the Consolidated Interest Expense of such
Person attributable to interest on any Indebtedness under a revolving credit
facility computed on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the applicable period.

                  "Consolidated Income Tax Expense" of any Person means, for any
period, the provision for federal, state, local and foreign income taxes of such
Person and its Consolidated Restricted Subsidiaries for such period as
determined in accordance with GAAP.

                  "Consolidated Interest Expense" of any Person means, without
duplication, for any period, the sum of (a) the interest expense of such Person
and its Restricted Subsidiaries for such period, on a Consolidated basis (other
than interest expense under any Inventory Facility), including, without
limitation, (i) amortization of debt discount, (ii) the net costs associated
with Interest Rate Agreements, Currency Hedging Agreements and Commodity Price
Protection Agreements (including amortization of discounts), (iii) the interest
portion of any deferred payment obligation, (iv) all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers
acceptance financing and (v) accrued interest, plus (b) (i) the interest
component of the Capital Lease Obligations paid, accrued and/or scheduled to be
paid or accrued by such Person and its Restricted Subsidiaries during such
period and (ii) all capitalized interest of such Person and its Restricted
Subsidiaries, plus (c) the interest

                                      -7-



expense under any Guaranteed Debt of such Person and any Restricted Subsidiary
to the extent not included under clause (a)(iv) above, whether or not paid by
such Person or its Restricted Subsidiaries.

                  "Consolidated Net Income (Loss)" of any Person means, for any
period, the Consolidated net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a Consolidated basis as determined in accordance
with GAAP, adjusted, to the extent included in calculating such net income (or
loss), by excluding, without duplication, (i) all extraordinary gains or losses
net of taxes (less all fees and expenses relating thereto), (ii) the portion of
net income (or loss) of such Person and its Restricted Subsidiaries on a
Consolidated basis allocable to minority interests in unconsolidated Persons or
Unrestricted Subsidiaries to the extent that cash dividends or distributions
have not actually been received by such Person or one of its Consolidated
Restricted Subsidiaries, (iii) net income (or loss) of any Person combined with
such Person or any of its Restricted Subsidiaries on a "pooling of interests"
basis attributable to any period prior to the date of combination, (iv) any gain
or loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) gains or losses, net of taxes (less all fees and expenses
relating thereto), in respect of dispositions of assets other than in the
ordinary course of business, (vi) the net income of any Restricted Subsidiary to
the extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, (vii) any
restoration to net income of any contingency reserve, except to the extent
provision for such reserve was made out of income accrued at any time following
July 31, 1998, or (viii) any net gain arising from the acquisition of any
securities or extinguishment, under GAAP, of any Indebtedness of such Person.

                  "Consolidated Non-cash Charges" of any Person means, for any
period, the aggregate depreciation, amortization and other non-cash charges of
such Person and its subsidiaries on a Consolidated basis for such period, as
determined in accordance with GAAP (excluding any non-cash charge which requires
an accrual or reserve for cash charges for any future period).

                  "Consolidated Tangible Assets" of any Person means (a) all
amounts that would be shown as assets on a Consolidated balance sheet of such
Person and its Restricted Subsidiaries prepared in accordance with GAAP, less
(b) the amount thereof constituting goodwill and other intangible assets as
calculated in accordance with GAAP.

                  "Consolidation" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its subsidiaries if and
to the extent the accounts of such Person and each of its subsidiaries would
normally be consolidated with those of such Person, all in accordance with GAAP.
The term "Consolidated" shall have a similar meaning.

                                      -8-



                  "Corporate Trust Office" means the office of the Trustee or an
affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of this Indenture shall be principally administered,
which office at the date of execution of this Indenture is located at 100 Wall
Street, 20th Floor, New York, New York 10005.

                  "Currency Hedging Agreements" means one or more of the
following agreements which shall be entered into by one or more financial
institutions: foreign exchange contracts, currency swap agreements or other
similar agreements or arrangements designed to protect against the fluctuations
in currency values.

                  "Default" means any event which is, or after notice or passage
of any time or both would be, an Event of Default.

                  "Depositary" means, with respect to the Securities
issued in the form of one or more Book-Entry Securities, The Depository Trust
Company ("DTC"), its nominees and successors, or another Person designated as
Depositary by the Company,which must be a clearing agency registered under the
Exchange Act.

                  "Designated Senior Indebtedness" means (i) all Senior
Indebtedness under the Floor Plan Facility or the Revolving Facility and (ii)
any other Senior Indebtedness which at the time of determination has an
aggregate principal amount outstanding of at least $25 million and which is
specifically designated in the instrument evidencing such Senior Indebtedness or
the agreement under which such Senior Indebtedness arises as "Designated Senior
Indebtedness" by the Company.

                  "Disinterested Director" means, with respect to any
transaction or series of related transactions, a member of the Board of
Directors of the Company who does not have any material direct or indirect
financial interest in or with respect to such transaction or series of related
transactions.

                  "Euroclear" means the Euroclear Clearance System (or any
successor securities clearing agency).

                  "Event of Default" has the meaning specified in Section 501.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations promulgated by
the Commission thereunder.

                  "Exchange Offer" means the exchange offer by the Company and
the Guarantors of Series D Securities for Series C Securities or the Company's
outstanding 11% Senior Subordinated Notes due 2008, Series B (the "Series B
Securities") issued pursuant to the B Indenture to be effected pursuant to
Section 2.1 of the Registration Rights Agreement.

                                      -9-


                  "Exchange Offer Registration Statement" means the registration
statement under the Securities Act contemplated by Section 2.1 of the
Registration Rights Agreement.

                  "Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's-length free market
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy. Fair Market Value
shall be determined by the Board of Directors of the Company acting in good
faith and shall be evidenced by a Board Resolution.

                  "Floor Plan Facility" means an agreement from Ford Motor
Credit Company or any other bank or asset-based lender pursuant to which the
Company or any Restricted Subsidiary incurs Indebtedness all of the net proceeds
of which are used to purchase, finance or refinance vehicles and/or vehicle
parts and supplies to be sold in the ordinary course of business of the Company
and its Restricted Subsidiaries and which may not be secured except by a Lien
that does not extend to or cover any property other than the property of the
dealership(s) which use the proceeds of the Floor Plan Facility.

                  "Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States, consistently
applied, which (i) for the purpose of determining compliance with the covenants
contained in this Indenture, were in effect as of July 31, 1998, and (ii) for
purposes of compliance with the reporting requirements contained in this
Indenture, are in effect from time to time.

                  "Global Securities" means the Rule 144A Global Securities, the
Regulation S Global Securities and the Series D Global Securities to be issued
as Book-Entry Securities issued to the Depositary in accordance with Section
306.

                  "Guarantee" means the guarantee by any Guarantor of the
Company's Indenture Obligations.

                  "Guaranteed Debt" of any Person means, without duplication,
all Indebtedness of any other Person referred to in the definition of
Indebtedness below guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person through an
agreement (i) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness, (ii) to purchase, sell or
lease (as lessee or lessor) property, or to purchase or sell services, primarily
for the purpose of enabling the debtor to make payment of such Indebtedness or
to assure the holder of such Indebtedness against loss, (iii) to supply funds
to, or in any other manner invest in, the debtor (including any agreement to pay
for property or services without requiring that such property be received or
such services be rendered), (iv) to maintain working capital or equity capital
of the debtor, or otherwise to maintain the net worth, solvency or other
financial condition of the debtor or to cause

                                      -10-




such debtor to achieve certain levels of financial performance or (v) otherwise
to assure a creditor against loss; provided that the term "guarantee" shall not
include endorsements for collection or deposit, in either case in the ordinary
course of business.

                  "Guarantor" means any Subsidiary which is a guarantor of the
Securities, including any Person that is required to execute a guarantee of the
Securities pursuant to Section 1011 or Section 1013 until a successor replaces
such party pursuant to the applicable provisions of this Indenture and,
thereafter, shall mean such successor.

                  "Holder" means a Person in whose name a Security is registered
in the Security Register.

                  "Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payables
and other accrued current liabilities arising in the ordinary course of
business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit issued under
letter of credit facilities, acceptance facilities or other similar facilities,
(ii) all obligations of such Person evidenced by bonds, notes, debentures or
other similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), but excluding trade payables arising in the ordinary course
of business, (iv) all obligations of such Person under Interest Rate Agreements,
Currency Hedging Agreements or Commodity Price Protection Agreements of such
Person, (v) all Capital Lease Obligations of such Person, (vi) all Indebtedness
referred to in clauses (i) through (v) above of other Persons and all dividends
of other Persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien, upon or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness, (vii) all
Guaranteed Debt of such Person, (viii) all Redeemable Capital Stock issued by
such Person valued at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends, (ix) Preferred Stock of any
Restricted Subsidiary of the Company which is not a Guarantor and (x) any
amendment, supplement, modification, deferral, renewal, extension, refunding or
refinancing of any liability of the types referred to in clauses (i) through
(ix) above. For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Redeemable Capital
Stock, such Fair Market

                                      -11-



Value to be determined in good faith by the board of directors of the issuer of
such Redeemable Capital Stock.

                  "Indenture" means this instrument as originally executed
(including all exhibits and schedules thereto) and as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.

                  "Indenture Obligations" means the obligations of the Company
and any other obligor under this Indenture or under the Securities, including
any Guarantor, to pay principal of, premium, if any, and interest when due and
payable, and all other amounts due or to become due under or in connection with
this Indenture, the Securities and the performance of all other obligations to
the Trustee and the Holders under this Indenture and the Securities, according
to the respective terms hereof and thereof.

                  "Initial Purchasers" means Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Banc of America Securities LLC.

                  "Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.

                  "Interest Rate Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.

                  "Inventory Facility" means any Floor Plan Facility or any
other agreement (including pursuant to a commercial paper program) pursuant to
which the Company or any Restricted Subsidiary incurs Indebtedness, the net
proceeds of which are used to purchase, finance or refinance vehicles and/or
vehicle parts and supplies to be sold in the ordinary course of business of the
Company and its Restricted Subsidiaries and which may not be secured except by
Lien that does not extend to or cover any property other than the property of
the dealership(s) which use the proceeds of the Inventory Facility.

                  "Investment" means, with respect to any Person, directly or
indirectly, any advance, loan (including guarantees), or other extension of
credit or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase, acquisition or ownership by such Person of any
Capital Stock, bonds, notes, debentures or other securities issued or owned by
any other Person and all other items that would be classified as investments on
a balance sheet prepared in accordance with GAAP.

                  "Issue Date" means the original issue date of the Securities
under this Indenture.

                                      -12-



                  "Lien" means any mortgage or deed of trust, charge, pledge,
lien (statutory or otherwise), privilege, security interest, assignment,
deposit, arrangement, easement, hypothecation, claim, preference, priority or
other encumbrance upon or with respect to any property of any kind (including
any conditional sale, capital lease or other title retention agreement, any
leases in the nature thereof, and any agreement to give any security interest),
real or personal, movable or immovable, now owned or hereafter acquired. A
Person will be deemed to own subject to a Lien any property which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, Capitalized Lease Obligation or other title
retention agreement.

                  "Manufacturer" means a vehicle manufacturer which is a party
to a dealership franchise agreement with the Company or any Restricted
Subsidiary.

                  "Maturity" means, when used with respect to the Securities,
the date on which the principal of the Securities becomes due and payable as
therein provided or as provided in this Indenture, whether at Stated Maturity,
the Offer Date or the Redemption Date and whether by declaration of
acceleration, Offer in respect of Excess Proceeds, Change of Control Offer in
respect of a Change of Control, call for redemption or otherwise.

                  "Moody's" means Moody's Investors Service, Inc. or any
successor rating agency.

                  "Net Cash Proceeds" means (a) with respect to any Asset Sale
by any Person, the proceeds thereof (without duplication in respect of all Asset
Sales) in the form of cash or Temporary Cash Investments including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed of for, cash or Temporary Cash Investments (except
to the extent that such obligations are financed or sold with recourse to the
Company or any Restricted Subsidiary) net of (i) brokerage commissions and other
reasonable fees and expenses (including fees and expenses of counsel and
investment bankers) related to such Asset Sale, (ii) provisions for all taxes
payable as a result of such Asset Sale, (iii) payments made to retire
Indebtedness where payment of such Indebtedness is secured by the assets or
properties the subject of such Asset Sale, (iv) amounts required to be paid to
any Person (other than the Company or any Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (v) appropriate
amounts to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected in an Officers'
Certificate delivered to the Trustee and (b) with respect to any issuance or
sale of Capital Stock or options, warrants or rights to purchase Capital Stock,
or debt securities or Capital Stock that have been converted

                                      -13-



into or exchanged for Capital Stock as referred to in Section 1009, the proceeds
of such issuance or sale in the form of cash or Temporary Cash Investments
including payments in respect of deferred payment obligations when received in
the form of, or stock or other assets when disposed of for, cash or Temporary
Cash Investments (except to the extent that such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary), net of
attorney's fees, accountant's fees and brokerage, consultation, underwriting and
other fees and expenses actually incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof.

                  "Non-U.S. Person" means a Person that is not a "U.S. person"
as defined in Regulation S under the Securities Act.

                  "Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President, the Chief Executive Officer, the Chief
Financial Officer or a Vice President (regardless of Vice Presidential
designation), and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company or any Guarantor, as the case may be, and in
form and substance reasonably satisfactory to, and delivered to, the Trustee.

                  "Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, any Guarantor or the Trustee, unless an Opinion
of Independent Counsel is required pursuant to the terms of this Indenture, and
who shall be acceptable to the Trustee, and which opinion shall be in form and
substance reasonably satisfactory to the Trustee.

                  "Opinion of Independent Counsel" means a written opinion of
counsel which is issued by a Person who is not an employee, director or
consultant (other than non-employee legal counsel) of the Company or any
Guarantor and who shall be acceptable to the Trustee, and which opinion shall be
in form and substance reasonably satisfactory to the Trustee.

                  "Outstanding" when used with respect to Securities means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:

                  (a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;

                  (b) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company or an Affiliate thereof) in
trust or set aside and segregated in trust by the Company or an Affiliate
thereof (if the Company or an Affiliate thereof shall act as its own Paying
Agent) for the Holders of such Securities; provided that if such Securities are
to be redeemed, notice of such redemption has been duly given

                                      -14-



pursuant to this Indenture or provision therefor reasonably satisfactory to the
Trustee has been made;

                  (c) Securities, to the extent provided in Sections 402 and
403, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Four; and

                  (d) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this Indenture,
other than any such Securities in respect of which there shall have been
presented to the Trustee and the Company proof reasonably satisfactory to each
of them that such Securities are held by a bona fide purchaser in whose hands
the Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company, any Guarantor, or any other obligor upon the Securities or any
Affiliate of the Company, any Guarantor or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the reasonable satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the Company,
any Guarantor or any other obligor upon the Securities or any Affiliate of the
Company, any Guarantor or such other obligor.

                  "Pari Passu Indebtedness" means (a) any Indebtedness of the
Company that is pari passu in right of payment to the Securities (including,
without limitation, the Series B Securities) and (b) with respect to any
Guarantee, Indebtedness which ranks pari passu in right of payment to such
Guarantee including without limitation, the Guarantees with respect to the
Series B Securities.

                  "Paying Agent" means any Person (including the Company)
authorized by the Company to pay the principal of, premium, if any, or interest
on, any Securities on behalf of the Company.

                  "Permitted Holders" means (i) Mr. O. Bruton Smith or Mr.
William S. Egan and their respective guardians, conservators, committees, or
attorneys-in-fact; (ii) lineal descendants of Mr. Smith or Mr. Egan (in either
case, a "Descendant") and their respective guardians, conservators, committees
or attorneys-in-fact; and (iii) each "Family Controlled Entity" (as defined
herein). 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

                                      -15-



least 80% of the value of its outstanding equity is owned by a Permitted
Holder; (c) any partnership if at least 80% of the value of the partnership
interests are owned by a Permitted Holder; (d) any limited liability or similar
company if at least 80% of the value of the company is owned by a Permitted
Holder; and (e) any trusts created for the benefit of any of the persons listed
in (i) or (ii) of the prior sentence.


                  "Permitted Investment" means (i) Investments in any Wholly
Owned Restricted Subsidiary or any Person which, as a result of such Investment,
(a) becomes a Wholly Owned Restricted Subsidiary or (b) is merged or
consolidated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or any Wholly Owned Restricted
Subsidiary; (ii) Indebtedness of the Company or a Restricted Subsidiary
described under clauses (v), (vi) and (vii) of the definition of "Permitted
Indebtedness"; (iii) Investments in any of the Securities or the Series B
Securities, as the case may be; provided, however, that the aggregate amount of
such Investment shall not exceed $125,000,000; (iv) Temporary Cash Investments;
(v) Investments acquired by the Company or any Restricted Subsidiary in
connection with an Asset Sale permitted under Section 1012 herein to the extent
such Investments are non-cash proceeds as permitted under such covenant; (vi)
any Investment to the extent the consideration therefor consists of Qualified
Capital Stock of the Company or any Restricted Subsidiary; (vii) Investments
representing Capital Stock or obligations issued to the Company or any
Restricted Subsidiary in the ordinary course of the good faith settlement of
claims against any other Person by reason of a composition or readjustment of
debt or a reorganization of any debtor or any Restricted Subsidiary; (viii)
prepaid expenses advanced to employees in the ordinary course of business or
other loans or advances to employees in the ordinary course of business not to
exceed $1 million in the aggregate at any one time outstanding; (ix) Investments
in existence on July 31, 1998; and (x) in addition to the Investments described
in clauses (i) through (ix) above, Investments in an amount not to exceed $10
million in the aggregate at any one time outstanding. In connection with any
assets or property contributed or transferred to any Person as an Investment,
such property and assets shall be equal to the Fair Market Value (as determined
by the Company's Board of Directors) at the time of Investment.

                   "Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

                  "Predecessor Security" of any particular Security means every
previous Security, including without limitation, any Series B Securities
evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 308 in exchange for a mutilated
Security or in lieu of a lost, destroyed or stolen Security shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Security.

                                      -16-



                  "Preferred Stock" means, with respect to any Person, any
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over the Capital Stock of any other class in such Person.

                   "Prospectus" means the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Series C Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.

                  "Purchase Money Obligation" means any Indebtedness secured by
a Lien on assets related to the business of the Company and any additions and
accessions thereto, which are purchased by the Company at any time after July
31, 1998; provided that (i) the security agreement or conditional sales or other
title retention contract pursuant to which the Lien on such assets is created
(collectively a "Purchase Money Security Agreement") shall be entered into
within 90 days after the purchase or substantial completion of the construction
of such assets and shall at all times be confined solely to the assets so
purchased or acquired, any additions and accessions thereto and any proceeds
therefrom, (ii) at no time shall the aggregate principal amount of the
outstanding Indebtedness secured thereby be increased, except in connection with
the purchase of additions and accessions thereto and except in respect of fees
and other obligations in respect of such Indebtedness and (iii) (A) the
aggregate outstanding principal amount of Indebtedness secured thereby
(determined on a per asset basis in the case of any additions and accessions)
shall not at the time such Purchase Money Security Agreement is entered into
exceed 100% of the purchase price to the Company of the assets subject thereto
or (B) the Indebtedness secured thereby shall be with recourse solely to the
assets so purchased or acquired, any additions and accessions thereto and any
proceeds therefrom.

                  "QIB" means a "Qualified Institutional Buyer" under Rule 144A
under the Securities Act.

                  "Qualified Capital Stock" of any Person means any and all
Capital Stock of such Person other than Redeemable Capital Stock.

                  "Redeemable Capital Stock" means any Capital Stock that,
either by its terms or by the terms of any security into which it is convertible
or exchangeable or otherwise, is or upon the happening of an event or passage of
time would be, required to be redeemed prior to the final Stated Maturity of the
principal of the Securities or is redeemable at the option of the holder thereof
at any time prior to such final Stated

                                      -17-



Maturity (other than upon a change of control of the Company in circumstances
where a Holder would have similar rights), or is convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof.

                  "Redemption Date" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the date fixed for
such redemption by or pursuant to this Indenture.

                  "Redemption Price" when used with respect to any Security to
be redeemed pursuant to any provision in this Indenture means the price at which
it is to be redeemed pursuant to this Indenture.

                  "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of November 19, 2001, among the Company, the Guarantors and
the Initial Purchasers.

                  "Registration Statement" means any registration statement of
the Company and the Guarantors which covers the sale or issuance of any of the
Series C Securities (and related guarantees) or Series D Securities (and related
guarantees) pursuant to the provisions of the Registration Rights Agreement, and
all amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.

                  "Regular Record Date" for the interest payable on any Interest
Payment Date means the January 15 or July 15 (whether or not a Business Day)
next preceding such Interest Payment Date.

                  "Regulation S" means Regulation S under the Securities Act, as
amended from time to time.

                  "Regulation S Global Securities" means one or more permanent
global Securities in registered form representing the aggregate principal amount
of Securities sold in reliance on Regulation S under the Securities Act.

                  "Responsible Officer" when used with respect to the Trustee
means any officer or employee assigned to the Corporate Trust Office or any
agent of the Trustee appointed hereunder, including any vice president,
assistant vice president, secretary, assistant secretary, or any other officer
or assistant officer of the Trustee or any agent of the Trustee appointed
hereunder to whom any corporate trust matter is referred because of his or her
knowledge of and familiarity with the particular subject.

                  "Replacement Assets" means properties and assets (other than
cash or any Capital Stock or other security) that will be used in a business of
the Company or its

                                      -18-



Restricted Subsidiaries existing on July 31, 1998 or in business reasonably
related thereto.

                  "Restricted Subsidiary" means any Subsidiary of the Company
that has not been designated by the Board of Directors of the Company by a Board
Resolution delivered to the Trustee as an Unrestricted Subsidiary pursuant to
and in compliance with Section 1018 herein.

                  "Revolving Facility" means the Credit Agreement among the
Company, the Guarantors and Ford Motor Credit Company, dated as of December 15,
1997, as such agreement, in whole or in part, may have been or may be amended,
renewed, extended, substituted, refinanced, restructured, replaced, supplemented
or otherwise modified from time to time (including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplementations or other modifications of the foregoing).

                  "Rule 144A" means Rule 144A under the Securities Act, as
amended from time to time.

                  "Rule 144A Global Securities" means one or more permanent
global Securities in registered form representing the aggregate principal amount
of Securities sold in reliance on Rule 144A under the Securities Act.

                  "S&P" means Standard & Poor's Rating Group, a division of
McGraw Hill, Inc. or any successor rating agency.

                  "Securities Act" means the Securities Act of 1933, as amended,
or any successor statute and the rules and regulations promulgated by the
Commission thereunder.

                  "Senior Guarantor Indebtedness" means the principal of,
premium, if any, and interest (including interest, to the extent allowable,
accruing after the filing of a petition initiating any proceeding under any
state, federal or foreign bankruptcy law) on any Indebtedness of any Guarantor
(other than as otherwise provided in this definition), whether outstanding on
July 31, 1998 or thereafter created, incurred or assumed, and whether at any
time owing, actually or contingent, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to any Guarantee. Notwithstanding the
foregoing, "Senior Guarantor Indebtedness" shall (x) include the Floor Plan
Facility and the Revolving Facility to the extent any Guarantor is a party
thereto and (y) not include (i) Indebtedness evidenced by the Guarantees or the
Guarantees with respect to the Series B Securities, (ii) Indebtedness that is
subordinated or junior in right of payment to any Indebtedness of any Guarantor,
(iii) Indebtedness which when incurred and without respect to any election under
Section 1111(b) of Title 11 United States Code is without recourse to any
Guarantor,

                                      -19-



(iv) Indebtedness which is represented by Redeemable Capital Stock, (v) any
liability for foreign, federal, state, local or other taxes owed or owing by any
Guarantor to the extent such liability constitutes Indebtedness, (vi)
Indebtedness of any Guarantor to a Subsidiary or any other Affiliate of the
Company or any of such Affiliate's Subsidiaries, (vii) to the extent it might
constitute Indebtedness, amounts owing for goods, materials or services
purchased in the ordinary course of business or consisting of trade accounts
payable owed or owing by such Guarantor, and amounts owed by such Guarantor for
compensation to employees or services rendered to such Guarantor, (viii) that
portion of any Indebtedness which at the time of issuance is issued in violation
of this Indenture and (ix) Indebtedness evidenced by any guarantee of any
Subordinated Indebtedness or Pari Passu Indebtedness.

                  "Senior Indebtedness" means the principal of, premium, if any,
and interest (including interest, to the extent allowable, accruing after the
filing of a petition initiating any proceeding under any state, federal or
foreign bankruptcy law) on any Indebtedness of the Company (other than as
otherwise provided in this definition), whether outstanding on July 31, 1998 or
thereafter created, incurred or assumed, and whether at any time owing, actually
or contingent, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Notes. Notwithstanding the foregoing, "Senior
Indebtedness" shall (x) include the Floor Plan Facility and the Revolving
Facility to the extent the Company is a party thereto and (y) not include (i)
Indebtedness evidenced by the Securities or the Series B Securities, (ii)
Indebtedness that is subordinate or junior in right of payment to any
Indebtedness of the Company, (iii) Indebtedness which when incurred and without
respect to any election under Section 1111(b) of Title 11 United States Code is
without recourse to the Company, (iv) Indebtedness which is represented by
Redeemable Capital Stock, (v) any liability for foreign, federal, state, local
or other taxes owed or owing by the Company to the extent such liability
constitutes Indebtedness, (vi) Indebtedness of the Company to a Subsidiary or
any other Affiliate of the Company or any of such Affiliate's Subsidiaries,
(vii) to the extent it might constitute Indebtedness, amounts owing for goods,
materials or services purchased in the ordinary course of business or consisting
of trade accounts payable owed or owing by the Company, and amounts owed by the
Company for compensation to employees or services rendered to the Company,
(viii) that portion of any Indebtedness which at the time of issuance is issued
in violation of this Indenture and (ix) Indebtedness evidenced by any guarantee
of any Subordinated Indebtedness or Pari Passu Indebtedness.

                  "Senior Representative" means the agent, indenture trustee or
other trustee or representative for any Senior Indebtedness.

                                      -20-



                  "Series D Global Securities" means one or more permanent
Global Securities in registered form representing the aggregate principal amount
of Series D Securities exchanged for Series C Securities or Series B Securities
pursuant to the Exchange Offer.

                  "Shelf Registration Statement" means a "shelf" registration
statement of the Company and the Guarantors pursuant to Section 2.2 of the of
the Registration Rights Agreement, which covers all of the Registrable
Securities (as defined in the Registration Rights Agreement) on an appropriate
form under Rule 415 under the Securities Act, or any similar rule that may be
adopted by the Commission, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

                  "Significant Restricted Subsidiary" means, at any particular
time, any Restricted Subsidiary that, together with the Restricted Subsidiaries
of such Restricted Subsidiary (i) accounted for more than 5% of the Consolidated
revenues of the Company and its Restricted Subsidiaries for their most recently
completed fiscal year or (ii) is or are the owner(s) of more than 5% of the
Consolidated assets of the Company and its Restricted Subsidiaries as at the end
of such fiscal year, all as calculated in accordance with GAAP and as shown on
the Consolidated financial statements of the Company and its Restricted
Subsidiaries for such fiscal year.

                  "Smith Subordinated Loan" means the subordinated loan from O.
Bruton Smith to the Company in the principal amount of $5.5 million in existence
on the Issue Date.

                  "Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 309.

                  "Stated Maturity" means, when used with respect to any
Indebtedness or any installment of interest thereon, the dates specified in such
Indebtedness as the fixed date on which the principal of such Indebtedness or
such installment of interest, as the case may be, is due and payable.

                  "Subordinated Indebtedness" means Indebtedness of the Company
or a Guarantor subordinated in right of payment to the Securities or the
Guarantee of such Guarantor, as the case may be.

                  "Subsidiary" of a Person means (i) any corporation more than
50% of the outstanding voting power of the Voting Stock of which is owned or
controlled, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person, or by such Person and one or more other
Subsidiaries thereof, or (ii) any limited partnership of which such Person or
any Subsidiary of such Person is a general partner, or (iii) any other Person in
which such Person, or one or more other Subsidiaries of such Person, or such

                                      -21-



Person and one or more other Subsidiaries, directly or indirectly, has more than
50% of the outstanding partnership or similar interests or has the power, by
contract or otherwise, to direct or cause the direction of the policies,
management and affairs thereof.

                  "Successor Security" of any particular Security means every
Security issued after, and evidencing all or a portion of the same debt as that
evidenced by, such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 307 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall
be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.

                  "Temporary Cash Investments" means (i) any evidence of
Indebtedness, maturing not more than one year after the date of acquisition,
issued by the United States of America, or an instrumentality or agency thereof,
and guaranteed fully as to principal, premium, if any, and interest by the
United States of America, (ii) any certificate of deposit, maturing not more
than one year after the date of acquisition, issued by, or time deposit of, a
commercial banking institution that is a member of the Federal Reserve System
and that has combined capital and surplus and undivided profits of not less than
$500 million, whose debt has a rating, at the time as of which any investment
therein is made, of "P-1" (or higher) according to Moody's or any successor
rating agency or "A-1" (or higher) according to S&P or any successor rating
agency, (iii) commercial paper, maturing not more than one year after the date
of acquisition, issued by a corporation (other than an Affiliate or Subsidiary
of the Company) organized and existing under the laws of the United States of
America with a rating, at the time as of which any investment therein is made,
of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P,
and (iv) any money market deposit accounts issued or offered by a domestic
commercial bank having capital and surplus in excess of $500 million; provided
that the short term debt of such commercial bank has a rating, at the time of
Investment, of "P-1" (or higher) according to Moody's or "A-1" (or higher)
according to S&P.

                  "Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture, until a successor trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor trustee.

                  "Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, or any successor statute.

                  "Unrestricted Subsidiary" means any Subsidiary of the Company
(other than a Guarantor) designated as such pursuant to and in compliance with
Section 1018 herein.

                  "Unrestricted Subsidiary Indebtedness" of any Unrestricted
Subsidiary means Indebtedness of such Unrestricted Subsidiary (i) as to which
neither the Company nor any Restricted Subsidiary is directly or indirectly
liable (by virtue of the Company or

                                      -22-



any such Subsidiary being the primary obligor on, guarantor of, or otherwise
liable in any respect to, such Indebtedness), except Guaranteed Debt of the
Company or any Restricted Subsidiary to any Affiliate, in which case (unless the
incurrence of such Guaranteed Debt resulted in a Restricted Payment at the time
of incurrence) the Company shall be deemed to have made a Restricted Payment
equal to the principal amount of any such Indebtedness to the extent guaranteed
at the time such Affiliate is designated an Unrestricted Subsidiary and (ii)
which, upon the occurrence of a default with respect thereto, does not result
in, or permit any holder of any Indebtedness of the Company or any Subsidiary to
declare, a default on such Indebtedness of the Company or any Subsidiary or
cause the payment thereof to be accelerated or payable prior to its Stated
Maturity; provided that notwithstanding the foregoing any Unrestricted
Subsidiary may guarantee the Securities.

                  "Voting Stock" means Capital Stock of the class or classes
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of such Person (irrespective of whether or not at the time
Capital Stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).

                  "Wholly Owned Restricted Subsidiary" means a Restricted
Subsidiary all the Capital Stock of which (other than directors' qualifying
shares and shares of Capital Stock of a Restricted Subsidiary which a
Manufacturer requires to be held by another Person and which Capital Stock,
together with any related contractual arrangements, has no significant economic
value with respect to distributions of profits or losses in ordinary
circumstances) is owned by the Company or another Wholly Owned Restricted
Subsidiary (other than directors' qualifying shares).

        Section 102. Other Definitions.
                     ------------------

 Term                                                        Defined in
 ----                                                         Section
                                                             ----------

 "Act"                                                          105
 "Agent Members"                                                306
 "Change of Control Offer"                                     1014
 "Change of Control Purchase Date"                             1014
 "Change of Control Purchase Notice"                           1014
 "Change of Control Purchase Price"                            1014
 "covenant defeasance"                                          403
 "Defaulted Interest"                                           309
 "defeasance"                                                   402
 "Defeasance Redemption Date"                                   404
 "Defeased Securities"                                          401
 "Excess Proceeds"                                             1012
 "incur"                                                       1008

                                      -23-



 "Offer"                                                       1012
 "Offer Date"                                                  1012
 "Offered Price"                                               1012
 "Pari Passu Debt Amount"                                      1012
 "Pari Passu Offer"                                            1012
 "Permitted Indebtedness"                                      1008
 "Permitted Payment"                                           1009
 "Private Placement Legend"                                     202
 "Purchase Money Security Agreement"                            101
 "refinancing"                                                 1008
 "Required Filing Date"                                        1019
 "Restricted Payments"                                         1009
 "Securities"                                              Recitals
 "Security Amount"                                             1012
 "Security Register"                                            305
 "Security Registrar"                                           305
 "Series C Securities"                                     Recitals
 "Series D Securities"                                     Recitals
 "Special Payment Date"                                         309
 "Surviving Entity"                                             801
 "Surviving Guarantor Entity"                                   801
 "U.S. Government Obligations"                                  404


        Section 103. Compliance Certificates and Opinions.
                     -------------------------------------

                  Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture and as may be requested
by the Trustee, the Company and any Guarantor (if applicable) and any other
obligor on the Securities (if applicable) shall furnish to the Trustee an
Officers' Certificate in a form and substance reasonably acceptable to the
Trustee stating that all conditions precedent, if any, provided for in this
Indenture (including any covenant compliance with which constitutes a condition
precedent) relating to the proposed action have been complied with, and an
Opinion of Counsel in a form and substance reasonably acceptable to the Trustee
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that, in the case of any such application
or request as to which the furnishing of such certificates or opinions is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

                  Every certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:

                                      -24-



                  (a) a statement that each individual signing such certificate
or individual or firm signing such opinion has read and understands such
covenant or condition and the definitions herein relating thereto;

                  (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;

                  (c) a statement that, in the opinion of each such individual
or such firm, he or it has made such examination or investigation as is
necessary to enable him or it to express an informed opinion as to whether or
not such covenant or condition has been complied with; and

                  (d) a statement as to whether, in the opinion of each such
individual or such firm, such condition or covenant has been complied with.

       Section 104. Form of Documents Delivered to Trustee.
                    ---------------------------------------

                  In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

                  Any certificate of an officer of the Company, any Guarantor or
other obligor on the Securities may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer has actual knowledge that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company, any Guarantor or
other obligor on the Securities stating that the information with respect to
such factual matters is in the possession of the Company, any Guarantor or other
obligor on the Securities, unless such officer or counsel has actual knowledge
that the certificate or opinion or representations with respect to such matters
are erroneous. Opinions of Counsel required to be delivered to the Trustee may
have qualifications customary for opinions of the type required and counsel
delivering such Opinions of Counsel may rely on certificates of the Company or
government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact, including that various
financial covenants have been complied with.

                  Any certificate or opinion of an officer of the Company, any
Guarantor or other obligor on the Securities may be based, insofar as it relates
to accounting matters,

                                      -25-



upon a certificate or opinion of, or representations by, an accountant or firm
of accountants in the employ of the Company, unless such officer has actual
knowledge that the certificate or opinion or representations with respect to the
accounting matters upon which his certificate or opinion may be based are
erroneous. Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent with respect to the Company.

                  Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.

        Section 105. Acts of Holders.
                     ---------------

                  (a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section 105.

                  (b) The ownership of Securities shall be proved by the
Security Register.

                  (c) Any request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holder of any Security shall bind every
future Holder of the same Security or the Holder of every Security issued upon
the transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, suffered or omitted to be done by the Trustee, any Paying Agent
or the Company, any Guarantor or any other obligor of the Securities in reliance
thereon, whether or not notation of such action is made upon such Security.

                  (d) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any

                                      -26-



such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Trustee deems sufficient.

                  (e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of such Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding Trust
Indenture Act Section 316(c), any such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
more than 30 days prior to the first solicitation of Holders generally in
connection therewith and no later than the date such first solicitation is
completed.

                  If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for purposes of
determining whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for this
purpose the Securities then Outstanding shall be computed as of such record
date; provided that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after such record date.

                  (f) For purposes of this Indenture, any action by the Holders
which may be taken in writing may be taken by electronic means or as otherwise
reasonably acceptable to the Trustee.

      Section 106. Notices, etc., to the Trustee, the Company and any Guarantor.
                   -------------------------------------------------------------

                  Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with:

                  (a) the Trustee by any Holder or by the Company or any
Guarantor or any other obligor on the Securities shall be sufficient for every
purpose (except as provided in Section 501(c)) hereunder if in writing and
mailed, first-class postage prepaid, or delivered by recognized overnight
courier, to or with the Trustee at its Corporate Trust Office, or at any other
address previously furnished in writing to the Holders or the Company, any
Guarantor or any other obligor on the Securities by the Trustee; or

                  (b) the Company or any Guarantor by the Trustee or any Holder
shall be sufficient for every purpose (except as provided in Section 501(c))
hereunder if in writing

                                      -27-



and mailed, first-class postage prepaid, or delivered by
recognized overnight courier, to the Company or such Guarantor addressed to it
c/o Sonic Automotive, Inc., 5401 East Independence Boulevard, Charlotte, North
Carolina 28212, Attention: Chief Financial Officer or at any other address
previously furnished in writing to the Trustee by the Company or such Guarantor.

       Section 107. Notice to Holders; Waiver.
                    --------------------------

                  Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, or
delivered by recognized overnight courier, to each Holder affected by such
event, at its address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice when mailed to a Holder in the aforesaid manner shall
be conclusively deemed to have been received by such Holder whether or not
actually received by such Holder. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.

                  In case by reason of the suspension of regular mail service or
by reason of any other cause, it shall be impracticable to mail notice of any
event as required by any provision of this Indenture, then any method of giving
such notice as shall be reasonably satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.

       Section 108. Conflict with Trust Indenture Act.
                    ----------------------------------

                  If any provision hereof limits, qualifies or conflicts with
any provision of the Trust Indenture Act or another provision which is required
or deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.

       Section 109. Effect of Headings and Table of Contents.
                    -----------------------------------------


                  The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.

                                      -28-



       Section 110. Successors and Assigns.
                    -----------------------

                  All covenants and agreements in this Indenture by the Company
and the Guarantors shall bind their respective successors and assigns, whether
so expressed or not.

       Section 111. Separability Clause.
                    --------------------

                  In case any provision in this Indenture or in the Securities
or Guarantees shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

       Section 112. Benefits of Indenture.
                    ----------------------

                  Nothing in this Indenture or in the Securities or Guarantees,
express or implied, shall give to any Person (other than the parties hereto and
their successors hereunder, any Paying Agent and the Holders) any benefit or any
legal or equitable right, remedy or claim under this Indenture.

       Section 113. GOVERNING LAW.
                    --------------

                  THIS INDENTURE, THE SECURITIES AND THE GUARANTEES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

       Section 114. Legal Holidays.
                    ---------------

                  In any case where any Interest Payment Date, Redemption Date,
Maturity or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal or premium, if any, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on such Interest Payment Date or Redemption Date, or at
the Maturity or Stated Maturity and no interest shall accrue with respect to
such payment for the period from and after such Interest Payment Date,
Redemption Date, Maturity or Stated Maturity, as the case may be, to the next
succeeding Business Day.

       Section 115. Independence of Covenants.
                    --------------------------

                  All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenants, the fact that it would be permitted by an exception to,
or be otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.

                                      -29-



       Section 116. Schedules and Exhibits.
                    -----------------------

                  All schedules and exhibits attached hereto are by this
reference made a part hereof with the same effect as if herein set forth in
full.

       Section 117. Counterparts.
                    -------------


                  This Indenture may be executed in any number of counterparts,
each of which shall be deemed an original; but all such counterparts shall
together constitute but one and the same instrument.

                                   ARTICLE TWO

                                 SECURITY FORMS

       Section 201. Forms Generally.
                    ----------------

                  The Securities, the Guarantees and the Trustee's certificate
of authentication thereon shall be in substantially the forms set forth in this
Article Two, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted hereby and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange,
any organizational document or governing instrument or applicable law or as may,
consistently herewith, be determined by the officers executing such Securities
and Guarantees, as evidenced by their execution of the Securities and
Guarantees. Any portion of the text of any Security may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the
Security.

                  The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.

                  Initial Securities offered and sold in reliance on Rule 144A
shall be issued initially in the form of one or more Rule 144A Global
Securities, substantially in the form set forth in Section 202, deposited upon
issuance with the Trustee, as custodian for the Depositary, registered in the
name of the Depositary, or its nominee, in each case for credit to an account of
a direct or indirect participant of the Depositary, duly executed by the Company
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Rule 144A Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.

                                      -30-



                  Initial Securities offered and sold in reliance on Regulation
S shall be issued in the form of one or more Regulation S Global Securities,
substantially in the form set forth in Section 202, deposited upon issuance with
the Trustee, as custodian for the Depositary, registered in the name of the
Depositary, or its nominee in each case for credit by the Depositary to an
account of a direct or indirect participant of the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided; provided,
however, that upon such deposit through and including the 40th day after the
later of the commencement of the Offering and the original issue date of the
Securities (such period through and including such 40th day, the "Restricted
Period"), all such Securities shall be credited to or through accounts
maintained at the Depositary by or on behalf of Euroclear or Clearstream unless
exchanged for interests in the Rule 144A Global Securities in accordance with
the transfer and certification requirements described below. The aggregate
principal amount of the Regulation S Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.

                  Series D Securities exchanged for Series C Securities or
Series B Securities shall be issued initially in the form of one or more Series
D Global Securities, substantially in the form set forth in Section 202,
deposited upon issuance with the Trustee, as custodian for the Depositary,
registered in the name of the Depositary or its nominee, in each case for credit
to an account of a direct or indirect participant of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Series D Global Securities may
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.

       Section 202. Form of Face of Security.
                    -------------------------

                  (a) The form of the face of any Series C Securities
authenticated and delivered hereunder shall be substantially as follows:

                  Unless and until (i) a Series C Security is sold under an
effective Registration Statement or (ii) a Series C Security is exchanged for a
Series D Security in connection with an effective Registration Statement, in
each case pursuant to the Registration Rights Agreement, then such Security
shall bear the legend set forth below (the "Private Placement Legend") on the
face thereof:

                  THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
                  SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
                  PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
                  TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
                  THE ABSENCE OF

                                      -31-



                  SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
                  EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AS SET FORTH
                  BELOW.

                  BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
                  IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
                  144A UNDER THE SECURITIES ACT ("RULE 144A")) OR (B) IT IS NOT
                  A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
                  TRANSACTION, (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
                  SUCH SECURITY PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
                  LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
                  WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
                  OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)
                  ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
                  STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
                  SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
                  FOR RESALE PURSUANT TO RULE 144A INSIDE THE UNITED STATES, TO
                  A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
                  BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN
                  ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
                  TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
                  RELIANCE ON RULE 144A, (D) OUTSIDE THE UNITED STATES PURSUANT
                  TO OFFERS AND SALES TO NON-U.S. PERSONS IN AN OFFSHORE
                  TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE
                  SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
                  FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
                  SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY
                  SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSES (D) OR
                  (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
                  CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
                  THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT
                  A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
                  SIDE OF THIS
                                      -32-



                  SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
                  TRUSTEE. AS USED HEREIN, THE TERMS "UNITED STATES," "OFFSHORE
                  TRANSACTION," AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS
                  GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

                  [Legend if Security is a Global Security]

                  THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
                  INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
                  NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
                  SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
                  BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
                  OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
                  NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
                  SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
                  RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE
                  INDENTURE.

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
                  REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
                  CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
                  REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
                  CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
                  IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
                  REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
                  OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
                  REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
                  HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
                  INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
                  INTEREST HEREIN.

                  THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER
                  AND TO THE EXTENT SET FORTH IN ARTICLE FOURTEEN OF THE
                  INDENTURE TO THE OBLIGATIONS (INCLUDING

                                      -33-



                  INTEREST) OWED BY THE COMPANY AND CERTAIN OF ITS SUBSIDIARIES
                  TO ALL SENIOR INDEBTEDNESS; AND EACH HOLDER HEREOF BY ITS
                  ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE
                  SUBORDINATION AS SET FORTH IN SAID ARTICLE FOURTEEN OF THE
                  INDENTURE."

                                      -34-



                             SONIC AUTOMOTIVE, INC.
                               ------------------

                 11% SENIOR SUBORDINATED NOTE DUE 2008, SERIES C

                                                            CUSIP NO. 83545GAC6

No. 1                                                       $75,000,000



                  Sonic Automotive, Inc., a Delaware corporation (herein called
the "Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
___________ or registered assigns, the principal sum of $75,000,000 United
States dollars, or such other principal amount (which, when taken together with
the principal amounts of all other Outstanding Securities, shall not exceed
$75,000,000 less the principal amount of Securities redeemed by the Company in
accordance with the Indenture) as may be set forth on the Security Register on
Appendix A hereto in accordance with the Indenture, on August 1, 2008, at the
office or agency of the Company referred to below, and to pay interest thereon
from November 19, 2001, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semiannually on February 1and
August 1 in each year, commencing February 1, 2002 at the rate of 11% per annum,
subject to adjustments as described in the second following paragraph, in United
States dollars, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year comprised of twelve
30-day months.

                  The Holder of this Series C Security is entitled to the
benefits of the Registration Rights Agreement among the Company, the Guarantors
and the Initial Purchasers, dated November 19, 2001, pursuant to which, subject
to the terms and conditions thereof, the Company and the Guarantors are
obligated to consummate the Exchange Offer pursuant to which the Holder of this
Security (and related Guarantees) shall have the right to exchange this Security
(and related Guarantees) for 11% Senior Subordinated Notes due 2008, Series D
and related Guarantees (herein called the "Series D Securities") in like
principal amount as provided therein. The Series C Securities and the Series D
Securities are together (including related Guarantees) referred to as the
"Securities." The Series C Securities rank pari passu in right of payment with
the Series D Securities. Pursuant to the Registration Rights Agreement, the
holders of the Company's $125,000,000 11% Senior Subordinated Notes due 2008,
Series B (the "Series B Notes") will also be offered the opportunity to exchange
their Series B Notes for Series D Securities.

                  In the event that (a) the Exchange Offer Registration
Statement is not filed with the Commission on or prior to the 60th calendar day
following the date of original

                                      -35-



issue of the Series C Securities, (b) the Exchange Offer Registration Statement
has not been declared effective on or prior to the 135th calendar day following
the date of original issue of the Series C Securities, (c) the Exchange Offer is
not consummated or a Shelf Registration Statement is not declared effective, in
either case, on or prior to the 165th calendar day following the date of
original issue of the Series C Securities or (d) the Shelf Registration
Statement is declared effective but shall thereafter become unusable for more
than 30 days in the aggregate (each such event referred to in clauses (a)
through (d) above, a "Registration Default"), the interest rate borne by the
Series C Securities shall be increased by one-quarter of one percent per annum
upon the occurrence of each Registration Default, which rate (as increased
aforesaid) will increase by an additional one quarter of one percent each 90-day
period that such additional interest continues to accrue under any such
circumstance, with an aggregate maximum increase in the interest rate equal to
one percent (1%) per annum. The Shelf Registration Statement will be required to
remain effective until the second anniversary of the Series C Securities.
Following the cure of all Registration Defaults, the accrual of additional
interest will cease and the interest rate will revert to the original rate.

                  The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security (or any Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the January 15 or July 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid, or duly provided for, and interest on such
defaulted interest at the interest rate borne by the Series C Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may either be paid to the Person in whose name this Security
(or any Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by this Indenture not inconsistent with the requirements of such
exchange, all as more fully provided in this Indenture.

                  Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of the Security, will be made at the
office or agency of the Company in The City of New York maintained for that
purpose (which initially will be a corporate trust office of the Trustee located
at 100 Wall Street, 20th Floor, New York, New York, 10005), or at such other
office or agency as may be maintained for such purpose, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that payment of interest
may be made at the option of the Company by check mailed to the address of the
Person entitled thereto as such address shall appear on the Security Register.

                                      -36-



                  Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

                  This Security is entitled to the benefits of the Guarantees by
the Guarantors of the punctual payment when due and performance of the Indenture
Obligations made in favor of the Trustee for the benefit of the Holders.
Reference is made to Article Thirteen of the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations under the
Guarantees of the Guarantors.

                  Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.

                  IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by the manual or facsimile signature of its authorized
officers.

                                        Sonic Automotive, Inc.

                                        By:
                                           ------------------------------------
                                        Name:
                                        Title:

Attest:

- ------------------------------------
Name:
Title:

                                      -37-



                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

                  This is one of the 11% Senior Subordinated Notes due 2008,
Series C referred to in the within-mentioned Indenture.

                                        U.S Bank Trust National Association,
                                            as Trustee



                                        By:
                                           ------------------------------------
                                           Authorized Signer

Dated:








                       OPTION OF HOLDER TO ELECT PURCHASE

                  If you wish to have this Security purchased by the Company
pursuant to Section 1012 or Section 1014, as applicable, of the Indenture, check
the Box: [ ].

                  If you wish to have a portion of this Security purchased by
the Company pursuant to Section 1012 or Section 1014 as applicable, of the
Indenture, state the amount (in original principal amount):

                                $ ---------------



Date:                                   Your Signature:
     ---------------------------------                 -------------------------

(Sign exactly as your name appears on the other side of this Security)

                                      -38-



Signature Guarantee:
                   ----------------------------------------------------------

[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]

                  (b) The form of the face of any Series D Securities
authenticated and delivered hereunder shall be substantially as follows:

                  [Legend if Security is a Global Security]

                  THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
                  INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
                  NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
                  SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
                  BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
                  OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
                  NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
                  SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
                  RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE
                  INDENTURE.

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
                  REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK
                  CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
                  REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
                  CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
                  IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
                  REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
                  OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
                  REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
                  HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
                  INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
                  INTEREST HEREIN.

                                      -39-




                  THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER
                  AND TO THE EXTENT SET FORTH IN ARTICLE FOURTEEN OF THE
                  INDENTURE TO THE OBLIGATIONS (INCLUDING INTEREST) OWED BY THE
                  COMPANY AND CERTAIN OF ITS SUBSIDIARIES TO ALL SENIOR
                  INDEBTEDNESS; AND EACH HOLDER HEREOF BY ITS ACCEPTANCE HEREOF,
                  SHALL BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AS SET
                  FORTH IN SAID ARTICLE FOURTEEN OF THE INDENTURE."

                                      -40-



                             Sonic Automotive, Inc.

                               ------------------

                 11% SENIOR SUBORDINATED NOTE DUE 2008, SERIES D

                                                                 CUSIP NO.
No.                                                            $
   -------------                                                -------------

     Sonic Automotive, Inc., a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay        to
                                                                    -------
or registered assigns, the principal sum of        United States dollars on
                                           -------
August 1, 2008, at the office or agency of the Company referred to below, and
to pay interest thereon from November 19, 2001, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semiannually
on February 1 and August 1 in each year, commencing August 1, 2002 at the rate
of 11% per annum, in United States dollars, until the principal hereof is paid
or duly provided for; provided that to the extent interest has not been paid or
duly provided for with respect to the Series C Security or the 11% Senior
Subordinated Notes due 2008, Series B and related Guarantees (herein called the
"Series B Securities") exchanged for this Series D Security, interest on this
Series D Security shall accrue from the most recent Interest Payment Date to
which interest on the Series C Security or Series B Security which was exchanged
for this Series D Security has been paid or duly provided for, or if no interest
has been paid on the Series C Security, it shall accrue interest from November
19, 2001 with respect to Series C Securities exchanged for Series D Securities.
Interest shall be computed on the basis of a 360-day year comprised of twelve
30-day months.

                  This Series D Security was issued pursuant to the Exchange
Offer pursuant to which the 11% Senior Subordinated Notes due 2008, Series C and
related Guarantees (herein called the "Series C Securities") and the Series B
Securities in like principal amount were exchanged for the Series D Securities
and related Guarantees. The Series D Securities rank pari passu in right of
payment with the Series C Securities and the Series B Securities.

                  In addition, for any period in which a Series C Security
exchanged for this Series D Security was outstanding, in the event that (a) the
Exchange Offer Registration Statement is not filed with the Commission on or
prior to the 60th calendar day following the date of original issue of the
Series C Security, (b) the Exchange Offer Registration Statement has not been
declared effective on or prior to the 135th calendar day following the date
after the original issue of the Series C Security, (c) the Exchange Offer is not
consummated or a Shelf Registration Statement is not declared effective, in
either case,

                                      -41-



on or prior to the 135th calendar day following the date of original issue of
the Series C Security or (d) the Shelf Registration Statement is declared
effective but shall thereafter become unusable for more than 30 days in the
aggregate (each such event referred to in clauses (a) through (d) above, a
"Registration Default"), the interest rate borne by the Series C Securities
shall be increased by one-quarter of one percent per annum upon the occurrence
of each Registration Default, which rate (as increased as aforesaid) will
increase by an additional one quarter of one percent each 90-day period that
such additional interest continues to accrue under any such circumstance, with
an aggregate maximum increase in the interest rate equal to one percent (1%) per
annum. The Shelf Registration Statement will be required to remain effective
until the second anniversary of the issuance of the Series C Securities.
Following the cure of all Registration Defaults the accrual of additional
interest will cease and the interest rate will revert to the original rate;
provided that, to the extent interest at such increased interest rate has been
paid or duly provided for with respect to the Series C Security, interest at
such increased interest rate, if any, on this Series D Security shall accrue
from the most recent Interest Payment Date to which such interest on the Series
C Security has been paid or duly provided for; provided, however, that, if after
any such reduction in interest rate, a different event specified in clause (a),
(b), (c) or (d) above occurs, the interest rate shall again be increased
pursuant to the foregoing provisions.

                  The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security (or any Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the January 15 or July 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid, or duly provided for, and interest on such
defaulted interest at the interest rate borne by the Series D Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may either be paid to the Person in whose name this Security
(or any Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in this Indenture.

                  Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of the Security, will be made at the
office or agency of the Company in The City of New York maintained for such
purpose (which initially will be a corporate trust office of the Trustee located
at 100 Wall Street, 20th Floor, New York, New York, 10005, or at such other
office or agency as may be maintained for such purpose, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that payment of interest
may be made at the option of the Company by check mailed to the

                                      -42-



address of the Person entitled thereto as such address shall appear on the
Security Register.

                  Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

                  This Security is entitled to the benefits of the Guarantees by
the Guarantors of the punctual payment when due and performance of the Indenture
Obligations made in favor of the Trustee for the benefit of the Holders.
Reference is made to Article Thirteen of the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations under the
Guarantees of the Guarantors.

                  Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.

                  IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by the manual or facsimile signature of its authorized
officers.

                                        Sonic Automotive, Inc.

                                        By:
                                              ---------------------------------
                                        Title:
                                              ---------------------------------

Attest:


- ------------------------------------
        Authorized Officer

                                      -43-



                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

                  This is one of the 11% Senior Subordinated Notes due 2008,
Series D referred to in the within-mentioned Indenture.

                                        U.S. Bank Trust National Association,
                                           as Trustee



                                        By:
                                           ------------------------------------
                                           Authorized Signer

Dated:



                       OPTION OF HOLDER TO ELECT PURCHASE

                  If you wish to have this Security purchased by the Company
pursuant to Section 1012 or Section 1014, as applicable, of the Indenture, check
the Box: [ ].

                                      -44-



                  If you wish to have a portion of this Security purchased by
the Company pursuant to Section 1012 or Section 1014 as applicable, of the
Indenture, state the amount (in original principal amount):

                                $
                                 ----------------


Date:                                   Your Signature:
     ---------------------------------                 -------------------------

(Sign exactly as your name appears on the other side of this Security)

Signature Guarantee:
                      ----------------------------------------------------------

[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]

       Section 203. Form of Reverse of Securities.
                    ------------------------------

                  (a) The form of the reverse of the Series C Securities shall
be substantially as follows:




                             Sonic Automotive, Inc.
                 11% Senior Subordinated Note due 2008, Series C

                  This Security is one of a duly authorized issue of Securities
of the Company designated as its 11% Senior Subordinated Notes due 2008, Series
C (herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $75,000,000,
issued under and subject to the terms of an indenture (herein called the
"Indenture") dated as of November 19, 2001, among the Company, the Guarantors
and U.S. Bank Trust National Association, as trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Guarantors, the
Trustee and

                                      -45-




the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered.

                  The Securities are subject to redemption at any time on or
after August 1, 2003, at the option of the Company, in whole or in part, on not
less than 30 nor more than 60 days' prior notice, in amounts of $1,000 or an
integral multiple thereof, at the following redemption prices (expressed as
percentages of the principal amount), if redeemed during the 12-month period
beginning August 1 of the years indicated below:

                                                           Redemption
                          Year                                Price
                          ----                             -----------
                          2003                               105.50%
                          2004                               103.667%
                          2005                               101.833%

and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant record dates to receive interest due on
an Interest Payment Date).


                  If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities or portions thereof to be redeemed pro rata,
by lot or by any other method the Trustee shall deem fair and reasonable.

                  Upon the occurrence of a Change of Control, each Holder may
require the Company to purchase such Holder's Securities in whole or in part in
integral multiples of $1,000, at a purchase price in cash in an amount equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase, pursuant to a Change of Control Offer in accordance
with the procedures set forth in the Indenture.

                  Under certain circumstances, in the event the Net Cash
Proceeds received by the Company from any Asset Sale, which proceeds are not
used to repay permanently any Senior Indebtedness or Senior Guarantor
Indebtedness or invested in Replacement Assets or exceeds a specified amount the
Company will be required to apply such proceeds to the repayment of the
Securities and certain Indebtedness ranking pari passu in right of payment to
the Securities.

                  In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.

                                      -46-



                  In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.

                  If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.

                  The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance with certain conditions set forth therein.

                  The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders and certain
amendments which require the consent of all the Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders under the Indenture and
the Securities and the Guarantees at any time by the Company and the Trustee
with the consent of the Holders of at least a majority in aggregate principal
amount of the Securities at the time Outstanding. The Indenture also contains
provisions permitting the Holders of at least a majority in aggregate principal
amount of the Securities (100% of the Holders in certain circumstances) at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company and the Guarantors with certain provisions of the
Indenture and the Securities and the Guarantees and certain past Defaults under
the Indenture and the Securities and the Guarantees and their consequences. Any
such consent or waiver by or on behalf of the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Security.

                  No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event such
Guarantor or such other obligor is obligated to make payments in respect of the
Securities), which is absolute and unconditional, to pay the principal of,
premium, if any, and interest on, this Security at the times, place, and rate,
and in the coin or currency, herein prescribed.

                  As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security

                                      -47-



Registrar duly executed by, the Holder hereof or its attorney duly authorized in
writing, and  thereupon one or more new Securities, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.

                  Certificated Securities shall be transferred to all beneficial
holders in exchange for their beneficial interests in the Rule 144A Global
Securities or the Regulation S Global Securities, if any, if (x) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such Global Security and a successor Depositary is not appointed by the
Company within 90 days or (y) there shall have occurred and be continuing an
Event of Default and the Security Registrar has received a request from the
Depositary. Upon any such issuance, the Trustee is required to register such
certificated Securities in the name of, and cause the same to be delivered to,
such Person or Persons (or the nominee of any thereof). All such certificated
Securities would be required to include the Private Placement Legend.

                  Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a differing authorized denomination,
as requested by the Holder surrendering the same.

                  At any time when the Company is not subject to Sections 13 or
15(d) of the Exchange Act, upon the written request of a Holder of a Series C
Security, the Company will promptly furnish or cause to be furnished such
information as is specified pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto) to such Holder or to a prospective
purchaser of such Security who such Holder informs the Company is reasonably
believed to be a "Qualified Institutional Buyer" within the meaning of Rule 144A
under the Securities Act, as the case may be, in order to permit compliance by
such Holder with Rule 144A under the Securities Act.

                  No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

                  Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary.

                  THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.

                                      -48-



                  All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.

                  [The Transferee Certificate, in the form of Appendix I hereto,
will be attached to the Series C Security.]

                  (b) The form of the reverse of the Series D Securities shall
be substantially as follows:




                             Sonic Automotive, Inc.
                 11% Senior Subordinated Note due 2008, Series D

                  This Security is one of a duly authorized issue of Securities
of the Company designated as its 11% Senior Subordinated Notes due 2008, Series
D (herein called the "Securities") limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $200,000,000 (less
the principal amount of Series B Securities outstanding), issued under and
subject to the terms of an indenture (herein called the "Indenture") dated as of
November 19, 2001 among the Company, the Guarantors and U.S. Bank Trust National
Association, as trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties, obligations and immunities thereunder of
the Company, the Guarantors, the Trustee and the Holders of the Securities, and
of the terms upon which the Securities are, and are to be, authenticated and
delivered.

                  The Series D Securities are subject to redemption at any time
on or after August 1, 2003, at the option of the Company, in whole or in part,
on not less than 30 nor more than 60 days' prior notice, in amounts of $1,000 or
an integral multiple thereof, at the following redemption prices (expressed as
percentages of the principal amount), if redeemed during the 12-month period
beginning August 1 of the years indicated below:


                                                          Redemption
      Year                                                  Price
      ----                                                ----------
      2003                                                 105.50%
      2004                                                103.667%
      2005                                                101.833%

and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant record dates to receive interest due on
an Interest Payment Date).

                                      -49-



                  If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities or portions thereof to be redeemed pro rata,
by lot or by any other method the Trustee shall deem fair and reasonable.

                  Upon the occurrence of a Change of Control, each Holder may
require the Company to purchase such Holder's Securities in whole or in part in
integral multiples of $1,000, at a purchase price in cash in an amount equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase, pursuant to Change of Control Offer and in accordance
with the procedures set forth in the Indenture.

                  Under certain circumstances, in the event the Net Cash
Proceeds received by the Company from any Asset Sale, which proceeds are not
used to repay permanently any Senior Indebtedness or Senior Guarantor
Indebtedness or invested in Replacement Assets or exceeds a specified amount,
the Company will be required to apply such proceeds to the repayment of the
Securities and certain Indebtedness ranking pari passu in right of payment to
the Securities.

                  In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.

                  In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.

                  If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.

                  The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance with certain conditions set forth therein.

                  The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders and certain
amendments which required the consent of all of the Holders) as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Guarantors and the rights of the Holders
under the Indenture and the Securities and the Guarantees at any time by the
Company and the Trustee with the consent of the Holders of at least a majority
in aggregate principal amount of the Securities at the time

                                      -50-



Outstanding. The Indenture also contains provisions permitting the Holders of at
least a majority in aggregate principal amount of the Securities (100% of the
Holders in certain circumstances) at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company and the
Guarantors with certain provisions of the Indenture and the Securities and the
Guarantees and certain past Defaults under the Indenture and the Securities and
the Guarantees and their consequences. Any such consent or waiver by or on
behalf of the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Security.

                  No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event such
Guarantor or such other obligor is obligated to make payments in respect of the
Securities), which is absolute and unconditional, to pay the principal of, and
premium, if any, and interest on, this Security at the times, place, and rate,
and in the coin or currency, herein prescribed.

                  As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or its attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.

                  Certificated Securities shall be transferred to all beneficial
holders in exchange for their beneficial interests in the Rule 144A Global
Securities or the Regulation S Global Securities if (x) the Depositary notifies
the Company that it is unwilling or unable to continue as Depositary for such
Global Security and a successor Depositary is not appointed by the Company
within 90 days or (y) there shall have occurred and be continuing an Event of
Default and the Security Registrar has received a request from the Depositary.
Upon any such issuance, the Trustee is required to register such certificated
Securities in the name of, and cause the same to be delivered to, such Person or
Persons (or the nominee of any thereof).

                  Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a differing authorized denomination,
as requested by the Holder surrendering the same.

                                      -51-



                  No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

                  Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary.

                  THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.

                  All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.

                  [The Transferee Certificate, in the form of Appendix II
hereto, will be attached to the Series D Security.]

       Section 204. Form of Guarantee.
                    ------------------

                  The form of Guarantee shall be set forth on the Securities
substantially as follows:

                                    GUARANTEE

         For value received, each of the undersigned hereby absolutely, fully
and unconditionally and irrevocably guarantees, jointly and severally with each
other Guarantor, to the holder of this Security the payment of principal of,
premium, if any, and interest on this Security upon which these Guarantees are
endorsed in the amounts and at the time when due and payable whether by
declaration thereof, or otherwise, and interest on the overdue principal and
interest, if any, of this Security, if lawful, and the payment or performance of
all other obligations of the Company under the Indenture or the Securities, to
the holder of this Security and the Trustee, all in accordance with and subject
to the terms and limitations of this Security and Article Thirteen of the
Indenture. This Guarantee will not become effective until the Trustee duly
executes the certificate of authentication on this Security. These Guarantees
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to conflict of law principles thereof.

Dated:

           AUTOBAHN, INC. (a California corporation)
           CAPITOL CHEVROLET AND IMPORTS, INC. (an Alabama corporation)
           COBB PONTIAC CADILLAC, INC. (an Alabama corporation)

                                      -52-



    FA SERVICE CORPORATION (a California corporation)
    FAA AUTO FACTORY, INC. (a California corporation)
    FAA BEVERLY HILLS, INC. (a California corporation)
    FAA CAPITOL F, INC. (a California corporation)
    FAA CAPITOL N, INC. (a California corporation)
    FAA CONCORD H, INC. (a California corporation)
    FAA CONCORD N, INC. (a California corporation)
    FAA CONCORD T, INC. (a California corporation)
    FAA DUBLIN N, INC. (a California corporation)
    FAA DUBLIN VWD, INC. (a California corporation)
    FAA HOLDING CORP. (a California corporation)
    FAA LAS VEGAS H, INC. (a Nevada corporation)
    FAA MARIN D, INC. (a California corporation)
    FAA MARIN F, INC. (a California corporation)
    FAA MARIN LR, INC. (a California corporation)
    FAA POWAY D, INC. (a California corporation)
    FAA POWAY G, INC. (a California corporation)
    FAA POWAY H, INC. (a California corporation)
    FAA POWAY T, INC. (a California corporation)
    FAA SAN BRUNO, INC. (a California corporation)
    FAA SANTA MONICA V, INC. (a California corporation)
    FAA SERRAMONTE H, INC. (a California corporation)
    FAA SERRAMONTE L, INC. (a California corporation)
    FAA SERRAMONTE, INC. (a California corporation)
    FAA STEVENS CREEK, INC. (a California corporation)
    FAA TORRANCE CPJ, INC. (a California corporation)
    FIRSTAMERICA AUTOMOTIVE, INC. (a Delaware corporation)
    FORT MILL CHRYSLER-PLYMOUTH-DODGE INC. (a South Carolina corporation)
    FORT MILL FORD, INC. (a South Carolina corporation)
    FRANCISCAN MOTORS, INC. (a California corporation)
    FREEDOM FORD, INC. (a Florida corporation)
    FRONTIER OLDSMOBILE-CADILLAC, INC. (a North Carolina corporation)
    HMC FINANCE ALABAMA, INC. (an Alabama corporation)
    KRAMER MOTORS INCORPORATED (a California corporation)
    LAWRENCE MARSHALL CHEVROLET, LLC (a Delaware limited liability company)
    LAWRENCE MARSHALL CHEVROLET, L.P. (a Texas limited partnership)
    L DEALERSHIP GROUP, INC. (a Texas corporation)
    MARCUS DAVID CORPORATION (a North Carolina corporation)
    PHILPOTT MOTORS, LTD. (a Texas limited partnership)
    RIVERSIDE NISSAN, INC. (an  Oklahoma corporation)
    ROYAL MOTOR COMPANY, INC. (an Alabama corporation)
    SANTA CLARA IMPORTED CARS, INC. (a California corporation)
    SMART NISSAN, INC. (a California corporation)
    SONIC AUTOMOTIVE - BONDESEN, INC. (a Florida corporation)
    SONIC AUTOMOTIVE OF CHATTANOOGA, LLC (a Tennessee limited liability company)
    SONIC AUTOMOTIVE-CLEARWATER, INC. (a Florida corporation)
    SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER, INC.(a Florida corporation)
    SONIC AUTOMOTIVE F&I, LLC (a Nevada limited liability company)
    SONIC AUTOMOTIVE OF GEORGIA, INC. (a Georgia corporation)
    SONIC AUTOMOTIVE OF NASHVILLE, LLC (a Tennessee limited liability company)
    SONIC AUTOMOTIVE OF NEVADA, INC. (a Nevada corporation)
    SONIC AUTOMOTIVE SERVICING COMPANY, LLC (a Nevada limited liability company)
    SONIC AUTOMOTIVE OF TENNESSEE, INC. (a Tennessee corporation)
    SONIC AUTOMOTIVE OF TEXAS, L.P. (a Texas limited partnership)

                                      -53-



   SONIC AUTOMOTIVE WEST, LLC (a Nevada limited liability company
   SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC. (a Florida corporation)
   SONIC AUTOMOTIVE-1400 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
   SONIC AUTOMOTIVE-1455 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
   SONIC AUTOMOTIVE-1495 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
   SONIC AUTOMOTIVE-1500 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
   SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC. (a Florida corporation)
   SONIC AUTOMOTIVE - 1720 MASON AVE., DB, LLC (a Florida limited liability
                                    company)
   SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC. (a Florida corporation)
   SONIC AUTOMOTIVE - 21699 U.S. HWY 19 N., INC. (a Florida corporation)
   SONIC AUTOMOTIVE - 241 RIDGEWOOD AVE., HH, INC. (a Florida corporation)
   SONIC AUTOMOTIVE 2424 LAURENS RD., GREENVILLE, INC. (a South Carolina
                                  corporation)
   SONIC AUTOMOTIVE - 2490 SOUTH LEE HIGHWAY, LLC (a Tennessee limited liability
                                   company),
   SONIC AUTOMOTIVE 2752 LAURENS RD., GREENVILLE, INC. (a South Carolina
                                  corporation)
   SONIC AUTOMOTIVE - 3401 N. MAIN, TX, L.P. (a Texas limited partnership)
   SONIC AUTOMOTIVE-3700 WEST BROAD STREET, COLUMBUS, INC. (an Ohio corporation)
   SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC. (a Florida corporation)
   SONIC AUTOMOTIVE-4000 WEST BROAD STREET, COLUMBUS, INC. (an Ohio corporation)
   SONIC AUTOMOTIVE - 4701 I-10 EAST, TX, L.P. (a Texas limited partnership)
   SONIC AUTOMOTIVE - 5221 I-10 EAST, TX, L.P. (a Texas limited partnership)
   SONIC AUTOMOTIVE 5260 PEACHTREE INDUSTRIAL BLVD., LLC (a Georgia limited
                               liability company)
   SONIC AUTOMOTIVE-5585 PEACHTREE INDUSTRIAL BLVD., LLC (a Georgia limited
                              liability company),
   SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC. (a Florida corporation)
   SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE,LLC(a Tennessee limited liability
                                    company)
   SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE, NC, LLC (a North Carolina limited
                               liability company)
   SONIC - BETHANY H, INC. (an Oklahoma corporation)
   SONIC - 2185 CHAPMAN RD., CHATTANOOGA, LLC (a Tennessee limited liability
                                    company)
   SONIC - BUENA PARK H, INC. (a California corporation)
   SONIC - CAMP FORD, L.P. (a Texas limited partnership)
   SONIC - CAPITAL CHEVROLET, INC. (an Ohio corporation)
   SONIC - CARROLLTON V, L.P. (a Texas limited partnership)
   SONIC CHRYSLER-PLYMOUTH-JEEP, LLC(a North Carolina limited liability company)
   SONIC - CLASSIC DODGE, INC. (an Alabama corporation)
   SONIC - COAST CADILLAC, INC. (a California corporation)
   SONIC DODGE, LLC (a North Carolina limited liability company)
   SONIC DEVELOPMENT, LLC (a North Carolina limited liability company)
   SONIC - FM AUTOMOTIVE, LLC (a Florida limited liability company)
   SONIC - FM , INC. (a Florida corporation)
   SONIC - FM NISSAN, INC. (a Florida corporation)
   SONIC - FM VW, INC. (a Florida corporation)
   SONIC - FORT WORTH T, L.P. (a Texas limited partnership)
   SONIC - FREELAND, INC. (a Florida corporation)
   SONIC - GLOBAL IMPORTS, L.P. (a Georgia limited partnership)
   SONIC-GLOVER, INC. (an Oklahoma corporation)
   SONIC - HARBOR CITY H, INC. (a California corporation)
   SONIC - HOUSTON V, L.P. (a Texas limited partnership)
   SONIC - INTEGRITY DODGE LV, LLC (a Nevada limited liability company)
   SONIC - LAS VEGAS C EAST, LLC (a Nevada limited liability company)
   SONIC - LAS VEGAS C WEST, LLC (a Nevada limited liability company)

                                      -54-



           SONIC - LLOYD NISSAN, INC. (a Florida corporation)
           SONIC - LLOYD PONTIAC - CADILLAC, INC. (a Florida corporation)
           SONIC - LUTE RILEY, L. P. (a Texas limited partnership)
           SONIC - MANHATTAN FAIRFAX, INC. (a Virginia corporation)
           SONIC - MANHATTAN WALDORF, INC. (a Maryland corporation)
           SONIC-MONTGOMERY FLM, INC. (an Alabama corporation)
           SONIC - NEWSOME CHEVROLET WORLD, INC. (a South Carolina corporation)
           SONIC - NEWSOME OF FLORENCE, INC. (a South Carolina corporation)
           SONIC - NORTH CHARLESTON, INC. (a South Carolina corporation)
           SONIC - NORTH CHARLESTON DODGE, INC. (a South Carolina corporation)
           SONIC - PARK PLACE A, L.P. (a Texas limited partnership)
           (formerly Sonic - Dallas Auto Factory, L.P.)
           SONIC PEACHTREE INDUSTRIAL BLVD., L.P. (a Georgia limited
           partnership)
           SONIC - READING, L.P. (a Texas limited partnership)
           SONIC RESOURCES, INC. (a Nevada corporation)
           SONIC - RICHARDSON F, L.P. (a Texas limited partnership)
           SONIC-RIVERSIDE, INC. (an Oklahoma corporation)
           SONIC - RIVERSIDE AUTO FACTORY, INC. (an Oklahoma corporation)
           SONIC - ROCKVILLE IMPORTS, INC. (a Maryland corporation)
           SONIC - ROCKVILLE MOTORS, INC. (a Maryland corporation)
           SONIC - SAM WHITE NISSAN, L.P. (a Texas limited partnership)
           SONIC - SHOTTENKIRK, INC. (a Florida corporation)
           SONIC - STEVENS CREEK B, INC.
           (a California corporation) (formerly known as Don Lucas
           International, Inc.)
           SONIC - SUPERIOR OLDSMOBILE, LLC (a Tennessee limited liability
           company)
           SONIC OF TEXAS, INC. (a Texas corporation)
           SONIC-VOLVO LV, LLC (a Nevada limited liability company)
           SONIC - WEST COVINA T, INC. (a California corporation)
           SONIC - WEST RENO CHEVROLET, INC. (an Oklahoma corporation)
           SONIC - WILLIAMS BUICK, INC. (an Alabama corporation)
           SONIC - WILLIAMS CADILLAC, INC. (an Alabama corporation)
           SONIC - WILLIAMS IMPORTS, INC. (an Alabama corporation)
           SONIC - WILLIAMS MOTORS, LLC (an Alabama limited liability company)
           SPEEDWAY CHEVROLET, INC. (an Oklahoma corporation)
           SRE ALABAMA - 2, LLC (an Alabama limited liability company)
           SRE ALABAMA - 3, LLC (an Alabama limited liability company)
           SREALESTATE ARIZONA - 1, LLC (an Arizona limited liability company)
           SREALESTATE ARIZONA - 2, LLC (an Arizona limited liability company)
           SREALESTATE ARIZONA - 3, LLC (an Arizona limited liability company)
           SREALESTATE ARIZONA - 4, LLC (an Arizona limited liability company)
           SRE FLORIDA - 1, LLC (a Florida limited liability company)
           SRE FLORIDA - 2, LLC (a Florida limited liability company)
           SRE FLORIDA - 3, LLC (a Florida limited liability company)
           SRE GEORGIA - 1, L.P. (a Georgia limited liability partnership)
           SRE GEORGIA - 2, L.P. (a Georgia limited liability partnership)
           SRE GEORGIA - 3, L.P. (a Georgia limited liability partnership)
           SRE HOLDING, LLC (a North Carolina limited liability company)
           SRE NEVADA - 1, LLC (a Nevada limited liability company)
           SRE NEVADA - 2, LLC (a Nevada limited liability company)
           SRE NEVADA - 3, LLC (a Nevada limited liability company)
           SRE SOUTH CAROLINA - 2, LLC (a South Carolina limited liability
           company)
           SRE TENNESSEE - 1, LLC (a Tennessee limited liability company)
           SRE TENNESSEE - 2, LLC (a Tennessee limited liability company)
           SRE TENNESSEE - 3, LLC (a Tennessee limited liability company)

                                      -55-



           SRE TEXAS - 1, L.P. (a Texas limited partnership)
           SRE TEXAS - 2, L.P. (a Texas limited partnership)
           SRE  TEXAS - 3, L.P. (a Texas limited partnership)
           SRE  VIRGINIA - 1, LLC (a Virginia limited liability company)
           STEVENS CREEK CADILLAC, INC. (a California corporation)
           TRANSCAR LEASING, INC. (a California corporation)
           TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC (a Tennessee limited
              liability company)
           TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF ROCK HILL, INC. (a South
              Carolina corporation)
           TOWN AND COUNTRY DODGE OF CHATTANOOGA, LLC ( a Tennessee limited
              liability company)
           TOWN AND COUNTRY FORD, INCORPORATED (a North Carolina corporation)
           TOWN AND COUNTRY FORD OF CLEVELAND, LLC (a Tennessee limited
              liability company)
           TOWN AND COUNTRY JAGUAR, LLC (a Tennessee limited liability company)
           VILLAGE IMPORTED CARS, INC. (a Maryland corporation) and
           WINDWARD, INC. (a Hawaii corporation)

                                    By:
                                         ---------------------------------------
                                       Name:
                                       Title:

Attest:  ________________________
          Name:
          Title:
                  ARTICLE THREE

THE SECURITIES

                  Section 301.      Title and Terms.
                                    ---------------


                  The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture and outstanding at any time is
limited to $200,000,000 (less the principal amount of Series B Securities
outstanding) in principal amount of Securities, except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 303, 304, 305, 306,
307, 308, 906, 1012, 1015, 1108 or otherwise.

                  The Securities shall be known and designated as the "11%
Senior Subordinated Notes due 2008" of the Company. A separate reference may be
made to each series. The Stated Maturity of the Securities shall be August 1,
2008, and the Securities shall each bear interest at the rate of 11% per annum,
as such interest rate may be adjusted as set forth in the Securities, from
November 19, 2001, or from the most recent Interest Payment Date to which
interest has been paid, payable semiannually on February 1 and August 1 in each
year, commencing as of February 1, 2002 until the

                                      -56-



principal thereof is paid or duly provided for. Interest on any overdue
principal, interest (to the extent lawful) or premium, if any, shall be payable
on demand.

                  The principal of, premium, if any, and interest on, the
Securities shall be payable and the Securities shall be exchangeable and
transferable at an office or agency of the Company in The City of New York
maintained for such purposes (which initially will be a corporate trust office
of the Trustee located at 100 Wall Street, 20th Floor, New York, New York,
10005); provided, however, that payment of interest may be made at the option of
the Company by check mailed to addresses of the Persons entitled thereto as
shown on the Security Register.

                  For all purposes hereunder, the Series C Securities and the
Series D Securities will be treated as one class and are together referred to as
the "Securities." The Series C Securities rank pari passu in right of payment
with the Series D Securities.

                  The Securities shall be subject to repurchase by the Company
pursuant to an Offer as provided in Section 1012.

                  Holders shall have the right to require the Company to
purchase their Securities, in whole or in part, in the event of a Change of
Control pursuant to Section 1014.

                  The Securities shall be redeemable as provided in Article
Eleven and in the Securities.

                  The Indebtedness evidenced by these Securities shall be
subordinated in right of payment with all other Senior Indebtedness.

                  At the election of the Company, the entire Indebtedness on the
Securities or certain of the Company's obligations and covenants and certain
Events of Default thereunder may be defeased as provided in Article Four.

                  Section 302.      Denominations.
                                    -------------


                  The Securities shall be issuable only in fully registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof.

                  Section 303.   Execution, Authentication, Delivery and Dating.
                                 ----------------------------------------------

                  The Securities shall be executed on behalf of the Company by
one of its Chairman of the Board, its President, its Chief Executive Officer,
its Chief Financial Officer or one of its Vice Presidents under its corporate
seal reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signatures of any of these officers on the Securities may be
manual or facsimile.

                                      -57-




                  Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.

                  At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee (with or without Guarantees endorsed thereon) for
authentication, together with a Company Order for the authentication and
delivery of such Securities; and the Trustee in accordance with such Company
Order shall authenticate and make available for delivery such Securities as
provided in this Indenture and not otherwise.

                  Each Security shall be dated the date of its authentication.

                  No Security or Guarantee endorsed thereon shall be entitled to
any benefit under this Indenture or be valid or obligatory for any purpose
unless there appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by the Trustee by
manual signature of an authorized officer, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.

                  In case the Company or any Guarantor, pursuant to Article
Eight, shall, in a single transaction or through a series of related
transactions, be consolidated or merged with or into any other Person or shall
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any Person, and the successor
Person resulting from such consolidation or surviving such merger, or into which
the Company or such Guarantor shall have been merged, or the successor Person
which shall have participated in the sale, assignment, conveyance, transfer,
lease or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Trustee pursuant to Article Eight, any of the
Securities authenticated or delivered prior to such consolidation, merger, sale,
assignment, conveyance, transfer, lease or other disposition may, from time to
time, at the request of the successor Person, be exchanged for other Securities
executed in the name of the successor Person with such changes in phraseology
and form as may be appropriate, but otherwise in substance of like tenor as the
Securities surrendered for such exchange and of like principal amount; and the
Trustee, upon Company Request of the successor Person, shall authenticate and
deliver Securities as specified in such request for the purpose of such
exchange. If Securities shall at any time be authenticated and delivered in any
new name of a successor Person pursuant to this Section 303 in exchange or
substitution for or upon registration of transfer of any Securities, such
successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange of all Securities at the time Outstanding for
Securities authenticated and delivered in such new name.

                                      -58-




                  The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities on behalf of the Trustee. Unless limited
by the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Security Registrar or Paying
Agent to deal with the Company and its Affiliates.

                  If an officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates such Security such Security
shall be valid nevertheless.

       Section 304. Temporary Securities.
                    ---------------------

                  Pending the preparation of definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten or otherwise produced, in any authorized denomination, substantially
of the tenor of the definitive Securities in lieu of which they are issued and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as conclusively
evidenced by their execution of such Securities.

                  If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 1002, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute
and the Trustee (in accordance with a Company Order for the authentication of
such Securities) shall authenticate and make available for delivery in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities.

       Section 305. Registration, Registration of Transfer and Exchange.
                    ----------------------------------------------------

                  The Company shall cause the Trustee to keep, so long as it is
the Security Registrar, at the Corporate Trust Office of the Trustee, or such
other office as the Trustee may designate, a register (the register maintained
in such office or in any other office or agency designated pursuant to Section
1002 being herein sometimes referred to as the "Security Register") in which,
subject to such reasonable regulations as the Security Registrar may prescribe,
the Company shall provide for the registration of Securities and of transfers of
Securities. The Trustee shall initially be the "Security Registrar" for the
purpose of registering Securities and transfers of Securities as herein
provided. The Company may change the Security Registrar or appoint one or more
co-Security Registrars without notice.

                                      -59-


                  Upon surrender for registration of transfer of any Security at
the office or agency of the Company designated pursuant to Section 1002, the
Company shall execute, and the Trustee shall (in accordance with a Company Order
for the authentication of such Securities) authenticate and make available for
delivery, in the name of the designated transferee or
transferees, one or more new Securities of the same series of any authorized
denomination or denominations, of a like aggregate principal amount.

                  Furthermore, any Holder of the Global Security shall, by
acceptance of such Global Security, agree that transfers of beneficial interests
in such Global Security may be effected only through a book-entry system
maintained by the Holder of such Global Security (or its agent), and that
ownership of a beneficial interest in a Security shall be required to be
reflected in a book entry.

                  At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations, of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall (in accordance with a Company
Order for the authentication of such Securities) authenticate and make available
for delivery, Securities of the same series which the Holder making the exchange
is entitled to receive; provided that no exchange of Series C Securities for
Series D Securities shall occur until an Exchange Offer Registration Statement
shall have been declared effective by the Commission and that the Series C
Securities exchanged for the Series D Securities shall be canceled.

                  All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same Indebtedness, and entitled to the same benefits under this Indenture,
as the Securities surrendered upon such registration of transfer or exchange.

                  Every Security presented or surrendered for registration of
transfer, or for exchange, repurchase or redemption, shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing.

                  No service charge shall be made to a Holder for any
registration of transfer, exchange or redemption of Securities, except for any
tax or other governmental charge that may be imposed in connection therewith,
other than exchanges pursuant to Sections 303, 304, 305, 308, 906, 1012, 1014 or
1108 not involving any transfer.

                  The Company shall not be required (a) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of the Securities
selected for redemption under Section 1104 and ending at the close of business
on the day of such mailing or

                                      -60-




(b) to register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of Securities
being redeemed in part.

                  Every Security shall be subject to the restrictions on
transfer provided in the legend required to be set forth on the face of each
Security pursuant to Section 202, and the restrictions set forth in this Section
305, and the Holder of each Security, by such Holder's acceptance thereof (or
interest therein), agrees to be bound by such restrictions on transfer.

                  Except as provided in the preceding paragraph, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any Global Security, whether pursuant to this Section 305,
Section 304, 308, 906 or 1108 or otherwise, shall also be a Global Security and
bear the legend specified in Section 202.

                  Section 306.      Book Entry Provisions for Global Securities.
                                    -------------------------------------------

                  (a) Each Global Security initially shall (i) be registered in
the name of the Depositary for such Global Security or the nominee of such
Depositary, (ii) be deposited with, or on behalf of, the Depositary or with the
Trustee as custodian for such Depositary and (iii) bear legends as set forth in
Section 202.

                  Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under such Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or shall impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a holder of any
Security.

                  (b) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (i) such Depositary (A) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Security or (B)
has ceased to be a clearing agency registered as such under the Exchange Act,
and in either case the Company fails to appoint a successor Depositary, (ii) the
Company, at its option, executes and delivers to the Trustee a Company Order
stating that it elects to cause the issuance of the Securities in certificated
form and that all Global Securities shall be exchanged in whole for Securities
that are not Global Securities (in which case such exchange shall be effected by
the Trustee) or (iii) there shall have occurred and be continuing an Event of
Default or any

                                      -61-



event which after notice or lapse of time or both would be an Event of Default
with respect to such Global Security.

                  (c) If any Global Security is to be exchanged for other
Securities or canceled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Security Registrar, for exchange or
cancellation as provided in this Article Three. If any Global Security is to be
exchanged for other Securities or canceled in part, or if another Security is to
be exchanged in whole or in part for a beneficial interest in any Global
Security, then either (i) such Global Security shall be so surrendered for
exchange or cancellation as provided in this Article Three or (ii) the principal
amount thereof shall be reduced or increased by an amount equal to the portion
thereof to be so exchanged or canceled, or equal to the principal amount of such
other Security to be so exchanged for a beneficial interest therein, as the case
may be, by means of an appropriate adjustment made on the records of the
Trustee, as Security Registrar, whereupon the Trustee, in accordance with the
Applicable Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Security, the Trustee shall, subject to this
Section 306(c) and as otherwise provided in this Article Three, authenticate and
deliver any Securities issuable in exchange for such Global Security (or any
portion thereof) to or upon the order of, and registered in such names as may be
directed by, the Depositary or its authorized representative. Upon the request
of the Trustee in connection with the occurrence of any of the events specified
in the preceding paragraph, the Company shall promptly make available to the
Trustee a reasonable supply of Securities that are not in the form of Global
Securities. The Trustee shall be entitled to rely upon any order, direction or
request of the Depositary or its authorized representative which is given or
made pursuant to this Article Three if such order, direction or request is given
or made in accordance with the Applicable Procedures.

                  (d) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global Security
or any portion thereof, whether pursuant to this Article Three or otherwise,
shall be authenticated and delivered in the form of, and shall be, a Global
Security, unless such Security is registered in the name of a Person other than
the Depositary for such Global Security or a nominee thereof.

                  (e) The Depositary or its nominee, as registered owner of a
Global Security, shall be the Holder of such Global Security for all purposes
under this Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members.

                                      -62-



                  Section 307.      Special Transfer and Exchange Provisions.
                                    -----------------------------------------

                  (a)      Certain Transfers and Exchanges.  Transfers and
                           -------------------------------
exchanges of Securities and beneficial interests in a Global Security of the
kinds specified in this Section 307 shall be made only in accordance with this
Section 307.

                           (i) Rule 144A Global Security to Regulation S Global
                  Security. If the owner of a beneficial interest in the Rule
                  144A Global Security wishes at any time to transfer such
                  interest to a Person who wishes to acquire the same in the
                  form of a beneficial interest in the Regulation S Global
                  Security, such transfer may be effected only in accordance
                  with the provisions of this paragraph and paragraph (iv) below
                  and subject to the Applicable Procedures. Upon receipt by the
                  Trustee, as Security Registrar, of (a) an order given by the
                  Depositary or its authorized representative directing that a
                  beneficial interest in the Regulation S Global Security in a
                  specified principal amount be credited to a specified Agent
                  Member's account and that a beneficial interest in the Rule
                  144A Global Security in an equal principal amount be debited
                  from another specified Agent Member's account and (b) a
                  Regulation S Certificate in the form of Exhibit A hereto,
                  satisfactory to the Trustee and duly executed by the owner of
                  such beneficial interest in the Rule 144A Global Security or
                  his attorney duly authorized in writing, then the Trustee, as
                  Security Registrar but subject to paragraph (iv) below, shall
                  reduce the principal amount of the Rule 144A Global Security
                  and increase the principal amount of the Regulation S Global
                  Security by such specified principal amount as provided in
                  Section 306(c).

                           (ii) Regulation S Global Security to Rule 144A Global
                  Security. If the owner of a beneficial interest in the
                  Regulation S Global Security wishes at any time to transfer
                  such interest to a Person who wishes to acquire the same in
                  the form of a beneficial interest in the Rule 144A Global
                  Security, such transfer may be effected only in accordance
                  with this paragraph (ii) and subject to the Applicable
                  Procedures. Upon receipt by the Trustee, as Security
                  Registrar, of (a) an order given by the Depositary or its
                  authorized representative directing that a beneficial interest
                  in the Rule 144A Global Security in a specified principal
                  amount be credited to a specified Agent Member's account and
                  that a beneficial interest inthe Regulation S Global Security
                  in an equal principal amount be debited from another specified
                  Agent Member's account and (b) if such transfer is to occur
                  during the Restricted Period, a Restricted Securities
                  Certificate in the form of Exhibit B hereto, satisfactory to
                  the Trustee and duly executed by the owner of such beneficial
                  interest in the Regulation S Global Security or his attorney
                  duly authorized in writing, then the Trustee, as Security
                  Registrar, shall reduce the principal amount of the Regulation
                  S Global

                                      -63-




                  Security and increase the principal amount of the Rule 144A
                  Global Security by such specified principal amount as provided
                  in Section 306(c).

                           (iii) Exchanges between Global Security and
                  Non-Global Security. A beneficial interest in a Global
                  Security may be exchanged for a Security that is not a Global
                  Security as provided in Section 307(b), provided that, if such
                  interest is a beneficial interest in the Rule 144A Global
                  Security, or if such interest is a beneficial interest in the
                  Regulation S Global Security and such exchange is to occur
                  during the Restricted Period, then such interest shall bear
                  the Private Placement Legend (subject in each case to Section
                  307(b)).

                           (iv) Regulation S Global Security to be Held Through
                  Euroclear or Clearstream during Restricted Period. The Company
                  shall use its best efforts to cause the Depositary to ensure
                  that, until the expiration of the Restricted Period,
                  beneficial interests in the Regulation S Global Security may
                  be held only in or through accounts maintained at the
                  Depositary by Euroclear or Clearstream (or by Agent Members
                  acting for the account thereof), and no person shall be
                  entitled to effect any transfer or exchange that would result
                  in any such interest being held otherwise than in or through
                  such an account; provided that this paragraph (iv) shall not
                  prohibit any transfer or exchange of such an interest in
                  accordance with paragraph (ii) above.

                  (b)      Private Placement Legends.  Rule 144A Securities and
                           -------------------------
their Successor Securities and Regulation S Securities and their Successor
Securities shall bear a Private Placement Legend, subject to the following:

                           (i) subject to the following clauses of this Section
                  307(b), a Security or any portion thereof which is exchanged,
                  upon transfer or otherwise, for a Global Security or any
                  portion thereof shall bear the Private Placement Legend borne
                  by such Global Security while represented thereby;

                           (ii) subject to the following Clauses of this Section
                  307(b), a new Security which is not a Global Security and is
                  issued in exchange for another Security (including a Global
                  Security) or any portion thereof, upon transfer or otherwise,
                  shall bear the Private Placement Legend borne by such other
                  Security;

                           (iii) Exchange Securities, and all other Securities
                  sold or otherwise disposed of pursuant to an effective
                  registration statement under the Securities Act, together with
                  their respective Successor Securities, shall not bear a
                  Private Placement Legend;

                                      -64-



                           (iv) at any time after the Securities may be freely
                  transferred without registration under the Securities Act or
                  without being subject to transfer restrictions pursuant to the
                  Securities Act, a new Security which does not bear a Private
                  Placement Legend may be issued in exchange for or in lieu of a
                  Security (other than a Global Security) or any portion thereof
                  which bears such a legend if the Trustee has received an
                  Unrestricted Securities Certificate substantially in the form
                  of Exhibit C hereto, satisfactory to the Trustee and duly
                  executed by the Holder of such legended Security or his
                  attorney duly authorized in writing, and after such date and
                  receipt of such certificate, the Trustee shall authenticate
                  and deliver such a new Security in exchange for or in lieu of
                  such other Security as provided in this Article Three;

                           (v) a new Security which does not bear a Private
                  Placement Legend may be issued in exchange for or in lieu of a
                  Security (other than a Global Security) or any portion thereof
                  which bears such a legend if, in the Company's judgment,
                  placing such a legend upon such new Security is not necessary
                  to ensure compliance with the registration requirements of the
                  Securities Act, and the Trustee, at the direction of the
                  Company, shall authenticate and deliver such a new Security as
                  provided in this Article Three; and

                           (vi) notwithstanding the foregoing provisions of this
                  Section 307(b), a Successor Security of a Security that does
                  not bear a particular form of Private Placement Legend shall
                  not bear such form of legend unless the Company has reasonable
                  cause to believe that such Successor Security is a "restricted
                  security" within the meaning of Rule 144, in which case the
                  Trustee, at the direction of the Company, shall authenticate
                  and deliver a new Security bearing a Private Placement Legend
                  in exchange for such Successor Security as provided in this
                  Article Three.


                  By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.

                  The Security Registrar shall retain copies of all letters,
notices and other written communications received pursuant to Section 306 or
this Section 307. The Company shall have the right to inspect and make copies of
all such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Security Registrar.

                                      -65-



             In the event that Regulation S is amended during the term of
this Indenture to alter the applicable holding period, all reference in this
Indenture to a holding period for Non-U.S. Persons will be deemed to include
such amendment.

             Section 308.      Mutilated, Destroyed, Lost and Stolen Securities.
                               -------------------------------------------------

             If (a) any mutilated Security is surrendered to the Trustee,
or (b) the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company, any Guarantor and the Trustee, such security or indemnity, in each
case, as may be required by them to save each of them harmless, then, in the
absence of notice to the Company, any Guarantor or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon a Company Request the Trustee shall authenticate and deliver, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a replacement Security of like tenor and principal amount,
bearing a number not contemporaneously outstanding and each Guarantor shall
execute a replacement Guarantee.

             In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a replacement Security, pay such Security.

             Upon the issuance of any replacement Securities under this
Section, the Company may require the payment of a sum sufficient to pay all
documentary, stamp or similar issue or transfer taxes or other governmental
charges that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.

             Every replacement Security and Guarantee issued pursuant to
this Section in lieu of any destroyed, lost or stolen Security shall constitute
an original additional contractual obligation of the Company and any Guarantor,
whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.

              The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.

              Section 309.      Payment of Interest; Interest Rights Preserved.
                                -----------------------------------------------

              Interest on any Security which is payable, and is punctually
paid or duly provided for, on the Stated Maturity of such interest shall be paid
to the Person in whose name the Security (or any Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
payment.

                                      -66-


                  Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on the Stated Maturity of such interest,
and interest on such defaulted interest at the then applicable interest rate
borne by the Securities, to the extent lawful (such defaulted interest and
interest thereon herein collectively called "Defaulted Interest"), shall
forthwith cease to be payable to the Holder on the Regular Record Date; and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Subsection (a) or (b) below:

                  (a) The Company may elect to make payment of any Defaulted
                  Interest to the Persons in whose names the Securities (or any
                  relevant Predecessor Securities) are registered at the close
                  of business on a Special Record Date for the payment of such
                  Defaulted Interest, which shall be fixed in the following
                  manner. The Company shall notify the Trustee in writing of the
                  amount of Defaulted Interest proposed to be paid on each
                  Security and the date (not less than 30 days after such
                  notice) of the proposed payment (the "Special Payment Date"),
                  and at the same time the Company shall deposit with the
                  Trustee an amount of money equal to the aggregate amount
                  proposed to be paid in respect of such Defaulted Interest or
                  shall make arrangements satisfactory to the Trustee for such
                  deposit prior to the Special Payment Date, such money when
                  deposited to be held in trust for the benefit of the Persons
                  entitled to such Defaulted Interest as in this Subsection
                  provided. Thereupon the Trustee shall fix a Special Record
                  Date for the payment of such Defaulted Interest which shall be
                  not more than 15 days and not less than 10 days prior to the
                  date of the Special Payment Date and not less than 10 days
                  after the receipt by the Trustee of the notice of the proposed
                  payment. The Trustee shall promptly notify the Company in
                  writing of such Special Record Date. In the name and at the
                  expense of the Company, the Trustee shall cause notice of the
                  proposed payment of such Defaulted Interest and the Special
                  Record Date therefor to be mailed, first-class postage
                  prepaid, to each Holder at its address as it appears in the
                  Security Register, not less than 10 days prior to such Special
                  Record Date. Notice of the proposed payment of such Defaulted
                  Interest and the Special Record Date and Special Payment Date
                  therefor having been so mailed, such Defaulted Interest shall
                  be paid to the Persons in whose names the Securities are
                  registered on such Special Record Date and shall no longer be
                  payable pursuant to the following Subsection (b).

                  (b) The Company may make payment of any Defaulted Interest in
                  any other lawful manner not inconsistent with the requirements
                  of any securities exchange on which the Securities may be
                  listed, and upon such notice as may be required by this
                  Indenture not inconsistent with the requirements of such
                  exchange, if, after written notice given by the Company to the
                  Trustee of the proposed payment pursuant to this Subsection,
                  such payment shall be deemed practicable by the Trustee.

                                      -67-



                  Subject to the foregoing provisions of this Section 309, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.

                  Section 310.      CUSIP Numbers.
                                    -------------


                    The Company in issuing the Securities may use "CUSIP"
numbers (if then generally in use), and the Company, or the Trustee on behalf of
the Company, shall use CUSIP numbers in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice shall state that
no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of redemption or
exchange and that reliance may be placed only on the other identification
numbers printed on the Securities; and provided further, however, that failure
to use CUSIP numbers in any notice of redemption or exchange shall not affect
the validity or sufficiency of such notice.

                  Section 311.      Persons Deemed Owners.
                                    ---------------------

                  Prior to due presentment of a Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 309) interest on, such
Security and for all other purposes whatsoever, whether or not such Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any agent of
the Company, any Guarantor or the Trustee shall be affected by notice to the
contrary.

                  Section 312.      Cancellation.
                                    ------------


                  All Securities surrendered for payment, purchase, redemption,
registration of transfer or exchange shall be delivered to the Trustee and, if
not already canceled, shall be promptly canceled by it. The Company and any
Guarantor may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company or such
Guarantor may have acquired in any manner whatsoever, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 312, except as expressly permitted by this Indenture. All
canceled Securities held by the Trustee shall be returned to the Company. The
Trustee shall provide the Company a list of all Securities that have been
canceled from time to time as requested by the Company.

                                      -68-



                  Section 313.      Computation of Interest.
                                    -----------------------

                  Interest on the Securities shall be computed on the basis of a
360-day year comprised of twelve 30-day months.

                  ARTICLE FOUR  DEFEASANCE AND COVENANT DEFEASANCE

                  Section 401.      Company's Option to Effect Defeasance
                                    -------------------------------------
                                      or Covenant Defeasance.
                                      ----------------------

                  The Company may, at its option by Board Resolution, at any
time, with respect to the Securities, elect to have either Section 402 or
Section 403 be applied to all of the Outstanding Securities (the "Defeased
Securities"), upon compliance with the conditions set forth below in this
Article Four.

                  Section 402.      Defeasance and Discharge.
                                    ------------------------

                  Upon the Company's exercise under Section 401 of the option
applicable to this Section 402, the Company, each Guarantor and any other
obligor upon the Securities, if any, shall be deemed to have been discharged
from its obligations with respect to the Defeased Securities on the date the
conditions set forth in Section 404 below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company, each
Guarantor and any other obligor under this Indenture shall be deemed to have
paid and discharged the entire Indebtedness represented by the Defeased
Securities, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 405 and the other Sections of this Indenture referred to in
(a) and (b) below, and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Company and upon Company Request, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of Defeased Securities to receive, solely from the trust fund described
in Section 404 and as more fully set forth in such Section, payments in respect
of the principal of, premium, if any, and interest on, such Securities, when
such payments are due, (b) the Company's obligations with respect to such
Defeased Securities under Sections 304, 305, 308, 1002 and 1003, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder, including,
without limitation, the Trustee's rights under Section 607, and (d) this Article
Four. Subject to compliance with this Article Four, the Company may exercise its
option under this Section 402 notwithstanding the prior exercise of its option
under Section 403 with respect to the Securities.

                                      -69-



                  Section 403.      Covenant Defeasance.
                                    -------------------

                  Upon the Company's exercise under Section 401 of the option
applicable to this Section 403, the Company and each Guarantor shall be released
from its obligations under any covenant or provision contained or referred to in
Sections 1005 through 1020, inclusive, and the provisions of clause (iii) of
Section 801(a), with respect to the Defeased Securities, on and after the date
the conditions set forth in Section 404 below are satisfied (hereinafter,
"covenant defeasance"), and the Defeased Securities shall thereafter be deemed
to be not "Outstanding" for the purposes of any direction, waiver, consent or
declaration or Act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the Defeased Securities, the Company and each
Guarantor may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such Section, whether directly or
indirectly, by reason of any reference elsewhere herein to any such Section or
by reason of any reference in any such Section to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 501(c), (d), (f) or (g) but, except as
specified above, the remainder of this Indenture and such Defeased Securities
shall be unaffected thereby.

                  Section 404.      Conditions to Defeasance or Covenant
                                    ------------------------------------
                                      Defeasance.
                                      ----------

                  The following shall be the conditions to application of either
Section 402 or Section 403 to the Defeased Securities:

                  (1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (a) cash in United
States dollars, (b) U.S. Government Obligations, or (c) a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants or a nationally recognized investment
banking firm expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee to pay
and discharge, the principal of, premium, if any, and interest on, the Defeased
Securities, on the Stated Maturity of such principal or interest (or on any date
after August 1, 2003 (such date being referred to as the "Defeasance Redemption
Date") if at or prior to electing to exercise either its option applicable to
Section 402 or its option applicable to Section 403, the Company has delivered
to the Trustee an irrevocable notice to redeem the Defeased Securities on the
Defeasance Redemption Date). For this purpose, "U.S. Government Obligations"
means securities that are (i) direct obligations of the United States of America
for the timely payment of which its full faith and credit is pledged or (ii)
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which is

                                      -70-



unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a Depositary receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian
with respect to any such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such Depositary receipt, provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such Depositary receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such Depositary receipt;

                  (2) In the case of an election under Section 402, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in the
United States stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since July 1, 1998,
there has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such Opinion of Independent Counsel in the
United States shall confirm that, the Holders of the Outstanding Securities will
not recognize income, gain or loss for federal income tax purposes as a result
of such defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such defeasance had not occurred;

                  (3) In the case of an election under Section 403, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in the
United States to the effect that the Holders of the Outstanding Securities will
not recognize income, gain or loss for federal income tax purposes as a result
of such covenant defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred;

                  (4) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Section 501(h) or (i) is
concerned, at any time during the period ending on the 91st day after the date
of deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period) (other than a Default which
results from the borrowing of amounts to finance the defeasance and which
borrowing does not result in a breach or violation of, or constitute a default,
under any other material agreement or instrument to which the Company or any
Restricted Subsidiary is a party or to which it is bound);

                  (5) Such defeasance or covenant defeasance shall not cause the
Trustee for the Securities to have a conflicting interest in violation of and
for purposes of the Trust Indenture Act with respect to any other securities of
the Company or any Guarantor;

                                      -71-



                  (6) Such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a Default under, this Indenture or any
other material agreement or instrument to which the Company, any Guarantor or
any Restricted Subsidiary is a party or by which it is bound;

                  (7) Such defeasance or covenant defeasance shall not result in
the trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, as amended, unless such trust
shall be registered under such Act or exempt from registration thereunder;

                  (8) The Company shall have delivered to the Trustee an Opinion
of Independent Counsel in the United States to the effect that (assuming that no
Holder of any Securities would be considered an insider of the Company under any
applicable bankruptcy or insolvency law) after the 91st day following the
deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally;

                  (9) The Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the holders of the Securities or any Guarantee over the
other creditors of the Company or any Guarantor with the intent of defeating,
hindering, delaying or defrauding creditors of the Company, any Guarantor or
others;

                  (10) No event or condition shall exist that would prevent the
Company from making payments of the principal of, premium, if any, and interest
on the Securities on the date of such deposit or at any time ending on the 91st
day after the date of such deposit; and

                  (11) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Independent Counsel, each stating that
all conditions precedent provided for relating to either the defeasance under
Section 402 or the covenant defeasance under Section 403 (as the case may be)
have been complied with.

                  Opinions of Counsel or Opinions of Independent Counsel
required to be delivered under this Section shall be in form and substance
reasonably satisfactory to the Trustee may have qualifications customary for
opinions of the type required and counsel delivering such opinions may rely on
certificates of the Company or government or other officials customary for
opinions of the type required, which certificates shall be limited as to matters
of fact, including that various financial covenants have been complied with.

                  Section 405.      Deposited Money and U.S. Government
                                    -----------------------------------
                                      Obligations to Be Held in Trust; Other
                                      --------------------------------------
                                      Miscellaneous Provisions.
                                      ------------------------

                  Subject to the provisions of the last paragraph of Section
1003, all United States dollars and U.S. Government Obligations (including the
proceeds thereof)

                                      -72-



deposited with the Trustee pursuant to Section 404 in respect of the Defeased
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (excluding the Company or any of its
Affiliates acting as Paying Agent), as the Trustee may determine, to the Holders
of such Securities of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.

                  The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 404 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is imposed, assessed or for the account of the Holders of the Defeased
Securities.

                  Anything in this Article Four to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any United States dollars or U.S. Government Obligations held by it as
provided in Section 404 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect defeasance or covenant defeasance.

                  Section 406.      Reinstatement.
                                    --------------

                  If the Trustee or Paying Agent is unable to apply any United
States dollars or U.S. Government Obligations in accordance with Section 402 or
403, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities and any Guarantor's obligations under any Guarantee shall be revived
and reinstated, with present and prospective effect, as though no deposit had
occurred pursuant to Section 402 or 403, as the case may be, until such time as
the Trustee or Paying Agent is permitted to apply all such United States dollars
or U.S. Government Obligations in accordance with Section 402 or 403, as the
case may be; provided, however, that if the Company makes any payment to the
Trustee or Paying Agent of principal of, premium, if any, or interest on any
Security following the reinstatement of its obligations, the Trustee or Paying
Agent shall promptly pay any such amount to the Holders of the Securities and
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the United States dollars and U.S. Government
Obligations held by the Trustee or Paying Agent.

                                      -73-





                                  ARTICLE FIVE

                                    REMEDIES

       Section 501. Events of Default.
                    ------------------

                  "Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):

                  (a) there shall be a default in the payment of any interest on
any Security when it becomes due and payable, and such default shall continue
for a period of 30 days (whether or not prohibited by the subordination
provisions of this Indenture);

                  (b) there shall be a default in the payment of the principal
of (or premium, if any, on) any Security at its Maturity (upon acceleration,
optional or mandatory redemption, required repurchase or otherwise) (whether or
not prohibited by the subordination provisions of this Indenture);

                  (c) (i) there shall be a default in the performance, or
breach, of any covenant or agreement of the Company or any Guarantor under this
Indenture or any Guarantee (other than a default in the performance, or breach,
of a covenant or agreement which is specifically dealt with in clause (a), (b)
or in clause (ii), (iii) or (iv) of this clause (c)) and such default or breach
shall continue for a period of 60 days after written notice (30 days in the case
of a default under Section 1008 or Section 1009 herein) has been given, by
certified mail, (x) to the Company by the Trustee or (y) to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
outstanding Securities; (ii) there shall be a default in the performance or
breach of the provisions of Article Eight; (iii) the Company shall have failed
to consummate an Offer in accordance with the provisions of Section 1012; or
(iv) the Company shall have failed to consummate a Change of Control Offer in
accordance with the provisions of Section 1014;

                  (d) one or more defaults, individually or in the aggregate,
shall have occurred under any of the agreements, indentures or instruments under
which the Company or any Restricted Subsidiary then has outstanding Indebtedness
in excess of $20 million in principal amount, individually or in the aggregate,
and either (i) such default results from the failure to pay such Indebtedness at
its stated final maturity or (ii) such default or defaults resulted in the
acceleration of the maturity of such Indebtedness;

                  (e) any Guarantee shall for any reason cease to be, or shall
for any reason be asserted in writing by any Guarantor or the Company not to be,
in full force

                                      -74-


and effect and enforceable in accordance with its terms, except to
the extent contemplated by this Indenture and any such Guarantee;

                  (f) one or more final judgments, orders or decrees (not
subject to appeal) of any court or regulatory or administrative agency for the
payment of money in excess of $20 million, either individually or in the
aggregate (exclusive of any portion of any such payment covered by insurance, if
and to the extent the insurer has acknowledged in writing its liability
therefor), shall be rendered against the Company, any Guarantor or any
Subsidiary or any of their respective properties and shall not be discharged or
fully binded and there shall have been a period of 60 consecutive days during
which a stay of enforcement of such judgment or order, by reason of an appeal or
otherwise, shall not be in effect;

                  (g) any holder or holders of at least $20 million in aggregate
principal amount of Indebtedness of the Company, any Guarantor or any Restricted
Subsidiary after a default under such Indebtedness shall notify the Trustee of
the intended sale or disposition of any assets of the Company, any Guarantor or
any Subsidiary that have been pledged to or for the benefit of such holder or
holders to secure such Indebtedness or shall commence proceedings, or take any
action (including by way of set-off), to retain in satisfaction of such
Indebtedness or to collect on, seize, dispose of or apply in satisfaction of
Indebtedness, assets of the Company, any Guarantor or any Restricted Subsidiary
(including funds on deposit or held pursuant to lock-box and other similar
arrangements);

                  (h) there shall have been the entry by a court of competent
jurisdiction of (i) a decree or order for relief in respect of the Company or
any Significant Restricted Subsidiary in an involuntary case or proceeding under
any applicable Bankruptcy Law or (ii) a decree or order adjudging the Company or
any Significant Restricted Subsidiary bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company or any Significant Restricted Subsidiary under any applicable federal or
state law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or any Significant
Restricted Subsidiary or of any substantial part of their respective properties,
or ordering the winding up or liquidation of their respective affairs, and any
such decree or order for relief shall continue to be in effect, or any such
other decree or order shall be unstayed and in effect, for a period of 60
consecutive days; or

                  (i) (i) the Company or any Significant Restricted Subsidiary
commences a voluntary case or proceeding under any applicable Bankruptcy Law or
any other case or proceeding to be adjudicated bankrupt or insolvent, (ii) the
Company or any Significant Restricted Subsidiary consents to the entry of a
decree or order for relief in respect of the Company or such Significant
Restricted Subsidiary in an involuntary case or proceeding under any applicable
Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, (iii) the Company or any


                                      -75-



Significant Restricted Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, (iv) the
Company or any Significant Restricted Subsidiary (1) consents to the filing of
such petition or the appointment of, or taking possession by, a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official of the
Company or such Significant Restricted Subsidiary or of any substantial part of
their respective properties, (2) makes an assignment for the benefit of
creditors or (3) admits in writing its inability to pay its debts generally as
they become due or (v) the Company or any Significant Restricted Subsidiary
takes any corporate action in furtherance of any such actions in this paragraph
(i).

       Section 502.  Acceleration of Maturity; Rescission and Annulment.
                     ---------------------------------------------------

                  If an Event of Default (other than an Event of Default
specified in Sections 501(h) and (i)) shall occur and be continuing with respect
to this Indenture, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Securities then Outstanding may, and the Trustee at the
request of such Holders shall, declare all unpaid principal of, premium, if any,
and accrued interest on all Securities to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by the Holders of
the Securities) and upon any such declaration, such principal, premium, if any,
and interest shall become due and payable immediately. If an Event of Default
specified in clause (h) or (i) of Section 501 occurs and is continuing, then all
the Securities shall ipso facto become and be due and payable immediately in an
amount equal to the principal amount of the Securities, together with accrued
and unpaid interest, if any, to the date the Securities become due and payable,
without any declaration or other act on the part of the Trustee or any Holder.
Thereupon, the Trustee may, at its discretion, proceed to protect and enforce
the rights of the Holders of the Securities by appropriate judicial proceedings.

                  After a declaration of acceleration with respect to the
Securities, but before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article provided, the
Holders of a majority in aggregate principal amount of the Securities
Outstanding, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if:

                  (a) the Company has paid or deposited with the Trustee a sum
sufficient to pay

                      (i) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel,

                      (ii) all overdue interest on all Outstanding Securities,


                                      -76-



                      (iii) the principal of and premium, if any, on any
                  Outstanding Securities which have become due otherwise than by
                  such declaration of acceleration and interest thereon at the
                  rate borne by the Securities, and

                      (iv) to the extent that payment of such interest is
                  lawful, interest upon overdue interest at the rate borne by
                  the Securities;

                  (b) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction; and

                  (c) all Events of Default, other than the non-payment of
principal of, premium, if any, and interest on the Securities which have become
due solely by such declaration of acceleration, have been cured or waived as
provided in Section 513. No such rescission shall affect any subsequent Default
or impair any right consequent thereon.

       Section 503. Collection of Indebtedness and Suits for Enforcement by
                    -------------------------------------------------------
                    Trustee.
                    --------

                  The Company and each Guarantor covenant that if

                  (a) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or

                  (b) default is made in the payment of the principal of or
premium, if any, on any Security at the Stated Maturity thereof or otherwise,

the Company and such Guarantor will, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal and premium, if any, and interest, with
interest upon the overdue principal and premium, if any, and, to the extent that
payment of such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Securities; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

                  If the Company or any Guarantor, as the case may be, fails to
pay such amounts forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute such proceeding to
judgment or final decree, and may enforce the same against the Company or any
Guarantor or any other obligor upon the Securities and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company, any Guarantor or any other obligor upon the Securities,
wherever situated.


                                      -77-


                  If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders under this Indenture or any Guarantee by such appropriate private
or judicial proceedings as the Trustee shall deem most effectual to protect and
enforce such rights, including seeking recourse against any Guarantor pursuant
to the terms of any Guarantee, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein or therein, or to enforce any other proper remedy, including,
without limitation, seeking recourse against any Guarantor pursuant to the terms
of a Guarantee, or to enforce any other proper remedy, subject however to
Section 512. No recovery of any such judgment upon any property of the Company
or any Guarantor shall affect or impair any rights, powers or remedies of the
Trustee or the Holders.

       Section 504. Trustee May File Proofs of Claim.
                    ---------------------------------

                  In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor,
including any Guarantor, upon the Securities or the property of the Company or
of such other obligor or their creditors, the Trustee (irrespective of whether
the principal of the Securities shall then be due and payable as therein
expressedor by declaration or otherwise and irrespective of whether the Trustee
shallhave made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise,

                  (a) to file and prove a claim for the whole amount of
principal, and premium, if any, and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and

                  (b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.

                  Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of


                                      -78-



reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

       Section 505. Trustee May Enforce Claims without Possession of Securities.
                    ------------------------------------------------------------

                  All rights of action and claims under this Indenture, the
Securities or the Guarantees may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name and as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities in
respect of which such judgment has been recovered.

       Section 506. Application of Money Collected.
                    -------------------------------

                  Any money collected by the Trustee pursuant to this Article or
otherwise on behalf of the Holders or the Trustee pursuant to this Article or
through any proceeding or any arrangement or restructuring in anticipation or in
lieu of any proceeding contemplated by this Article shall be applied, subject to
applicable law, in the following order, at the date or datesfixed by the Trustee
and, in case of the distribution of such money on accountof principal, premium,
if any, or interest, upon presentation of the Securitiesand the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:

                  FIRST: To the payment of all amounts due the Trustee under
Section 607;

                  SECOND: To the payment of the amounts then due and unpaid upon
the Securities for principal, premium, if any, and interest, in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal, premium, if any, and interest; and

                  THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Company, provided that all sums due and owing to the
Holders and the Trustee have been paid in full as required by this Indenture.

       Section 507. Limitation on Suits.
                    --------------------

                  No Holder of any Securities shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or the
Securities, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless


                                      -79-



                  (a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;

                  (b) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as trustee hereunder;

                  (c) such Holder or Holders have offered to the Trustee a
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;

                  (d) the Trustee for 15 days after its receipt of such notice,
request and offer (and if requested, provision) of indemnity has failed to
institute any such proceeding; and

                  (e) no direction inconsistent with such written request has
been given to the Trustee during such 15-day period by the Holders of a majority
in principal amount of the Outstanding Securities;

it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Security or any Guarantee to affect, disturb or prejudice
the rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
any Security or any Guarantee, except in the manner provided in this Indenture
and for the equal and ratable benefit of all the Holders.

       Section 508. Unconditional Right of Holders to Receive Principal, Premium
                    ------------------------------------------------------------
                    and Interest.
                    -------------

                  Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right based on the terms stated herein,
which is absolute and unconditional, to receive payment of the principal of,
premium, if any, and (subject to Section 309) interest on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date or the repurchase date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.

       Section 509. Restoration of Rights and Remedies.
                    -----------------------------------

                  If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Guarantee and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Company, any Guarantor, any other obligor on the Securities, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former


                                      -80-



positions hereunder, and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.

       Section 510. Rights and Remedies Cumulative.
                    -------------------------------

                  No right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

       Section 511. Delay or Omission Not Waiver.
                    -----------------------------

                  No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.

       Section 512. Control by Holders.
                    -------------------

                  The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, provided that

                  (a) such direction shall not be in conflict with any rule of
law or with this Indenture (including, without limitation, Section 507) or any
Guarantee, expose the Trustee to personal liability, or be unduly prejudicial to
Holders not joining therein; and

                  (b) subject to the provisions of Section 315 of the Trust
Indenture Act, the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.

       Section 513. Waiver of Past Defaults.
                    ------------------------

                  The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all
Outstanding Securities waive any past Default hereunder and its consequences,
except a Default


                                      -81-



                  (a) in the payment of the principal of, premium, if any, or
interest on any Security (which may only be waived with the consent of each
Holder of the Securities affected); or

                  (b) in respect of a covenant or a provision hereof which under
this Indenture cannot be modified or amended without the consent of the Holder
of each Security Outstanding affected by such modification or amendment.

                  Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.

       Section 514. Undertaking for Costs.
                    ----------------------

                  All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant,
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of, premium, if any, or interest on, any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).

       Section 515. Waiver of Stay, Extension or Usury Laws.
                    ----------------------------------------

                  Each of the Company and the Guarantors covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury or other law wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company or any
Guarantor from paying all or any portion of the principal of, premium, if any,
or interest on the Securities contemplated herein or in the Securities or which
may affect the covenants or the performance of this Indenture; and each of the
Company and the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.


                                      -82-



       Section 516. Remedies Subject to Applicable Law.
                    -----------------------------------

                  All rights, remedies and powers provided by this Article Five
may be exercised only to the extent that the exercise thereof does not violate
any applicable provision of law in the premises, and all the provisions of this
Indenture are intended to be subject to all applicable mandatory provisions of
law which may be controlling in the premises and to be limited to the extent
necessary so that they will not render this Indenture invalid, unenforceable or
not entitled to be recorded, registered or filed under the provisions of any
applicable law.

                                   ARTICLE SIX

                                  THE TRUSTEE

       Section 601. Duties of Trustee.
                    ------------------

                  Subject to the provisions of Trust Indenture Act Sections
315(a) through 315(d):

                  (a) if a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs;

                  (b) except during the continuance of a Default or an Event of
Default:

                      (1) the Trustee need perform only those duties as are
                  specifically set forth in this Indenture and no covenants or
                  obligations shall be implied in this Indenture that are
                  adverse to the Trustee; and

                      (2) in the absence of bad faith or willful misconduct on
                  its part, the Trustee may conclusively rely, as to the truth
                  of the statements and the correctness of the opinions
                  expressed therein, upon certificates or opinions furnished to
                  the Trustee and conforming to the requirements of this
                  Indenture. However, the Trustee shall examine the certificates
                  and opinions to determine whether or not they conform to the
                  requirements of this Indenture;

                  (c) the Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

                      (1) this Subsection (c) does not limit the effect of
                  Subsection (b) of this Section 601;


                                      -83-



                           (2) the Trustee shall not be liable for any error of
                  judgment made in good faith by a Responsible Officer, unless
                  it is proved that the Trustee was negligent in ascertaining
                  the pertinent facts; and

                           (3) the Trustee shall not be liable with respect to
                  any action it takes or omits to take in good faith, in
                  accordance with a direction of the Holders of a majority in
                  principal amount of Outstanding Securities relating to the
                  time, method and place of conducting any proceeding for any
                  remedy available to the Trustee, or exercising any trust or
                  power confirmed upon the Trustee under this Indenture;

                  (d) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it;

                  (e) whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
Subsections (a), (b), (c) and (d) and (f) of this Section 601; and

                  (f) the Trustee shall not be liable for interest on any money
or assets received by it except as the Trustee may agree with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.

       Section 602. Notice of Defaults.
                    -------------------

                  Within 30 days after a Responsible Officer of the Trustee
receives notice of the occurrence of any Default, the Trustee shall transmit by
mail to all Holders and any other Persons entitled to receive reports pursuant
to Section 313(c) of the Trust Indenture Act, as their names and addresses
appear in the Security Register, notice of such Default hereunder known to the
Trustee, unless such Default shall have been cured or waived; provided, however,
that, except in the case of a Default in the payment of the principal of,
premium, if any, or interest on any Security, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders.

       Section 603. Certain Rights of Trustee.
                    --------------------------

                  Subject to the provisions of Section 601 hereof and Trust
Indenture Act Sections 315(a) through 315(d):

                  (a) the Trustee may rely and shall be protected in acting or
refraining from acting upon receipt by it of any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other


                                      -84-



evidence of Indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;

                  (b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;



                  (c) the Trustee may consult with counsel of its selection and
any advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon in accordance with such
advice or Opinion of Counsel;

                  (d) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred
therein;

                  (e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other than any
liabilities arising out of the negligence, bad faith or willful misconduct of
the Trustee;

                  (f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security or other paper or
document unless requested in writing to do so by the Holders of not less than a
majority in aggregate principal amount of the Securities then Outstanding;
provided that, if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or liabilities as
a condition to proceeding; the reasonable expenses of every such investigation
so requested by the Holders of not less than 25% in aggregate principal amount
of the Securities Outstanding shall be paid by the Company or, if paid by the
Trustee or any predecessor Trustee, shall be repaid by the Company upon demand;
provided, further, the Trustee in its discretion may make such further inquiry
or investigation into such facts or matters as it may deem fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and

                  (g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the


                                      -85-



Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.

                  (h) Except with respect to Section 1001, the Trustee shall
have no duty to inquire as to the performance of the Company with respect to the
covenants contained in Article 10. In addition, the Trustee shall not be deemed
to have knowledge of an Event of Default except (i) any Default or Event of
Default occurring pursuant to Sections 1001, 501(a) or 50l(b) or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.

                  (i) Delivery of reports, information and documents to the
Trustee under Section 1019 is for informational purposes only and the Trustee's
receipt of the foregoing shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of their covenants
hereunder (as to which the Trustee is entitled to rely exclusively on Officer's
Certificates).

       Section 604. Trustee Not Responsible for Recitals, Dispositions of
                    -----------------------------------------------------
                    Securities or Application of Proceeds Thereof.
                    ----------------------------------------------

                  The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Guarantors, and the Trustee assumes no responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder and that the
statements made by it in any Statement of Eligibility and Qualification on Form
T-1 supplied to the Company are true and accurate subject to the qualifications
set forth therein. The Trustee shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.

       Section 605. Trustee and Agents May Hold Securities; Collections; etc.
                    ---------------------------------------------------------

                  The Trustee, any Paying Agent, Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities, with the same rights it would have if it were
not the Trustee, Paying Agent, Security Registrar or such other agent and,
subject to Trust Indenture Act Sections 310 and 311, may otherwise deal with the
Company and receive, collect, hold and retain collections from the Company with
the same rights it would have if it were not the Trustee, Paying Agent, Security
Registrar or such other agent.


                                      -86-



       Section 606. Money Held in Trust.
                    --------------------

                  All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Except for funds or securities
deposited with the Trustee pursuant to Article Four, the Trustee shall be
required to invest all moneys received by the Trustee, until used or applied as
herein provided, in Temporary Cash Investments in accordance with the directions
of the Company.

       Section 607. Compensation and Indemnification of Trustee and Its Prior
                    ---------------------------------------------------------
                    Claim.
                    ------

                  The Company covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, such compensation as the
parties shall agree in writing from time to time for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) and the Company
covenants and agrees to pay or reimburse the Trustee and each predecessor
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by or on behalf of the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence, bad faith or willful misconduct. The Company also
covenants and agrees to indemnify the Trustee and each predecessor Trustee for,
and to hold it harmless against, any claim, loss, liability, tax, assessment or
other governmental charge (other than taxes applicable to the Trustee's
compensation hereunder) or expense incurred without negligence, bad faith or
willful misconduct on its part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and its
duties hereunder, including enforcement of this Section 607 and also including
any liability which the Trustee may incur as a result of failure to withhold,
pay or report any tax, assessment or other governmental charge, and the costs
and expenses of defending itself against or investigating any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligations of the Company under this Section 607 to compensate
and indemnify the Trustee and each predecessor Trustee and to pay or reimburse
the Trustee and each predecessor Trustee for reasonable expenses, disbursements
and advances shall constitute an additional obligation hereunder and shall
survive the satisfaction and discharge of this Indenture and the resignation or
removal of the Trustee and each predecessor Trustee.

                                      -87-



       Section 608. Conflicting Interests.
                    ----------------------

                  The Trustee shall comply with the provisions of Section 310(b)
of the Trust Indenture Act.


       Section 609. Trustee Eligibility.
                    --------------------

                  There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under Trust Indenture Act Section 310(a) and is a
member of a bank holding company which shall have a combined capital and surplus
of at least $250,000,000, to the extent there is an institution eligible and
willing to serve. If the Trustee does not have a Corporate Trust Office in The
City of New York, the Trustee may appoint an agent in The City of New York
reasonably acceptable to the Company to conduct any activities which the Trustee
may be required under this Indenture to conduct in The City of New York. If such
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of federal, state, territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section 609,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 609, the Trustee shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.

       Section 610. Resignation and Removal; Appointment of Successor Trustee.
                    ----------------------------------------------------------

                  (a) No resignation or removal of the Trustee and no
appointment of a successor trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor trustee under
Section 611.

                  (b) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice thereof to the
Company no later than 20 Business Days prior to the proposed date of
resignation. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee by written instrument executed by authority
of the Board of Directors of the Company, a copy of which shall be delivered to
the resigning Trustee and a copy to the successor trustee. If an instrument of
acceptance by a successor trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may, or any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper, appoint and prescribe a successor trustee.


                                      -88-



                  (c) The Trustee may be removed at any time for any cause or
for no cause by an Act of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, delivered to the Trustee and to
the Company.

                  (d) If at any time:

                      (1) the Trustee shall fail to comply with the provisions
                  of Trust Indenture Act Section 310(b) after written request
                  therefor by the Company or by any Holder who has been a bona
                  fide Holder of a Security for at least six months,

                      (2) the Trustee shall cease to be eligible under Section
                  609 and shall fail to resign after written request therefor by
                  the Company or by any Holder who has been a bona fide Holder
                  of a Security for at least six months, or

                      (3) the Trustee shall become incapable of acting or shall
                  be adjudged a bankrupt or insolvent, or a receiver of the
                  Trustee or of its property shall be appointed or any public
                  officer shall take charge or control of the Trustee or of its
                  property or affairs for the purpose of rehabilitation,
                  conservation or liquidation,

then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 514, the Holder of any Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.

                  (e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor trustee and shall comply with the applicable requirements of Section
611. If, within 60 days after such resignation, removal or incapability, or the
occurrence of such vacancy, the Company has not appointed a successor Trustee, a
successor trustee shall be appointed by the Act of the Holders of a majority in
principal amount of the Outstanding Securities delivered to the Company and the
retiring Trustee. Such successor trustee so appointed shall forthwith upon its
acceptance of such appointment become the successor trustee and supersede the
successor trustee appointed by the Company. If no successor trustee shall have
been so appointed by the Company or the Holders of the Securities and accepted
appointment in the manner hereinafter provided, the Trustee or the Holder of any
Security who has been a bona fide Holder for at least six months may, subject to
Section 514, on behalf of


                                      -89-



himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor trustee.



                  (f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor trustee and the
address of its Corporate Trust Office or agent hereunder.

       Section 611. Acceptance of Appointment by Successor.
                    ---------------------------------------

                  Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee as if originally named as
Trustee hereunder; but, nevertheless, on the written request of the Company or
the successor trustee, upon payment of its charges pursuant to Section 607 then
unpaid, such retiring Trustee shall pay over to the successor trustee all moneys
at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.

                  No successor trustee with respect to the Securities shall
accept appointment as provided in this Section 611 unless at the time of such
acceptance such successor trustee shall be eligible to act as trustee under the
provisions of Trust Indenture Act Section 310(a) and this Article Six and shall
have a combined capital and surplus of at least $250,000,000 and have a
Corporate Trust Office or an agent selected in accordance with Section 609.

                  Upon acceptance of appointment by any successor trustee as
provided in this Section 611, the Company shall give notice thereof to the
Holders of the Securities, by mailing such notice to such Holders at their
addresses as they shall appear on the Security Register. If the acceptance of
appointment is substantially contemporaneous with the appointment, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 610. If the Company fails to give such notice within 10
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be given at the expense of the Company.


                                      -90-



       Section 612. Merger, Conversion, Consolidation or Succession to Business.
                    ------------------------------------------------------------

                  Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including the trust created by this
Indenture) shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under Trust Indenture Act Section 310(a) and this
Article Six and shall have a combined capital and surplus of at least
$250,000,000 and have a Corporate Trust Office or an agent selected in
accordance with Section 609, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.

                  In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have; provided that
the right to adopt the certificate of authentication of any predecessor Trustee
or to authenticate Securities in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or consolidation.

       Section 613. Preferential Collection of Claims Against Company.
                    --------------------------------------------------

                  If and when the Trustee shall be or become a creditor of the
Company (or other obligor under the Securities), the Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor). A Trustee who has resigned or
been removed shall be subject to Trust Indenture Act Section 311(a) to the
extent indicated therein.

                                       -91-




                                  ARTICLE SEVEN

               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY


                   Section 701. Company to Furnish Trustee Names and Addresses
                               ------------------------------------------------
 of Holders.
 -----------
                   The Company will furnish or cause to be furnished to the
Trustee


                   (a) semiannually, not more than 10 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and


                   (b) at such other times as the Trustee may reasonably request
in writing, within 30 days after receipt by the Company of any such request, a
list of similar form and content to that in subsection (a) hereof as of a date
not more than 15 days prior to the time such list is furnished;

provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.

                   Section 702. Disclosure of Names and Addresses of Holders.
                                ---------------------------------------------

                   Holders may communicate pursuant to Trust Indenture Act
Section 312(b) with other Holders with respect to their rights under this
Indenture or the Securities, and the Trustee shall comply with Trust Indenture
Act Section 312(b). The Company, the Trustee, the Security Registrar and any
other Person shall have the protection of Trust Indenture Act Section 312(c).
Further, every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee or any
agent of either of them shall be held accountable by reason of the disclosure of
any information as to the names and addresses of the Holders in accordance with
Trust Indenture Act Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Trust Indenture
Act Section 312.

                   Section 703. Reports by Trustee.
                              -------------------

                   (a) Within 60 days after May 15 of each year commencing with
the first May 15 after the issuance of Securities, the Trustee, if so required
under the Trust Indenture Act, shall transmit by mail to all Holders, in the
manner and to the extent provided in Trust Indenture Act Section 313(c), a brief
report dated as of such May 15 in accordance with and with respect to the
matters required by Trust Indenture Act Section 313(a). The Trustee shall also
transmit by mail to all Holders, in the manner and to the extent provided in
Trust Indenture Act Section 313(c), a brief report in accordance with and with
respect to the matters required by Trust Indenture Act Section 313(b)(2).


                                       -92-



                   (b) A copy of each report transmitted to Holders pursuant to
this Section 703 shall, at the time of such transmission, be mailed to the
Company and filed with each stock exchange, if any, upon which the Securities
are listed and also with the Commission. The Company will notify the Trustee
promptly if the Securities are listed on any stock exchange.

                   Section 704. Reports by Company and Guarantors.
                                ----------------------------------

                  The Company and each Guarantor, as the case may be, shall:

                   (a) file with the Trustee, within 15 days after the Company
or any Guarantor, as the case may be, is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the
Company or any Guarantor may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Company or any
Guarantor, as the case may be, is not required to file information, documents or
reports pursuant to either of said Sections, then it shall (i) deliver to the
Trustee annual audited financial statements of the Company and its Subsidiaries,
prepared on a Consolidated basis in conformity with GAAP, within 120 days after
the end of each fiscal year of the Company, and (ii) file with the Trustee and,
to the extent permitted by law, the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;

                   (b) file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to compliance by
the Company or any Guarantor, as the case may be, with the conditions and
covenants of this Indenture as are required from time to time by such rules and
regulations (including such information, documents and reports referred to in
Trust Indenture Act Section 314(a)); and

                   (c) within 15 days after the filing thereof with the Trustee,
transmit by mail to all Holders in the manner and to the extent provided in
Trust Indenture Act Section 313(c), such summaries of any information, documents
and reports required to be filed by the Company or any Guarantor, as the case
may be, pursuant to Section 1019 hereunder and subsections (a) and (b) of this
Section as are required by rules and regulations prescribed from time to time by
the Commission.


                                       -93-



                                  ARTICLE EIGHT

                     CONSOLIDATION, MERGER, SALE OF ASSETS

                   Section 801. Company and Guarantors May Consolidate, etc.,
                                ---------------------------------------------
Only on Certain Terms.
- ----------------------


                   (a) The Company will not, in a single transaction or through
a series of related transactions, consolidate with or merge with or into any
other Person or sell, assign, convey, transfer, lease or otherwise dispose of
all or substantially all of its properties and assets to any Person or group of
Persons, or permit any of its Restricted Subsidiaries to enter into any such
transaction or series of related transactions if such transaction or series of
related transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Company and its Restricted Subsidiaries on a
Consolidated basis to any other Person or group of Persons, unless at the time
and after giving effect thereto:

                            (i) either (a) the Company will be the continuing
                  corporation (in the case of a consolidation or merger
                  involving the Company) or (b) the Person (if other than the
                  Company) formed by such consolidation or into which the
                  Company is merged or the Person which acquires by sale,
                  assignment, conveyance, transfer, lease or disposition all or
                  substantially all of the properties and assets of the Company
                  and its Restricted Subsidiaries on a Consolidated basis (the
                  "Surviving Entity") will be a corporation duly organized and
                  validly existing under the laws of the United States of
                  America, any state thereof or the District of Columbia and
                  such Person expressly assumes, by a supplemental indenture, in
                  a form reasonably satisfactory to the Trustee, all the
                  obligations of the Company under the Securities and this
                  Indenture and the Registration Rights Agreement, as the case
                  may be, and the Securities and this Indenture and the
                  Registration Rights Agreement will remain in full force and
                  effect as so supplemented;

                            (ii) immediately before and immediately after giving
                  effect to such transaction on a pro forma basis (and treating
                  any Indebtedness not previously an obligation of the Company
                  or any of its Restricted Subsidiaries which becomes the
                  obligation of the Company or any of its Restricted
                  Subsidiaries as a result of such transaction as having been
                  incurred at the time of such transaction), no Default or Event
                  of Default will have occurred and be continuing;


                            (iii) immediately before and immediately after
                  giving effect to such transaction on a pro forma basis (on the
                  assumption that the transaction occurred on the first day of
                  the four-quarter period for which


                                       -94-



                  financial statements are available ending immediately prior to
                  the consummation of such transaction with the appropriate
                  adjustments with respect to the transaction being included in
                  such pro forma calculation), the Company (or the Surviving
                  Entity if the Company is not the continuing obligor hereunder)
                  could incur $1.00 of additional Indebtedness (other than
                  Permitted Indebtedness) under Section 1008;

                           (iv) at the time of the transaction, each Guarantor,
                  if any, unless it is the other party to the transactions
                  described above, will have by supplemental indenture confirmed
                  that its Guarantee shall apply to such Person's obligations
                  under this Indenture and under the Securities;

                           (v) at the time of the transaction if any of the
                  property or assets of the Company or any of its Restricted
                  Subsidiaries would thereupon become subject to any Lien, the
                  provisions of Section 1011 are complied with; and

                           (vi) at the time of the transaction the Company or
                  the Surviving Entity will have delivered, or caused to be
                  delivered, to the Trustee, in form and substance reasonably
                  satisfactory to the Trustee, an Officers' Certificate and an
                  Opinion of Counsel, each to the effect that such
                  consolidation, merger, transfer, sale, assignment, conveyance,
                  transfer, lease or other transaction and the supplemental
                  indenture in respect thereof comply with this Indenture and
                  that all conditions precedent herein provided for relating to
                  such transaction have been complied with.

                  (b) Each Guarantor will not, and the Company will not permit a
Guarantor to, in a single transaction or through a series of related
transactions, consolidate with or merge with or into any other Person (other
than the Company or any Guarantor) or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets on a
Consolidated basis to any Person or group of Persons (other than the Company or
any Guarantor), or permit any of its Restricted Subsidiaries to enter into any
such transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of the Guarantor and its Restricted Subsidiaries on a Consolidated basis
to any other Person or group of Persons (other than the Company or any
Guarantor), unless at the time and after giving effect thereto:

                           (i) either (1) the Guarantor will be the continuing
                  corporation (in the case of a consolidation or merger
                  involving the Guarantor) or (2) the Person (if other than the
                  Guarantor) formed by such consolidation or into which such
                  Guarantor is merged or the Person which acquires by sale,
                  assignment, conveyance, transfer, lease or disposition all or
                  substantially all

                                       -95-



                  of the properties and assets of the Guarantor and its
                  Restricted Subsidiaries on a Consolidated basis (the
                  "Surviving Guarantor Entity") is duly organized and validly
                  existing under the laws of the United States of America, any
                  state thereof or the District of Columbia and such Person
                  expressly assumes, by a supplemental indenture, in a form
                  satisfactory to the Trustee, all the obligations of such
                  Guarantor under its Guarantee of the Securities and this
                  Indenture and the Registration Rights Agreement and such
                  Guarantee, Indenture and Registration Rights Agreement will
                  remain in full force and effect;

                           (ii) immediately before and immediately after giving
                  effect to such transaction, on a pro forma basis, no Default
                  or Event of Default will have occurred and be continuing; and

                           (iii) at the time of the transaction such Guarantor
                  or the Surviving Guarantor Entity will have delivered, or
                  caused to be delivered, to the Trustee, in form and substance
                  reasonably satisfactory to the Trustee, an Officers'
                  Certificate and an Opinion of Counsel, each to the effect that
                  such consolidation, merger, transfer, sale, assignment,
                  conveyance, lease or other transaction and the supplemental
                  indenture in respect thereof comply with this Indenture and
                  that all conditions precedent therein provided for relating to
                  such transaction have been complied with.

                  (c) Notwithstanding the foregoing, the provisions of Section
801(b) shall not apply to any Guarantor whose Guarantee of the Notes is
unconditionally released and discharged in accordance with paragraph (c) under
Section 1013.

                  Section 802.  Successor Substituted.
                                ----------------------

                  Upon any consolidation or merger, or any sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Company or any Guarantor, if any, in accordance
with Section 801, the successor Person formed by such consolidation or into
which the Company or such Guarantor, as the case may be, is merged or the
successor Person to which such sale, assignment, conveyance, transfer, lease or
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Guarantor, as the case may be,
under this Indenture, the Securities and/or the related Guarantee, as the case
may be, with the same effect as if such successor had been named as the Company
or such Guarantor, as the case may be, herein, in the Securities and/or in the
Guarantee, as the case may be, and the Company or such Guarantor, as the case
may be, shall be discharged from all obligations and covenants under this
Indenture and the Securities or its Guarantee, as the case may be; provided that
in the case of a transfer by lease or a sale of substantially all of the assets
of the Company or a Guarantor that results in the sale, assignment, conveyance,
transfer or other disposition of assets constituting or accounting for less than



                                       -96-


95% of the consolidated assets, revenues or Consolidated Net Income (Loss) of
the Company or such Guarantor, as the case may be, the predecessor shall not be
released from the payment of principal and interest on the Securities or its
Guarantee, as the case may be.

                                  ARTICLE NINE

                            SUPPLEMENTAL INDENTURES

                  Section 901. Supplemental Indentures and Agreements without
                               -----------------------------------------------
Consent of Holders.
- -------------------


                  Without the consent of any Holders, the Company, the
Guarantors, if any, and any other obligor under the Securities when authorized
by a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto or agreements or other
instruments with respect to this Indenture, the Securities or any Guarantee, in
form and substance satisfactory to the Trustee, for any of the following
purposes:

                  (a) to evidence the succession of another Person to the
Company or a Guarantor or any other obligor upon the Securities, and the
assumption by any such successor of the covenants of the Company or such
Guarantor or obligor herein and in the Securities and in any Guarantee in
accordance with Article Eight;

                  (b) to add to the covenants of the Company, any Guarantor or
any other obligor upon the Securities for the benefit of the Holders, or to
surrender any right or power conferred upon the Company or any Guarantor or any
other obligor upon the Securities, as applicable, herein, in the Securities or
in any Guarantee;

                  (c) to cure any ambiguity, or to correct or supplement any
provision herein or in any supplemental indenture, the Securities or any
Guarantee which may be defective or inconsistent with any other provision herein
or in the Securities or any Guarantee or to make any other provisions with
respect to matters or questions arising under this Indenture, the Securities or
the Guarantees; provided that, in each case, such provisions shall not adversely
affect the interest of the Holders;

                  (d) to comply with the requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the Trust
Indenture Act, as contemplated by Section 905 or otherwise;

                  (e)  to add a Guarantor pursuant to the requirements of
Section 1013 hereof or otherwise;

                                       -97-


                  (f)  to evidence and provide the acceptance of the appointment
of a successor Trustee hereunder; or

                  (g) to mortgage, pledge, hypothecate or grant a security
interest in favor of the Trustee for the benefit of the Holders as additional
security for the payment and performance of the Company's or any Guarantor's
Indenture Obligations, in any property, or assets, including any of which are
required to be mortgaged, pledged or hypothecated, or in which a security
interest is required to be granted to the Trustee pursuant to this Indenture or
otherwise.

                  Section 902.  Supplemental Indentures and Agreements with
                                 -------------------------------------------
 Consent of Holders.
 -------------------

                  Except as permitted by Section 901, with the consent of the
Holders of at least a majority in aggregate principal amount of the Outstanding
Securities, by Act of said Holders delivered to the Company, each Guarantor, if
any, and the Trustee, the Company and each Guarantor (if a party thereto) when
authorized by Board Resolutions, and the Trustee may (i) enter into an indenture
or indentures supplemental hereto or agreements or other instruments with
respect to any Guarantee in form and substance satisfactory to the Trustee, for
the purpose of adding any provisions to or amending, modifying or changing in
any manner or eliminating any of the provisions of this Indenture, the
Securities or any Guarantee (including but not limited to, for the purpose of
modifying in any manner the rights of the Holders under this Indenture, the
Securities or any Guarantee) or (ii) waive compliance with any provision in this
Indenture, the Securities or any Guarantee (other than waivers of past Defaults
covered by Section 513 and waivers of covenants which are covered by Section
1021); provided, however, that no such supplemental indenture, agreement or
instrument shall, without the consent of the Holder of each Outstanding Security
affected thereby:

                  (a) change the Stated Maturity of the principal of, or any
installment of interest on, or change to an earlier date any Redemption Date of,
or waive a default in the payment of the principal of, premium, if any, or
interest on, any such Security or reduce the principal amount thereof or the
rate of interest thereon or any premium payable upon the redemption thereof, or
change the coin or currency in which the principal of any Security or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date);

                  (b) amend, change or modify the obligation of the Company to
make and consummate an Offer with respect to any Asset Sale or Asset Sales in
accordance with Section 1012 or the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control in
accordance with Section 1014, including, in each case, amending, changing or
modifying any definitions relating thereto but only to the extent such
definitions relate thereto;

                                       -98-


                  (c) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver or compliance with certain provisions of this Indenture;

                  (d) modify any of the provisions of this Section 902 or
Section 513 or 1021, except to increase the percentage of such Outstanding
Securities required for any such actions or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each such Security affected thereby;

                  (e) except as otherwise permitted under Article Eight, consent
to the assignment or transfer by the Company or any Guarantor of any of its
rights and obligations hereunder; or

                  (f) amend or modify any of the provisions of this Indenture in
any manner which subordinates the Securities issued hereunder in right of
payment to any other Indebtedness of the Company or which subordinates any
Guarantee in right of payment to any other Indebtedness of the Guarantor issuing
such Guarantee.

                  Upon the written request of the Company and each Guarantor, if
any, accompanied by a copy of Board Resolutions authorizing the execution of any
such supplemental indenture or Guarantee, and upon the filing with the Trustee
of evidence of the consent of Holders as aforesaid, the Trustee shall join with
the Company and each Guarantor in the execution of such supplemental indenture
or Guarantee.

                  It shall not be necessary for any Act of Holders under this
Section 902 to approve the particular form of any proposed supplemental
indenture or Guarantee or agreement or instrument relating to any Guarantee, but
it shall be sufficient if such Act shall approve the substance thereof.

                  Section 903.  Execution of Supplemental Indentures and
                                -----------------------------------------
Agreements.
- -----------

                  In executing, or accepting the additional trusts created by,
any supplemental indenture, agreement, instrument or waiver permitted by this
Article Nine or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Trust
Indenture Act Sections 315(a) through 315(d) and Section 603(a) hereof) shall be
fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate stating that the execution of such supplemental indenture, agreement
or instrument (a) is authorized or permitted by this Indenture and (b) does not
violate the provisions of any agreement or instrument evidencing any other
Indebtedness of the Company, any Guarantor or any other Restricted Subsidiary.
The Trustee may, but shall not be obligated to, enter into any such supplemental
indenture, agreement or instrument which affects the Trustee's own rights,
duties or immunities under this Indenture, any Guarantee or otherwise.

                                       -99-


       Section 904. Effect of Supplemental Indentures.
                    ----------------------------------

                   Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.

       Section 905. Conformity with Trust Indenture Act.
                    -----------------------------------

                  Every supplemental indenture executed pursuant to this Article
Nine shall conform to the requirements of the Trust Indenture Act as then in
effect.

       Section 906. Reference in Securities to Supplemental
                    ---------------------------------------
                    Indentures.
                    -----------

                  Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article Nine may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any such supplemental indenture may be
prepared and executed by the Company and each Guarantor and authenticated and
delivered by the Trustee in exchange for Outstanding Securities.

       Section 907. Notice of Supplemental Indentures.
                    ----------------------------------

                  Promptly after the execution by the Company, any Guarantor and
the Trustee of any supplemental indenture pursuant to the provisions of Section
902, the Company shall give notice thereof to the Holders of each Outstanding
Security affected, in the manner provided for in Section 106, setting forth in
general terms the substance of such supplemental indenture. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.

                                   ARTICLE TEN

                                   COVENANTS

       Section 1001. Payment of Principal, Premium and Interest.
                     -------------------------------------------

                  The Company shall duly and punctually pay the principal of,
premium, if any, and interest on the Securities in accordance with the terms of
the Securities and this Indenture.

                                      -100-


                  Section 1002. Maintenance of Office or Agency.
                                --------------------------------

                  The Company shall maintain an office or agency where
Securities may be presented or surrendered for payment. The Company also will
maintain in The City of New York an office or agency where Securities may be
surrendered for registration of transfer, redemption or exchange and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The office of the Trustee, at its Corporate Trust
Office initially located at 100 Wall Street, 20th Floor, New York, New York
10005, will be such office or agency of the Company, unless the Company shall
designate and maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the Trustee of the
location and any change in the location of any such offices or agencies. If at
any time the Company shall fail to maintain any such required offices or
agencies or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
office of the Trustee and the Company hereby appoints the Trustee such agent as
its agent to receive all such presentations, surrenders, notices and demands.

                  The Company may from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Securities
may be presented or surrendered for any or all such purposes, and may from time
to time rescind such designation. The Company will give prompt written notice to
the Trustee of any such designation or rescission and any change in the location
of any such office or agency.

                  The Trustee shall initially act as Paying Agent for the
Securities.

                  Section 1003. Money for Security Payments to Be Held in Trust.
                                ------------------------------------------------

                  If the Company or any of its Affiliates shall at any time act
as Paying Agent, it will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities, segregate and hold in
trust for the benefit of the Holders entitled thereto a sum sufficient to pay
the principal, premium, if any, or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided, and
will promptly notify the Trustee of its action or failure so to act.

                  If the Company or any of its Affiliates is not acting as
Paying Agent, the Company will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities, deposit with a Paying
Agent a sum in same day funds sufficient to pay the principal, premium, if any,
or interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of such
action or any failure so to act.

                  If the Company is not acting as Paying Agent, the Company will
cause each Paying Agent other than the Trustee to execute and deliver to the
Trustee an instrument

                                       -101-



in which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:

                  (a) hold all sums held by it for the payment of the principal
of, premium, if any, or interest on the Securities in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;

                  (b) give the Trustee notice of any Default by the Company or
any Guarantor (or any other obligor upon the Securities) in the making of any
payment of principal, premium, if any, or interest on the Securities;

                  (c) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent; and

                  (d) acknowledge, accept and agree to comply in all aspects
with the provisions of this Indenture relating to the duties, rights and
liabilities of such Paying Agent.

                  The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.

                  Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Security and remaining unclaimed for two years after
such principal and premium, if any, or interest has become due and payable shall
promptly be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
                                                          ---------------    ---
Wall Street Journal (national edition), and mail to each such Holder, notice
- -------------------
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such notification,
publication and mailing, any unclaimed balance of such money then remaining will
promptly be repaid to the Company.

                                       -102-


                  Section 1004. Corporate Existence.
                                --------------------

                  Subject to Article Eight, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect the
corporate existence and related rights and franchises (charter and statutory) of
the Company and each Restricted Subsidiary; provided, however, that the Company
shall not be required to preserve any such right or franchise or the corporate
existence of any such Restricted Subsidiary if the Board of Directors of the
Company shall determine that the preservation thereof is no longer necessary or
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries as a whole; and provided, further, however, that the foregoing
shall not prohibit a sale, transfer or conveyance of a Restricted Subsidiary or
any of its assets in compliance with the terms of this Indenture.

                  Section 1005. Payment of Taxes and Other Claims.
                                ----------------------------------

                  The Company shall pay or discharge or cause to be paid or
discharged, on or before the date the same shall become due and payable, (a) all
taxes, assessments and governmental charges levied or imposed upon the Company
or any of its Restricted Subsidiaries shown to be due on any return of the
Company or any of its Restricted Subsidiaries or otherwise assessed or upon the
income, profits or property of the Company or any of its Restricted Subsidiaries
if failure to pay or discharge the same could reasonably be expected to have a
material adverse effect on the ability of the Company or any Guarantor to
perform its obligations hereunder and (b) all lawful claims for labor, materials
and supplies, which, if unpaid, would by law become a Lien upon the property of
the Company or any of its Restricted Subsidiaries, except for any Lien permitted
to be incurred under Section 1011, if failure to pay or discharge the same could
reasonably be expected to have a material adverse effect on the ability of the
Company or any Guarantor to perform its obligations hereunder; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings properly instituted and diligently conducted and in respect of which
appropriate reserves (in the good faith judgment of management of the Company)
are being maintained in accordance with GAAP.

                  Section 1006. Maintenance of Properties.
                                --------------------------

                  The Company shall cause all material properties owned by the
Company or any of its Restricted Subsidiaries or used or held for use in the
conduct of its business or the business of any of its Restricted Subsidiaries to
be maintained and kept in good condition, repair and working order (ordinary
wear and tear excepted) and supplied with all necessary equipment and will cause
to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the reasonable judgment of the Company may be
consistent with sound business practice and necessary so that the business
carried on in connection therewith may be properly conducted at all times;


                                       -103-


provided, however, that nothing in this Section shall prevent the Company from
discontinuing the maintenance of any of such properties if such discontinuance
is, in the reasonable judgment of the Company, desirable in the conduct of its
business or the business of any of its Restricted Subsidiaries; and provided,
further, however, that the foregoing shall not prohibit a sale, transfer or
conveyance of a Restricted Subsidiary or any of its properties or assets in
compliance with the terms of this Indenture.

                  Section 1007. Maintenance of Insurance.
                                -------------------------

                  The Company shall at all times keep all of its and its
Restricted Subsidiaries' properties which are of an insurable nature insured
with insurers, believed by the Company in good faith to be financially sound and
responsible, against loss or damage to the extent that property of similar
character is usually so insured by corporations similarly situated and owning
like properties in the same general geographic areas in which the Company and
its Restricted Subsidiaries operate, except where the failure to do so could not
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or prospects of the Company
and its Restricted Subsidiaries, taken as a whole.

                  Section 1008. Limitation on Indebtedness.
                                ---------------------------

                  The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, create, issue, incur, assume, guarantee or otherwise
in any manner become directly or indirectly liable for the payment of or
otherwise incur, contingently or otherwise (collectively, "incur"), any
Indebtedness (including any Acquired Indebtedness), unless such Indebtedness is
incurred by the Company or any Guarantor or constitutes Acquired Indebtedness of
a Restricted Subsidiary and, in each case, the Company's Consolidated Fixed
Charge Coverage Ratio for the most recent four full fiscal quarters for which
financial statements are available immediately preceding the incurrence of such
Indebtedness taken as one period is at least equal to or greater than 2.00:1.

                  Notwithstanding the foregoing, the Company and, to the extent
specifically set forth below, the Restricted Subsidiaries may incur each and all
of the following (collectively, the "Permitted Indebtedness"):

                  (i) Indebtedness of the Company and the Guarantors under the
Revolving Facility (including any refinancing (as defined below) thereof) in an
aggregate principal amount at any one time outstanding not to exceed the greater
of (a) $75 million or (b) 20% of the Company's Consolidated Tangible Assets, in
any case under the Revolving Facility (including any refinancing thereof) or in
respect of letters of credit thereunder;

                  (ii) Indebtedness of the Company and the Guarantors under any
Inventory Facility.

                                       -104-


                  (iii) Indebtedness of the Company pursuant to the Series B
Securities and Indebtedness of any Guarantor pursuant to a guarantee of the
Series B Securities;

                  (iv) Indebtedness of the Company or any Restricted Subsidiary
outstanding on July 31, 1998, and listed on a schedule to the B Indenture and
not otherwise referred to in this definition of Permitted Indebtedness;

                  (v) Indebtedness of the Company owing to a Restricted
Subsidiary; provided that any Indebtedness of the Company owing to a Restricted
Subsidiary that is not a Guarantor is made pursuant to an intercompany note in
the form attached as Annex A to this Indenture and is unsecured and subordinated
in right of payment from and after such time as the Securities shall become due
and payable (whether at Stated Maturity, acceleration or otherwise) to the
payment and performance of the Company's obligations under the Securities;
provided, further, that any disposition, pledge or transfer of any such
Indebtedness to a Person (other than a disposition, pledge or transfer to a
Restricted Subsidiary) shall be deemed to be an incurrence of such Indebtedness
by the Company or other obligor not permitted by this clause (v);

                  (vi) Indebtedness of a Wholly Owned Restricted Subsidiary
owing to the Company or another Wholly Owned Restricted Subsidiary; provided
that any such Indebtedness is made pursuant to an intercompany note in the form
attached as Annex A to this Indenture; provided, further, that (a) any
disposition, pledge or transfer of any such Indebtedness to a Person (other than
a disposition, pledge or transfer to the Company or a Wholly Owned Restricted
Subsidiary) shall be deemed to be an incurrence of such Indebtedness by the
obligor not permitted by this clause (vi), and (b) any transaction pursuant to
which any Wholly Owned Restricted Subsidiary, which has Indebtedness owing to
the Company or any other Wholly Owned Restricted Subsidiary, ceases to be a
Wholly Owned Restricted Subsidiary shall be deemed to be the incurrence of
Indebtedness by such Wholly Owned Restricted Subsidiary that is not permitted by
this clause (vi);

                  (vii) guarantees of any Restricted Subsidiary made in
accordance with the provisions of Section 1013;

                  (viii) obligations of the Company or any Guarantor entered
into in the ordinary course of business (a) pursuant to Interest Rate Agreements
designed to protect the Company or any Restricted Subsidiary against
fluctuations in interest rates in respect of Indebtedness of the Company or any
Restricted Subsidiary as long as such obligations do not exceed the aggregate
principal amount of such Indebtedness then outstanding, (b) under any Currency
Hedging Agreements, relating to (i) Indebtedness of the Company or any
Restricted Subsidiary and/or (ii) obligations to purchase or sell assets or
properties, in each case, incurred in the ordinary course of business of the
Company or any Restricted Subsidiary; provided, however, that such Currency
Hedging Agreements do not increase the Indebtedness or other obligations of the
Company or any Restricted

                                       -105-



Subsidiary outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder or (c) under any Commodity Price Protection Agreements which
do not increase the amount of Indebtedness or other obligations of the Company
or any Restricted Subsidiary outstanding other than as a result of fluctuations
in commodity prices or by reason of fees, indemnities and compensation payable
thereunder;

                  (ix) Indebtedness of the Company or any Restricted Subsidiary
represented by Capital Lease Obligations or Purchase Money Obligations or other
Indebtedness incurred or assumed in connection with the acquisition or
development of real or personal, movable or immovable, property in each case
incurred for the purpose of financing or refinancing all or any part of the
purchase price or cost of construction or improvement of property used in the
business of the Company, in an aggregate principal amount pursuant to this
clause (ix) not to exceed $20 million outstanding at any time; provided that the
principal amount of any Indebtedness permitted under this clause (ix) did not in
each case at the time of incurrence exceed the Fair Market Value, as determined
by the Board of Directors of the Company in good faith, of the acquired or
constructed asset or improvement so financed;

                  (x) obligations arising from agreements by the Company or a
Restricted Subsidiary to provide for indemnification, customary purchase price
closing adjustments, earn-outs or other similar obligations, in each case,
incurred in connection with the acquisition or disposition of any business or
assets of a Restricted Subsidiary;

                  (xi) Indebtedness evidenced by letters of credit in the
ordinary course of business to support the Company's or any Restricted
Subsidiary's insurance or self-insurance obligations for workers' compensation
and other similar insurance coverages;

                  (xii) any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a "refinancing") of any Indebtedness
described in clauses (iii) and (iv) of this definition of "Permitted
Indebtedness," including any successive refinancings so long as the borrower
under such refinancing is the Company or, if not the Company, the same as the
borrower of the Indebtedness being refinanced and the aggregate principal amount
of Indebtedness represented thereby (or if such Indebtedness provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof, the original issue price of
such Indebtedness plus any accreted value attributable thereto since the
original issuance of such Indebtedness) does not exceed the initial principal
amount of such Indebtedness plus the lesser of (I) the stated amount of any
premium or other payment required to be paid in connection with such a
refinancing pursuant to the terms of the Indebtedness being refinanced or (II)
the amount of premium or other payment actually paid at such time to refinance
the Indebtedness, plus, in either case, the amount of expenses of the Company
incurred in connection with such refinancing and (A) in the case of any
refinancing of Indebtedness that is Subordinated Indebtedness, such new
Indebtedness is made


                                       -106-


subordinated to the Securities at least to the same extent as the Indebtedness
being refinanced and (B) in the case of Pari Passu Indebtedness or Subordinated
Indebtedness, as the case may be, such refinancing does not reduce the Average
Life to Stated Maturity or the Stated Maturity of such Indebtedness; and

                  (xiii) Indebtedness of the Company and its Restricted
Subsidiaries or any Guarantor in addition to that described in clauses (i)
through (xii) above, and any renewals, extensions, substitutions, refinancings
or replacements of such Indebtedness, so long as the aggregate principal amount
of all such Indebtedness shall not exceed $10 million outstanding at any one
time in the aggregate.


                  For purposes of determining compliance with this Section 1008,
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness permitted by this Section 1008, the Company in its
sole discretion shall classify such item of Indebtedness and only be required to
include the amount of such Indebtedness as one of such types.

                  Section 1009. Limitation on Restricted Payments.
                                ----------------------------------

                  (a) The Company will not, and will not cause or permit any
Restricted Subsidiary to, directly or indirectly:

                  (i)      declare or pay any dividend on, or make any
                           distribution to holders of, any shares of the
                           Company's Capital Stock (other than dividends or
                           distributions payable solely in shares of its
                           Qualified Capital Stock or in options, warrants or
                           other rights to acquire shares of such Qualified
                           Capital Stock);

                  (ii)     purchase, redeem, defease or otherwise acquire or
                           retire for value, directly or indirectly, the
                           Company's Capital Stock or any Capital Stock of any
                           Affiliate of the Company, including any Subsidiary of
                           the Company (other than Capital Stock of any Wholly
                           Owned Restricted Subsidiary of the Company), or
                           options, warrants or other rights to acquire such
                           Capital Stock;

                  (iii)    make any principal payment on, or repurchase, redeem,
                           defease, retire or otherwise acquire for value, prior
                           to any scheduled principal payment, sinking fund
                           payment or maturity, any Subordinated Indebtedness;

                  (iv)     declare or pay any dividend or distribution on any
                           Capital Stock of any Restricted Subsidiary to any
                           Person (other than (a) to the Company or any of its
                           Wholly Owned Restricted Subsidiaries or (b) dividends
                           and distributions made by a Restricted Subsidiary (i)
                           organized as a partnership, limited liability company
                           or similar pass-


                                       -107-


                           through entity to the holders of its Capital Stock in
                           amounts sufficient to satisfy the tax liabilities
                           arising from their ownership of such Capital Stock or
                           (ii) on a pro rata basis to all stockholders of such
                           Restricted Subsidiary); or

                  (v)      make any Investment in any Person (other than any
                           Permitted Investments)


(any of the foregoing actions described in clauses (i) through (v), other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted Payments") (the amount of any such Restricted Payment, if other than
cash, shall be the Fair Market Value of the assets proposed to be transferred,
as determined by the board of directors of the Company, whose determination
shall be conclusive and evidenced by a board resolution), unless (1) immediately
before and immediately after giving effect to such proposed Restricted Payment
on a pro forma basis, no Default or Event of Default shall have occurred and be
continuing and such Restricted Payment shall not be an event which is, or after
notice or lapse of time or both, would be, an "event of default" under the terms
of any Indebtedness of the Company or its Restricted Subsidiaries; (2)
immediately before and immediately after giving effect to such Restricted
Payment on a pro forma basis, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 1008 herein; and
(3) after giving effect to the proposed Restricted Payment, the aggregate amount
of all such Restricted Payments declared or made after July 31, 1998 and all
Designation Amounts does not exceed the sum of:

         (A)      $5 million;

         (B)      50% of the aggregate Consolidated Net Income of the Company
                  accrued on a cumulative basis during the period beginning on
                  the first day of the Company's fiscal quarter in which July
                  31, 1998 fell and ending on the last day of the Company's last
                  fiscal quarter ending prior to the date of the Restricted
                  Payment, or, if such aggregate cumulative Consolidated Net
                  Income shall be a loss, minus 100% of such loss;

         (C)      the aggregate Net Cash Proceeds received after July 31, 1998
                  by the Company either (x) as capital contributions in the form
                  of common equity to the Company or (y) from the issuance or
                  sale (other than to any of its Subsidiaries) of Qualified
                  Capital Stock of the Company or any options, warrants or
                  rights to purchase such Qualified Capital Stock of the Company
                  (except, in each case, to the extent such proceeds are used to
                  purchase, redeem or otherwise retire Capital Stock or
                  Subordinated Indebtedness as set forth below in clause (ii) or
                  (iii) of paragraph (b) below) (and excluding the Net Cash
                  Proceeds from the issuance of Qualified Capital Stock


                                       -108-


                  financed, directly or indirectly, using funds borrowed from
                  the Company or any Subsidiary until and to the extent such
                  borrowing is repaid);

         (D)      the aggregate Net Cash Proceeds received after July 31, 1998
                  by the Company (other than from any of its Subsidiaries) upon
                  the exercise of any options, warrants or rights to purchase
                  Qualified Capital Stock of the Company (and excluding the Net
                  Cash Proceeds from the exercise of any options, warrants or
                  rights to purchase Qualified Capital Stock financed, directly
                  or indirectly, using funds borrowed from the Company or any
                  Subsidiary until and to the extent such borrowing is repaid);

         (E)      the aggregate Net Cash Proceeds received after July 31, 1998
                  by the Company from the conversion or exchange, if any, of
                  debt securities or Redeemable Capital Stock of the Company or
                  its Restricted Subsidiaries into or for Qualified Capital
                  Stock of the Company plus, to the extent such debt securities
                  or Redeemable Capital Stock were issued after July 31, 1998,
                  upon the conversion or exchange of such debt securities or
                  Redeemable Capital Stock, the aggregate of Net Cash Proceeds
                  from their original issuance (and excluding the Net Cash
                  Proceeds from the conversion or exchange of debt securities or
                  Redeemable Capital Stock financed, directly or indirectly,
                  using funds borrowed from the Company or any Subsidiary until
                  and to the extent such borrowing is repaid); and

         (F)      (a) in the case of the disposition or repayment of any
                  Investment constituting a Restricted Payment made after July
                  31, 1998, an amount (to the extent not included in
                  Consolidated Net Income) equal to the lesser of the return of
                  capital with respect to such Investment and the initial amount
                  of such Investment, in either case, less the cost of the
                  disposition of such Investment and net of taxes, and (b) in
                  the case of the designation of an Unrestricted Subsidiary as a
                  Restricted Subsidiary (as long as the designation of such
                  Subsidiary as an Unrestricted Subsidiary was deemed a
                  Restricted Payment), the Fair Market Value of the Company's
                  interest in such Subsidiary provided that such amount shall
                  not in any case exceed the amount of the Restricted Payment
                  deemed made at the time the Subsidiary was designated as an
                  Unrestricted Subsidiary.

         (b) Notwithstanding the foregoing, and in the case of clauses (ii)
through (iv) below, so long as no Default or Event of Default is continuing or
would arise therefrom, the foregoing provisions shall not prohibit the following
actions (each of clauses (i) through (iv) and (viii) being referred to as a
"Permitted Payment"):

                           (i)      the payment of any dividend within 60 days
                                    after the date of declaration thereof, if at
                                    such date of declaration such payment was
                                    permitted by the provisions of paragraph (a)
                                    of


                                       -109-


                                    this Section and such payment shall have
                                    been deemed to have been paid on
                                    such date of declaration and shall not have
                                    been deemed a "Permitted Payment" for
                                    purposes of the calculation required by
                                    paragraph (a) of this Section 1009;

                           (ii)     the repurchase, redemption, or other
                                    acquisition or retirement for value of any
                                    shares of any class of Capital Stock of the
                                    Company in exchange for, including any such
                                    exchange pursuant to the exercise of a
                                    conversion right or privilege in connection
                                    with which cash is paid in lieu of the
                                    issuance of fractional shares or scrip, or
                                    out of the Net Cash Proceeds of a
                                    substantially concurrent issuance and sale
                                    for cash (other than to a Subsidiary) of,
                                    other shares of Qualified Capital Stock of
                                    the Company; provided that the Net Cash
                                    Proceeds from the issuance of such shares of
                                    Qualified Capital Stock are excluded from
                                    clause (3)(C) of paragraph (a) of this
                                    Section 1009;

                           (iii)    the repurchase, redemption, defeasance,
                                    retirement or acquisition for value or
                                    payment of principal of any Subordinated
                                    Indebtedness or Redeemable Capital Stock in
                                    exchange for, or in an amount not in excess
                                    of the Net Cash Proceeds of, a substantially
                                    concurrent issuance and sale for cash (other
                                    than to any Subsidiary of the Company) of
                                    any Qualified Capital Stock of the Company,
                                    provided that the Net Cash Proceeds from the
                                    issuance of such shares of Qualified Capital
                                    Stock are excluded from clause (3)(C) of
                                    paragraph (a) of this Section 1009;

                           (iv)     the repurchase, redemption, defeasance,
                                    retirement, refinancing, acquisition for
                                    value or payment of principal of any
                                    Subordinated Indebtedness (other than
                                    Redeemable Capital Stock) (a "refinancing")
                                    through the substantially concurrent
                                    issuance of new Subordinated Indebtedness of
                                    the Company, provided that any such new
                                    Subordinated Indebtedness (1) shall be in a
                                    principal amount that does not exceed the
                                    principal amount so refinanced (or, if such
                                    Subordinated Indebtedness provides for an
                                    amount less than the principal amount
                                    thereof to be due and payable upon a
                                    declaration of acceleration thereof,
                                    then such lesser amount as of the date of
                                    determination), plus the lesser of (I) the
                                    stated amount of any premium or other
                                    payment required to be paid in connection
                                    with such a refinancing pursuant to the
                                    terms of the Indebtedness being refinanced
                                    or (II) the amount of


                                       -110-



                                    premium or other payment actually paid at
                                    such time to refinance the Indebtedness,
                                    plus, in either case, the amount of expenses
                                    of the Company incurred in connection with
                                    such refinancing; (2) has an Average Life to
                                    Stated Maturity greater than the remaining
                                    Average Life to Stated Maturity of the
                                    Securities; (3) has a Stated Maturity for
                                    its final scheduled principal payment later
                                    than the Stated Maturity for the final
                                    scheduled principal payment of the
                                    Securities; and (4) is expressly
                                    subordinated in right of payment to the
                                    Securities at least to the same extent as
                                    the Subordinated Indebtedness to be
                                    refinanced;

                           (v)      the purchase, redemption, or other
                                    acquisition or retirement for value of any
                                    class of Capital Stock of the Company from
                                    employees, former employees, directors or
                                    former directors of the Company or any
                                    Subsidiary pursuant to the terms of the
                                    agreements pursuant to which such Capital
                                    Stock was acquired in an amount not to
                                    exceed $1.0 million in the aggregate in any
                                    calendar year;

                           (vi)     the repurchase, redemption or other
                                    acquisition or retirement for value of
                                    Capital Stock of the Company issued pursuant
                                    to acquisitions by the Company to the extent
                                    required by or needed to comply with the
                                    requirements of any of the Manufacturers
                                    with which the Company or a Restricted
                                    Subsidiary is a party to a franchise
                                    agreement;

                          (vii)     the repurchase, redemption, defeasance,
                                    retirement or acquisition for value or
                                    payment of principal on the Smith
                                    Subordinated Loan; and

                           (viii)   the payment of the contingent purchase price
                                    of an acquisition to the extent such payment
                                    would be deemed a Restricted Payment.

                  Section 1010. Limitation on Transactions with Affiliates.
                                -------------------------------------------

                  The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into any transaction
or series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with or for the
benefit of any Affiliate of the Company (other than the Company or a Wholly
Owned Restricted Subsidiary) unless such transaction or series of related
transactions is entered into in good faith and in writing and (a) such
transaction or series of related transactions is on terms that are no less
favorable to the Company or



                                       -111-



such Restricted Subsidiary, as the case may be, than those that would be
available in a comparable transaction in arm's-length dealings with an unrelated
third party, (b) with respect to any transaction or series of related
transactions involving aggregate value in excess of $500,000, the Company
delivers an Officers' Certificate to the Trustee certifying that such
transaction or series of related transactions complies with clause (a) above or
such transaction or series of related transactions is approved by a majority of
the Disinterested Directors of the Board of Directors of the Company, or in the
event there is only one Disinterested Director, by such Disinterested Director,
and (c) with respect to any transaction or series of related transactions
involving aggregate value in excess of $1 million, either (A) such transaction
or series of related transactions has been approved by a majority of the
Disinterested Directors of the Company, or in the event there is only one
Disinterested Director, by such Disinterested Director, or (B) the Company
delivers to the Trustee a written opinion of an investment banking firm of
national standing or other recognized independent expert with experience
appraising the terms and conditions of the type of transaction or series of
related transactions for which an opinion is required stating that the
transactions or series of related transactions is fair to the Company or such
Restricted Subsidiary from a financial point of view; provided, however, that
this provision shall not apply to (i) compensation and employee benefit
arrangements with any officer or director of the Company, including under any
stock option or stock incentive plans, entered into in the ordinary course of
business; (ii) any transaction permitted as a Restricted Payment pursuant to
Section 1009; (iii) the payment of customary fees to directors of the Company
and its Restricted Subsidiaries; (iv) any transaction with any officer or member
of the Board of Directors of the Company involving indemnification arrangements;
and (v) loans or advances to officers of the Company in the ordinary course of
business not to exceed $1 million in any calendar year.

                  Section 1011. Limitation on Liens.
                                --------------------

                  The Company will not, and will not cause or permit any
Restricted Subsidiary to, directly or indirectly, create, incur or affirm any
Lien of any kind securing any Pari Passu Indebtedness or Subordinated
Indebtedness (including any assumption, guarantee or other liability with
respect thereto by any Restricted Subsidiary) upon any property or assets
(including any intercompany notes) of the Company or any Restricted Subsidiary
owned on July 31, 1998 or acquired after July 31, 1998, or assign or convey any
right to receive any income or profits therefrom, unless the Securities or a
Guarantee in the case of Liens of a Guarantor are directly secured equally and
ratably with (or, in the case of Subordinated Indebtedness, prior or senior
thereto, with the same relative priority as the Securities shall have with
respect to such Subordinated Indebtedness) the obligation or liability secured
by such Lien except for Liens (A) securing any Indebtedness which became
Indebtedness pursuant to a transaction permitted under Article Eight or securing
Acquired Indebtedness which was created prior to (and not created in connection
with, or in contemplation of) the incurrence of such Pari Passu Indebtedness or
Subordinated Indebtedness (including any assumption, guarantee or other



                                       -112-


liability with respect thereto by any Restricted Subsidiary) and which
Indebtedness is permitted under the provisions of Section 1008 or (B) securing
any Indebtedness incurred in connection with any refinancing, renewal,
substitutions or replacements of any such Indebtedness described in clause (A),
so long as the aggregate principal amount of Indebtedness represented thereby
(or if such Indebtedness provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration of the maturity
thereof, the original issue price of such Indebtedness plus any accreted value
attributable thereto since the original issuance of such Indebtedness) is not
increased by such refinancing by an amount greater than the lesser of (i) the
stated amount of any premium or other payment required to be paid in connection
with such a refinancing pursuant to the terms of the Indebtedness being
refinanced or (ii) the amount of premium or other payment actually paid at such
time to refinance the Indebtedness, plus, in either case, the amount of expenses
of the Company incurred in connection with such refinancing; provided, however,
that in the case of clauses (A) and (B), any such Lien only extends to the
assets that were subject to such Lien securing such Indebtedness prior to the
related acquisition by the Company or its Restricted Subsidiaries.
Notwithstanding the foregoing, any Lien securing the Securities granted pursuant
to this covenant shall be automatically and unconditionally released and
discharged upon the release by the holders of the Pari Passu Indebtedness or
Subordinated Indebtedness described above of their Lien on the property or
assets of the Company or any Restricted Subsidiary (including any deemed release
upon payment in full of all obligations under such Indebtedness), at such time
as the holders of all such Pari Passu Indebtedness or Subordinated Indebtedness
also release their Lien on the property or assets of the Company or such
Restricted Subsidiary, or upon any sale, exchange or transfer to any Person not
an Affiliate of the Company of the property or assets secured by such Lien, or
of all of the Capital Stock held by the Company or any Restricted Subsidiary in,
or all or substantially all the assets of, any Restricted Subsidiary creating
such Lien.

                  Section 1012. Limitation on Sale of Assets.
                                ----------------------------

                  (a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, consummate an Asset Sale
unless (i) at least 80% of the consideration from such Asset Sale consists of
(A) cash or Cash Equivalents, (B) the assumption of Senior Indebtedness or
Senior Guarantor Indebtedness by the party acquiring the assets from the Company
of any Restricted Subsidiary, (C) Replacement Assets or (D) a combination of any
of the foregoing; and (ii) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the shares or assets subject to such Asset Sale (as determined by the
Board of Directors of the Company and evidenced in a Board Resolution); provided
that any notes or other obligations received by the Company or any such
Restricted Subsidiary from any transferee of assets from the Company or such
Restricted Subsidiary that are converted by the Company or such Restricted
Subsidiary into cash at Fair Market Value within 30 days after receipt shall be
deemed to be cash for purposes of this provision.

                                       -113-


                  (b) If all or a portion of the Net Cash Proceeds of any Asset
Sale are not required to be applied to repay permanently any Senior Indebtedness
or Senior Guarantor Indebtedness then outstanding as required by the terms
thereof, or the Company determines not to apply such Net Cash Proceeds to the
permanent prepayment of such Senior Indebtedness or Senior Guarantor
Indebtedness, or if no such Senior Indebtedness or Senior Guarantor Indebtedness
is then outstanding, then the Company or a Restricted Subsidiary may within 365
days of the Asset Sale invest the Net Cash Proceeds in Replacement Assets. The
amount of such Net Cash Proceeds not used or invested within 365 days of the
Asset Sale as set forth in this paragraph constitutes "Excess Proceeds."

                  (c) When the aggregate amount of Excess Proceeds exceeds $10
million or more, the Company will apply the Excess Proceeds to the repayment of
the Securities and any other Pari Passu Indebtedness outstanding with similar
provisions requiring the Company to make an offer to purchase such Indebtedness
with the proceeds from any Asset Sale as follows: (A) the Company will make an
offer to purchase (an "Offer") from all holders of the Securities in accordance
with the procedures set forth in this Indenture in the maximum principal amount
(expressed as a multiple of $1,000) of Securities that may be purchased out of
an amount (the "Security Amount") equal to the product of such Excess Proceeds
multiplied by a fraction, the numerator of which is the outstanding principal
amount of the Securities, and the denominator of which is the sum of the
outstanding principal amount of the Securities and such Pari Passu Indebtedness
(subject to proration in the event such amount is less than the aggregate
Offered Price (as defined herein) of all Securities tendered) and (B) to the
extent required by such Pari Passu Indebtedness to permanently reduce the
principal amount of such Pari Passu Indebtedness, the Company will make an offer
to purchase or otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari
Passu Offer") in an amount (the "Pari Passu Debt Amount") equal to the excess of
the Excess Proceeds over the Security Amount; provided that in no event will the
Company be required to make a Pari Passu Offer in a Pari Passu Debt Amount
exceeding the principal amount of such Pari Passu Indebtedness plus the amount
of any premium required to be paid to repurchase such Pari Passu Indebtedness.
The offer price for the Securities will be payable in cash in an amount equal to
100% of the principal amount of the Securities plus accrued and unpaid interest,
if any, to the date (the "Offer Date") such Offer is consummated (the "Offered
Price"), in accordance with the procedures set forth herein. To the extent that
the aggregate Offered Price of the Securities tendered pursuant to the Offer is
less than the Security Amount relating thereto or the aggregate amount of Pari
Passu Indebtedness that is purchased in a Pari Passu Offer is less than the Pari
Passu Debt Amount, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Securities and Pari
Passu Indebtedness surrendered by holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Securities to be purchased on a pro rata
basis. Upon the completion of the purchase of all the Securities tendered
pursuant to an Offer and the completion of a Pari Passu Offer, the amount of
Excess Proceeds, if any, shall be reset at zero.

                                       -114-


                  (d) When the aggregate amount of Excess Proceeds exceeds $10
million, such Excess Proceeds will, prior to any purchase of Securities
described in paragraph (c) above, be set aside by the Company in a separate
account pending (i) deposit with the Depositary or a paying agent of the amount
required to purchase the Securities tendered in an Offer or Pari Passu
Indebtedness tendered in a Pari Passu Offer, (ii) delivery by the Company of the
Offered Price to the holders of the Securities tendered in an Offer or Pari
Passu Indebtedness tendered in a Pari Passu Offer and (iii) the completion of
the purchase of all the Securities tendered pursuant to the Offer and the
completion of the Pari Passu Offer. Such Excess Proceeds may be invested in
Temporary Cash Investments, provided that the maturity date of any such
investment made after the amount of Excess Proceeds exceeds $10 million shall
not be later than the Offer Date. The Company shall be entitled to any interest
or dividends accrued, earned or paid on such Temporary Cash Investments;
provided that the Company shall not withdraw such interest from the separate
account if an Event of Default has occurred and is continuing.

                  (e) If the Company becomes obligated to make an Offer pursuant
to clause (c) above, the Securities and the Pari Passu Indebtedness shall be
purchased by the Company, at the option of the holders thereof, in whole or in
part in integral multiples of $1,000, on a date that is not earlier than 30 days
and not later than 60 days from the date the notice of the Offer is given to
holders, or such later date as may be necessary for the Company to comply with
the requirements under the Exchange Act.

                  (f) The Company will comply with the applicable tender offer
rules, including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with an Offer.

                  (g) Subject to paragraph (e) above, within 30 days after the
date on which the amount of Excess Proceeds equals or exceeds $10 million, the
Company shall send or cause to be sent by first-class mail, postage prepaid, to
the Trustee and to each Holder, at his address appearing in the Security
Register, a notice stating or including:

                           (1) that the Holder has the right to require the
                  Company to repurchase, subject to proration, such  Holder's
                  Securities at the Offered Price;

                           (2)  the Offer Date;

                           (3) the instructions a Holder must follow in order
                  to have his Securities purchased in accordance with paragraph
                 (c) of this Section;

                           (4) (i) the most recently filed Annual Report on Form
                  10-K (including audited consolidated financial statements) of
                  the Company, the most recent subsequently filed Quarterly
                  Report on Form 10-Q, as applicable, and any Current Report on
                  Form 8-K of the Company filed subsequent to such Quarterly
                  Report, other than Current Reports describing


                                       -115-



                  Asset Sales otherwise described in the offering materials (or
                  corresponding successor reports) (or in the event the Company
                  is not required to prepare any of the foregoing Forms, the
                  comparable information required pursuant to Section 1020),
                  (ii) a description of material developments, if any, in the
                  Company's business subsequent to the date of the latest of
                  such reports, (iii) if material, appropriate pro forma
                  financial information, and (iv) such other information, if
                  any, concerning the business of the Company which the Company
                  in good faith believes will enable such Holders to make an
                  informed investment decision regarding the Offer;

                           (5)  the Offered Price;

                           (6)  the names and addresses of the Paying Agent
                  and the offices or agencies referred to in Section
                  1002;

                           (7) that Securities must be surrendered prior to the
                  Offer Date to the Paying Agent at the office of the Paying
                  Agent or to an office or agency referred to in Section 1002 to
                  collect payment;

                           (8) that any Securities not tendered will continue to
                  accrue interest and that unless the Company defaults in the
                  payment of the Offered Price, any Security accepted for
                  payment pursuant to the Offer shall cease to accrue interest
                  on and after the Offer Date;

                           (9)  the procedures for withdrawing a tender; and

                           (10) that the Offered Price for any Security which
                  has been properly tendered and not withdrawn and which has
                  been accepted for payment pursuant to the Offer will be paid
                  promptly following the Offered Date.

                  (h) Holders electing to have Securities purchased hereunder
will be required to surrender such Securities at the address specified in the
notice prior to the Offer Date. Holders will be entitled to withdraw their
election to have their Securities purchased pursuant to this Section 1012 if the
Company receives, not later than one Business Day prior to the Offer Date, a
telegram, telex, facsimile transmission or letter setting forth (1) the name of
the Holder, (2) the certificate number of the Security in respect of which such
notice of withdrawal is being submitted, (3) the principal amount of the
Security (which shall be $1,000 or an integral multiple thereof) delivered for
purchase by the Holder as to which his election is to be withdrawn, (4) a
statement that such Holder is withdrawing his election to have such principal
amount of such Security purchased, and (5) the principal amount, if any, of such
Security (which shall be $1,000 or an integral multiple thereof) that remains
subject to the original notice of the Offer and that has been or will be
delivered for purchase by the Company.


                                       -116-



                  (i) The Company shall (i) not later than the Offer Date,
accept for payment Securities or portions thereof tendered pursuant to the
Offer, (ii) not later than 10:00 a.m. (New York time) on the Offer Date, deposit
with the Trustee or with a Paying Agent an amount of money in same day funds (or
New York Clearing House funds if such deposit is made prior to the Offer Date)
sufficient to pay the aggregate Offered Price of all the Securities or portions
thereof which are to be purchased on that date and (iii) not later than 10:00
a.m. (New York time) on the Offer Date, deliver to the Paying Agent an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Offered Price of the
Securities purchased from each such Holder, and the Company shall execute and
the Trustee shall promptly authenticate and mail or deliver to such Holders a
new Security equal in principal amount to any unpurchased portion of the
Security surrendered. Any Securities not so accepted shall be promptly mailed or
delivered by the Paying Agent at the Company's expense to the Holder thereof.
For purposes of this Section 1012, the Company shall choose a Paying Agent which
shall not be the Company.

                  Subject to applicable escheat laws, the Trustee and the Paying
Agent shall return to the Company any cash that remains unclaimed, together with
interest, if any, thereon, held by them for the payment of the Offered Price;
provided, however, that (x) to the extent that the aggregate amount of cash
deposited by the Company with the Trustee in respect of an Offer exceeds the
aggregate Offered Price of the Securities or portions thereof to be purchased,
then the Trustee shall hold such excess for the Company and (y) unless otherwise
directed by the Company in writing, promptly after the Business Day following
the Offer Date the Trustee shall return any such excess to the Company together
with interest or dividends, if any, thereon.

                  (j) Securities to be purchased shall, on the Offer Date,
become due and payable at the Offered Price and from and after such date (unless
the Company shall default in the payment of the Offered Price) such Securities
shall cease to bear interest. Such Offered Price shall be paid to such Holder
promptly following the later of the Offer Date and the time of delivery of such
Security to the relevant Paying Agent at the office of such Paying Agent by the
Holder thereof in the manner required. Upon surrender of any such Security for
purchase in accordance with the foregoing provisions, such Security shall be
paid by the Company at the Offered Price; provided, however, that installments
of interest whose Stated Maturity is on or prior to the Offer Date shall be
payable to the Person in whose name the Securities (or any Predecessor
Securities) is registered as such on the relevant Regular Record Dates according
to the terms and the provisions of Section 309; provided, further, that
Securities to be purchased are subject to proration in the event the Excess
Proceeds are less than the aggregate Offered Price of all Securities tendered
for purchase, with such adjustments as may be appropriate by the Trustee so that
only Securities in denominations of $1,000 or integral multiples thereof, shall
be purchased. If any Security tendered for purchase shall not be so paid upon
surrender thereof by deposit of funds with the Trustee or a Paying Agent in
accordance


                                       -117-



with paragraph (h) above, the principal thereof (and premium, if any,
thereon) shall, until paid, bear interest from the Offer Date at the rate borne
by such Security. Any Security that is to be purchased only in part shall be
surrendered to a Paying Agent at the office of such Paying Agent (with, if the
Company, the Security Registrar or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Security Registrar or the Trustee duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing), and the Company shall execute and
the Trustee shall authenticate and deliver to the Holder of such Security,
without service charge, one or more new Securities of any authorized
denomination as requested by such Holder in an aggregate principal amount equal
to, and in exchange for, the portion of the principal amount of the Security so
surrendered that is not purchased. The Company shall publicly announce the
results of the Offer on or as soon as practicable after the Offer Date.

                  Section 1013. Limitation on Issuances of Guarantees of and
                                --------------------------------------------
Pledges for Indebtedness.
- -------------------------


                  (a) The Company will not cause or permit any Restricted
Subsidiary, other than a Guarantor, directly or indirectly, to secure the
payment of any Senior Indebtedness of the Company and the Company will not, and
will not permit any Restricted Subsidiary to, pledge any intercompany notes
representing obligations of any Restricted Subsidiary (other than a Guarantor)
to secure the payment of any Senior Indebtedness unless in each case such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to this Indenture providing for a guarantee of payment of the
Securities by such Restricted Subsidiary, which guarantee shall be on the same
terms as the guarantee of the Senior Indebtedness (if a guarantee of Senior
Indebtedness is granted by any such Restricted Subsidiary) except that the
guarantee of the Securities need not be secured and shall be subordinated to the
claims against such Restricted Subsidiary in respect of Senior Indebtedness to
the same extent as the Securities are subordinated to Senior Indebtedness of the
Company under this Indenture.

                  (b) The Company will not cause or permit any Restricted
Subsidiary (which is not a Guarantor), directly or indirectly, to guarantee,
assume or in any other manner become liable with respect to any Indebtedness of
the Company or any Restricted Subsidiary unless such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a Guarantee of the Securities on the same terms as the guarantee
of such Indebtedness except that (A) such guarantee need not be secured unless
required pursuant to Section 1011, (B) if such Indebtedness is by its terms
Senior Indebtedness, any such assumption, guarantee or other liability of such
Restricted Subsidiary with respect to such Indebtedness shall be senior to such
Restricted Subsidiary's Guarantee of the Securities to the same extent as such
Senior Indebtedness is senior to the Securities and (C) if such Indebtedness is
by its terms expressly subordinated to the Securities, any such assumption,
guarantee or other liability of such


                                       -118-



Restricted Subsidiary with respect to such Indebtedness shall be subordinated to
such Restricted Subsidiary's Guarantee of the Securities at least to the same
extent as such Indebtedness is subordinated to the Securities.

                  (c) Notwithstanding the foregoing, any Guarantee by a
Restricted Subsidiary of the Securities shall provide by its terms that it (and
all Liens securing the same) shall be automatically and unconditionally released
and discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary, which transaction
is in compliance with the terms of this Indenture and pursuant to which
transaction such Subsidiary is released from all guarantees, if any, by it of
other Indebtedness of the Company or any Restricted Subsidiaries or (ii) the
release by the holders of the Indebtedness of the Company of their security
interest or their guarantee by such Restricted Subsidiary (including any deemed
release upon payment in full of all obligations under such Indebtedness), at
such time as (A) no other Indebtedness of the Company has been secured or
guaranteed by such Restricted Subsidiary, as the case may be, or (B) the holders
of all such other Indebtedness which is secured or guaranteed by such Restricted
Subsidiary also release their security interest in or guarantee by such
Restricted Subsidiary (including any deemed release upon payment in full of all
obligations under such Indebtedness).

                  Section 1014. Purchase of Securities upon a Change of Control.
                                ------------------------------------------------

                  (a) If a Change of Control shall occur at any time, then each
Holder shall have the right to require that the Company purchase such Holder's
Securities in whole or in part in integral multiples of $1,000, at a purchase
price (the "Change of Control Purchase Price") in cash in an amount equal to
101% of the principal amount of such Securities, plus accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control Purchase
Date"), pursuant to the offer described below in this Section 1014 (the "Change
of Control Offer") and in accordance with the other procedures set forth in
subsections (b), (c), (d) and (e) of this Section 1014.

                  (b) Within 30 days of any Change of Control, the Company shall
notify the Trustee thereof and give written notice (a "Change of Control
Purchase Notice") of such Change of Control to each Holder by first-class mail,
postage prepaid, at his address appearing in the Security Register, stating
among other things:

                           (1) that a Change of Control has occurred, the date
                  of such event, and that such Holder has the right to require
                  the Company to repurchase such Holder's Securities at the
                  Change of Control Purchase Price;

                           (2) the circumstances and relevant facts regarding
                  such Change of Control (including, but not limited to,
                  information with respect to pro forma historical income, cash
                  flow and capitalization after giving effect to such Change of
                  Control);


                                       -119-



                           (3) (i) the most recently filed Annual Report on Form
                  10-K (including audited consolidated financial statements) of
                  the Company, the most recent subsequently filed Quarterly
                  Report on Form 10-Q, as applicable, and any Current Report on
                  Form 8-K of the Company filed subsequent to such Quarterly
                  Report (or in the event the Company is not required to prepare
                  any of the foregoing Forms, the comparable information
                  required to be prepared by the Company and any Guarantor
                  pursuant to Section 1020), (ii) a description of material
                  developments, if any, in the Company's business subsequent to
                  the date of the latest of such reports and (iii) such other
                  information, if any, concerning the business of the Company
                  which the Company in good faith believes will enable such
                  Holders to make an informed investment decision regarding the
                  Change of Control Offer;

                           (4) that the Change of Control Offer is being made
                  pursuant to this Section 1014 and that all Securities properly
                  tendered pursuant to the Change of Control Offer will be
                  accepted for payment at the Change of Control Purchase Price;

                           (5) the Change of Control Purchase Date, which shall
                  be a Business Day no earlier than 30 days nor later than 60
                  days from the date such notice is mailed, or such later date
                  as is necessary to comply with requirements under the Exchange
                  Act;

                           (6) the Change of Control Purchase Price;

                           (7)  the names and addresses of the Paying Agent and
                  the offices or agencies referred to in Section 1002;

                           (8) that Securities must be surrendered on or prior
                  to the Change of Control Purchase Date to the Paying Agent at
                  the office of the Paying Agent or to an office or agency
                  referred to in Section 1002 to collect payment;

                           (9) that the Change of Control Purchase Price for any
                  Security which has been properly tendered and not withdrawn
                  will be paid promptly following the Change of Control Offer
                  Purchase Date;

                           (10)   the procedures that a Holder must follow to
                  accept a Change of Control Offer or to withdraw such
                  acceptance;

                           (11) that any Security not tendered will continue to
                  accrue interest; and


                                       -120-


                           (12) that, unless the Company defaults in the payment
                  of the Change of Control Purchase Price, any Securities
                  accepted for payment pursuant to the Change of Control Offer
                  shall cease to accrue interest after the Change of Control
                  Purchase Date.

                  (c) Upon receipt by the Company of the proper tender of
Securities, the Holder of the Security in respect of which such proper tender
was made shall (unless the tender of such Security is properly withdrawn)
thereafter be entitled to receive solely the Change of Control Purchase Price
with respect to such Security. Upon surrender of any such Security for purchase
in accordance with the foregoing provisions, such Security shall be paid by the
Company at the Change of Control Purchase Price; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Change of
Control Purchase Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such on the relevant Regular
Record Dates according to the terms and the provisions of Section 309. If any
Security tendered for purchase in accordance with the provisions of this Section
1014 shall not be so paid upon surrender thereof, the principal thereof (and
premium, if any, thereon) shall, until paid, bear interest from the Change of
Control Purchase Date at the rate borne by such Security. Holders electing to
have Securities purchased will be required to surrender such Securities to the
Paying Agent at the address specified in the Change of Control Purchase Notice
at least one Business Day prior to the Change of Control Purchase Date. Any
Security that is to be purchased only in part shall be surrendered to a Paying
Agent at the office of such Paying Agent (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar or the Trustee, as the case may be, duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge, one or more new Securities of any
authorized denomination as requested by such Holder in an aggregate principal
amount equal to, and in exchange for, the portion of the principal amount of the
Security so surrendered that is not purchased.

                  (d) The Company shall (i) not later than the Change of Control
Purchase Date, accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer, (ii) not later than 10:00 a.m. (New
York time) on the Change of Control Purchase Date, deposit with the Trustee or
with a Paying Agent an amount of money in same day funds sufficient to pay the
aggregate Change of Control Purchase Price of all the Securities or portions
thereof which are to be purchased as of the Change of Control Purchase Date and
(iii) not later than 10:00 a.m. (New York time) on the Change of Control
Purchase Date, deliver to the Paying Agent an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail or deliver to Holders of Securities so accepted
payment in an amount equal to the Change of Control Purchase Price of the
Securities purchased from each such Holder, and the Company shall execute and
the Trustee shall promptly authenticate and



                                       -121-



mail or deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Paying Agent at the Company's
expense to the Holder thereof. The Company will publicly announce the results of
the Change of Control Offer on the Change of Control Purchase Date. For purposes
of this Section 1014, the Company shall choose a Paying Agent which shall not be
the Company.

                  (e) A tender made in response to a Change of Control Purchase
Notice may be withdrawn if the Company receives, not later than one Business Day
prior to the Change of Control Purchase Date, a telegram, telex, facsimile
transmission or letter, specifying, as applicable:

                           (1)  the name of the Holder;

                           (2)  the certificate number of the Security in
                  respect of which such notice of withdrawal is being submitted;

                           (3) the principal amount of the Security (which shall
                  be $1,000 or an integral multiple thereof) delivered for
                  purchase by the Holder as to which such notice of withdrawal
                  is being submitted;

                           (4)      a statement that such Holder is withdrawing
                  his election to have such principal amount of such Security
                  purchased; and

                           (5) the principal amount, if any, of such Security
                  (which shall be $1,000 or an integral multiple thereof) that
                  remains subject to the original Change of Control Purchase
                  Notice and that has been or will be delivered for purchase by
                  the Company.

                  (f) Subject to applicable escheat laws, the Trustee and the
Paying Agent shall return to the Company any cash that remains unclaimed,
together with interest or dividends, if any, thereon, held by them for the
payment of the Change of Control Purchase Price; provided, however, that, (x) to
the extent that the aggregate amount of cash deposited by the Company pursuant
to clause (ii) of paragraph (d) above exceeds the aggregate Change of Control
Purchase Price of the Securities or portions thereof to be purchased, then the
Trustee shall hold such excess for the Company and (y) unless otherwise directed
by the Company in writing, promptly after the Business Day following the Change
of Control Purchase Date the Trustee shall return any such excess to the Company
together with interest, if any, thereon.

                  (g) The Company shall comply, to the extent applicable, with
the applicable tender offer rules, including Rule 14e-1 under the Exchange Act,
and any other applicable securities laws or regulations in connection with a
Change of Control Offer.

                                       -122-


                  (h) Notwithstanding the foregoing, the Company will not be
required to make a Change of Control Offer if a third party makes the Change of
Control Offer, in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all the Securities validly tendered and not
withdrawn under such Change of Control Offer.

                  Section 1015. Limitation on Subsidiary Preferred Stock.
                                -----------------------------------------

                  The Company will not permit (a) any Restricted Subsidiary of
the Company to issue, sell or transfer any Preferred Stock, except for (i)
Preferred Stock issued or sold to, held by or transferred to the Company or a
Wholly Owned Restricted Subsidiary, and (ii) Preferred Stock issued by a Person
prior to the time (A) such Person becomes a Restricted Subsidiary, (B) such
Person merges with or into a Restricted Subsidiary or (C) a Restricted
Subsidiary merges with or into such Person; provided that such Preferred Stock
was not issued or incurred by such Person in anticipation of the type of
transaction contemplated by subclause (A), (B) or (C) or (b) any Person (other
than the Company or a Wholly Owned Restricted Subsidiary) to acquire Preferred
Stock of any Restricted Subsidiary from the Company or any Restricted
Subsidiary, except, in the case of clause (a) or (b), upon the acquisition of
all the outstanding Capital Stock of such Restricted Subsidiary in accordance
with the terms of this Indenture.

                  Section 1016. Limitation on Dividends and Other Payment
                                -----------------------------------------
Restrictions Affecting Subsidiaries.
- ------------------------------------

                  The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (i) pay dividends or make any other
distribution on its Capital Stock, or any other interest or participation in or
measured by its profits, (ii) pay any Indebtedness owed to the Company or any
other Restricted Subsidiary, (iii) make any Investment in the Company or any
other Restricted Subsidiary or (iv) transfer any of its properties or assets to
the Company or any other Restricted Subsidiary, except for: (a) any encumbrance
or restriction pursuant to an agreement in effect on July 31, 1998; (b) any
encumbrance or restriction, with respect to a Restricted Subsidiary that was not
a Restricted Subsidiary of the Company on July 31, 1998, in existence at the
time such Person becomes a Restricted Subsidiary of the Company and not incurred
in connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary, provided that such encumbrances and restrictions are not applicable
to the Company or any Restricted Subsidiary or the properties or assets of the
Company or any Restricted Subsidiary other than such Subsidiary which is
becoming a Restricted Subsidiary; (c) customary provisions contained in an
agreement that has been entered into for the sale or other disposition of all or
substantially all of the Capital Stock or assets of a Restricted Subsidiary;
provided, however, that the restrictions are applicable only to such Restricted


                                       -123-


Subsidiary or assets; (d) any encumbrance or restriction existing under or by
reason of applicable law; (e) customary provisions restricting subletting or
assignment of any lease governing any leasehold interest of any Restricted
Subsidiary; (f) covenants in franchise agreements with Manufacturers customary
for franchise agreements in the automobile retailing industry; (g) any
encumbrance or restriction contained in any Purchase Money Obligations for
property to the extent such restriction or encumbrance restricts the transfer of
such property; (h) any encumbrances or restrictions in security agreements
securing Indebtedness (other than Subordinated Indebtedness) of a Guarantor
(including any Inventory Facility) (to the extent that such Liens are otherwise
incurred in accordance with Section 1011) that restrict the transfer of property
subject to such agreements, provided that any such encumbrance or restriction is
released to the extent the underlying Lien is released or the related
Indebtedness is repaid; and (i) any encumbrance or restriction existing under
any agreement that extends, renews, refinances or replaces the agreements
containing the encumbrances or restrictions in the foregoing clauses (a) and
(b), or in this clause (i), provided that the terms and conditions of any such
encumbrances or restrictions are no more restrictive in any material respect
than those under or pursuant to the agreement evidencing the Indebtedness so
extended, renewed, refinanced or replaced.

                  Section 1017. Limitation on Senior Subordinated Indebtedness.
                                -----------------------------------------------

                  The Company will not, and will not permit or cause any
Guarantor to, directly or indirectly, create, incur, issue, assume, guarantee or
otherwise in any manner become directly or indirectly liable for or with respect
to or otherwise permit to exist any Indebtedness that is subordinate in right of
payment to any Indebtedness of the Company or such Guarantor, as the case may
be, unless such Indebtedness is also pari passu with the Securities or the
Guarantee of such Guarantor or subordinated in right of payment to the
Securities or such Guarantee at least to the same extent as the Securities or
such Guarantee are subordinated in right of payment to Senior Indebtedness or
such Guarantor's Senior Guarantor Indebtedness, as the case may be, as set forth
in this Indenture.


                  Section 1018. Limitations on Unrestricted Subsidiaries.
                                -----------------------------------------

                  The Company may designate after the Issue Date any Subsidiary
as an "Unrestricted Subsidiary" under this Indenture (a "Designation") only if:

                  (a) no Default shall have occurred and be continuing at the
time of or after giving effect to such Designation;

                  (b) the Company would be permitted to make an Investment
(other than a Permitted Investment) at the time of Designation (assuming the
effectiveness of such Designation) pursuant to the first paragraph of Section
1009 herein in an amount (the "Designation Amount") equal to the greater of (1)
the net book value of the Company's


                                       -124-



interest in such Subsidiary calculated in accordance with GAAP or (2) the Fair
Market Value of the Company's interest in such Subsidiary as determined in good
faith by the Company's board of directors;

                  (c) the Company would be permitted to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
1008 at the time of such Designation (assuming the effectiveness of such
Designation);

                  (d) such Unrestricted Subsidiary does not own any Capital
Stock in any Restricted Subsidiary of the Company which is not simultaneously
being designated an Unrestricted Subsidiary;

                  (e) such Unrestricted Subsidiary is not liable, directly or
indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness, provided that an Unrestricted Subsidiary may provide a Guarantee
for the Securities; and

                  (f) such Unrestricted Subsidiary is not a party to any
agreement, contract, arrangement or understanding at such time with the Company
or any Restricted Subsidiary unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company or, in the event such condition is not
satisfied, the value of such agreement, contract, arrangement or understanding
to such Unrestricted Subsidiary shall be deemed a Restricted Payment.

                  In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted Payment pursuant to
Section 1009 for all purposes of this Indenture in the Designation Amount.

                  The Company shall not and shall not cause or permit any
Restricted Subsidiary to at any time (x) provide credit support for, or subject
any of its property or assets (other than the Capital Stock of any Unrestricted
Subsidiary) to the satisfaction of, any Indebtedness of any Unrestricted
Subsidiary (including any undertaking, agreement or instrument evidencing such
Indebtedness) (other than Permitted Investments in Unrestricted Subsidiaries) or
(y) be directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary. For purposes of the foregoing, the Designation of a Subsidiary of
the Company as an Unrestricted Subsidiary shall be deemed to be the Designation
of all of the Subsidiaries of such Subsidiary.

                  The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if:

                  (a) no Default shall have occurred and be continuing at the
time of and after giving effect to such Revocation;

                                       -125-


                  (b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at such
time, have been permitted to be incurred for all purposes of this Indenture; and

                  (c) unless such redesignated Subsidiary shall not have any
Indebtedness outstanding (other than Indebtedness that would be Permitted
Indebtedness), immediately after giving effect to such proposed Revocation, and
after giving pro forma effect to the incurrence of any such Indebtedness of such
redesignated Subsidiary as if such Indebtedness was incurred on the date of the
Revocation, the Company could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to Section 1008 herein.

                  All Designations and Revocations must be evidenced by a
resolution of the Board of Directors of the Company delivered to the Trustee
certifying compliance with the foregoing provisions.

                  Section 1019. Provision of Financial Statements.
                                ----------------------------------

                  Whether or not the Company is subject to Section 13(a) or
15(d) of the Exchange Act, the Company and each Guarantor (to the extent such
Guarantor would be required if subject to Section 13(a) or 15(d) of the Exchange
Act) will, to the extent permitted under the Exchange Act, file with the
Commission the annual reports, quarterly reports and other documents which the
Company and such Guarantor would have been required to file with the Commission
pursuant to Sections 13(a) or 15(d) if the Company or such Guarantor were so
subject, such documents to be filed with the Commission on or prior to the date
(the "Required Filing Date") by which the Company and such Guarantor would have
been required so to file such documents if the Company and such Guarantor were
so subject. The Company will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, without cost to such Holders and (ii)
file with the Trustee copies of the annual reports, quarterly reports and other
documents which the Company and such Guarantor would have been required to file
with the Commission pursuant to Sections 13(a) or 15(d) of the Exchange Act if
the Company and such Guarantor were subject to either of such Sections and (y)
if filing such documents by the Company and such Guarantor with the Commission
is not permitted under the Exchange Act, promptly upon written request and
payment of the reasonable cost of duplication and delivery, supply copies of
such documents to any prospective Holder at the Company's cost. If any
Guarantor's financial statements would be required to be included in the
financial statements filed or delivered pursuant to this Indenture if the
Company were subject to Section 13(a) or 15(d) of the Exchange Act, the Company
shall include such Guarantor's financial statements in any filing or delivery
pursuant to this Indenture. In addition, so long as any of the Securities remain
outstanding, the Company will make available to any prospective purchaser of
Securities or beneficial owner of Securities in connection with any sale thereof
the information required by Rule 144A(d)(4) under the Securities Act,


                                       -126-



until such time as the Company has either exchanged the Securities for
securities identical in all material respects which have been registered under
the Securities Act or until such time as the Holders thereof have disposed of
such Securities pursuant to an effective registration statement under the
Securities Act.

                  Section 1020. Statement by Officers as to Default.
                                ------------------------------------

                  (a) The Company will deliver to the Trustee, on or before a
date not more than 120 days after the end of each fiscal year of the Company
ending after the date hereof, and 60 days after the end of each fiscal quarter
ending after the date hereof, a written statement signed by two executive
officers of the Company and the Guarantors, one of whom shall be the principal
executive officer, principal financial officer or principal accounting officer
of the Company and the Guarantors, as to compliance herewith, including whether
or not, after a review of the activities of the Company during such year and of
the Company's and each Guarantor's performance under this Indenture, to the best
knowledge, based on such review, of the signers thereof, the Company and each
Guarantor have fulfilled all of their respective obligations and are in
compliance with all conditions and covenants under this Indenture throughout
such year and, if there has been a Default specifying each Default and the
nature and status thereof and any actions being taken by the Company with
respect thereto.

                  (b) When any Default or Event of Default has occurred and is
continuing, or if the Trustee or any Holder or the trustee for or the holder of
any other evidence of Indebtedness of the Company or any Subsidiary gives any
notice or takes any other action with respect to a claimed default the Company
shall deliver to the Trustee by registered or certified mail or facsimile
transmission followed by an originally executed copy of an Officers' Certificate
specifying such Default, Event of Default, notice or other action, the status
thereof and what actions the Company is taking or proposes to take with respect
thereto, within five Business Days after the occurrence of such Default or Event
of Default.

                  Section 1021. Waiver of Certain Covenants.
                                ----------------------------

                  The Company may omit in any particular instance to comply with
any covenant or condition set forth in Sections 1006 through 1011, 1013 and 1015
through 1020, if, before or after the time for such compliance, the Holders of
not less than a majority in aggregate principal amount of the Securities at the
time Outstanding shall, by Act of such Holders, waive such compliance in such
instance with such covenant or provision, but no such waiver shall extend to or
affect such covenant or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such covenant or condition shall remain
in full force and effect.

                                       -127-




                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

                  Section 1101.  Rights of Redemption.
                                 --------------------

                  The Securities are subject to redemption at any time on or
after August 1, 2003, at the option of the Company, in whole or in part, subject
to the conditions, and at the Redemption Prices, specified in the form of
Security, together with accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on relevant Regular Record Dates
and Special Record Dates to receive interest due on relevant Interest Payment
Dates and Special Payment Dates).

                  Section 1102. Applicability of Article.
                                -------------------------

                  Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this Indenture, shall be
made in accordance with such provision and this Article Eleven.

                  Section 1103. Election to Redeem; Notice to Trustee.
                                --------------------------------------

                  The election of the Company to redeem any Securities pursuant
to Section 1101 shall be evidenced by a Company Order and an Officers'
Certificate. In case of any redemption at the election of the Company, the
Company shall, not less than 45 nor more than 60 days prior to the Redemption
Date fixed by the Company (unless a shorter notice period shall be satisfactory
to the Trustee), notify the Trustee in writing of such Redemption Date and of
the principal amount of Securities to be redeemed.

                  Section 1104. Selection by Trustee of Securities to Be
                                ----------------------------------------
Redeemed.
- ---------

                  If less than all the Securities are to be redeemed, the
particular Securities or portions thereof to be redeemed in compliance with the
national security exchange, if any, on which the securities are listed, or if
the securities are not so listed, on a pro rata basis, by lot or by any other
method the Trustee shall deem fair and reasonable.

                  The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.

                  For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part, to
the portion of the principal amount of such Security which has been or is to be
redeemed.




                                       -128-



                  Section 1105. Notice of Redemption.
                                ---------------------

                  Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 days nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at its address
appearing in the Security Register.

                  All notices of redemption shall state:

                  (a) the Redemption Date;

                  (b) the Redemption Price;

                  (c) if less than all Outstanding Securities are to be
redeemed, the identification of the particular Securities to be redeemed;

                  (d) in the case of a Security to be redeemed in part, the
principal amount of such Security to be redeemed and that after the Redemption
Date upon surrender of such Security, new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will be
issued;

                  (e) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price;

                  (f) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security or portion thereof to be
redeemed, and that (unless the Company shall default in payment of the
Redemption Price) interest thereon shall cease to accrue on and after said date;

                  (g) the names and addresses of the Paying Agent and the
offices or agencies referred to in Section 1002 where such Securities are to be
surrendered for payment of the Redemption Price;

                  (h) the CUSIP number, if any, relating to such Securities; and

                  (i) the procedures that a Holder must follow to surrender the
Securities to be redeemed.

                  Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
written request, by the Trustee in the name and at the expense of the Company.
If the Company elects to give notice of redemption, it shall provide the Trustee
with a certificate stating that such notice has been given in compliance with
the requirements of this Section 1105.

                  The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any


                                       -129-




Security designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Security.

                  Section 1106. Deposit of Redemption Price.
                                ----------------------------

                  On or prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company or any of its
Affiliates is acting as Paying Agent, segregate and hold in trust as provided in
Section 1003) an amount of money in same day funds sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date or Special Payment Date) accrued interest on, all the Securities or
portions thereof which are to be redeemed on that date. The Paying Agent shall
promptly mail or deliver to Holders of Securities so redeemed payment in an
amount equal to the Redemption Price of the Securities purchased from each such
Holder. All money, if any, earned on funds held in trust by the Trustee or any
Paying Agent shall be remitted to the Company. For purposes of this Section
1106, the Company shall choose a Paying Agent which shall not be the Company.

                  Section 1107. Securities Payable on Redemption Date.
                                --------------------------------------

                  Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Holders will be
required to surrender the Securities to be redeemed to the Paying Agent at the
address specified in the notice of redemption at least one Business Day prior to
the Redemption Date. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
Redemption Price together with accrued interest to the Redemption Date;
provided, however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such on the relevant
Regular Record Dates and Special Record Dates according to the terms and the
provisions of Section 309.

                  If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by such
Security.

                  Section 1108. Securities Redeemed or Purchased in Part.
                                -----------------------------------------

                  Any Security which is to be redeemed or purchased only in part
shall be surrendered to the Paying Agent at the office or agency maintained for
such purpose pursuant to Section 1002 (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar or the Trustee, as the case may be, duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the


                                       -130-





Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities, of
any authorized denomination as requested by such Holder in aggregate principal
amount equal to, and in exchange for, the unredeemed portion of the principal of
the Security so surrendered that is not redeemed or purchased.

                                 ARTICLE TWELVE

                           SATISFACTION AND DISCHARGE

                  Section 1201.  Satisfaction and Discharge of Indenture.
                                 ---------------------------------------

                  This Indenture shall be discharged and shall cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of Securities as expressly provided for herein) as to all Outstanding
Securities hereunder, and the Trustee, upon Company Request and at the expense
of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when

                  (a) either

                           (1) all the Securities theretofore authenticated and
                  delivered (except (i) lost, stolen or destroyed Securities
                  which have been replaced or paid as provided in Section 308 or
                  (ii) all Securities whose payment has theretofore been
                  deposited in trust or segregated and held in trust by the
                  Company and thereafter repaid to the Company or discharged
                  from such trust as provided in Section 1003) have been
                  delivered to the Trustee for cancellation; or

                           (2) all Securities not theretofore delivered to the
                  Trustee for cancellation (i) have become due and payable, (ii)
                  will become due and payable at their Stated Maturity within
                  one year or (iii) are to be called for redemption within one
                  year under arrangements reasonably satisfactory to the Trustee
                  for the giving of notice of redemption by the Trustee in the
                  name, and at the expense, of the Company; and the Company or
                  any Guarantor has irrevocably deposited or caused to be
                  deposited with the Trustee as trust funds in trust an amount
                  in United States dollars sufficient to pay and discharge the
                  entire Indebtedness on the Securities not theretofore
                  delivered to the Trustee for cancellation, including the
                  principal of, premium, if any, and accrued interest on, such
                  Securities at such Maturity, Stated Maturity or Redemption
                  Date;

                  (b) the Company or any Guarantor has paid or caused to be paid
all other sums payable hereunder by the Company and any Guarantor; and




                                       -131-



                  (c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Independent Counsel, in form and substance
reasonably satisfactory to the Trustee, each stating that (i) all conditions
precedent herein relating to the satisfaction and discharge hereof have been
complied with and (ii) such satisfaction and discharge will not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company, any Guarantor or
any Restricted Subsidiary is a party or by which the Company, any Guarantor or
any Restricted Subsidiary is bound.

                  Notwithstanding the satisfaction and discharge hereof, the
obligations of the Company to the Trustee under Section 607 and, if United
States dollars shall have been deposited with the Trustee pursuant to subclause
(2) of subsection (a) of this Section 1201, the obligations of the Trustee under
Section 1202 and the last paragraph of Section 1003 shall survive.

                  Section 1202. Application of Trust Money.
                                ---------------------------

                  Subject to the provisions of the last paragraph of Section
1003, all United States dollars deposited with the Trustee pursuant to Section
1201 shall be held in trust and applied by it, in accordance with the provisions
of the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal of,
premium, if any, and interest on, the Securities for whose payment such United
States dollars have been deposited with the Trustee.

                                ARTICLE THIRTEEN

                                   GUARANTEES

                  Section 1301.  Guarantors' Guarantee.
                                 ---------------------

                  For value received, each of the Guarantors, in accordance with
this Article Thirteen, hereby absolutely, fully, unconditionally and irrevocably
guarantees, jointly and severally with each other and with each other Person
which may become a Guarantor hereunder, to the Trustee and the Holders, as if
the Guarantors were the principal debtor, the punctual payment and performance
when due of all Indenture Obligations (which for purposes of this Guarantee
shall also be deemed to include all commissions, fees, charges, costs and other
expenses (including reasonable legal fees and disbursements of one counsel)
arising out of or incurred by the Trustee or the Holders in connection with the
enforcement of this Guarantee).

                                       -132-



                  Section 1302. Continuing Guarantee; No Right of Set-Off;
                                ------------------------------------------
Independent Obligation.
- -----------------------

                  (a) This Guarantee shall be a continuing guarantee of the
payment and performance of all Indenture Obligations and shall remain in full
force and effect until the payment in full of all of the Indenture Obligations
and shall apply to and secure any ultimate balance due or remaining unpaid to
the Trustee or the Holders; and this Guarantee shall not be considered as wholly
or partially satisfied by the payment or liquidation at any time or from time to
time of any sum of money for the time being due or remaining unpaid to the
Trustee or the Holders. Each Guarantor, jointly and severally, covenants and
agrees to comply with all obligations, covenants, agreements and provisions
applicable to it in this Indenture including those set forth in Article Eight.
Without limiting the generality of the foregoing, each Guarantor's liability
shall extend to all amounts which constitute part of the Indenture Obligations
and would be owed by the Company under this Indenture and the Securities but for
the fact that they are unenforceable, reduced, limited, impaired, suspended or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Company.

                  (b) Each Guarantor, jointly and severally, hereby guarantees
that the Indenture Obligations will be paid to the Trustee without set-off or
counterclaim or other reduction whatsoever (whether for taxes, withholding or
otherwise) in lawful currency of the United States of America.

                  (c) Each Guarantor, jointly and severally, guarantees that the
Indenture Obligations shall be paid strictly in accordance with their terms
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the holders of the
Securities.

                  (d) Each Guarantor's liability to pay or perform or cause the
performance of the Indenture Obligations under this Guarantee shall arise
forthwith after demand for payment or performance by the Trustee has been given
to the Guarantors in the manner prescribed in Section 106 hereof.

                  (e) Except as provided herein, the provisions of this Article
Thirteen cover all agreements between the parties hereto relative to this
Guarantee and none of the parties shall be bound by any representation, warranty
or promise made by any Person relative thereto which is not embodied herein; and
it is specifically acknowledged and agreed that this Guarantee has been
delivered by each Guarantor free of any conditions whatsoever and that no
representations, warranties or promises have been made to any Guarantor
affecting its liabilities hereunder, and that the Trustee shall not be bound by
any representations, warranties or promises now or at any time hereafter made by
the Company to any Guarantor.

                                       -133-



                  (f) This Guarantee is a guarantee of payment, performance and
compliance and not of collectibility and is in no way conditioned or contingent
upon any attempt to collect from or enforce performance or compliance by the
Company or upon any event or condition whatsoever.

                  (g) The obligations of the Guarantors set forth herein
constitute the full recourse obligations of the Guarantors enforceable against
them to the full extent of all their assets and properties.

                  (h) The Guarantee of Sonic Resources, Inc., Sonic - Harbor
City H, Inc., Sonic - West Covina T, Inc., Sonic - Buena Park H, Inc., Sonic -
West Reno Chevrolet, Inc., Sonic - Bethany H, Inc., Sonic - Houston V, L.P.,
Lawrence Marshall Chevrolet, L.P. and Lawrence Marshall Chevrolett, LLC shall be
subordinated to claims against the Guarantor to the same extent as the
Securities are subordinated to Senior Indebtedness.


                  Section 1303. Guarantee Absolute.
                                -------------------

                  The obligations of the Guarantors hereunder are independent of
the obligations of the Company under the Securities and this Indenture and a
separate action or actions may be brought and prosecuted against any Guarantor
whether or not an action or proceeding is brought against the Company and
whether or not the Company is joined in any such action or proceeding. The
liability of the Guarantors hereunder is irrevocable, absolute and unconditional
and (to the extent permitted by law) the liability and obligations of the
Guarantors hereunder shall not be released, discharged, mitigated, waived,
impaired or affected in whole or in part by:

                  (a)      any defect or lack of validity or enforceability in
                           respect of any Indebtedness or other obligation of
                           the Company or any other Person under this Indenture
                           or the Securities, or any agreement or instrument
                           relating to any of the foregoing;

                  (b)      any grants of time, renewals, extensions,
                           indulgences, releases, discharges or modifications
                           which the Trustee or the Holders may extend to, or
                           make with, the Company, any Guarantor or any other
                           Person, or any change in the time, manner or place of
                           payment of, or in any other term of, all or any of
                           the Indenture Obligations, or any other amendment or
                           waiver of, or any consent to or departure from, this
                           Indenture or the Securities, including any increase
                           or decrease in the Indenture Obligations;

                                       -134-



                  (c)      the taking of security from the Company, any
                           Guarantor or any other Person, and the release,
                           discharge or alteration of, or other dealing with,
                           such security;


                  (d)      the occurrence of any change in the laws, rules,
                           regulations or ordinances of any jurisdiction by any
                           present or future action of any governmental
                           authority or court amending, varying, reducing or
                           otherwise affecting, or purporting to amend, vary,
                           reduce or otherwise affect, any of the Indenture
                           Obligations and the obligations of any Guarantor
                           hereunder;

                  (e)      the abstention from taking security from the Company,
                           any Guarantor or any other Person or from perfecting,
                           continuing to keep perfected or taking advantage of
                           any security;

                  (f)      any loss, diminution of value or lack of
                           enforceability of any security received from the
                           Company, any Guarantor or any other Person, and
                           including any other guarantees received by the
                           Trustee;

                  (g)      any other dealings with the Company, any Guarantor
                           or any other Person, or with any security;

                  (h)      the Trustee's or the Holders' acceptance of
                           compositions from the Company or any Guarantor;

                  (i)      the application by the Holders or the Trustee of all
                           monies at any time and from time to time received
                           from the Company, any Guarantor or any other Person
                           on account of any indebtedness and liabilities owing
                           by the Company or any Guarantor to the Trustee or the
                           Holders, in such manner as the Trustee or the Holders
                           deems best and the changing of such application in
                           whole or in part and at any time or from time to
                           time, or any manner of application of collateral, or
                           proceeds thereof, to all or any of the Indenture
                           Obligations, or the manner of sale of any collateral;

                  (j)      the release or discharge of the Company or any
                           Guarantor of the Securities or of any Person liable
                           directly as surety or otherwise by operation of law
                           or otherwise for the Securities, other than an
                           express release in writing given by the Trustee, on
                           behalf of the Holders, of the liability and
                           obligations of any Guarantor hereunder;

                                       -135-



                  (k)      any change in the name, business, capital structure
                           or governing instrument of the Company or any
                           Guarantor or any refinancing or restructuring of any
                           of the Indenture Obligations;

                  (l)      the sale of the Company's or any Guarantor's business
                           or any part thereof;

                  (m)      subject to Section 1314, any merger or consolidation,
                           arrangement or reorganization of the Company, any
                           Guarantor, any Person resulting from the merger or
                           consolidation of the Company or any Guarantor with
                           any other Person or any other successor to such
                           Person or merged or consolidated Person or any other
                           change in the corporate existence, structure or
                           ownership of the Company or any Guarantor or any
                           change in the corporate relationship between the
                           Company and any Guarantor, or any termination of such
                           relationship;

                  (n)      the insolvency, bankruptcy, liquidation, winding-up,
                           dissolution, receivership, arrangement, readjustment,
                           assignment for the benefit of creditors or
                           distribution of the assets of the Company or its
                           assets or any resulting discharge of any obligations
                           of the Company (whether voluntary or involuntary) or
                           of any Guarantor (whether voluntary or involuntary)
                           or the loss of corporate existence;

                  (o)      subject to Section 1314, any arrangement or plan of
                           reorganization affecting the Company or any
                           Guarantor;

                  (p)      any failure, omission or delay on the part of the
                           Company to conform or comply with any term of this
                           Indenture;

                  (q)      any limitation on the liability or obligations of the
                           Company or any other Person under this Indenture, or
                           any discharge, termination, cancellation,
                           distribution, irregularity, invalidity or
                           unenforceability in whole or in part of this
                           Indenture;

                  (r)      any other circumstance (including any statute of
                           limitations) that might otherwise constitute a
                           defense available to, or discharge of, the Company
                           or any Guarantor; or

                  (s)      any modification, compromise, settlement or release
                           by the Trustee, or by operation of law or otherwise,
                           of the Indenture Obligations or the liability of the
                           Company or any other obligor under the Securities, in
                           whole or in part, and any refusal of payment by the
                           Trustee, in whole or in part, from any other obligor
                           or other


                                       -136-



                           guarantor in connection with any of the Indenture
                           Obligations, whether or not with notice to, or
                           further assent by, or any reservation of rights
                           against, each of the Guarantors.

                  Section 1304. Right to Demand Full Performance.
                                ---------------------------------

                  In the event of any demand for payment or performance by the
Trustee from any Guarantor hereunder, the Trustee or the Holders shall have the
right to demand its full claim and to receive all dividends or other payments in
respect thereof until the Indenture Obligations have been paid in full, and the
Guarantors shall continue to be jointly and severally liable hereunder for any
balance which may be owing to the Trustee or the Holders by the Company under
this Indenture and the Securities. The retention by the Trustee or the Holders
of any security, prior to the realization by the Trustee or the Holders of its
rights to such security upon foreclosure thereon, shall not, as between the
Trustee and any Guarantor, be considered as a purchase of such security, or as
payment, satisfaction or reduction of the Indenture Obligations due to the
Trustee or the Holders by the Company or any part thereof. Each Guarantor,
promptly after demand, will reimburse the Trustee and the Holders for all costs
and expenses of collecting such amount under, or enforcing this Guarantee,
including, without limitation, the reasonable fees and expenses of counsel.

                  Section 1305.  Waivers.
                                 -------


                  (a) Each Guarantor hereby expressly waives (to the extent
permitted by law) notice of the acceptance of this Guarantee and notice of the
existence, renewal, extension or the non-performance, non-payment, or
non-observance on the part of the Company of any of the terms, covenants,
conditions and provisions of this Indenture or the Securities or any other
notice whatsoever to or upon the Company or such Guarantor with respect to the
Indenture Obligations, whether by statute, rule of law or otherwise. Each
Guarantor hereby acknowledges communication to it of the terms of this Indenture
and the Securities and all of the provisions therein contained and consents to
and approves the same. Each Guarantor hereby expressly waives (to the extent
permitted by law) diligence, presentment, protest and demand for payment with
respect to (i) any notice of sale, transfer or other disposition of any right,
title to or interest in the Securities by the Holders or in this Indenture, (ii)
any release of any Guarantor from its obligations hereunder resulting from any
loss by it of its rights of subrogation hereunder and (iii) any other
circumstances whatsoever that might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety or that might otherwise
limit recourse against such Guarantor.

                  (b) Without prejudice to any of the rights or recourses which
the Trustee or the Holders may have against the Company, each Guarantor hereby
expressly waives (to the extent permitted by law) any right to require the
Trustee or the Holders to:

                                       -137-



                           (i)      enforce, assert, exercise, initiate or
                                    exhaust any rights, remedies or recourse
                                    against the Company, any Guarantor or any
                                    other Person under this Indenture or
                                    otherwise;

                           (ii)    value, realize upon, or dispose of any
                                   security of the Company or any other Person
                                   held by the Trustee or the Holders;

                           (iii)   initiate or exhaust any other remedy which
                                   the Trustee or the Holders may have in law or
                                   equity; or

                           (iv)    mitigate the damages resulting from any
                                   default under this Indenture;

before requiring or becoming entitled to demand payment from such Guarantor
under this Guarantee.

                  Section 1306. The Guarantors Remain Obligated in Event the
                                ---------------------------------------------
Company Is No Longer Obligated to Discharge Indenture Obligations.
- ------------------------------------------------------------------


                  It is the express intention of the Trustee and the Guarantors
that if for any reason the Company has no legal existence, is or becomes under
no legal obligation to discharge the Indenture Obligations owing to the Trustee
or the Holders by the Company or if any of the Indenture Obligations owing by
the Company to the Trustee or the Holders becomes irrecoverable from the Company
by operation of law or for any reason whatsoever, this Guarantee and the
covenants, agreements and obligations of the Guarantors contained in this
Article Thirteen shall nevertheless be binding upon the Guarantors, as principal
debtor, until such time as all such Indenture Obligations have been paid in full
to the Trustee and all Indenture Obligations owing to the Trustee or the Holders
by the Company have been discharged, or such earlier time as Section 402 shall
apply to the Securities and the Guarantors shall be responsible for the payment
thereof to the Trustee or the Holders upon demand.

                  Section 1307. Fraudulent Conveyance; Contribution;
                                -------------------------------------
Subrogation.
- ------------


                  (a) Each Guarantor that is a Subsidiary of the Company, and by
its acceptance hereof each Holder, hereby confirms that it is the intention of
all such parties that the Guarantee by such Guarantor pursuant to its Guarantee
not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law. To effectuate the foregoing
intention, the Holders and such Guarantor hereby irrevocably agree that the
obligations of such Guarantor under its Guarantee shall be limited to the
maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Guarantor, and after giving effect to any collections from
or payments made by or


                                       -138-



on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
this Indenture, will result in the obligations of such Guarantor under its
Guarantee not constituting such fraudulent transfer or conveyance.


                  (b) Each Guarantor that makes a payment or distribution under
its Guarantee shall be entitled to a contribution from each other Guarantor, if
any, in a pro rata amount based on the net assets of each Guarantor, determined
in accordance with GAAP.

                  (c) Each Guarantor hereby waives all rights of subrogation or
contribution, whether arising by contract or operation of law (including,
without limitation, any such right arising under federal bankruptcy law) or
otherwise by reason of any payment by it pursuant to the provisions of this
Article Thirteen until payment in full of all Indenture Obligations.

                  Section 1308.  Guarantee Is in Addition to Other Security.
                                 -------------------------------------------

                  This Guarantee shall be in addition to and not in substitution
for any other guarantees or other security which the Trustee may now or
hereafter hold in respect of the Indenture Obligations owing to the Trustee or
the Holders by the Company and (except as may be required by law) the Trustee
shall be under no obligation to marshal in favor of each of the Guarantors any
other guarantees or other security or any moneys or other assets which the
Trustee may be entitled to receive or upon which the Trustee or the Holders may
have a claim.

                  Section 1309.  Release of Security Interests.
                                 ------------------------------

                  Without limiting the generality of the foregoing and except as
otherwise provided in this Indenture, each Guarantor hereby consents and agrees,
to the fullest extent permitted by applicable law, that the rights of the
Trustee hereunder, and the liability of the Guarantors hereunder, shall not be
affected by any and all releases for any purpose of any collateral, if any, from
the Liens and security interests created by any collateral document and that
this Guarantee shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Indenture Obligations is rescinded
or must otherwise be returned by the Trustee upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had not
been made.

                  Section 1310.  No Bar to Further Actions.
                                 --------------------------

                  Except as provided by law, no action or proceeding brought or
instituted under Article Thirteen and this Guarantee and no recovery or judgment
in pursuance thereof shall be a bar or defense to any further action or
proceeding which may be


                                       -139-




brought under Article Thirteen and this Guarantee by reason of any further
default or defaults under Article Thirteen and this Guarantee or in the payment
of any of the Indenture Obligations owing by the Company.



                  Section 1311. Failure to Exercise Rights Shall Not Operate as
                                -----------------------------------------------
a Waiver; No Suspension of Remedies.
- ------------------------------------


                  (a) No failure to exercise and no delay in exercising, on the
part of the Trustee or the Holders, any right, power, privilege or remedy under
this Article Thirteen and this Guarantee shall operate as a waiver thereof, nor
shall any single or partial exercise of any rights, power, privilege or remedy
preclude any other or further exercise thereof, or the exercise of any other
rights, powers, privileges or remedies. The rights and remedies herein provided
for are cumulative and not exclusive of any rights or remedies provided in law
or equity.

                  (b) Nothing contained in this Article Thirteen shall limit the
right of the Trustee or the Holders to take any action to accelerate the
maturity of the Securities pursuant to Article Five or to pursue any rights or
remedies hereunder or under applicable law.

                  Section 1312.  Trustee's Duties; Notice to Trustee.
                                 ------------------------------------

                  (a) Any provision in this Article Thirteen or elsewhere in
this Indenture allowing the Trustee to request any information or to take any
action authorized by, or on behalf of any Guarantor, shall be permissive and
shall not be obligatory on the Trustee except as the Holders may direct in
accordance with the provisions of this Indenture or where the failure of the
Trustee to request any such information or to take any such action arises from
the Trustee's negligence, bad faith or willful misconduct.

                  (b) The Trustee shall not be required to inquire into the
existence, powers or capacities of the Company, any Guarantor or the officers,
directors or agents acting or purporting to act on their respective behalf.

                  Section 1313.  Successors and Assigns.
                                 -----------------------

                  All terms, agreements and conditions of this Article Thirteen
shall extend to and be binding upon each Guarantor and its successors and
permitted assigns and shall enure to the benefit of and may be enforced by the
Trustee and its successors and assigns; provided, however, that the Guarantors
may not assign any of their rights or obligations hereunder other than in
accordance with Article Eight.

                                       -140-



                  Section 1314.  Release of Guarantee.
                                 ---------------------

                  Concurrently with the payment in full of all of the Indenture
Obligations, the Guarantors shall be released from and relieved of their
obligations under this Article Thirteen. Upon the delivery by the Company to the
Trustee of an Officers' Certificate and, if requested by the Trustee, an Opinion
of Counsel to the effect that the transaction giving rise to the release of this
Guarantee was made by the Company in accordance with the provisions of this
Indenture and the Securities, the Trustee shall execute any documents reasonably
required in order to evidence the release of the Guarantors from their
obligations under this Guarantee. If any of the Indenture Obligations are
revived and reinstated after the termination of this Guarantee, then all of the
obligations of the Guarantors under this Guarantee shall be revived and
reinstated as if this Guarantee had not been terminated until such time as the
Indenture Obligations are paid in full, and each Guarantor shall enter into an
amendment to this Guarantee, reasonably satisfactory to the Trustee, evidencing
such revival and reinstatement.

                  This Guarantee shall terminate with respect to each Guarantor
and shall be automatically and unconditionally released and discharged as
provided in Section 1013(c).

                  Section 1315.  Execution of Guarantee.
                                 -----------------------

                  (a) To evidence the Guarantee, each Guarantor hereby agrees to
execute the guarantee substantially in the form set forth in Section 205, to be
endorsed on each Security authenticated and delivered by the Trustee and that
this Indenture shall be executed on behalf of each Guarantor by its Chairman of
the Board, its President, its Chief Executive Officer, Chief Operating Officer
or one of its Vice Presidents, under its corporate seal reproduced thereon
attested by its Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or facsimile.

                  (b) Any person that was not a Guarantor on July 31, 1998 may
become a Guarantor by executing and delivering to the Trustee (i) a supplemental
indenture in form and substance satisfactory to the Trustee, which subjects such
person to the provisions (including the representations and warranties) of this
Indenture as a Guarantor, (ii) in the event that as of the date of such
supplemental indenture any Registrable Securities are outstanding, an instrument
in form and substance satisfactory to the Trustee which subjects such person to
the provisions of the Registration Rights Agreement with respect to such
outstanding Registrable Securities, and (iii) an Opinion of Counsel to the
effect that such supplemental indenture has been duly authorized and executed by
such person and constitutes the legal, valid and binding obligation of such
person (subject to such customary assumptions and exceptions as may be
acceptable to the Trustee in its reasonable discretion).


                                       -141-



                  (c) If an officer whose signature is on this Indenture no
longer holds that office at the time the Trustee authenticates a Security on
which this Guarantee is endorsed, such Guarantee shall be valid nevertheless.

                                ARTICLE FOURTEEN

                           SUBORDINATION OF SECURITIES

                  Section 1401. Securities Subordinate to Senior Indebtedness.
                                ---------------------------------------------

                  The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and agrees, that, to the
extent and in the manner hereinafter set forth in this Article, the Indebtedness
represented by the Securities and the payment of the principal of, premium, if
any, and interest on, the Securities are hereby expressly made subordinate and
subject in right of payment as provided in this Article to the prior payment in
full of all Senior Indebtedness.

                  This Article Fourteen shall constitute a continuing offer to
all Persons who, in reliance upon such provisions, become holders of, or
continue to hold Senior Indebtedness; and such provisions are made for the
benefit of the holders of Senior Indebtedness; and such holders are made
obligees hereunder and they or each of them may enforce such provisions.

                  Section 1402. Payment Over of Proceeds Upon Dissolution, etc.
                                -----------------------------------------------

                  In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or its
assets, or (b) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary, or whether or not involving insolvency or
bankruptcy, or (c) any assignment for the benefit of creditors or any other
marshaling of assets or liabilities of the Company, then and in any such event:

                  (1) the holders of Senior Indebtedness shall be entitled to
receive payment in full of all amounts due on or in respect of Senior
Indebtedness before the Holders of the Securities are entitled to receive any
payment or distribution of any kind or character (excluding securities of the
Company or any other corporation that are equity securities or are subordinated
in right of payment to all Senior Indebtedness, that may be outstanding, to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article ("Permitted Junior Securities"))
on account of the principal of, premium, if any, or interest on the Securities
or on account of the purchase, redemption, defeasance or other acquisition of,
or in respect of, the Securities


                                       -142-




(other than amounts previously set aside with the Trustee, or payments
previously made, in either case, pursuant to the provisions of Sections 402 and
403 of this Indenture); and

                  (2) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities (excluding
Permitted Junior Securities), by set-off or otherwise, to which the Holders or
the Trustee would be entitled but for the provisions of this Article shall be
paid by the liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the holders of Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full, of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and

                  (3) in the event that, notwithstanding the foregoing
provisions of this Section, the Trustee or the Holder of any Security shall have
received any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (excluding Permitted Junior
Securities), in respect of principal, premium, if any, and interest on the
Securities before all Senior Indebtedness is paid in full, then and in such
event such payment or distribution (excluding Permitted Junior Securities) shall
be paid over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making payments
or distributions of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.

                  The consolidation of the Company with, or the merger of the
Company with or into, another Person or the liquidation or dissolution of the
Company following the sale, assignment, conveyance, transfer, lease or other
disposal of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article Eight shall not be
deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshaling of assets and liabilities of the Company
for the purposes of this Section if the Person formed by such consolidation or
the surviving entity of such merger or the Person which acquires by sale,
assignment, conveyance, transfer, lease or other disposal of such properties and
assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, sale, assignment, conveyance, transfer, lease or
other disposal, comply with the conditions set forth in Article Eight.

                                       -143-



                  Section 1403. Suspension of Payment When Designated Senior
                                --------------------------------------------
Indebtedness in Default.
- ------------------------

                  (a) Unless Section 1402 shall be applicable, upon the
occurrence and during the continuance of any default in the payment of any
Designated Senior Indebtedness beyond any applicable grace period (a "Payment
Default") and after the receipt by the Trustee from a Senior Representative of
any Designated Senior Indebtedness of written notice of such default, no payment
(other than amounts previously set aside with the Trustee or payments previously
made, in either case, pursuant to Section 402 or 403 in this Indenture) or
distribution of any assets of the Company or any Subsidiary of any kind or
character (excluding Permitted Junior Securities) may be made by the Company on
account of the principal of, premium, if any, or interest on, the Securities, or
on account of the purchase, redemption, defeasance or other acquisition of or in
respect of, the Securities unless and until such Payment Default shall have been
cured or waived or shall have ceased to exist or such Designated Senior
Indebtedness shall have been discharged or paid in full, after which the Company
shall (subject to the other provisions of this Article Fourteen) resume making
any and all required payments in respect of the Securities, including any missed
payments.

                  (b) Unless Section 1402 shall be applicable, (1) upon the
occurrence and during the continuance of any non-payment default with respect to
any Designated Senior Indebtedness pursuant to which the maturity thereof may
then be accelerated immediately (a "Non-payment Default") and (2) after the
receipt by the Trustee and the Company from a Senior Representative of any
Designated Senior Indebtedness of written notice of such Non-payment Default, no
payment (other than any amounts previously set aside with the Trustee, or
payments previously made, in either case, pursuant to the provisions of Sections
402 or 403 in this Indenture) or distribution of any assets of the Company of
any kind or character (excluding Permitted Junior Securities) may be made by the
Company or any Subsidiary on account of the principal of, premium, if any, or
interest on, the Securities, or on account of the purchase, redemption,
defeasance or other acquisition of, or in respect of, the Securities for the
period specified below ("Payment Blockage Period").

                  (c) The Payment Blockage Period shall commence upon the
receipt of notice of the Non-payment Default by the Trustee and the Company from
a Senior Representative and shall end on the earliest of (i) the 179th day after
such commencement, (ii) the date on which such Non-payment Default (and all
other Non-payment Defaults as to which notice is given after such Payment
Blockage Period is initiated) is cured, waived or ceases to exist or on which
such Designated Senior Indebtedness is discharged or paid in full, or (iii) the
date on which such Payment Blockage Period (and all Non-payment Defaults as to
which notice is given after such Payment Blockage Period is initiated) shall
have been terminated by written notice to the Company or the Trustee from the
Senior Representative initiating such Payment Blockage Period, after which, in
the case of clauses (i), (ii) and (iii), the Company shall



                                       -144-



promptly resume making any and all required payments in respect of the
Securities, including any missed payments. In no event will a Payment Blockage
Period extend beyond 179 days from the date of the receipt by the Company and
the Trustee of the notice initiating such Payment Blockage Period (such 179-day
period referred to as the "Initial Period"). Any number of notices of
Non-payment Defaults may be given during the Initial Period; provided that
during any period of 365 consecutive days only one Payment Blockage Period,
during which payment of principal of, premium, if any, or interest on, the
Securities may not be made, may commence and the duration of such period may not
exceed 179 days. No Non-payment Default with respect to any Designated Senior
Indebtedness that existed or was continuing on the date of the commencement of
any Payment Blockage Period will be, or can be, made the basis for the
commencement of a second Payment Blockage Period, whether or not within a period
of 365 consecutive days, unless such default has been cured or waived for a
period of not less than 90 consecutive days. The Company shall deliver a notice
to the Trustee promptly after the date on which any Non-payment Default is cured
or waived or ceases to exist or on which the Designated Senior Indebtedness
related thereto is discharged or paid in full, and the Trustee is authorized to
act in reliance on such notice.

                  (d) In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of any Security
prohibited by the foregoing provisions of this Section, then and in such event
such payment shall be paid over and delivered forthwith to a Senior
Representative of the holders of the Designated Senior Indebtedness or as a
court of competent jurisdiction shall direct.

                  Section 1404. Payment Permitted if No Default.
                                --------------------------------

                  Nothing contained in this Article, elsewhere in this Indenture
or in any of the Securities shall prevent the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other
winding-up, assignment for the benefit of creditors or other marshaling of
assets and liabilities of the Company referred to in Section 1402 or under the
conditions described in Section 1403, from making payments at any time of
principal of, premium, if any, or interest on the Securities.

                  Section 1405. Subrogation to Rights of Holders of Senior
                                ------------------------------------------
Indebtedness.
- -------------

                  After the payment in full, the Holders of the Securities shall
be subrogated to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the principal of, premium, if any, and interest
on, the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payments



                                       -145-



over pursuant to the provisions of this Article to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness, and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.

                  Section 1406. Provisions Solely to Define Relative Rights.
                                --------------------------------------------

                  The provisions of this Article are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of, premium, if any, and interest on, the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company or the
Holders of the Securities and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of the
holders of Senior Indebtedness (1) in any case, proceeding, dissolution,
liquidation or other winding up, assignment for the benefit of creditors or
other marshaling of assets and liabilities of the Company referred to in Section
1402, to receive, pursuant to and in accordance with such Section, cash,
property and securities otherwise payable or deliverable to the Trustee or such
Holder, or (2) under the conditions specified in Section 1303, to prevent any
payment prohibited by such Section or enforce their rights pursuant to Section
1303(d).

                  Section 1407. Trustee to Effectuate Subordination.
                                ------------------------------------

                  Each Holder of a Security by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the indebtedness of the Company owing to such Holder in the form required in
such proceedings and the causing of such claim to be approved.

                                       -146-



                  Section 1408. No Waiver of Subordination Provisions.
                                --------------------------------------

                  (a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.

                  (b) Without limiting the generality of subsection (a) of this
Section, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (1) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (2) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (3) release any Person liable in any manner for the collection or
payment of Senior Indebtedness; and (4) exercise or refrain from exercising any
rights against the Company and any other Person; provided, however, that in no
event shall any such actions limit the right of the Holders of the Securities to
take any action to accelerate the maturity of the Securities pursuant to Article
Five of this Indenture or to pursue any rights or remedies hereunder or under
applicable laws if the taking of such action does not otherwise violate the
terms of this Article.

                  Section 1409. Notice to Trustee.
                                ------------------

                  (a) The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the making of any
payment to or by the Trustee in respect of the Securities. Notwithstanding the
provisions of this Article or any other provision of this Indenture, the Trustee
shall not be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior Indebtedness or from a Senior
Representative or any trustee, fiduciary or agent therefor; and, prior to the
receipt of any such written notice, the Trustee shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section by Noon,
Eastern Time, on the Business Day prior to the date upon which by the terms
hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of, premium, if any, or interest on any
Security), then, anything herein contained to the contrary notwithstanding



                                       -147-



but without limiting the rights and remedies of the holders of Senior
Indebtedness, a Senior Representative or any trustee, fiduciary or agent
thereof, the Trustee shall have full power and authority to receive such money
and to apply the same to the purpose for which such money was received and shall
not be affected by any notice to the contrary which may be received by it after
such date; nor shall the Trustee be charged with knowledge of the curing of any
such default or the elimination of the act or condition preventing any such
payment unless and until the Trustee shall have received an Officers'
Certificate to such effect.

                  (b) The Trustee shall be entitled to rely on the delivery to
it of a written notice to the Trustee and the Company by a Person representing
himself to be a Senior Representative or a holder of Senior Indebtedness (or a
trustee, fiduciary or agent therefor) to establish that such notice has been
given by a Senior Representative or a holder of Senior Indebtedness (or a
trustee, fiduciary or agent therefor); provided, however, that failure to give
such notice to the Company shall not affect in any way the ability of the
Trustee to rely on such notice. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.

                  Section 1410. Reliance on Judicial Orders or Certificates.
                                --------------------------------------------

                  Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee and the Holders of the Securities shall
be entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other person
making such payment or distribution, or a certificate of a Senior
Representative, delivered to the Trustee or to the Holders of Securities for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article,
provided that the foregoing shall apply only if such court has been fully
apprised of the provisions of this Article.

                                       -148-



                  Section 1411. Rights of Trustee as a Holder of Senior
                                ---------------------------------------
Indebtedness; Preservation of Trustee's Rights.
- -----------------------------------------------

                  The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any Senior Indebtedness
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder. Nothing in this Article shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 607.

                  Section 1412. Article Applicable to Paying Agents.
                                ------------------------------------

                  In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting under this
Indenture, the term "Trustee" as used in this Article shall in such case (unless
the context otherwise requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article in addition to or in place of the
Trustee; provided, however, that Section 1411 shall not apply to the Company or
any Affiliate of the Company if it or such Affiliate acts as Paying Agent.

                  Section 1413. No Suspension of Remedies.
                                --------------------------

                  Nothing contained in this Article shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article Five of this Indenture or to
pursue any rights or remedies hereunder or under applicable law, subject to the
rights, if any, under this Article of the holders, from time to time, of Senior
Indebtedness to receive the cash, property or securities receivable upon the
exercise of such rights or remedies.

                  Section 1414. Trustee's Relation to Senior Indebtedness.
                                ------------------------------------------

                  With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Article against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and the
Trustee shall not be liable to any holder of Senior Indebtedness if it shall in
good faith mistakenly (absent negligence or willful misconduct) pay over or
deliver to Holders, the Company or any other Person moneys or assets to which
any holder of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.

                                      * * *





                                       -149-



                  IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.

                            Sonic Automotive, Inc.


                            By:    /s/ Theodore M. Wright
                                   -----------------------------
                                   Name:  Theodore M. Wright
                                   Title:  Vice President, Treasurer and Chief
                                   Financial Officer

Attest:    /s/ Stephen K. Coss
           -------------------------
           Name:  Stephen K. Coss
           Title:  Vice President, General
           Counsel and Secretary

                            AUTOBAHN, INC. (a California corporation)
                            CAPITOL CHEVROLET AND IMPORTS, INC. (an Alabama
                              corporation)
                            COBB PONTIAC CADILLAC, INC. (an Alabama corporation)
                            FA SERVICE CORPORATION (a California corporation)
                            FAA AUTO FACTORY, INC. (a California corporation)
                            FAA BEVERLY HILLS, INC. (a California corporation)
                            FAA CAPITOL F, INC. (a California corporation)
                            FAA CAPITOL N, INC. (a California corporation)
                            FAA CONCORD H, INC. (a California corporation)
                            FAA CONCORD N, INC. (a California corporation)
                            FAA CONCORD T, INC. (a California corporation)
                            FAA DUBLIN N, INC. (a California corporation)
                            FAA DUBLIN VWD, INC. (a California corporation)
                            FAA HOLDING CORP. (a California corporation)
                            FAA LAS VEGAS H, INC. (a Nevada corporation)
                            FAA MARIN D, INC. (a California corporation)
                            FAA MARIN F, INC. (a California corporation)
                            FAA MARIN LR, INC. (a California corporation)
                            FAA POWAY D, INC. (a California corporation)
                            FAA POWAY G, INC. (a California corporation)
                            FAA POWAY H, INC. (a California corporation)
                            FAA POWAY T, INC. (a California corporation)
                            FAA SAN BRUNO, INC. (a California corporation)
                            FAA SANTA MONICA V, INC. (a California corporation)
                            FAA SERRAMONTE H, INC. (a California corporation)
                            FAA SERRAMONTE L, INC. (a California corporation)
                            FAA SERRAMONTE, INC. (a California corporation)
                            FAA STEVENS CREEK, INC. (a California corporation)
                            FAA TORRANCE CPJ, INC. (a California corporation)
                            FIRSTAMERICA AUTOMOTIVE, INC. (a Delaware
                              corporation)
                            FORT MILL CHRYSLER-PLYMOUTH-DODGE INC. (a South
                              Carolina corporation)


                                       -150-



                            FORT MILL FORD, INC. (a South Carolina corporation)
                            FRANCISCAN MOTORS, INC. (a California corporation)
                            FREEDOM FORD, INC. (a Florida corporation)
                            FRONTIER OLDSMOBILE-CADILLAC, INC. (a North Carolina
                              corporation)
                            HMC FINANCE ALABAMA, INC. (an Alabama corporation)
                            KRAMER MOTORS INCORPORATED (a California
                              corporation)
                            LAWRENCE MARSHALL CHEVROLET, LLC (a Delaware limited
                               liability company)
                            LAWRENCE MARSHALL CHEVROLET, L.P. (a Texas limited
                               partnership)
                            L DEALERSHIP GROUP, INC. (a Texas corporation)
                            MARCUS DAVID CORPORATION (a North Carolina
                               corporation)
                            PHILPOTT MOTORS, LTD. (a Texas limited partnership)
                            RIVERSIDE NISSAN, INC. (an  Oklahoma corporation)
                            ROYAL MOTOR COMPANY, INC. (an Alabama corporation)
                            SANTA CLARA IMPORTED CARS, INC. (a California
                               corporation)
                            SMART NISSAN, INC. (a California corporation)
                            SONIC AUTOMOTIVE - BONDESEN, INC. (a Florida
                               corporation)
                            SONIC AUTOMOTIVE OF CHATTANOOGA, LLC (a Tennessee
                               limited liability company)
                            SONIC AUTOMOTIVE-CLEARWATER, INC. (a Florida
                               corporation)
                            SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER,
                               INC. (a Florida corporation)
                            SONIC AUTOMOTIVE F&I, LLC (a Nevada limited
                               liability company)
                            SONIC AUTOMOTIVE OF GEORGIA, INC. (a Georgia
                               corporation)
                            SONIC AUTOMOTIVE OF NASHVILLE, LLC (a Tennessee
                               limited liability company)
                            SONIC AUTOMOTIVE OF NEVADA, INC. (a Nevada
                               corporation)
                            SONIC AUTOMOTIVE SERVICING COMPANY, LLC (a Nevada
                               limited liability company)
                            SONIC AUTOMOTIVE OF TENNESSEE, INC. (a Tennessee
                               corporation)
                            SONIC AUTOMOTIVE OF TEXAS, L.P. (a Texas limited
                               partnership)
                            SONIC AUTOMOTIVE WEST, LLC (a Nevada limited l
                               iability company)
                            SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC. (a
                               Florida corporation)
                            SONIC AUTOMOTIVE-1400 AUTOMALL DRIVE, COLUMBUS, INC.
                              (an Ohio corporation)
                            SONIC AUTOMOTIVE-1455 AUTOMALL DRIVE, COLUMBUS, INC.
                              (an Ohio corporation)
                            SONIC AUTOMOTIVE-1495 AUTOMALL DRIVE, COLUMBUS, INC.
                              (an Ohio corporation)
                            SONIC AUTOMOTIVE-1500 AUTOMALL DRIVE, COLUMBUS, INC.
                              (an Ohio corporation)


                                       -151-



                            SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC. (a
                              Florida corporation)
                            SONIC AUTOMOTIVE - 1720 MASON AVE., DB, LLC (a
                              Florida limited liability
                                company)
                            SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC.
                                (a Florida corporation)
                            SONIC AUTOMOTIVE - 21699 U.S. HWY 19 N., INC. (a
                                Florida corporation)
                            SONIC AUTOMOTIVE - 241 RIDGEWOOD AVE., HH, INC. (a
                                Florida corporation)
                            SONIC AUTOMOTIVE 2424 LAURENS RD., GREENVILLE, INC.
                               (a South Carolina corporation)
                            SONIC AUTOMOTIVE - 2490 SOUTH LEE
                                HIGHWAY, LLC (a Tennessee
                                limited liability company),
                            SONIC AUTOMOTIVE 2752 LAURENS RD., GREENVILLE, INC.
                                (a South Carolina corporation)
                            SONIC AUTOMOTIVE - 3401 N. MAIN, TX, L.P. (a Texas
                                limited partnership)
                            SONIC AUTOMOTIVE-3700 WEST BROAD STREET, COLUMBUS,
                                INC. (an Ohio corporation)
                            SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC. (a
                                Florida corporation)
                            SONIC AUTOMOTIVE-4000 WEST BROAD STREET, COLUMBUS,
                                INC. (an Ohio corporation)
                            SONIC AUTOMOTIVE - 4701 I-10 EAST, TX, L.P. (a Texas
                                limited partnership)
                            SONIC AUTOMOTIVE - 5221 I-10 EAST, TX, L.P. (a Texas
                                limited partnership)
                            SONIC AUTOMOTIVE  5260 PEACHTREE INDUSTRIAL BLVD.,
                                LLC (a Georgia limited liability company)
                            SONIC AUTOMOTIVE-5585 PEACHTREE INDUSTRIAL BLVD.,
                                LLC (a Georgia limited liability company),
                            SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC. (a
                                Florida corporation)
                            SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE, LLC (a
                                Tennessee limited
                                liability company)
                            SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE, NC, LLC (a
                                North Carolina limited liability company)
                            SONIC - BETHANY H, INC. (an Oklahoma corporation)
                            SONIC - 2185 CHAPMAN RD., CHATTANOOGA, LLC (a
                                Tennessee limited liability company)
                            SONIC - BUENA PARK H, INC. (a California
                                 corporation)
                            SONIC - CAMP FORD, L.P. (a Texas limited
                                partnership)
                            SONIC - CAPITAL CHEVROLET, INC. (an Ohio
                                corporation)
                            SONIC - CARROLLTON V, L.P. (a Texas limited
                                partnership)
                            SONIC CHRYSLER-PLYMOUTH-JEEP, LLC (a North Carolina
                                limited liabilitycompany)
                            SONIC - CLASSIC DODGE, INC. (an
                                Alabama corporation)
                            SONIC - COAST CADILLAC, INC. (a
                               California corporation)
                            SONIC DODGE, LLC (a North Carolina limited
                               liability company)
                            SONIC DEVELOPMENT, LLC (a North
                               Carolina limited liability company)
                            SONIC - FM AUTOMOTIVE, LLC (a Florida limited
                               liability company)


                                       -152-



                             SONIC - FM , INC. (a Florida corporation)
                             SONIC - FM NISSAN, INC. (a Florida corporation)
                             SONIC - FM VW, INC. (a Florida corporation)
                             SONIC - FORT WORTH T, L.P. (a Texas limited
                                 partnership)
                             SONIC - FREELAND, INC. (a Florida corporation)
                             SONIC - GLOBAL IMPORTS, L.P. (a Georgia limited
                                 partnership)
                             SONIC - GLOVER, INC. (an Oklahoma corporation)
                             SONIC - HARBOR CITY H, INC. (a California
                                 corporation)
                             SONIC - HOUSTON V, L.P. (a Texas limited
                                 partnership)
                             SONIC - INTEGRITY DODGE LV, LLC (a Nevada limited
                                 liability company)
                             SONIC - LAS VEGAS C EAST, LLC (a Nevada limited
                                 liability company)
                             SONIC - LAS VEGAS C WEST, LLC (a Nevada limited
                                 liability company)
                             SONIC - LLOYD NISSAN, INC. (a Florida corporation)
                             SONIC - LLOYD PONTIAC - CADILLAC, INC. (a Florida
                                 corporation)
                             SONIC - LUTE RILEY, L. P. (a Texas limited
                                 partnership)
                             SONIC - MANHATTAN FAIRFAX, INC. (a Virginia
                                 corporation)
                             SONIC - MANHATTAN WALDORF, INC. (a Maryland
                                 corporation)
                             SONIC - MONTGOMERY FLM, INC. (an Alabama
                                 corporation)
                             SONIC - NEWSOME CHEVROLET WORLD, INC. (a South
                                 Carolina corporation)
                             SONIC - NEWSOME OF FLORENCE, INC. (a South Carolina
                                 corporation)
                             SONIC - NORTH CHARLESTON, INC. (a South Carolina
                                 corporation)
                             SONIC - NORTH CHARLESTON DODGE, INC. (a South
                                 Carolina corporation)
                             SONIC - PARK PLACE A, L.P. (a Texas limited
                                 partnership) (formerly Sonic -
                                 Dallas Auto Factory, L.P.)
                             SONIC PEACHTREE INDUSTRIAL BLVD., L.P. (a Georgia
                                 limited partnership)
                             SONIC - READING, L.P. (a Texas limited partnership)
                             SONIC RESOURCES, INC. (a Nevada corporation)
                             SONIC - RICHARDSON F, L.P. (a Texas limited
                                  partnership)
                             SONIC-RIVERSIDE, INC. (an Oklahoma corporation)
                             SONIC - RIVERSIDE AUTO FACTORY, INC. (an Oklahoma
                                 corporation)
                             SONIC - ROCKVILLE IMPORTS, INC. (a Maryland
                                 corporation)
                             SONIC - ROCKVILLE MOTORS, INC. (a Maryland
                                 corporation)
                             SONIC - SAM WHITE NISSAN, L.P. (a Texas limited
                                 partnership)
                             SONIC - SHOTTENKIRK, INC. (a Florida corporation)
                             SONIC - STEVENS CREEK B, INC. (a California
                                 corporation) (formerly known as
                                 Don Lucas International, Inc.)
                             SONIC - SUPERIOR OLDSMOBILE, LLC  (a Tennessee
                                  limited liability company)
                             SONIC OF TEXAS, INC. (a Texas corporation)
                             SONIC-VOLVO LV, LLC (a Nevada limited liability
                                 company)
                             SONIC - WEST COVINA T, INC. (a California
                                 corporation)
                             SONIC - WEST RENO CHEVROLET, INC. (an Oklahoma
                                 corporation)


                                       -153-



                             SONIC - WILLIAMS BUICK, INC. (an Alabama
                                 corporation)
                             SONIC - WILLIAMS CADILLAC, INC. (an Alabama
                                 corporation)
                             SONIC - WILLIAMS IMPORTS, INC. (an Alabama
                                 corporation)
                             SONIC - WILLIAMS MOTORS, LLC (an Alabama limited
                                 liability company)
                             SPEEDWAY CHEVROLET, INC. (an Oklahoma corporation)
                             SRE ALABAMA - 2, LLC (an Alabama limited liability
                                 company)
                             SRE ALABAMA - 3, LLC (an Alabama limited liability
                                 company)
                             SREALESTATE ARIZONA - 1, LLC (an Arizona limited
                                 liability company)
                             SREALESTATE ARIZONA - 2, LLC (an Arizona limited
                                 liability company)
                             SREALESTATE ARIZONA - 3, LLC (an Arizona limited
                                 liability company)
                             SREALESTATE ARIZONA - 4, LLC (an Arizona limited
                                 liability company)
                             SRE FLORIDA - 1, LLC (a Florida limited liability
                                 company)
                             SRE FLORIDA - 2, LLC (a Florida limited liability
                                 company)
                             SRE FLORIDA - 3, LLC (a Florida limited liability
                                 company)
                             SRE GEORGIA - 1, L.P. (a Georgia limited liability
                                 partnership)
                             SRE GEORGIA - 2, L.P. (a Georgia limited liability
                                 partnership)
                             SRE GEORGIA - 3, L.P. (a Georgia limited liability
                                 partnership)
                             SRE HOLDING, LLC (a North Carolina limited
                                 liability company)
                             SRE NEVADA - 1, LLC (a Nevada limited liability
                                 company)
                             SRE NEVADA - 2, LLC (a Nevada limited liability
                                 company)
                             SRE NEVADA - 3, LLC (a Nevada limited liability
                                 company)
                             SRE SOUTH CAROLINA - 2, LLC (a South Carolina
                                 limited liability company)
                             SRE TENNESSEE - 1, LLC (a Tennessee limited
                                 liability company)
                             SRE TENNESSEE - 2, LLC (a Tennessee limited
                                 liability company)
                             SRE TENNESSEE - 3, LLC (a Tennessee limited
                                 liability company)
                             SRE TEXAS - 1, L.P. (a Texas limited partnership)
                             SRE TEXAS - 2, L.P. (a Texas limited partnership)
                             SRE TEXAS - 3, L.P. (a Texas limited partnership)
                             SRE VIRGINIA - 1, LLC (a Virginia limited liability
                                 company)
                             STEVENS CREEK CADILLAC, INC. (a California
                                 corporation)
                             TRANSCAR LEASING, INC. (a California corporation)
                             TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC (a
                                 Tennessee limited liability company]
                             TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF ROCK
                                 HILL, INC. (a South Carolina corporation)
                             TOWN AND COUNTRY DODGE OF CHATTANOOGA, LLC (a
                                 Tennessee limited liability company)
                             TOWN AND COUNTRY FORD, INCORPORATED (a North
                                 Carolina corporation)
                             TOWN AND COUNTRY FORD OF CLEVELAND, LLC (a
                                 Tennessee limited liability company)
                             TOWN AND COUNTRY JAGUAR, LLC (a Tennessee limited
                                 liability company)
                             VILLAGE IMPORTED CARS, INC. (a Maryland
                                 corporation)
                             WINDWARD, INC. (a Hawaii corporation)




                                       -154-




                                           By:   /s/ Theodore M. Wright
                                                 --------------------------
                                                 Name:  Theodore M. Wright
                                                 Title:  Vice President

Attest:    /s/ Stephen K. Coss
           -------------------------
           Name: Stephen K. Coss
           Title: Vice President

                                          U.S. BANK TRUST NATIONAL ASSOCIATION


                                          By:    /s/ Lori Anne Rosenberg
                                                 ------------------------------
                                                 Name: Lori Anne Rosenberg
                                                 Title: Assistant Vice President


                                      -1-






STATE OF North Carolina            )
                                   )  ss.:
COUNTY OF Mecklenburg              )

                  On the 19th day of November, 2001, before me personally came
Theodore M. Wright, to me known, who, being by me duly sworn, did depose and say
that he resides at Charlotte, North Carolina; that he is the Vice President,
Treasurer and Chief Financial Officer of Sonic Automotive, Inc., a corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto pursuant to authority of the Board of Directors of such
corporation.

                                                                       (NOTARIAL
                                                                           SEAL)



                                  /s/ Mary E. Goretti

                                  -------------------------
                                  Notary Public, Commission Expires 9/19/2004


                                      -1-




STATE OF North Carolina                                       )
                                                              )  ss.:
COUNTY OF Mecklenburg                                         )

                  On the 19th day of November, 2001, before me personally came
Theodore M. Wright, to me known, who, being by me duly sworn, did depose and say
that he resides at Charlotte, North Carolina; that he is the Vice President of
the corporations listed below, corporations described in and which executed the
foregoing instrument; and that he signed his name thereto pursuant to authority
of the Board of Directors of such corporations.

                                                                       (NOTARIAL
                                                                           SEAL)



                    / Mary E. Goretti
                    -------------------------------------------
                    Notary Public, Commission Expires 9/19/2004

                    AUTOBAHN, INC. (a California corporation)
                    CAPITOL CHEVROLET AND IMPORTS, INC. (an Alabama corporation)
                    COBB PONTIAC CADILLAC, INC. (an Alabama corporation)
                    FA SERVICE CORPORATION (a California corporation)
                    FAA AUTO FACTORY, INC. (a California corporation)
                    FAA BEVERLY HILLS, INC. (a California corporation)
                    FAA CAPITOL F, INC. (a California corporation)
                    FAA CAPITOL N, INC. (a California corporation)
                    FAA CONCORD H, INC. (a California corporation)
                    FAA CONCORD N, INC. (a California corporation)
                    FAA CONCORD T, INC. (a California corporation)
                    FAA DUBLIN N, INC. (a California corporation)
                    FAA DUBLIN VWD, INC. (a California corporation)
                    FAA HOLDING CORP. (a California corporation)
                    FAA LAS VEGAS H, INC. (a Nevada corporation)
                    FAA MARIN D, INC. (a California corporation)
                    FAA MARIN F, INC. (a California corporation)
                    FAA MARIN LR, INC. (a California corporation)
                    FAA POWAY D, INC. (a California corporation)
                    FAA POWAY G, INC. (a California corporation)
                    FAA POWAY H, INC. (a California corporation)
                    FAA POWAY T, INC. (a California corporation)
                    FAA SAN BRUNO, INC. (a California corporation)
                    FAA SANTA MONICA V, INC. (a California corporation)



                                       -157-



                    FAA SERRAMONTE H, INC. (a California corporation)
                    FAA SERRAMONTE L, INC. (a California corporation)
                    FAA SERRAMONTE, INC. (a California corporation)
                    FAA STEVENS CREEK, INC. (a California corporation)
                    FAA TORRANCE CPJ, INC. (a California corporation)
                    FIRSTAMERICA AUTOMOTIVE, INC. (a Delaware corporation)
                    FORT MILL CHRYSLER-PLYMOUTH-DODGE INC. (a South Carolina
                       corporation)
                    FORT MILL FORD, INC. (a South Carolina corporation)
                    FRANCISCAN MOTORS, INC. (a California corporation)
                    FREEDOM FORD, INC. (a Florida corporation)
                    FRONTIER OLDSMOBILE-CADILLAC, INC. (a North Carolina
                       corporation)
                    HMC FINANCE ALABAMA, INC. (an Alabama corporation)
                    KRAMER MOTORS INCORPORATED (a California corporation)
                    L DEALERSHIP GROUP, INC. (a Texas corporation)
                    MARCUS DAVID CORPORATION (a North Carolina corporation)
                    RIVERSIDE NISSAN, INC. (an  Oklahoma corporation)
                    ROYAL MOTOR COMPANY, INC. (an Alabama corporation)
                    SANTA CLARA IMPORTED CARS, INC. (a California corporation)
                    SMART NISSAN, INC. (a California corporation)
                    SONIC AUTOMOTIVE - BONDESEN, INC. (a Florida corporation)
                    SONIC AUTOMOTIVE - CLEARWATER, INC. (a Florida corporation)
                    SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER, INC. (a
                       Florida corporation)
                    SONIC AUTOMOTIVE OF GEORGIA, INC. (a Georgia corporation)
                    SONIC AUTOMOTIVE OF NEVADA, INC. (a Nevada corporation)
                    SONIC AUTOMOTIVE OF TENNESSEE, INC. (a Tennessee
                       corporation)
                    SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC. (a Florida
                       corporation)
                    SONIC AUTOMOTIVE - 1400 AUTOMALL DRIVE, COLUMBUS, INC.
                       (an Ohio corporation)
                    SONIC AUTOMOTIVE - 1455 AUTOMALL DRIVE, COLUMBUS, INC. (an
                       Ohio corporation)
                    SONIC AUTOMOTIVE - 1495 AUTOMALL DRIVE, COLUMBUS, INC. (an
                       Ohio corporation)

                                      -2-





                    SONIC AUTOMOTIVE - 1500 AUTOMALL DRIVE, COLUMBUS, INC. (an
                         Ohio corporation)
                    SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC. (a Florida
                         corporation)
                    SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC. (a Florida
                         corporation)
                    SONIC AUTOMOTIVE - 21699 U.S. HWY 19 N., INC. (a Florida
                         corporation)
                    SONIC AUTOMOTIVE - 241 RIDGEWOOD AVE., HH, INC. (a Florida
                         corporation)
                    SONIC AUTOMOTIVE - 2424 LAURENS RD., GREENVILLE, INC. (a
                         South Carolina corporation)
                    SONIC AUTOMOTIVE - 2752 LAURENS RD., GREENVILLE, INC. (a
                         South Carolina corporation)
                    SONIC AUTOMOTIVE - 3700 WEST BROAD STREET, COLUMBUS, INC.
                         (an Ohio corporation)
                    SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC. (a Florida
                          corporation)
                    SONIC AUTOMOTIVE - 4000 WEST BROAD STREET, COLUMBUS, INC.
                         (an Ohio corporation)
                    SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC. (a Florida
                         corporation)
                    SONIC - BETHANY H, INC. (an Oklahoma corporation)
                    SONIC - BUENA PARK H, INC. (a California corporation)
                    SONIC - CAPITAL CHEVROLET, INC. (an Ohio corporation)
                    SONIC - CLASSIC DODGE, INC. (an Alabama corporation)
                    SONIC - COAST CADILLAC, INC. (a California corporation)
                    SONIC - FM , INC. (a Florida corporation)
                    SONIC - FM NISSAN, INC. (a Florida corporation)
                    SONIC - FM VW, INC. (a Florida corporation)
                    SONIC - FREELAND, INC. (a Florida corporation)
                    SONIC - GLOVER, INC. (an Oklahoma corporation)
                    SONIC - HARBOR CITY H, INC. (a California corporation)
                    SONIC - LLOYD NISSAN, INC. (a Florida corporation)
                    SONIC - LLOYD PONTIAC - CADILLAC, INC. (a Florida
                         corporation)
                    SONIC - MANHATTAN FAIRFAX, INC. (a Virginia corporation)
                    SONIC - MANHATTAN WALDORF, INC. (a Maryland corporation)
                    SONIC - MONTGOMERY FLM, INC. (an Alabama corporation)
                    SONIC - NEWSOME CHEVROLET WORLD, INC. (a South Carolina
                         corporation)

                                      -3-




                    SONIC - NEWSOME OF FLORENCE, INC. (a South Carolina
                         corporation)
                    SONIC - NORTH CHARLESTON, INC. (a South Carolina
                         corporation)
                    SONIC - NORTH CHARLESTON DODGE, INC. (a South Carolina
                         corporation)
                    SONIC RESOURCES, INC. (a Nevada corporation)
                    SONIC - RIVERSIDE, INC. (an Oklahoma corporation)
                    SONIC - RIVERSIDE AUTO FACTORY, INC. (an Oklahoma
                         corporation)
                    SONIC - ROCKVILLE IMPORTS, INC. (a Maryland corporation)
                    SONIC - ROCKVILLE MOTORS, INC. (a Maryland corporation)
                    SONIC - SHOTTENKIRK, INC. (a Florida corporation)
                    SONIC - STEVENS CREEK B, INC. (a California corporation)
                        (formerly known as Don Lucas International, Inc.)
                    SONIC OF TEXAS, INC. (a Texas corporation)
                    SONIC - WEST COVINA T, INC. (a California corporation)
                    SONIC - WEST RENO CHEVROLET, INC. (an Oklahoma corporation)
                    SONIC - WILLIAMS BUICK, INC. (an Alabama corporation)
                    SONIC - WILLIAMS CADILLAC, INC. (an Alabama corporation)
                    SONIC - WILLIAMS IMPORTS, INC. (an Alabama corporation)
                    SPEEDWAY CHEVROLET, INC. (an Oklahoma corporation)
                    STEVENS CREEK CADILLAC, INC. (a California corporation)
                    TRANSCAR LEASING, INC. (a California corporation)
                    TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF ROCK HILL, INC.
                        (a South Carolina corporation)
                    TOWN AND COUNTRY FORD, INCORPORATED (a North Carolina
                        corporation)
                    VILLAGE IMPORTED CARS, INC. (a Maryland corporation)
                    WINDWARD, INC. (a Hawaii corporation)



                                      -4-




STATE OF North Carolina           )
                                  )  ss.:
COUNTY OF Mecklenburg             )

                  On the 19th day of November, 2001, before me personally came
Theodore M. Wright, to me known, who, being by me duly sworn, did depose and say
that he resides at Charlotte, North Carolina; that he is the Vice President of
the limited liability companiess listed below, limited liability companies
described in and which executed the foregoing instrument; and that he signed his
name thereto pursuant to authority under the operating agreements of such
limited liability companies.

                                                                       (NOTARIAL
                                                                           SEAL)



                               /s/ Mary E. Goretti

                              -------------------------------------------------
                             Notary Public, Commission Expires 9/19/2004

                             LAWRENCE MARSHALL CHEVROLET, LLC (a Delaware
                                 limited liability company)
                             SONIC AUTOMOTIVE OF CHATTANOOGA, LLC (a Tennessee
                                 limited liability company)
                             SONIC AUTOMOTIVE F&I, LLC (a Nevada limited
                                 liability company)
                             SONIC AUTOMOTIVE OF NASHVILLE, LLC (a Tennessee
                                 limited liability company)
                             SONIC AUTOMOTIVE SERVICING COMPANY, LLC (a Nevada
                                 limited liability company)
                             SONIC AUTOMOTIVE WEST, LLC (a Nevada limited
                                 liability company)
                             SONIC AUTOMOTIVE - 1720 MASON AVE., DB, LLC (a
                                 Florida limited liability company )
                             SONICAUTOMOTIVE - 2490 SOUTH LEE HIGHWAY, LLC (a
                                 Tennessee limited liability company)
                             SONIC AUTOMOTIVE - 5260 PEACHTREE INDUSTRIAL BLVD.,
                                 LLC (a Georgia limited liability company)
                             SONIC AUTOMOTIVE - 5585 PEACHTREE INDUSTRIAL BLVD.,
                                 LLC (a Georgia limited liability company)
                             SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE, LLC (a
                                 Tennessee limited liability company)


                                      -5-



                             SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE, NC, LLC (a
                                 North Carolina limited liability company)
                             SONIC - BETHANY H, INC. (an Oklahoma corporation)
                             SONIC - 2185 CHAPMAN RD., CHATTANOOGA, LLC (a
                                 Tennessee limited liability company)
                             SONIC CHRYSLER-PLYMOUTH-JEEP, LLC (a North Carolina
                                 limited liability company)
                             SONIC DODGE, LLC (a North Carolina limited
                                 liability company)
                             SONIC DEVELOPMENT, LLC (a North Carolina limited
                                 liability company)
                             SONIC - FM AUTOMOTIVE, LLC (a Florida limited
                                 liability company)
                             SONIC - INTEGRITY DODGE LV, LLC (a Nevada limited
                                 liability company)
                             SONIC - LAS VEGAS C EAST, LLC (a Nevada limited
                                 liability company)
                             SONIC - LAS VEGAS C WEST, LLC (a Nevada limited
                                 liability company)
                             SONIC - SUPERIOR OLDSMOBILE, LLC (a Tennessee
                                 limited liability company)
                             SONIC - VOLVO LV, LLC (a Nevada limited liability
                                 company)
                             SONIC - WILLIAMS MOTORS, LLC (an Alabama limited
                                 liability company)
                             SRE ALABAMA - 2, LLC (an Alabama limited liability
                                 company)
                             SRE ALABAMA - 3, LLC (an Alabama limited liability
                                 company)
                             SREALESTATE ARIZONA - 1, LLC (an Arizona limited
                                 liability company)
                             SREALESTATE ARIZONA - 2, LLC (an Arizona limited
                                 liability company)
                             SREALESTATE ARIZONA - 3, LLC (an Arizona limited
                                 liability company)
                             SREALESTATE ARIZONA - 4, LLC (an Arizona limited
                                 liability company)
                             SRE FLORIDA - 1, LLC (a Florida limited liability
                                 company)
                             SRE FLORIDA - 2, LLC (a Florida limited liability
                                 company)
                             SRE FLORIDA - 3, LLC (a Florida limited liability
                                 company)
                             SRE HOLDING, LLC (a North Carolina limited
                                 liability company) SRE
                             NEVADA - 1, LLC (a Nevada limited liability
                                 company)
                             SRE NEVADA - 2, LLC (a Nevada limited liability
                                 company)

                                      -6-




                             SRE NEVADA - 3, LLC (a Nevada limited liability
                                 company)
                             SRE SOUTH CAROLINA - 2, LLC (a South Carolina
                                 limited liability company)
                             SRE TENNESSEE - 1, LLC (a Tennessee limited
                                 liability company)
                             SRE TENNESSEE - 2, LLC (a Tennessee limited
                                 liability company)
                             SRE TENNESSEE - 3, LLC (a Tennessee limited
                                 liablity company)
                             SRE VIRGINIA - 1, LLC (a Virginia limited liability
                                 company)
                             TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC (a
                                 Tennessee limited liability company]
                             TOWN AND COUNTRY DODGE OF CHATTANOOGA, LLC (a
                                 Tennessee limited liability company)
                             TOWN AND COUNTRY FORD OF CLEVELAND, LLC (a
                                 Tennessee limited liability company)
                             TOWN AND COUNTRY JAGUAR, LLC (a Tennessee limited
                                 liability company)



                                      -7-




STATE OF North Carolina      )
                             )  ss.:
COUNTY OF Mecklenburg        )

                  On the 19th day of November, 2001, before me personally came
Theodore M. Wright, to me known, who, being by me duly sworn, did depose and say
that he resides at Charlotte, North Carolina; that he, the Vice President of the
general partner of each of the limited partnerships listed below; limited
partnerships described in and which executed the foregoing instrument; and that
he signed his name thereto pursuant to authority of the general partner under
the partnership agreements of such limited partnerships.

                                                                       (NOTARIAL
                                                                           SEAL)



                               /s/ Mary E. Goretti
                               ----------------------
                               Notary Public, Commission Expires 9/19/2004

                               LAWRENCE MARSHALL CHEVROLET, L.P. (a Texas
                                   unlimited partnership)
                               PHILPOTT MOTORS, LTD. (a Texas limited
                                   partnership)
                               SONIC AUTOMOTIVE OF TEXAS, L.P. (a Texas limited
                                   partnership)
                               SONIC AUTOMOTIVE - 3401 N. MAIN, TX, L.P. (a
                                   Texas limited partnership)
                               SONIC AUTOMOTIVE - 4701 I-10 EAST, TX, L.P. (a
                                   Texas limited partnership)
                               SONIC AUTOMOTIVE - 5221 I-10 EAST, TX, L.P. (a
                                   Texas limited partnership)
                               SONIC - CAMP FORD, L.P. (a Texas limited
                                   partnership)
                               SONIC - CARROLLTON V, L.P. (a Texas limited
                                   partnership)
                               SONIC - FORT WORTH T, L.P. (a Texas limited
                                   partnership)
                               SONIC - GLOBAL IMPORTS, L.P. (a Georgia limited
                                   partnership)
                               SONIC - HOUSTON V, L.P. (a Texas limited
                                   partnership)
                               SONIC - LUTE RILEY, L. P. (a Texas limited
                                   partnership)
                               SONIC - PARK PLACE A, L.P. (a Texas limited
                                   partnership) (formerly Sonic - Dallas Auto
                                   Factory, L.P.)

                                      -8-





                               SONIC PEACHTREE INDUSTRIAL BLVD., L.P. (a
                                    Georgia limited partnership)
                               SONIC - READING, L.P. (a Texas limited
                                    partnership)
                               SONIC - RICHARDSON F, L.P. (a Texas limited
                                    partnership)
                               SONIC - SAM WHITE NISSAN, L.P. (a Texas limited
                                    partnership)
                               SRE GEORGIA - 1, L.P. (a Georgia limited
                                    liability partnership)
                               SRE GEORGIA - 2, L.P. (a Georgia limited
                                    liability partnership)
                               SRE GEORGIA - 3, L.P. (a Georgia limited
                                    liability partnership)
                               SRE TEXAS - 1, L.P. (a Texas limited
                                    partnership)
                               SRE TEXAS - 2, L.P. (a Texas limited partnership)
                               SRE TEXAS - 3, L.P. (a Texas limited partnership)



                                      -9-



                                                                         ANNEX A
                                                                         -------

                                INTERCOMPANY NOTE

                                                     -------------- ---, ------


                  Evidences of all loans or advances ("Loans") made hereunder
shall be reflected on the grid attached hereto. FOR VALUE RECEIVED, __________,
a ____________________ corporation (the "Maker"), HEREBY PROMISES TO PAY ON
DEMAND to the order of ____________________________ (the "Holder") the principal
sum of the aggregate unpaid principal amount of all Loans (plus accrued
interest thereon) at any time and from time to time made hereunder which has
not been previously paid.

                  All capitalized terms used herein that are defined in, or by
reference in, the Indenture between Sonic Automotive Inc., a Delaware
corporation (the "Company"), the Guarantors and U.S. Bank Trust National
Association, as trustee, dated as of November 19, 2001, (the "Indenture"), have
the meanings assigned to such terms therein, or by reference therein, unless
otherwise defined.

                                    ARTICLE I

                           TERMS OF INTERCOMPANY NOTE

                  Section 1.01 Note Not Forgivable. Unless the Maker of the Loan
                               --------------------
hereunder is the Company or any Guarantor, the Holder may not forgive any
amounts owing under this intercompany note.

                  Section 1.02 Interest: Prepayment. (a) The interest rate
                               --------------------
("Interest Rate") on the Loans shall be a rate per annum reflected on the grid
attached hereto.

                  (b) The interest, if any, payable on each of the Loans shall
accrue from the date such Loan is made and, subject to Section 2.01, shall be
payable upon demand of the Holder.

                  (c) To the extent permitted by law, if the principal or
accrued interest, if any, of the Loans is not paid on the date demand is made,
interest on the unpaid principal and interest will accrue at a rate equal to the
Interest Rate, if any, plus 100 basis points per annum from maturity until the
principal and interest on such Loans are fully paid.

                  (d)      Subject to Section 2.01, any amounts hereunder may be
 repaid at any time by the Maker.

                  Section 1.02  Subordination.  All Loans hereunder shall be
                                --------------
payment and performance of the obligations of the Company and any Subsidiary
(which Subsidiary is also an obligor under this Indenture, the Securities, a

                                      -10-





Guarantee or other Senior Indebtedness or Pari Passu Indebtedness, as the case
may be, whether as a borrower or guarantor) under this Indenture, the
Securities, the Guarantees or any other Indebtedness ranking senior to or pari
passu with the Securities; provided, that this provision shall not prohibit the
repayment by any Subsidiary of any Loans of which the Company is the Holder.

                                   ARTICLE II

                                EVENTS OF DEFAULT

                  Section 2.01 Events of Default. If after the date of issuance
                               ------------------
of this Loan (i) an Event of Default has occurred under this Indenture or (ii)
an "event of default" (as defined) has occurred under any other Indebtedness of
the Company or any Subsidiary, then (x) in the event the Maker is (A) a
Subsidiary which is not a Guarantor or (B) a Guarantor in the case where the
Holder is the Company, all amounts owing under the Loans hereunder shall be
immediately due and payable to the Holder, (y) in the event the Maker is the
Company, the amounts owing under the Loans hereunder shall not be due and
payable at any time and shall not be paid and (z) in the event the Maker is a
Guarantor and the Holder is not the Company or any Guarantor, the amounts owing
under the Loans hereunder shall not be due and payable at any time and shall not
be paid; provided, however, that if such Event of Default or event of default
has been waived, cured or rescinded, such amounts shall no longer be due and
payable in the case of clause (x), and such amounts may be paid in the case of
clauses (y) and (z). If the Holder is a Subsidiary, then the Holder hereby
agrees that if it receives any payments or distributions on any Loan from the
Company or a Guarantor which is not payable pursuant to clause (y) or (z) of the
prior sentence after any Event of Default described in clauses (i) or (ii) or
any event of default described in clause (iii) above has occurred, is continuing
and has not been waived, cured or rescinded, it will pay over and deliver
forthwith to the Company or such Guarantor, as the case may be, all such
payments and distributions.

                                   ARTICLE III

                                  MISCELLANEOUS

                  Section 3.01 Amendments, Etc. No amendment or waiver of any
                               ----------------
provision of this intercompany note, or consent to depart herefrom is permitted
at any time for any reason, except with the consent of the Holders of not less
than a majority in aggregate principal amount of the Outstanding Securities.

                  Section 3.02 Assignment. No party to this Agreement may
                               -----------
assign, in whole or in part, any of its rights and obligations under this
intercompany note, except to its legal successor in interest.

                                      -11-




                  Section 3.03 Third Party Beneficiaries. The holders of the
                               --------------------------
Securities or any other Indebtedness ranking pari passu with or senior to, the
Securities or any Guarantees shall be third party beneficiaries to this
intercompany note and upon an Event of Default shall have the right to enforce
this intercompany note against the Company or any of its Subsidiaries.

                  Section 3.04 Headings. Article and Section headings in this
                               ---------
intercompany note are included for convenience of reference only and shall not
constitute a part of this intercompany note for any other purpose.

                  Section 3.05 Entire Agreement. This intercompany note sets
                               -----------------
forth the entire agreement of the parties with respect to its subject matter and
supersedes all previous understandings, written or oral, in respect thereof.

                  Section 3.06 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
                               --------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).

                  Section 3.07 Waivers. The Maker hereby waives presentment,
                               --------
demand for payment, notice of protest and all other demands and notices in
connection with the delivery, acceptance, performance or enforcement hereof.

                           By:
                               -----------------------------------------------

                BORROWINGS, MATURITIES, AND PAYMENTS OF PRINCIPAL



                  Amount of         Maturity of            Amount
                 Borrowing/         Borrowing/         Principal Paid         Unpaid Principal           Notation
Date              Principal          Principal           or Prepaid               Balance                 Made by
- ---------------------------------------------------------------------------------------------------------------------------

     


                                      -12-




                                                                      SCHEDULE I

                              Existing Indebtedness

                                      None


                                     - 1 -





                                                                       EXHIBIT A

                            REGULATION S CERTIFICATE

            (For transfers pursuant toss.307(a)(i) of the Indenture)

U.S. Bank Trust National Association
100 Wall Street, 20th Floor
New York, New York 10005

           Re:  11% Senior Subordinated Notes due 2008 of Sonic Automotive, Inc.
                (the "Securities")
                 ------------------

         Reference is made to the Indenture, dated as of November 19, 2001, (the
"Indenture"), among Sonic Automotive, Inc., a Delaware corporation (the
"Company"), the Guarantors and U.S. Bank Trust National Association as Trustee.
Terms used herein and defined in the Indenture or in Regulation S or Rule 144
under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as
so defined.

         This certificate relates to US$____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):

                  CUSIP No(s). ___________________________

                  CERTIFICATE No(s). _____________________

         The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner."
The Specified Securities are represented by a Global Security and are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner.

         The Owner has requested that the Specified Securities be transferred to
a person (the "Transferee") who will take delivery in the form of a Regulation S
Global Security. In connection with such transfer, the Owner hereby certifies
that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 904 or Rule 144 under the Securities Act and with all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:

                           (1) Rule 904 Transfers.  If the transfer is
                               -------------------
                    being effected in accordance with Rule 904:



                                     - 1 -






                                    (A) the Owner is not a distributor of the
                           Securities, an affiliate of the Company or any such
                           distributor or a person acting on behalf of any of
                           the foregoing;

                                    (B) the offer of the Specified Securities
                           was not made to a person in the United States;

                                    (C) either:

                                         (i) at the time the buy order was
                                    originated, the Transferee was outside the
                                    United States or the Owner and any person
                                    acting on its behalf reasonably believed
                                    that the Transferee was outside the United
                                    States, or

                                        (ii) the transaction is being executed
                                    in, on or through the facilities of the
                                    Eurobond market, as regulated by the
                                    Association of International Bond Dealers,
                                    or another designated offshore securities
                                    market and neither the Owner nor any person
                                    acting on its behalf knows that the
                                    transaction has been prearranged with a
                                    buyer in the United States;

                                    (D)  no directed selling efforts have been
                           made in the United States by or on behalf of the
                           Owner or any affiliate thereof;

                                    (E) if the Owner is a dealer in securities
                           or has received a selling concession, fee or other
                           remuneration in respect of the Specified Securities,
                           and the transfer is to occur during the Restricted
                           Period, then the requirements of Rule 904(c)(1) have
                           been satisfied; and

                                    (F) the transaction is not part of a plan or
                           scheme to evade the registration requirements of the
                           Securities Act.

                           (2)  Rule 144 Transfers.  If the transfer is being
                                ------------------
                           effected pursuant to Rule 144:

                                    (A) the transfer is occurring after a
                           holding period of at least one year (computed in
                           accordance with paragraph (d) of Rule 144) has
                           elapsed since the Specified Securities were last
                           acquired from the Company or from an affiliate of the
                           Company, whichever is later, and is being effected in
                           accordance with the applicable amount, manner of sale
                           and notice requirements of Rule 144; or


                                     - 2 -






                                    (B) the transfer is occurring after a
                           holding period of at least two years has elapsed
                           since the Specified Securities were last acquired
                           from the Company or from an affiliate of the Company,
                           whichever is later, and the Owner is not, and during
                           the preceding three months has not been, an affiliate
                           of the Company.

         This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers.

Dated:

                         (Print the name of the Undersigned, as such term
                         is defined in the second paragraph of this
                         certificate.)

                         By:
                            -----------------------------
                            Name:
                            Title:

                         (If the Undersigned is a corporation, partnership or
                         fiduciary, the title of the person signing on behalf of
                         the Undersigned must be stated.)


                                     - 3 -






                                                                       EXHIBIT B

                        RESTRICTED SECURITIES CERTIFICATE

            (For transfers pursuant toss.307(a)(ii) of the Indenture)

U.S. Bank Trust National Association
100 Wall Street, 20th Floor
New York, New York 10005

            Re: 11% Senior Subordinated Notes due 2008 of Sonic Automotive, Inc.
                (the "Securities")
                 ---------------

         Reference is made to the Indenture, dated as of November 19, 2001, (the
"Indenture"), among Sonic Automotive, Inc., a Delaware corporation (the
"Company"), the Guarantors and U.S. Bank Trust National Association, as Trustee.
Terms used herein and defined in the Indenture or in Rule 144A or Rule 144 under
the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so
defined.

         This certificate relates to US$_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):

                  CUSIP No(s). ___________________________

                  ISIN No(s). If any. ____________________

                  CERTIFICATE No(s). _____________________

         The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
The Specified Securities are represented by a Global Security and are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner.

         The Owner has requested that the Specified Securities be transferred to
a person (the "Transferee") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with Rule
144A or Rule 144 under the Securities Act and all applicable securities laws of
the states of the United States and other jurisdictions. Accordingly, the Owner
hereby further certifies as follows:

                           (1) Rule 144A Transfers.  If the transfer is
                               --------------------
                       being effected in accordance with Rule 144A:

                                     -1-




                                    (A) the Specified Securities are being
                           transferred to a person that the Owner and any person
                           acting on its behalf reasonably believe is a
                           "qualified institutional buyer" within the meaning of
                           Rule 144A, acquiring for its own account or for the
                           account of a qualified institutional buyer; and

                                    (B) the Owner and any person acting on its
                           behalf have taken reasonable steps to ensure that the
                           Transferee is aware that the Owner may be relying on
                           Rule 144A in connection with the transfer; and

                           (2)   Rule 144 Transfers.  If the transfer is being
                                 ------------------
                       effected pursuant to Rule 144:

                                    (A) the transfer is occurring after a
                           holding period of at least one year (computed in
                           accordance with paragraph (d) of Rule 144) has
                           elapsed since the Specified Securities were last
                           acquired from the Company or from an affiliate of the
                           Company, whichever is later, and is being effected in
                           accordance with the applicable amount, manner of sale
                           and notice requirements of Rule 144; or

                                    (B) the transfer is occurring after a
                           holding period of at least two years has elapsed
                           since the Specified Securities were last acquired
                           from the Company or from an affiliate of the Company,
                           whichever is later, and the Owner is not, and during
                           the preceding three months has not been, an affiliate
                           of the Company.

         This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers.

Dated:

                        (Print the name of the Undersigned, as such term
                        is defined in the second paragraph of this
                        certificate.)

                        By:
                           ----------------------------------
                           Name:
                           Title:

                        (If the Undersigned is a corporation, partnership or
                        fiduciary, the title of the person signing on behalf of
                        the Undersigned must be stated.)


                                     - 2 -







                                                                       EXHIBIT C

                       UNRESTRICTED SECURITIES CERTIFICATE

          (For removal of Securities Act Legends pursuant toss.307(b))

U.S. Bank Trust National Association
100 Wall Street, 20th Floor
New York, New York 10005

           Re:  11% Senior Subordinated Notes due 2008 of Sonic Automotive, Inc.
                (the "Securities")
                ------------------

         Reference is made to the Indenture, dated as of November 19, 2001,
among Sonic Automotive, Inc., a Delaware corporation (the "Company"), the
Guarantors and U.S. Bank Trust Company, as Trustee. Terms used herein and
defined in the Indenture or in Rule 144 under the U.S. Securities Act of 1933
(the "Securities Act") are used herein as so defined.

         This certificate relates to US$_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):

                  CUSIP No(s). ___________________________

                  CERTIFICATE No(s). _____________________

         The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.

         The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Private Placement Legend pursuant to Section 307(b) of the
Indenture. In connection with such exchange, the Owner hereby certifies that the
exchange is occurring after a holding period of at least two years (computed in
accordance with paragraph (d) of Rule 144) has elapsed since the Specified
Securities were last acquired from the Company or from an affiliate of the
Company, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company. The Owner also
acknowledges that any future transfers of the Specified Securities must comply
with all applicable securities laws of the states of the United States and other
jurisdictions.


                                     - 1 -










         This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers.

Dated:

                          (Print the name of the Undersigned, as such term
                           is defined in the second  paragraph of this
                           certificate.)

                           By:
                                -------------------------------------
                           Name:
                           Title:

                           (If the Undersigned is a corporation, partnership or
                           fiduciary, the title of the person signing on behalf
                           of the Undersigned must be stated.)


                                     - 2 -






                                                                   APPENDIX I

                            [FORM OF TRANSFER NOTICE]

         FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

- ----------------------------------------------

- -------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
(Please print or typewrite name and address including zip code of assignee)


 ------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing


 ------------------------------------------------------------------------------
attorney to transfer such Security on the books of the Company with full power
of substitution in the premises.

                     [THE FOLLOWING PROVISION TO BE INCLUDED
                   ON ALL CERTIFICATES FOR SERIES C SECURITIES
                       EXCEPT PERMANENT OFFSHORE PHYSICAL
                                  CERTIFICATES]

         In connection with any transfer of this Security occurring prior to the
date which is the earlier of the date of an effective Registration Statement or
November 19, 2001, the undersigned confirms that without utilizing any general
solicitation or general advertising that:

                                   [Check One]

[  ] (a)    this Security is being transferred in compliance with
            the exemption from registration under the Securities Act of
            1933, as amended, provided by Rule 144A thereunder.

                                       or

                                    ---------


[  ] (b)    this Security is being transferred other than in
            accordance with (a) above and documents are being furnished
            which comply with the conditions of transfer set forth in this
            Security and the Indenture.

If none of the foregoing boxes is checked, the Trustee or other Security
Registrar shall not be obligated to register this Security in the name of any
Person other than the Holder hereof


                                     - 1 -














unless and until the conditions to any such transfer of registration set forth
herein and in Section 307 of the Indenture shall have been satisfied.

Date: _______________________


                                            ------------------------------------
                                            NOTICE: The signature to this
                                            assignment must correspond with the
                                            name as written upon the face of the
                                            within-mentioned instrument in every
                                            particular, without alteration or
                                            any change whatsoever.

Signature Guarantee: _____________________________

[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

         The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

Dated:
        --------------------  --------------------------------------------------
                              NOTICE: To be executed by an autho rized signatory



                                     - 2 -



                                                                 APPENDIX II

                         FORM OF TRANSFEREE CERTIFICATE

I or we assign and transfer this Security to:
- -------------------------------------------------------

Please insert social security or other identifying number of assignee
- ---------------------------------------------------------------------

- ---------------------------------------------------------------------

- ---------------------------------------------------------------------



Print or type name, address and zip code of assignee and irrevocably
appoint
        -------------------------------------------------------------

- ---------------------------------------------------------------------


[Agent], to transfer this Security on the books of the Company. The Agent may
substitute another to act for him.

Dated  ____________________       Signed
                                           ---------------------------------
(Sign exactly as name appears on the other side of this Security)





[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17 Ad-15]

                                     - i -

EX-4.11

                                                                    Exhibit 4.11

                               Merrill Lynch & Co.
                      Merrill Lynch, Pierce, Fenner & Smith
                                  Incorporated
                         Banc of America Securities LLC


                          REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the "Agreement") is made and entered into
this 19/th/ day of November, 2001, among Sonic Automotive, Inc., a Delaware
corporation (the "Company"), the guarantors set forth on the signature page
hereto (each a "Guarantor" and collectively, the "Guarantors"), Merrill Lynch,
Pierce, Fenner & Smith, Incorporated and Banc of America Securities LLC
(collectively, the "Initial Purchasers").

          This Agreement is made pursuant to the Purchase Agreement, dated
November 8, 2001 among the Company, the Guarantors and the Initial Purchasers
(the "Purchase Agreement"), which provides for the sale by the Company to the
Initial Purchasers of an aggregate of $75 million principal amount of the
Company's 11% Senior Subordinated Notes due 2008, Series C, and related
guarantees (collectively, the "Securities"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Company has agreed to
provide to the Initial Purchasers and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution of this Agreement
is a condition to the closing under the Purchase Agreement.

          In consideration of the foregoing, the parties hereto agree as
follows:

          1.  Definitions.
              -----------

          As used in this Agreement, the following capitalized defined terms
shall have the following meanings:

          "1933 Act" shall mean the Securities Act of 1933, as amended from time
           --------
     to time.

          "1934 Act" shall mean the Securities Exchange Act of l934, as amended
           --------
     from time to time.

          "Closing Date" shall mean the Closing Time as defined in the Purchase
           ------------
     Agreement.

          "Company" shall have the meaning set forth in the preamble and shall
           -------
     also include the Company's successors.



          "Depositary" shall mean The Depository Trust Company, or any other
           ----------
     depositary appointed by the Company, provided, however, that such
     depositary must have an address in the Borough of Manhattan, in the City of
     New York.

          "Exchange Offer" shall mean the exchange offer by the Company of
           --------------
     Exchange Securities for Registrable Securities or Original Securities
     pursuant to Section 2.1 hereof.

          "Exchange Offer Registration" shall mean a registration under the 1933
           ---------------------------
     Act effected pursuant to Section 2.1 hereof.

          "Exchange Offer Registration Statement" shall mean an exchange offer
           -------------------------------------
     registration statement on Form S-4 (or, if applicable, on another
     appropriate form), and all amendments and supplements to such registration
     statement, including the Prospectus contained therein, all exhibits thereto
     and all documents incorporated by reference therein.

          "Exchange Period" shall have the meaning set forth in Section 2.1
           ---------------
     hereof.

          "Exchange Securities" shall mean (i) the 11% Senior Subordinated Notes
           -------------------
     due 2008, Series D, issued by the Company and (ii) the related guarantees
     issued by the Guarantors, in each case under the Indenture containing terms
     identical to the Securities in all material respects (except for references
     to certain interest rate provisions, restrictions on transfers and
     restrictive legends), to be offered to (i) Holders of Securities in
     exchange for Registrable Securities and (ii) holders of Original Securities
     in exchange for Original Securities pursuant to the Exchange Offer.

          "Holder" shall mean an Initial Purchaser, for so long as it owns any
           ------
     Registrable Securities, and each of its successors, assigns and direct and
     indirect transferees who become registered owners of Registrable Securities
     under the Indenture and each Participating Broker-Dealer that holds
     Exchange Securities for so long as such Participating Broker-Dealer is
     required to deliver a prospectus meeting the requirements of the 1933 Act
     in connection with any resale of such Exchange Securities.

          "Indenture" shall mean the Indenture relating to the Securities, the
           ---------
     Exchange Securities and the Private Exchange Securities, dated as of
     November 19, 2001 between the Company and U.S. Bank Trust National
     Association, as trustee, as the same may be amended, supplemented, waived
     or otherwise modified from time to time in accordance with the terms
     thereof.

          "Initial Purchasers" shall have the meaning set forth in the preamble.
           ------------------

          "Majority Holders" shall mean the Holders of a majority of the
           ----------------
     aggregate principal amount of Outstanding (as defined in the Indenture)
     Registrable



     Securities; provided that whenever the consent or approval of Holders of a
                 --------
     specified percentage of Registrable Securities is required hereunder,
     Registrable Securities held by the Company and other obligors on the
     Securities or any Affiliate (as defined in the Indenture) of the Company
     shall be disregarded in determining whether such consent or approval was
     given by the Holders of such required percentage amount.

          "Original Indenture" shall mean the Indenture, dated as of July 1,
           ------------------
     1998, between the Company, U.S. Bank Trust National Association, as trustee
     and the Guarantors and Initial Purchasers named therein, as amended or
     supplemented from time to time, in accordance with the terms thereof.

          "Original Securities" shall mean the $125,000,000 11% Senior
           -------------------
     Subordinated Notes due 2008 of the Company and the related guarantees
     outstanding under the Original Indenture.

          "Participating Broker-Dealer" shall mean any of Merrill Lynch, Pierce,
           ---------------------------
     Fenner & Smith Incorporated ("Merrill Lynch"), Banc of America Securities
     LLC and any other broker-dealer which makes a market in the Securities and
     exchanges Registrable Securities in the Exchange Offer for Exchange
     Securities.

          "Person" shall mean an individual, partnership (general or limited),
           ------
     corporation, limited liability company, trust or unincorporated
     organization, or a government or agency or political subdivision thereof.

          "Private Exchange" shall have the meaning set forth in Section 2.1
           ----------------
     hereof.

          "Private Exchange Securities" shall have the meaning set forth in
           ---------------------------
     Section 2.1 hereof.

          "Prospectus" shall mean the prospectus included in a Registration
           ----------
     Statement, including any preliminary prospectus, and any such prospectus as
     amended or supplemented by any prospectus supplement, including any such
     prospectus supplement with respect to the terms of the offering of any
     portion of the Registrable Securities covered by a Shelf Registration
     Statement, and by all other amendments and supplements to a prospectus,
     including post-effective amendments, and in each case including all
     material incorporated by reference therein.

          "Purchase Agreement" shall have the meaning set forth in the preamble.
           ------------------

          "Registrable Securities" shall mean the Securities and, if issued, the
           ----------------------
     Private Exchange Securities; provided, however, that the Securities and, if
     issued, the Private Exchange Securities, shall cease to be Registrable
     Securities when (i) a Registration Statement with respect to such
     Securities and, if issued, such Private Exchange Securities, shall have
     been declared effective under the 1933 Act and



     such Securities or Private Exchange Securities, as the case may be, shall
     have been disposed of pursuant to such Registration Statement, (ii) such
     Securities and, if issued, such Private Exchange Securities have been sold
     to the public pursuant to Rule l44 (or any similar provision then in force,
     but not Rule 144A) under the 1933 Act, (iii) such Securities or Private
     Exchange Securities, as the case may be, shall have ceased to be
     outstanding or (iv) the Exchange Offer is consummated (except in the case
     of Securities purchased from the Company and continued to be held by the
     Initial Purchasers).

          "Registration Expenses" shall mean any and all expenses incident to
           ---------------------
     performance of or compliance by the Company with this Agreement, including
     without limitation: (i) all SEC, stock exchange or National Association of
     Securities Dealers, Inc. (the "NASD") registration and filing fees,
     including, if applicable, the fees and expenses of any "qualified
     independent underwriter" (and the reasonable fees and expenses of its
     counsel) that is required to be retained by any holder of Registrable
     Securities in accordance with the rules and regulations of the NASD, (ii)
     all fees and expenses incurred in connection with compliance with state
     securities or blue sky laws and compliance with the rules of the NASD
     (including reasonable fees and disbursements of counsel for any
     underwriters or Holders in connection with blue sky qualification of any of
     the Exchange Securities, Registrable Securities or Original Securities and
     any filings with the NASD), (iii) all expenses of any Persons in preparing
     or assisting in preparing, word processing, printing and distributing any
     Registration Statement, any Prospectus, any amendments or supplements
     thereto, any underwriting agreements, securities sales agreements and other
     documents relating to the performance of and compliance with this
     Agreement, (iv) all fees and expenses incurred in connection with the
     listing, if any, of any of the Registrable Securities or Original
     Securities on any securities exchange or exchanges, (v) all rating agency
     fees, (vi) the fees and disbursements of counsel for the Company and of the
     independent public accountants of the Company, including the expenses of
     any special audits or "cold comfort" letters required by or incident to
     such performance and compliance, (vii) the fees and expenses of the
     Trustee, and any escrow agent or custodian, (viii) the reasonable fees and
     expenses of the Initial Purchasers in connection with the Exchange Offer,
     including the reasonable fees and expenses of counsel to the Initial
     Purchasers in connection therewith, (ix) the reasonable fees and
     disbursements of Fried, Frank, Harris, Shriver & Jacobson, special counsel
     representing the Holders of Registrable Securities and (x) any fees and
     disbursements of the underwriters customarily required to be paid by
     issuers or sellers of securities and the fees and expenses of any special
     experts retained by the Company in connection with any Registration
     Statement, but excluding underwriting discounts and commissions and
     transfer taxes, if any, relating to the sale or disposition of Registrable
     Securities or Original Securities by a Holder.

          "Registration Statement" shall mean any registration statement of the
           ----------------------
     Company which covers any of the Exchange Securities, Registrable Securities
     or



     Original Securities pursuant to the provisions of this Agreement, and all
     amendments and supplements to any such Registration Statement, including
     post-effective amendments, in each case including the Prospectus contained
     therein, all exhibits thereto and all material incorporated by reference
     therein.

          "SEC" shall mean the Securities and Exchange Commission or any
           ---
     successor agency or government body performing the functions currently
     performed by the United States Securities and Exchange Commission.

          "Shelf Registration" shall mean a registration effected pursuant to
           ------------------
     Section 2.2 hereof.

          "Shelf Registration Statement" shall mean a "shelf" registration
           ----------------------------
     statement of the Company pursuant to the provisions of Section 2.2 of this
     Agreement which covers all of the Registrable Securities or all of the
     Private Exchange Securities on an appropriate form under Rule 415 under the
     1933 Act, or any similar rule that may be adopted by the SEC, and all
     amendments and supplements to such registration statement, including
     post-effective amendments, in each case including the Prospectus contained
     therein, all exhibits thereto and all material incorporated by reference
     therein.

          "Trustee" shall mean the trustee with respect to the Securities, the
           -------
     Exchange Securities and the Private Exchange Securities under the
     Indenture.

          2.  Registration Under the 1933 Act.
              -------------------------------

          2.1 Exchange Offer. The Company and the Guarantors shall, for the
              --------------
benefit of the Holders, at the Company's and the Guarantors' cost, use their
reasonable best efforts to (A) prepare and, as soon as practicable but not later
than 60 days following the Closing Date, file with the SEC an Exchange Offer
Registration Statement on an appropriate form under the 1933 Act with respect to
a proposed Exchange Offer and the issuance and delivery to the Holders, in
exchange for the Registrable Securities (other than Private Exchange Securities)
or Original Securities, of a like principal amount of Exchange Securities, (B)
to cause the Exchange Offer Registration Statement to be declared effective
under the 1933 Act within 135 days of the Closing Date, (C) keep the Exchange
Offer Registration Statement effective until the closing of the Exchange Offer
and (D) cause the Exchange Offer to be consummated not later than 165 days
following the Closing Date, provided, however, that the Company agrees that it
will not consummate the Exchange Offer until after it has made its February 1,
2001 interest payment. The Exchange Securities will be issued under the
Indenture. Upon the effectiveness of the Exchange Offer Registration Statement,
the Company and the Guarantors shall promptly commence the Exchange Offer, it
being the objective of such Exchange Offer to enable each Holder eligible and
electing to exchange Registrable Securities and each holder eligible and
electing to exchange Original Securities for Exchange Securities (assuming that
such Holder or holder (a) is not an affiliate of the Company within the meaning
of Rule 405 under the 1933 Act, (b) is not a broker-dealer



tendering Registrable Securities acquired directly from the Company for its own
account, (c) acquired the Exchange Securities in the ordinary course of such
Holder's or holder's business and (d) has no arrangements or understandings with
any Person to participate in the Exchange Offer for the purpose of distributing
the Exchange Securities) to transfer such Exchange Securities from and after
their receipt without any limitations or restrictions under the 1933 Act and
under state securities or blue sky laws.

               In connection with the Exchange Offer, the Company and the
Guarantors shall:

                      (a)    mail as promptly as practicable to each Holder and
each holder of Original Securities a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;

                      (b)    keep the Exchange Offer open for acceptance for a
period of not less than 30 calendar days after the date notice thereof is mailed
to the Holders and the holders of Original Securities (or longer if required by
applicable law) (such period referred to herein as the "Exchange Period");

                      (c)    utilize the services of the Depositary for the
Exchange Offer;

                      (d)    permit Holders and holders of Original Securities
to withdraw tendered Registrable Securities or Original Securities at any time
prior to 5:00 p.m. (Eastern Standard Time), on the last business day of the
Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of such
Holder or holder or Original Securities, the principal amount of Registrable
Securities or Original Securities delivered for exchange, and a statement that
such Holder or holder of Original Securities is withdrawing such party's
election to have such Securities exchanged;

                      (e)    notify each Holder that any Registrable Security
not tendered will remain outstanding and continue to accrue interest, but will
not retain any rights under this Agreement (except in the case of the Initial
Purchasers and Participating Broker-Dealers as provided herein); and

                      (f)    otherwise comply in all respects with all
applicable laws relating to the Exchange Offer.

               If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Securities acquired by them and having the status of an
unsold allotment in the initial distribution, the Company and the Guarantors
upon the request of any Initial Purchaser shall, simultaneously with the
delivery of the Exchange Securities in the Exchange Offer, issue and deliver to
such Initial Purchaser in exchange (the "Private Exchange") for the Securities
held by such Initial Purchaser, a like principal amount of debt securities of
the Company, guaranteed by the Guarantors on a senior basis, that are identical
(except that





such securities shall bear appropriate transfer restrictions) to the Exchange
Securities (the "Private Exchange Securities").

                      The Exchange Securities and the Private Exchange
Securities shall be issued under (i) the Indenture or (ii) an indenture
identical in all material respects to the Indenture and which, in either case,
has been qualified under the Trust Indenture Act of 1939, as amended (the
"TIA"), or is exempt from such qualification and shall provide that the Exchange
Securities shall not be subject to the transfer restrictions set forth in the
Indenture but that the Private Exchange Securities shall be subject to such
transfer restrictions. The Indenture or such indenture shall provide that the
Exchange Securities, the Private Exchange Securities and the Securities shall
vote and consent together on all matters as one class and that none of the
Exchange Securities, the Private Exchange Securities or the Securities will have
the right to vote or consent as a separate class on any matter. The Private
Exchange Securities shall be of the same series as and the Company and the
Guarantors shall use all commercially reasonable efforts to have the Private
Exchange Securities bear the same CUSIP number as the Exchange Securities.
Neither the Company nor any of the Guarantors shall have any liability under
this Agreement solely as a result of such Private Exchange Securities not
bearing the same CUSIP number as the Exchange Securities.

                      As soon as practicable after the close of the Exchange
Offer and/or the Private Exchange, the Company and the Guarantors shall:

                             (i)    accept for exchange all Registrable
                      Securities and Original Securities duly tendered and not
                      validly withdrawn pursuant to the Exchange Offer in
                      accordance with the terms of the Exchange Offer
                      Registration Statement and the letter of transmittal which
                      shall be an exhibit thereto;

                             (ii)   accept for exchange all Securities properly
                      tendered pursuant to the Private Exchange;

                             (iii)  deliver, or cause to be delivered, to the
                      Trustee for cancellation all Registrable Securities and
                      Original Securities so accepted for exchange; and

                             (iv)   cause the Trustee promptly to authenticate
                      and deliver Exchange Securities or Private Exchange
                      Securities, as the case may be, to each Holder of
                      Registrable Securities and each holder of Original
                      Securities so accepted for exchange in a principal amount
                      equal to the principal amount of the Registrable
                      Securities or Original Securities of such party so
                      accepted for exchange.

                      Interest on each Exchange Security and Private Exchange
Security will accrue from the last date on which interest was paid on the
Registrable Securities or Original Securities surrendered in exchange therefor
or, if no interest has been paid on the





Registrable Securities, from the date of original issuance. The Exchange Offer
and the Private Exchange shall not be subject to any conditions, other than (i)
that the Exchange Offer or the Private Exchange, or the making of any exchange
by a Holder, does not violate applicable law or any applicable interpretation of
the staff of the SEC, (ii) the due tendering of Registrable Securities in
accordance with the Exchange Offer and the Private Exchange, (iii) that each
Holder of Registrable Securities exchanged in the Exchange Offer shall have
represented that all Exchange Securities to be received by it shall be acquired
in the ordinary course of its business and that at the time of the consummation
of the Exchange Offer it shall have no arrangement or understanding with any
person to participate in the distribution (within the meaning of the 1933 Act)
of the Exchange Securities and shall have made such other representations as may
be reasonably necessary under applicable SEC rules, regulations or
interpretations to render the use of Form S-4 or other appropriate form under
the 1933 Act available, (iv) that the Exchange Offer will not be consummated
with respect to any Original Securities unless at least $50,000,000 in aggregate
face value of such Original Securities are tendered and not withdrawn during the
Exchange Period; provided, however, that the failure to achieve such threshold
will not prevent the consummation of the Exchange Offer with respect to any
Registrable Securities, and (v) that no action or proceeding shall have been
instituted or threatened in any court or by or before any governmental agency
with respect to the Exchange Offer or the Private Exchange which, in the
Company's and the Guarantors' judgment, would reasonably be expected to impair
the ability of the Company and the Guarantors to proceed with the Exchange Offer
or the Private Exchange. The Company and the Guarantors shall inform the Initial
Purchasers of the names and addresses of the Holders and holders of Original
Securities to whom the Exchange Offer is made, and the Initial Purchasers shall
have the right to contact such parties and otherwise facilitate the tender of
Registrable Securities in the Exchange Offer.

                      2.2    Shelf Registration. (i) If, because of any changes
                             ------------------
in law, SEC rules or regulations or applicable interpretations thereof by the
staff of the SEC, the Company and the Guarantors are not permitted to effect the
Exchange Offer as contemplated by Section 2.1 hereof, (ii) if for any other
reason the Exchange Offer Registration Statement is not declared effective
within 135 days following the original issue of the Registrable Securities or
the Exchange Offer is not consummated within 165 days after the original issue
of the Registrable Securities, (iii) upon the request of any of the Initial
Purchasers or (iv) if a Holder is not permitted by applicable law to participate
in the Exchange Offer or elects to participate in the Exchange Offer but does
not receive fully tradeable Exchange Securities pursuant to the Exchange Offer,
then in case of each of clauses (i) through (iv) the Company and the Guarantors
shall, at their cost:

                             (a) As promptly as practicable, file with the SEC,
                      and thereafter shall use their reasonable best efforts to
                      cause to be declared effective within 165 days after the
                      original issue of the Registrable Securities, a Shelf
                      Registration Statement relating to the offer and sale of
                      the Registrable Securities by the Holders from time to
                      time in accordance with the methods





                      of distribution elected by the Majority Holders
                      participating in the Shelf Registration and set forth in
                      such Shelf Registration Statement.

                             (b) Use their reasonable best efforts to keep the
                      Shelf Registration Statement continuously effective in
                      order to permit the Prospectus forming part thereof to be
                      usable by Holders for a period of two years from the date
                      the Shelf Registration Statement is declared effective by
                      the SEC, or for such shorter period that will terminate
                      when all Registrable Securities covered by the Shelf
                      Registration Statement have been sold pursuant to the
                      Shelf Registration Statement or cease to be outstanding or
                      otherwise to be Registrable Securities (the "Effectiveness
                      Period"); provided, however, that the Effectiveness Period
                      in respect of the Shelf Registration Statement shall be
                      extended to the extent required to permit dealers to
                      comply with the applicable prospectus delivery
                      requirements of Rule 174 under the 1933 Act and as
                      otherwise provided herein.

                             (c) Notwithstanding any other provisions hereof,
                      use their reasonable best efforts to ensure that (i) any
                      Shelf Registration Statement and any amendment thereto and
                      any Prospectus forming part thereof and any supplement
                      thereto complies in all material respects with the 1933
                      Act and the rules and regulations thereunder, (ii) any
                      Shelf Registration Statement and any amendment thereto
                      does not, when it becomes effective, contain an untrue
                      statement of a material fact or omit to state a material
                      fact required to be stated therein or necessary to make
                      the statements therein not misleading and (iii) any
                      Prospectus forming part of any Shelf Registration
                      Statement, and any supplement to such Prospectus (as
                      amended or supplemented from time to time), does not
                      include an untrue statement of a material fact or omit to
                      state a material fact necessary in order to make the
                      statements, in light of the circumstances under which they
                      were made, not misleading.

                      The Company and the Guarantors shall not permit any
securities other than Registrable Securities to be included in the Shelf
Registration Statement. The Company and the Guarantors further agree, if
necessary, to supplement or amend the Shelf Registration Statement, as required
by Section 3(b) below, and to furnish to the Holders of Registrable Securities
copies of any such supplement or amendment promptly after its being used or
filed with the SEC.

                      2.3    Expenses. The Company and the Guarantors shall pay
                             --------
all Registration Expenses in connection with the registration pursuant to
Section 2.1 or 2.2. Each Holder shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
such Holder's Registrable Securities pursuant to the Shelf Registration
Statement.






                      2.4.   Effectiveness. (a) The Company and the Guarantors
                             -------------
will be deemed not have used their reasonable best efforts to cause the Exchange
Offer Registration Statement or the Shelf Registration Statement, as the case
may be, to become, or to remain, effective during the requisite period if the
Company or any of the Guarantors voluntarily takes any action that would, or
omits to take any action which omission would, result in any such Registration
Statement not being declared effective or in the Holders of Registrable
Securities or the holders of Original Securities covered thereby not being able
to exchange or offer and sell such Registrable Securities or Original Securities
during that period as and to the extent contemplated hereby, unless such action
is required by applicable law.


                             (b)    An Exchange Offer Registration Statement
pursuant to Section 2.1 hereof or a Shelf Registration Statement pursuant to
Section 2.2 hereof will not be deemed to have become effective unless it has
been declared effective by the SEC; provided, however, that if, after it has
been declared effective, the offering of (i) Registrable Securities or Original
Securities pursuant to an Exchange Offer Registration Statement or (ii)
Registrable Securities pursuant to a Shelf Registration Statement is interfered
with by any stop order, injunction or other order or requirement of the SEC or
any other governmental agency or court, such Registration Statement will be
deemed not to have become effective during the period of such interference,
until the offering of such securities pursuant to such Registration Statement
may legally resume.

                      2.5    Interest. The Indenture executed in connection with
                             --------
the Securities will provide that in the event that either (a) the Exchange Offer
Registration Statement is not filed with the Commission on or prior to the 60th
calendar day following the date of original issue of the Securities, (b) the
Exchange Offer Registration Statement has not been declared effective on or
prior to the 135th calendar day following the date of original issue of the
Securities or (c) the Exchange Offer is not consummated or a Shelf Registration
Statement is not declared effective, in either case, on or prior to the 165th
calendar day following the date of original issue of the Securities (each such
event referred to in clauses (a) through (c) above, a "Registration Default"),
the interest rate borne by the Securities and the Private Exchange Securities
shall be increased ("Additional Interest") by one-quarter of one percent per
annum upon the occurrence of each Registration Default, which rate will increase
by one quarter of one percent each 90-day period that such Additional Interest
continues to accrue under any such circumstance, provided that the maximum
aggregate increase in the interest rate will in no event exceed one percent (1%)
per annum. Following the cure of all Registration Defaults the accrual of
Additional Interest will cease and the interest rate will revert to the original
rate.

                      If the Shelf Registration Statement is declared effective
but shall thereafter become unusable by the Holders for any reason, and the
aggregate number of days in any consecutive twelve-month period for which the
Shelf Registration Statement shall not be usable exceeds 30 days in the
aggregate, then the interest rate borne by the Securities and the Private
Exchange Securities (so long as the Private Exchange Securities have the status
of an unsold allotment at the time of the Exchange Offer) will be increased by






0.25% per annum of the principal amount of the Securities and the Private
Exchange Securities for the first 90-day period (or portion thereof) beginning
on the 31st such date that such Shelf Registration Statement ceases to be
usable, which rate shall be increased by an additional 0.25% per annum of the
principal amount of the Securities and the Private Exchange (so long as the
Private Exchange Securities have the status of an unsold allotment at the time
of the Exchange Offer) at the beginning of each subsequent 90-day period,
provided that the maximum aggregate increase in the interest rate will in no
event exceed one percent (1%) per annum. Any amounts payable under this
paragraph shall also be deemed "Additional Interest" for purposes of this
Agreement. Upon the Shelf Registration Statement once again becoming usable, the
interest rate borne by the Securities and the Private Exchange Securities will
be reduced to the original interest rate if the Company is otherwise in
compliance with this Agreement at such time. Additional Interest shall be
computed based on the actual number of days elapsed in each 90-day period in
which the Shelf Registration Statement is unusable.

                  The Company and the Guarantors shall notify the Trustee within
five business days after each and every date on which an event occurs in respect
of which Additional Interest is required to be paid (an "Event Date").
Additional Interest shall be paid by depositing with the Trustee, in trust, for
the benefit of the Holders of Registrable Securities, on or before the
applicable semiannual interest payment date, immediately available funds in sums
sufficient to pay the Additional Interest then due. The Additional Interest due
shall be payable on each interest payment date to the record Holder of
Securities and Private Exchange Securities entitled to receive the interest
payment to be paid on such date as set forth in the Indenture. Each obligation
to pay Additional Interest shall be deemed to accrue from and including the day
following the applicable Event Date.

                  3.   Registration Procedures.
                       -----------------------

                  In connection with the obligations of the Company and the
Guarantors with respect to Registration Statements pursuant to Sections 2.1 and
2.2 hereof, the Company and the Guarantors shall:

                  (a)  prepare and file with the SEC a Registration Statement,
within the relevant time period specified in Section 2, on the appropriate form
under the 1933 Act, which form (i) shall be selected by the Company and the
Guarantors, (ii) shall, in the case of a Shelf Registration, be available for
the sale of the Registrable Securities by the selling Holders thereof, (iii)
shall comply as to form in all material respects with the requirements of the
applicable form and include or incorporate by reference all financial statements
required by the SEC to be filed therewith or incorporated by reference therein,
and (iv) shall comply in all respects with the requirements of Regulation S-T
under the 1933 Act, and use their reasonable best efforts to cause such
Registration Statement to become effective and remain effective in accordance
with Section 2 hereof;






                  (b)  prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary
under applicable law to keep such Registration Statement effective for the
applicable period; and cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provision then in force) under the 1933 Act and comply with the
provisions of the 1933 Act, the 1934 Act and the rules and regulations
thereunder applicable to them with respect to the disposition of all securities
covered by each Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the selling
holders thereof (including sales by any Participating Broker-Dealer);

                  (c)  in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities, at least five business days prior to filing,
that a Shelf Registration Statement with respect to the Registrable Securities
is being filed and advising such Holders that the distribution of Registrable
Securities will be made in accordance with the method selected by the Majority
Holders participating in the Shelf Registration; (ii) furnish to each Holder of
Registrable Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits, in order to facilitate the public sale or
other disposition of the Registrable Securities; and (iii) hereby consent to the
use of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities in connection with the offering and
sale of the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;

                  (d)  in the case of a Shelf Registration, use their reasonable
best efforts to register or qualify the Registrable Securities under all
applicable state securities or "blue sky" laws of such jurisdictions as any
Holder of Registrable Securities covered by a Registration Statement and each
underwriter of an underwritten offering of Registrable Securities shall
reasonably request by the time the applicable Registration Statement is declared
effective by the SEC, and do any and all other acts and things which may be
reasonably necessary or advisable to enable each such Holder and underwriter to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that none of the Company and
the Guarantors shall be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), or (ii) take any action which
would subject it to general service of process or taxation in any such
jurisdiction where it is not then so subject;

                  (e)  notify promptly each Holder of Registrable Securities
under a Shelf Registration or any Participating Broker-Dealer who has notified
the Company and the Guarantors that it is utilizing the Exchange Offer
Registration Statement as provided in paragraph (f) below and, if requested by
such Holder or Participating Broker-Dealer,





confirm such advice in writing promptly (i) when a Registration Statement has
become effective and when any post-effective amendments and supplements thereto
become effective, (ii) of any request by the SEC or any state securities
authority for post-effective amendments and supplements to a Registration
Statement and Prospectus or for additional information after the Registration
Statement has become effective, (iii) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) in the case of a Shelf Registration, if, between the effective date of such
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company and the
Guarantors contained in any underwriting agreement, securities sales agreement
or other similar agreement, if any, relating to the offering cease to be true
and correct in all material respects, (v) of the happening of any event or the
discovery of any facts during the period a Shelf Registration Statement is
effective which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires the making
of any changes in such Registration Statement or Prospectus in order to make the
statements therein not misleading, (vi) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities or the Exchange Securities, as the case may be, for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (vii) of any determination by the Company that a post-effective
amendment to such Registration Statement would be appropriate;

                  (f)  (A) in the case of the Exchange Offer Registration
Statement (i) include in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution" which section shall be reasonably acceptable to
Merrill Lynch on behalf of the Participating Broker-Dealers, and which shall
contain a summary statement of the positions taken or policies made by the staff
of the SEC with respect to the potential "underwriter" status of any
broker-dealer that holds Registrable Securities or Original Securities acquired
for its own account as a result of market-making activities or other trading
activities and that will be the beneficial owner (as defined in Rule 13d-3
promulgated under the 1934 Act) of Exchange Securities to be received by such
broker-dealer in the Exchange Offer, whether such positions or policies have
been publicly disseminated by the staff of the SEC or such positions or
policies, in the reasonable judgment of Merrill Lynch on behalf of the
Participating Broker-Dealers and its counsel, represent the prevailing views of
the staff of the SEC, including a statement that any such broker-dealer who
receives Exchange Securities for Registrable Securities or Original Securities
pursuant to the Exchange Offer may be deemed a statutory underwriter and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Securities, (ii) furnish to each Participating
Broker-Dealer who has delivered to the Company the notice referred to in Section
3(e), without charge, as many copies of each Prospectus included in the Exchange
Offer Registration Statement, including any preliminary prospectus, and any
amendment or supplement thereto, as such Participating Broker-Dealer may
reasonably request, (iii) hereby consent





to the use of the Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto, by any Person subject to the
prospectus delivery requirements of the SEC, including all Participating
Broker-Dealers, in connection with the sale or transfer of the Exchange
Securities covered by the Prospectus or any amendment or supplement thereto, and
(iv) include in the transmittal letter or similar documentation to be executed
by an exchange offeree in order to participate in the Exchange Offer (x) the
following provision:

                  "If the exchange offeree is a broker-dealer holding
                  Registrable Securities or Original Securities acquired for its
                  own account as a result of market-making activities or other
                  trading activities, it will deliver a prospectus meeting the
                  requirements of the 1933 Act in connection with any resale of
                  Exchange Securities received in respect of such Registrable
                  Securities or Original Securities pursuant to the Exchange
                  Offer;" and

(y) a statement to the effect that by a broker-dealer making the acknowledgment
described in clause (x) and by delivering a Prospectus in connection with the
exchange of Registrable Securities, the broker-dealer will not be deemed to
admit that it is an underwriter within the meaning of the 1933 Act; and

                             (B)    in the case of any Exchange Offer
Registration Statement, the Company and the Guarantors agree to deliver to the
Initial Purchasers on behalf of the Participating Broker-Dealers upon the
effectiveness of the Exchange Offer Registration Statement (i) an opinion of
counsel or opinions of counsel substantially in the form attached hereto as
Exhibit A, (ii) officers' certificates substantially in the form customarily
delivered in a public offering of debt securities and (iii) a comfort letter or
comfort letters in customary form to the extent permitted by Statement on
Auditing Standards No. 72 of the American Institute of Certified Public
Accountants (or if such a comfort letter is not permitted, an agreed upon
procedures letter in customary form) from the Company's independent certified
public accountants (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements are, or are required to be, included in
the Registration Statement) at least as broad in scope and coverage as the
comfort letter or comfort letters delivered to the Initial Purchasers in
connection with the initial sale of the Securities to the Initial Purchasers;

                  (g)  (i) in the case of an Exchange Offer, furnish counsel for
the Initial Purchasers and (ii) in the case of a Shelf Registration, furnish
counsel for the Holders of Registrable Securities copies of any comment letters
received from the SEC or any other request by the SEC or any state securities
authority for amendments or supplements to a Registration Statement and
Prospectus or for additional information;

                  (h)  make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at the
earliest possible moment;





                  (i)  in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, and each underwriter, if any, without charge,
at least one conformed copy of each Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
(without documents incorporated therein by reference and all exhibits thereto,
unless requested);

                  (j)  in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and enable such Registrable Securities to
be in such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if any, may
reasonably request at least three business days prior to the closing of any sale
of Registrable Securities;

                  (k)  in the case of a Shelf Registration, upon the occurrence
of any event or the discovery of any facts, each as contemplated by Sections
3(e)(v) and 3(e)(vi) hereof, as promptly as practicable after the occurrence of
such an event, use their best efforts to prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Securities
or Participating Broker-Dealers, such Prospectus will not contain at the time of
such delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or will remain so
qualified. At such time as such public disclosure is otherwise made or the
Company determines that such disclosure is not necessary, in each case to
correct any misstatement of a material fact or to include any omitted material
fact, the Company agrees promptly to notify each Holder of such determination
and to furnish each Holder such number of copies of the Prospectus as amended or
supplemented, as such Holder may reasonably request;

                  (l)  in the case of a Shelf Registration, within a reasonable
time prior to the filing of any Registration Statement, any Prospectus, any
amendment to a Registration Statement or amendment or supplement to a Prospectus
or any document which is to be incorporated by reference into a Registration
Statement or a Prospectus after initial filing of a Registration Statement,
provide copies of such document to the Initial Purchasers on behalf of such
Holders; and make representatives of the Company and the Guarantors as shall be
reasonably requested by the Holders of Registrable Securities, or the Initial
Purchasers on behalf of such Holders, available for discussion of such document;

                  (m)  use their reasonable best efforts to obtain a CUSIP
number for all Exchange Securities, Private Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates for
the Exchange Securities, Private Exchange Securities




or the Registrable Securities, as the case may be, in a form eligible for
deposit with the Depositary;

                  (n)      (i) cause the Indenture to be qualified under the
TIA in connection with the registration of the Exchange Securities or
Registrable Securities, as the case may be, (ii) cooperate with the Trustee and
the Holders to effect such changes to the Indenture as may be required for the
Indenture to be so qualified in accordance with the terms of the TIA and (iii)
execute, and use their reasonable best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;

                  (o)      in the case of a Shelf Registration, enter into
agreements (including underwriting agreements) and take all other customary and
appropriate actions in order to expedite or facilitate the disposition of such
Registrable Securities and in such connection whether or not an underwriting
agreement is entered into and whether or not the registration is an underwritten
registration:

                           (i)   make such representations and warranties to the
                  Holders of such Registrable Securities and the underwriters,
                  if any, in form, substance and scope as are customarily made
                  by issuers to underwriters in similar underwritten offerings
                  as may be reasonably requested by them;

                           (ii)  obtain opinions of counsel to the Company and
                  the Guarantors and updates thereof (which counsel and opinions
                  (in form, scope and substance) shall be reasonably
                  satisfactory to the managing underwriters, if any, and the
                  holders of a majority in principal amount of the Registrable
                  Securities being sold) addressed to each selling Holder and
                  the underwriters, if any, covering the matters customarily
                  covered in opinions requested in sales of securities or
                  underwritten offerings and such other matters as may be
                  reasonably requested by such Holders and underwriters;

                           (iii) obtain "cold comfort" letters and updates
                  thereof from the Company's and the Guarantors' independent
                  certified public accountants (and, if necessary, any other
                  independent certified public accountants of any subsidiary of
                  the Company or of any business acquired by the Company for
                  which financial statements are, or are required to be,
                  included in the Registration Statement) addressed to the
                  underwriters, if any, and use reasonable efforts to have such
                  letter addressed to the selling Holders of Registrable
                  Securities (to the extent consistent with Statement on
                  Auditing Standards No. 72 of the American Institute of
                  Certified Public Accounts), such letters to be in customary
                  form and covering matters of the type customarily covered in
                  "cold comfort" letters to underwriters in connection with
                  similar underwritten offerings;





                           (iv) enter into a securities sales agreement with the
                  Holders and an agent of the Holders providing for, among other
                  things, the appointment of such agent for the selling Holders
                  for the purpose of soliciting purchases of Registrable
                  Securities, which agreement shall be in form, substance and
                  scope customary for similar offerings;

                           (v)  if an underwriting agreement is entered into,
                  cause the same to set forth indemnification provisions and
                  procedures substantially equivalent to the indemnification
                  provisions and procedures set forth in Section 4 hereof with
                  respect to the underwriters and all other parties to be
                  indemnified pursuant to said Section or, at the request of any
                  underwriters, in the form customarily provided to such
                  underwriters in similar types of transactions; provided such
                  underwriting agreement shall contain customary provisions
                  regarding indemnification of the Company and the Guarantors
                  with the respect to information provided by the underwriters;
                  and

                           (vi) deliver such documents and certificates as may
                  be reasonably requested and as are customarily delivered in
                  similar offerings to the Holders of a majority in principal
                  amount of the Registrable Securities being sold and the
                  managing underwriters, if any.

The above shall be done at (i) the effectiveness of such Registration Statement
(and each post-effective amendment thereto) and (ii) each closing under any
underwriting or similar agreement as and to the extent required thereunder. In
the case of any underwritten offering, the Company and the Guarantors shall
provide written notice to the Holders of all Registrable Securities of such
underwritten offering at least 15 days prior to the filing of a prospectus
supplement for such underwritten offering. Such notice shall (x) offer each such
Holder the right to participate in such underwritten offering, (y) specify a
date, which shall be no earlier than 10 days following the date of such notice,
by which such Holder must inform the Company of its intent to participate in
such underwritten offering and (z) include the instructions such Holder must
follow in order to participate in such underwritten offering;

                  (p) in the case of a Shelf Registration or if a Prospectus is
required to be delivered by any Participating Broker-Dealer in the case of an
Exchange Offer, make available for inspection by representatives of the Holders
of the Registrable Securities, any underwriters participating in any disposition
pursuant to a Shelf Registration Statement, any Participating Broker-Dealer and
any counsel or accountant retained by any of the foregoing, all financial and
other records, pertinent corporate documents and properties of the Company and
the Guarantors reasonably requested by any such persons, and cause the
respective officers, directors, employees, and any other agents of the Company
and the Guarantors to supply all information reasonably requested by any such
representative, underwriter, special counsel or accountant in connection with a
Registration Statement, and make such representatives of the Company and the




Guarantors available for discussion of such documents as shall be reasonably
requested by the Initial Purchasers;

                  (q) (i)  in the case of an Exchange Offer Registration
Statement, within a reasonable time prior to the filing of any Exchange Offer
Registration Statement, any Prospectus forming a part thereof, any amendment to
an Exchange Offer Registration Statement or amendment or supplement to such
Prospectus, provide copies of such document to the Initial Purchasers and to
counsel to both the Holders of Registrable Securities and the holders of
Original Securities and make such changes in any such document prior to the
filing thereof as the Initial Purchasers or counsel to the Holders of
Registrable Securities or the holders or Original Securities may reasonably
request and, except as otherwise required by applicable law, not file any such
document in a form to which the Initial Purchasers on behalf of the Holders of
Registrable Securities and the holders of Original Securities and counsel to the
Holders of Registrable Securities or the holders of Original Securities shall
not have previously been advised and furnished a copy of or to which the Initial
Purchasers on behalf of the Holders of Registrable Securities and the holders of
Original Securities or counsel to either the Holders of Registrable Securities
or the holders of Original Securities shall reasonably object, and make the
representatives of the Company and the Guarantors available for discussion of
such documents as shall be reasonably requested by the Initial Purchasers; and

                      (ii) in the case of a Shelf Registration, within a
reasonable time prior to filing any Shelf Registration Statement, any Prospectus
forming a part thereof, any amendment to such Shelf Registration Statement or
amendment or supplement to such Prospectus, provide copies of such document to
the Holders of Registrable Securities, to the Initial Purchasers, to counsel for
the Holders and to the underwriter or underwriters of an underwritten offering
of Registrable Securities, if any, make such changes in any such document prior
to the filing thereof as the Initial Purchasers, the counsel to the Holders or
the underwriter or underwriters reasonably request and not file any such
document in a form to which the Majority Holders, the Initial Purchasers on
behalf of the Holders of Registrable Securities, counsel for the Holders of
Registrable Securities or any underwriter shall not have previously been advised
and furnished a copy of or to which the Majority Holders, the Initial Purchasers
of behalf of the Holders of Registrable Securities, counsel to the Holders of
Registrable Securities or any underwriter shall reasonably object, and make the
representatives of the Company and the Guarantors available for discussion of
such document as shall be reasonably requested by the Holders of Registrable
Securities, the Initial Purchasers on behalf of such Holders, counsel for the
Holders of Registrable Securities or any underwriter.

                  (r) in the case of a Shelf Registration, use their reasonable
best efforts to cause all Registrable Securities to be listed on any securities
exchange on which similar debt securities issued by the Company are then listed
if requested by the Majority Holders, or if requested by the underwriter or
underwriters of an underwritten offering of Registrable Securities, if any;




                  (s) in the case of a Shelf Registration, use their reasonable
best efforts to cause the Registrable Securities to be rated by the appropriate
rating agencies, if so requested by the Majority Holders, or if requested by the
underwriter or underwriters of an underwritten offering of Registrable
Securities, if any;

                  (t) otherwise comply with all applicable rules and regulations
of the SEC and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering at least 12 months which shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 promulgated
thereunder;

                  (u) cooperate and assist in any filings required to be made
with the NASD and, in the case of a Shelf Registration, in the performance of
any due diligence investigation by any underwriter and its counsel (including
any "qualified independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD); and

                  (v) upon consummation of an Exchange Offer or a Private
Exchange, obtain (i) a customary opinion of counsel to the Company and the
Guarantors addressed to the Trustee for the benefit of all Holders of
Registrable Securities and holders of Original Securities participating in the
Exchange Offer or a Private Exchange, and which includes an opinion that (A)
each of the Company and the Guarantors has duly authorized, executed and
delivered the Exchange Securities and/or Private Exchange Securities, as
applicable, and the related indenture, and (B) each of the Exchange Securities
and related indenture constitute legal, valid and binding obligations of each of
the Company and the Guarantors, enforceable against the Company and the
Guarantors in accordance with its respective terms (with customary exceptions)
and (ii) an officers' certificate containing the certifications substantially
similar to those set forth in Section 5(c) of the Purchase Agreement.

                  In the case of a Shelf Registration Statement, the Company and
the Guarantors may (as a condition to such Holder's participation in the Shelf
Registration) require each Holder of Registrable Securities to furnish to the
Company and the Guarantors such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company and the Guarantors may from time to time reasonably request in writing.

                  In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from the Company and the Guarantors of
the happening of any event or the discovery of any facts, each of the kind
described in Section 3(e)(v) and 3(e)(vi) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to a Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by
the Company and the Guarantors, such Holder will deliver to the Company and the
Guarantors (at their expense) all copies in such Holder's possession, other than




permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.

                  In the event that the Company and the Guarantors fail to
effect the Exchange Offer or file any Shelf Registration Statement and maintain
the effectiveness of any Shelf Registration Statement as provided herein, the
Company and the Guarantors shall not file any Registration Statement with
respect to any securities (within the meaning of Section 2(1) of the 1933 Act)
of the Company and the Guarantors other than Registrable Securities.

                  If any of the Registrable Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Registrable Securities
included in such offering and shall be acceptable to the Company and the
Guarantors. No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.

                  4.    Indemnification; Contribution.
                        -----------------------------

                  (a)   The Company and the Guarantors, jointly and severally,
agree to indemnify and hold harmless the Initial Purchasers, each Holder, each
Participating Broker-Dealer, each Person who participates as an underwriter (any
such Person being an "Underwriter") and each Person, if any, who controls any
Holder or Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:

                        (i)  against any and all loss, liability, claim, damage
                  and expense whatsoever, as incurred, arising out of any
                  untrue statement or alleged untrue statement of a material
                  fact contained in any Registration Statement (or any
                  amendment or supplement thereto) pursuant to which Exchange
                  Securities or Registrable Securities were registered under
                  the 1933 Act, including all documents incorporated therein
                  by reference, or the omission or alleged omission therefrom of
                  a material fact required to be stated therein or necessary to
                  make the statements therein not misleading, or arising out of
                  any untrue statement or alleged untrue statement of a material
                  fact contained in any Prospectus (or any amendment or
                  supplement thereto) or the omission or alleged omission
                  therefrom of a material fact necessary in order to make the
                  statements therein, in the light of the circumstances under
                  which they were made, not misleading;

                        (ii) against any and all loss, liability, claim, damage
                  and expense whatsoever, as incurred, to the extent of the
                  aggregate amount paid in





               settlement of any litigation, or any investigation or proceeding
               by any governmental agency or body, commenced or threatened, or
               of any claim whatsoever based upon any such untrue statement or
               omission, or any such alleged untrue statement or omission;
               provided that (subject to Section 4(d) below) any such settlement
               is effected with the written consent of the Company and the
               Guarantors; and

                    (iii) against any and all expense whatsoever, as incurred
               (including the fees and disbursements of counsel chosen by any
               indemnified party), reasonably incurred in investigating,
               preparing or defending against any litigation, or any
               investigation or proceeding by any governmental agency or body,
               commenced or threatened, or any claim whatsoever based upon any
               such untrue statement or omission, or any such alleged untrue
               statement or omission, to the extent that any such expense is not
               paid under subparagraph (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
- --------  -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company and the
Guarantors by the Holder, Participating Broker-Dealer or Underwriter expressly
for use in a Registration Statement (or any amendment thereto) or any Prospectus
(or any amendment or supplement thereto).

               (b) Each Holder severally, but not jointly, agrees to indemnify
and hold harmless the Company, the Guarantors, the Initial Purchasers, each
Underwriter and the other selling Holders, and each of their respective
directors and officers, and each Person, if any, who controls the Company, the
Guarantors, the Initial Purchasers, any Underwriter or any other selling Holder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 4(a) hereof, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus included therein (or any amendment or supplement thereto) in reliance
upon and in conformity with written information with respect to such Holder
furnished to the Company by such Holder expressly for use in the Shelf
Registration Statement (or any amendment thereto) or such Prospectus (or any
amendment or supplement thereto); provided, however, that no such Holder shall
be liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Registrable Securities pursuant to such
Shelf Registration Statement.

               (c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but
failure so to notify an indemnifying party shall not relieve such indemnifying
party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not





relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. An indemnifying party may participate at its own
expense in the defense of such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 4 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.

                  (d) If at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.

                  (e) If the indemnification provided for in this Section 4 is
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the Company and the Guarantors on
the one hand and the Holders and the Initial Purchasers each on the other hand
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

         The relative fault of the Company and the Guarantors on the one hand
and the Holders and the Initial Purchasers each on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company and the
Guarantors, the Holders or the Initial





Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

     The Company, the Guarantors, the Holders and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this Section
4 were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 4. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
4 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

     Notwithstanding the provisions of this Section 4, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities sold by it were offered exceeds the amount
of any damages which such Initial Purchaser has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.

     No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

     For purposes of this Section 4, each Person, if any, who controls an
Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Initial Purchaser or Holder, and each director of the Company and such
Guarantor, as the case may be, and each Person, if any, who controls the Company
and such Guarantor, as the case may be, within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The Initial Purchasers' respective obligations to
contribute pursuant to this Section 4 are several in proportion to the principal
amount of Securities set forth opposite their respective names in Schedule B to
the Purchase Agreement and not joint.

          5.    Miscellaneous.
                -------------

          5.1   Rule 144 and Rule 144A. For so long as the Company is subject to
the reporting requirements of Section 13 or 15 of the 1934 Act, the Company and
the Guarantors covenant that they will file the reports required to be filed by
them under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules
and regulations adopted by the SEC thereunder. If the Company ceases to be so
required to file such reports, the Company and the Guarantors covenant that they
will upon the request of any Holder of Registrable Securities (a) make publicly
available such information as is necessary to permit sales pursuant to Rule 144
under the 1933 Act, (b) deliver such





information to a prospective purchaser as is necessary to permit sales pursuant
to Rule 144A under the 1933 Act and it will take such further action as any
Holder of Registrable Securities may reasonably request, and (c) take such
further action that is reasonable in the circumstances, in each case, to the
extent required from time to time to enable such Holder to sell its Registrable
Securities without registration under the 1933 Act within the limitation of the
exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may
be amended from time to time, or (iii) any similar rules or regulations
hereafter adopted by the SEC. Upon the request of any Holder of Registrable
Securities, the Company and the Guarantors will deliver to such Holder a written
statement as to whether they have complied with such requirements.

     5.2  No Inconsistent Agreements. The Company and the Guarantors have not
          --------------------------
entered into and the Company and the Guarantors will not after the date of this
Agreement enter into any agreement which is inconsistent with the rights granted
to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with the rights granted to the holders of
the Company's and the Guarantor's other issued and outstanding securities under
any such agreements.

     5.3  Amendments and Waivers. The provisions of this Agreement, including
          ----------------------
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company and the Guarantors have obtained the written consent of
Holders of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure.

     5.4  Notices. All notices and other communications provided for or
          -------
permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (a) if to a Holder, at the most current address given by such Holder to
the Company and the Guarantors by means of a notice given in accordance with the
provisions of this Section 5.4, which address initially is the address set forth
in the Purchase Agreement with respect to the Initial Purchasers; and (b) if to
the Company and the Guarantors, initially at the Company's address set forth in
the Purchase Agreement, and thereafter at such other address of which notice is
given in accordance with the provisions of this Section 5.4.

     All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; two business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt is acknowledged, if telecopied; and on the next
business day if timely delivered to an air courier guaranteeing overnight
delivery.





                  Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee
under the Indenture, at the address specified in such Indenture.

                  5.5   Successor and Assigns. This Agreement shall inure to the
                        ---------------------
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
                                        --------
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.

                  5.6   Third Party Beneficiaries. The Initial Purchasers (even
                        -------------------------
if the Initial Purchasers are not Holders of Registrable Securities) shall be
third party beneficiaries to the agreements made hereunder between the Company
and the Guarantors, on the one hand, and the Holders, on the other hand, and
shall have the right to enforce such agreements directly to the extent they deem
such enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder. Each Holder of Registrable Securities shall be a third party
beneficiary to the agreements made under this Registration Rights Agreement
between the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, and shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights hereunder.

                  5.7.  Specific Enforcement. Without limiting the remedies
                        --------------------
available to the Initial Purchasers and the Holders, the Company and the
Guarantors acknowledge that any failure by the Company and the Guarantors to
comply with their obligations under Sections 2.1 through 2.4 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it would not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's and the Guarantor's obligations
under Sections 2.1 through 2.4 hereof.

                  5.8.  Restriction on Resales. Until the expiration of two
                        ----------------------
years after the original issuance of the Securities and the Guarantees, the
Company and the Guarantors will not, and will cause their "affiliates" (as such
term is defined in Rule 144(a)(1) under the 1933 Act) not to, resell any
Securities and Guarantees which are "restricted securities" (as such term is
defined under Rule 144(a)(3) under the 1933 Act) that have been reacquired by
any of them and shall immediately upon any purchase of any such




Securities and Guarantees submit such Securities and Guarantees to the Trustee
for cancellation.

     5.9  Counterparts. This Agreement may be executed in any number of
          ------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     5.10 Headings. The headings in this Agreement are for convenience of
          --------
reference only and shall not limit or otherwise affect the meaning hereof.

     5.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
          -------------
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.

     5.12 Severability. In the event that any one or more of the provisions
          ------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                                       SONIC AUTOMOTIVE, INC.


                                       By: /s/ Theodore M. Wright
                                           ---------------------------------
                                           Name:  Theodore M. Wright
                                           Title: Vice President, Treasurer and
                                              Chief Financial Officer

     The Guarantors:

     AUTOBAHN, INC. (a California corporation)
     CAPITOL CHEVROLET AND IMPORTS, INC. (an Alabama corporation)
     COBB PONTIAC CADILLAC, INC. (an Alabama corporation)
     FA SERVICE CORPORATION (a California corporation)
     FAA AUTO FACTORY, INC. (a California corporation)
     FAA BEVERLY HILLS, INC. (a California corporation)
     FAA CAPITOL F, INC. (a California corporation)
     FAA CAPITOL N, INC. (a California corporation)
     FAA CONCORD H, INC. (a California corporation)
     FAA CONCORD N, INC. (a California corporation)
     FAA CONCORD T, INC. (a California corporation)
     FAA DUBLIN N, INC. (a California corporation)
     FAA DUBLIN VWD, INC. (a California corporation)
     FAA HOLDING CORP. (a California corporation)
     FAA LAS VEGAS H, INC. (a Nevada corporation)
     FAA MARIN D, INC. (a California corporation)
     FAA MARIN F, INC. (a California corporation)
     FAA MARIN LR, INC. (a California corporation)
     FAA POWAY D, INC. (a California corporation)
     FAA POWAY G, INC. (a California corporation)
     FAA POWAY H, INC. (a California corporation)
     FAA POWAY T, INC. (a California corporation)
     FAA SAN BRUNO, INC. (a California corporation)
     FAA SANTA MONICA V, INC. (a California corporation)
     FAA SERRAMONTE H, INC. (a California corporation)
     FAA SERRAMONTE L, INC. (a California corporation)
     FAA SERRAMONTE, INC. (a California corporation)
     FAA STEVENS CREEK, INC. (a California corporation)
     FAA TORRANCE CPJ, INC. (a California corporation)
     FIRSTAMERICA AUTOMOTIVE, INC. (a Delaware corporation)
     FORT MILL CHRYSLER-PLYMOUTH-DODGE INC. (a South Carolina corporation)
     FORT MILL FORD, INC. (a South Carolina corporation)
     FRANCISCAN MOTORS, INC. (a California corporation)
     FREEDOM FORD, INC. (a Florida corporation)
     FRONTIER OLDSMOBILE-CADILLAC, INC. (a North Carolina corporation)
     HMC FINANCE ALABAMA, INC. (an Alabama corporation)
     KRAMER MOTORS INCORPORATED (a California corporation)
     LAWRENCE MARSHALL CHEVROLET, LLC (a Delaware limited liability company)
     LAWRENCE MARSHALL CHEVROLET, L.P. (a Texas limited partnership)
     L DEALERSHIP GROUP, INC. (a Texas corporation)
     MARCUS DAVID CORPORATION (a North Carolina corporation)




  PHILPOTT MOTORS, LTD. (a Texas limited partnership)
  RIVERSIDE NISSAN, INC. (an  Oklahoma corporation)
  ROYAL MOTOR COMPANY, INC. (an Alabama corporation)
  SANTA CLARA IMPORTED CARS, INC. (a California corporation)
  SMART NISSAN, INC. (a California corporation)
  SONIC AUTOMOTIVE - BONDESEN, INC. (a Florida corporation)
  SONIC AUTOMOTIVE OF CHATTANOOGA, LLC (a Tennessee limited liability company)
  SONIC AUTOMOTIVE-CLEARWATER, INC. (a Florida corporation)
  SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER, INC. (a Florida corporation)
  SONIC AUTOMOTIVE F&I, LLC (a Nevada limited liability company)
  SONIC AUTOMOTIVE OF GEORGIA, INC. (a Georgia corporation)
  SONIC AUTOMOTIVE OF NASHVILLE, LLC (a Tennessee limited liability company)
  SONIC AUTOMOTIVE OF NEVADA, INC. (a Nevada corporation)
  SONIC AUTOMOTIVE SERVICING COMPANY, LLC (a Nevada limited liability company)
  SONIC AUTOMOTIVE OF TENNESSEE, INC. (a Tennessee corporation)
  SONIC AUTOMOTIVE OF TEXAS, L.P. (a Texas limited partnership)
  SONIC AUTOMOTIVE WEST, LLC (a Nevada limited liability company)
  SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC. (a Florida corporation)
  SONIC AUTOMOTIVE-1400 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
  SONIC AUTOMOTIVE-1455 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
  SONIC AUTOMOTIVE-1495 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
  SONIC AUTOMOTIVE-1500 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
  SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC. (a Florida corporation)
  SONIC AUTOMOTIVE - 1720 MASON AVE., DB, LLC (a Florida limited liability
      company)
  SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC. (a Florida corporation)
  SONIC AUTOMOTIVE - 21699 U.S. HWY 19 N., INC. (a Florida corporation)
  SONIC AUTOMOTIVE - 241 RIDGEWOOD AVE., HH, INC. (a Florida corporation)
  SONIC AUTOMOTIVE 2424 LAURENS RD., GREENVILLE, INC. (a South Carolina
      corporation)
  SONIC AUTOMOTIVE - 2490 SOUTH LEE HIGHWAY, LLC (a Tennessee limited liability
      company),
  SONIC AUTOMOTIVE 2752 LAURENS RD., GREENVILLE, INC. (a South Carolina
  corporation)
  SONIC AUTOMOTIVE - 3401 N. MAIN, TX, L.P. (a Texas limited partnership)
  SONIC AUTOMOTIVE-3700 WEST BROAD STREET, COLUMBUS, INC. (an Ohio corporation)
  SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC. (a Florida corporation)
  SONIC AUTOMOTIVE-4000 WEST BROAD STREET, COLUMBUS, INC. (an Ohio corporation)
  SONIC AUTOMOTIVE - 4701 I-10 EAST, TX, L.P. (a Texas limited partnership)
  SONIC AUTOMOTIVE - 5221 I-10 EAST, TX, L.P. (a Texas limited partnership)
  SONIC AUTOMOTIVE  5260 PEACHTREE INDUSTRIAL BLVD., LLC (a Georgia limited
      liability company)
  SONIC AUTOMOTIVE-5585 PEACHTREE INDUSTRIAL BLVD., LLC (a Georgia limited
      liability company),
  SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC. (a Florida corporation)
  SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE, LLC (a Tennessee limited
      liability company)
  SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE, NC, LLC (a North Carolina limited
      liability company)
  SONIC - BETHANY H, INC. (an Oklahoma corporation)
  SONIC - 2185 CHAPMAN RD., CHATTANOOGA, LLC (a Tennessee limited liability
      company)
  SONIC - BUENA PARK H, INC. (a California corporation)
  SONIC - CAMP FORD, L.P. (a Texas limited partnership)
  SONIC - CAPITAL CHEVROLET, INC. (an Ohio corporation)
  SONIC - CARROLLTON V, L.P. (a Texas limited partnership)
  SONIC CHRYSLER-PLYMOUTH-JEEP, LLC (a North Carolina limited liability company)
  SONIC - CLASSIC DODGE, INC. (an Alabama corporation)
  SONIC - COAST CADILLAC, INC. (a California corporation)
  SONIC DODGE, LLC (a North Carolina limited liability company)
  SONIC DEVELOPMENT, LLC (a North Carolina limited liability company)
  SONIC - FM AUTOMOTIVE, LLC (a Florida limited liability company)



 SONIC - FM, INC. (a Florida corporation)
 SONIC - FM NISSAN, INC. (a Florida corporation)
 SONIC - FM VW, INC. (a Florida corporation)
 SONIC - FORT WORTH T, L.P. (a Texas limited partnership)
 SONIC - FREELAND, INC. (a Florida corporation)
 SONIC - GLOBAL IMPORTS, L.P. (a Georgia limited partnership)
 SONIC-GLOVER, INC. (an Oklahoma corporation)
 SONIC - HARBOR CITY H, INC. (a California corporation)
 SONIC - HOUSTON V, L.P. (a Texas limited partnership)
 SONIC - INTEGRITY DODGE LV, LLC (a Nevada limited liability company)
 SONIC - LAS VEGAS C EAST, LLC (a Nevada limited liability company)
 SONIC - LAS VEGAS C WEST, LLC (a Nevada limited liability company)
 SONIC - LLOYD NISSAN, INC. (a Florida corporation)
 SONIC - LLOYD PONTIAC - CADILLAC, INC. (a Florida corporation)
 SONIC - LUTE RILEY, L. P. (a Texas limited partnership)
 SONIC - MANHATTAN FAIRFAX, INC. (a Virginia corporation)
 SONIC - MANHATTAN WALDORF, INC. (a Maryland corporation)
 SONIC-MONTGOMERY FLM, INC. (an Alabama corporation)
 SONIC - NEWSOME CHEVROLET WORLD, INC. (a South Carolina corporation)
 SONIC - NEWSOME OF FLORENCE, INC. (a South Carolina corporation)
 SONIC - NORTH CHARLESTON, INC. (a South Carolina corporation)
 SONIC - NORTH CHARLESTON DODGE, INC. (a South Carolina corporation)
 SONIC - PARK PLACE A, L.P. (a Texas limited partnership) (formerly Sonic -
    Dallas Auto Factory, L.P.)
 SONIC PEACHTREE INDUSTRIAL BLVD., L.P. (a Georgia limited partnership)
 SONIC - READING, L.P. (a Texas limited partnership)
 SONIC RESOURCES, INC. (a Nevada corporation)
 SONIC - RICHARDSON F, L.P. (a Texas limited partnership)
 SONIC-RIVERSIDE, INC. (an Oklahoma corporation)
 SONIC - RIVERSIDE AUTO FACTORY, INC. (an Oklahoma corporation)
 SONIC - ROCKVILLE IMPORTS, INC. (a Maryland corporation)
 SONIC - ROCKVILLE MOTORS, INC. (a Maryland corporation)
 SONIC - SAM WHITE NISSAN, L.P. (a Texas limited partnership)
 SONIC - SHOTTENKIRK, INC. (a Florida corporation)
 SONIC - STEVENS CREEK B, INC. (a California corporation) (formerly
    known as Don Lucas International, Inc.)
 SONIC - SUPERIOR OLDSMOBILE, LLC (a Tennessee limited liability company)
 SONIC OF TEXAS, INC. (a Texas corporation)
 SONIC-VOLVO LV, LLC (a Nevada limited liability company)
 SONIC - WEST COVINA T, INC. (a California corporation)
 SONIC - WEST RENO CHEVROLET, INC. (an Oklahoma corporation)
 SONIC - WILLIAMS BUICK, INC. (an Alabama corporation)
 SONIC - WILLIAMS CADILLAC, INC. (an Alabama corporation)
 SONIC - WILLIAMS IMPORTS, INC. (an Alabama corporation)
 SONIC - WILLIAMS MOTORS, LLC (an Alabama limited liability company)
 SPEEDWAY CHEVROLET, INC. (an Oklahoma corporation)
 SRE ALABAMA - 2, LLC (an Alabama limited liability company)
 SRE ALABAMA - 3, LLC (an Alabama limited liability company)
 SREALESTATE ARIZONA - 1, LLC (an Arizona limited liability company)
 SREALESTATE ARIZONA - 2, LLC (an Arizona limited liability company)
 SREALESTATE ARIZONA - 3, LLC (an Arizona limited liability company)
 SREALESTATE ARIZONA - 4, LLC (an Arizona limited liability company)
 SRE FLORIDA - 1, LLC (a Florida limited liability company)
 SRE FLORIDA - 2, LLC (a Florida limited liability company)
 SRE FLORIDA - 3, LLC (a Florida limited liability company)
 SRE GEORGIA - 1, L.P. (a Georgia limited liability partnership)
 SRE GEORGIA - 2, L.P. (a Georgia limited liability partnership)
 SRE GEORGIA - 3, L.P. (a Georgia limited liability partnership)



  SRE HOLDING, LLC (a North Carolina limited liability company)
  SRE NEVADA - 1, LLC (a Nevada limited liability company)
  SRE NEVADA - 2, LLC (a Nevada limited liability company)
  SRE NEVADA - 3, LLC (a Nevada limited liability company)
  SRE SOUTH CAROLINA - 2, LLC (a South Carolina limited liability company)
  SRE TENNESSEE - 1, LLC (a Tennessee limited liability company)
  SRE TENNESSEE - 2, LLC (a Tennessee limited liability company)
  SRE TENNESSEE - 3, LLC (a Tennessee limited liability company)
  SRE TEXAS - 1, L.P. (a Texas limited partnership)
  SRE TEXAS - 2, L.P. (a Texas limited partnership)
  SRE TEXAS - 3, L.P. (a Texas limited partnership)
  SRE VIRGINIA - 1, LLC (a Virginia limited liability company)
  STEVENS CREEK CADILLAC, INC. (a California corporation)
  TRANSCAR LEASING, INC. (a California corporation)
  TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC (a Tennessee limited liability
    company]
  TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF ROCK HILL, INC. (a South Carolina
    corporation)
  TOWN AND COUNTRY FORD, INCORPORATED (a North Carolina corporation)
  TOWN AND COUNTRY FORD OF CLEVELAND, LLC (a Tennessee limited liability
    company)
  TOWN AND COUNTRY JAGUAR, LLC (a Tennessee limited liability company)
  VILLAGE IMPORTED CARS, INC. (a Maryland corporation)
  WINDWARD, INC. (a Hawaii corporation)



  By:  /s/ Theodore M. Wright
      ---------------------------------------
      Name: Theodore M. Wright
      Title: Vice President, Treasurer and
             Chief Financial Officer



Confirmed and accepted as
 of the date first above
 written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
            INCORPORATED

BANC OF AMERICA SECURITIES LLC

BY:  MERRILL LYNCH, PIERCE, FENNER & SMITH
                 INCORPORATED

By:  /s/ signature illegible
    --------------------------------------------------------
    Name:
    Title:





                                                                       Exhibit A
                                                                       ---------

                           Form of Opinion of Counsel
                           --------------------------

Merrily Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
North Tower
World Financial Center
New York, New York 10281

Ladies and Gentlemen:

         We have acted as counsel for Sonic Automotive, Inc., a Delaware
corporation (the "Company") and its subsidiaries (as "Guarantors" as defined in
the Registration Rights Agreement), in connection with the issuance and sale by
the Company to the Initial Purchasers (as defined below) of $75,000,000
aggregate principal amount of 11% Senior Subordinated Notes due 2008 (the
"Notes") of the Company pursuant to and in accordance with the terms of a the
Purchase Agreement dated as of November 8, 2001 (the "Purchase Agreement")
entered into among the Company, the Guarantors, Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Banc of America Securities LLC (collectively, the
"Initial Purchasers") and the filing by the Company and the Guarantors of an
Exchange Offer Registration Statement (the "Registration Statement") in
connection with an Exchange Offer to be effected pursuant to the Registration
Rights Agreement (the "Registration Rights Agreement"), dated as of November 19,
2001 between the Company, the Guarantors and the Initial Purchasers. This
opinion is furnished to you pursuant to Section 3(f)(B) of the Registration
Rights Agreement. Unless otherwise defined herein, capitalized terms used in
this opinion that are defined in the Registration Rights Agreement are used
herein as so defined.

         We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. In rendering this opinion, as to
all matters of fact relevant to this opinion, we have assumed the completeness
and accuracy of, and are relying solely upon, the representations and warranties
of the Company and the Guarantors set forth in the Purchase Agreement and the
statements set forth in certificates of public officials and officers of the
Company and the Guarantors, without making any independent investigation or
inquiry with respect to the completeness or accuracy of such representations,
warranties or statements, other than a review of the certificate of
incorporation, by-laws and relevant minute books of the Company and the
Guarantors.

         Based on and subject to the foregoing, we are of the opinion that:



         1.   The Exchange Securities (including the Guarantees thereof) have
been duly authorized, executed and delivered by the Company and the Guarantors,
as the case may be.

         2.   The Exchange Offer Registration Statement and the Prospectus
(other than the financial statements, notes or schedules thereto and other
financial data and supplemental schedules included or incorporated by reference
therein or omitted therefrom and the Form T-1, as to which such counsel need
express no opinion), comply as to form in all material respects with the
requirements of the 1933 Act and the applicable rules and regulations
promulgated under the 1933 Act.

         3.   We have participated with you and your counsel in the preparation
of the Registration Statement and the Prospectus and in the course thereof have
had discussions with representatives of the Initial Purchasers, officers and
other representatives of the Company and the Company's accountants, the
Company's independent public accountants, during which the contents of the
Registration Statement and the Prospectus were discussed. We have not, however,
independently verified and are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus. In the course of
such participation, no facts have come to our attention that would lead us to
believe that the Registration Statement (except for financial statements and
schedules and other financial data included therein as to which we make no
statement) contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any amendment or
supplement thereto (except for financial statements and schedules and other
financial data included therein, as to which such counsel need make no
statement), at the time the Prospectus was issued, at the time any such amended
or supplemented Prospectus was issued or at the Closing Time, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

     This opinion is being furnished to you solely for your benefit in
connection with the transactions contemplated by the Registration Rights
Agreement, and may not be used for any other purpose or relied upon by any
person other than you. Except with



our prior written consent, the opinions herein expressed are not to be used,
circulated, quoted or otherwise referred to in connection with any transactions
other than those contemplated by the Registration Rights Agreement by or to any
other person.

                                                     Very truly yours,

EX-4.12

                                                                    Exhibit 4.12
================================================================================

                SONIC AUTOMOTIVE, INC. (a Delaware corporation)
                       The Guarantors Listed on Schedule A

                                   $75,000,000

                     11% Senior Subordinated Notes due 2008

                               PURCHASE AGREEMENT
                               ------------------

                             Dated: November 8, 2001

================================================================================






                                                                          
PURCHASE AGREEMENT .........................................................   2

SECTION 1.    Representations and Warranties................................   3
              ------------------------------

(a)    Representations and Warranties by the Company and the Guarantors ....   3

      (i)     Similar Offerings.............................................   4
              -----------------

      (ii)    Offering Memorandum ..........................................   4
              -------------------

      (iii)   Independent Accountants.......................................   4
              -----------------------

      (iv)    Financial Statements..........................................   4
              --------------------

      (v)     No Material Adverse Change in Business .......................   4
              --------------------------------------

      (vi)    Good Standing of the Company .................................   5
              ----------------------------

      (vii)   Subsidiaries .................................................   5
              ------------

      (viii)  Capitalization ...............................................   6
              --------------

      (ix)    Authorization of Agreements ..................................   6
              ---------------------------

      (x)     Authorization of the Indenture ...............................   6
              ------------------------------

      (xi)    Authorization of the Securities, the Guarantees and
              ---------------------------------------------------
              the Exchange Securities ......................................   6
              -----------------------

      (xii)   Description of the Securities, the Guarantees, the
              --------------------------------------------------
              Indenture, the Registration Rights Agreement and the
              ----------------------------------------------------
              Exchange Securities ..........................................   7
              -------------------

      (xiii)  Absence of Defaults and Conflicts ............................   7
              ---------------------------------

      (xiv)   Absence of Labor Disputes ....................................   8
              -------------------------

      (xv)    Absence of Proceedings .......................................   8
              ----------------------

      (xvi)   Possession of Intellectual Property ..........................   9
              -----------------------------------

      (xvii)  Absence of Further Requirements ..............................   9
              -------------------------------

      (xviii) Possession of Licenses and Permits ...........................   9
              ----------------------------------

      (xix)   Title to Property ............................................  10
              -----------------

      (xx)    Tax Returns ..................................................  10
              -----------

      (xxi)   Insurance ....................................................  11
              ---------

      (xxii)  Solvency .....................................................  11
              --------

      (xxiii) Stabilization or Manipulation ................................  11
              -----------------------------



                                      -i-



                                                                           
      (xxiv)   Related Party Transactions ..................................  11
               --------------------------

      (xxv)    Suppliers....................................................  11
               ---------

      (xxvi)   Environmental Laws ..........................................  12
               ------------------

      (xxvii)  Registration Rights .........................................  12
               -------------------

      (xxviii) Accounting Controls .........................................  12
               -------------------

      (xxix)   Investment Company Act ......................................  13
               ----------------------

      (xxx)    Rule 144A Eligibility .......................................  13
               ---------------------

      (xxxi)   No General Solicitation .....................................  13
               -----------------------

      (xxxii)  No Registration Required ....................................  13
               ------------------------

      (xxxiii) PORTAL ......................................................  13
               ------

      (xxxiv)  Franchise Agreements ........................................  13
               --------------------

      (xxxv)   Smith Subordination Agreement ...............................  14
               -----------------------------

  (b) Officer's Certificates ...............................................  14

SECTION 2.     Sale and Delivery to Initial Purchasers; Closing ............  14
               ------------------------------------------------

  (a) Securities and Guarantees ............................................  14

  (b) Payment ..............................................................  14

  (c) Qualified Institutional Buyer ........................................  15

  (d) Denominations; Registration ..........................................  15

SECTION 3.     Covenants of the Company and the Guarantors .................  15
               -------------------------------------------

  (a) Offering Memorandum ..................................................  15

  (b) Notice and Effect of Material Events .................................  15

  (c) Amendment to Offering Memorandum and Supplements .....................  16

  (d) Qualification of Securities and Guarantees for Offer and Sale ........  16

  (e) Exchange Offer .......................................................  16

  (f) Integration ..........................................................  17



                                      -ii-



                                                                           
  (g)   Rating of Securities ...............................................  17

  (h)   Rule 144A Information ..............................................  17

  (i)   Restriction on Resales .............................................  17

  (j)   Use of Proceeds ....................................................  17

  (k)   Restriction on Sale of Securities ..................................  18

  (l)   DTC Clearance ......................................................  18

  (m)   Legends. ...........................................................  18

  (n)   Interim Financial Statements .......................................  18

  (o)   Periodic Reports ...................................................  18

SECTION 4.  Payment of Expenses ............................................  19
            -------------------

  (a)   Expenses ...........................................................  19

  (b)   Termination of Agreement ...........................................  19

SECTION 5.   Conditions of Initial Purchasers' Obligations .................  19
             ---------------------------------------------

  (a)   Opinion of Counsel for the Company and the Guarantors ..............  20

  (b)   Opinion of Counsel for the Initial Purchasers ......................  20

  (c)   Officers' Certificate ..............................................  20

  (d)   Accountants' Letters and Consents ..................................  21

  (e)   Maintenance of Rating ..............................................  21

  (f)   PORTAL .............................................................  21

  (g)   Chief Financial Officer's Certificate ..............................  21

  (h)   Registration Rights Agreement and Indenture ........................  21

  (i)   Manufacturers' Consents ............................................  22

  (j)   Lenders' Consents ..................................................  22



                                      -iii-



                                                                          
    (k)     Additional Documents ...........................................  22

    (l)     Termination of Agreement .......................................  22

SECTION 6.     Indemnification .............................................  22
               ---------------

    (a)     Indemnification of Initial Purchasers ..........................  22

    (b)     Indemnification of Company, Guarantors, and Directors ..........  23

    (c)     Actions against Parties;  Notification .........................  24

    (d)     Settlement without Consent if Failure to Reimburse .............  24

SECTION 7.     Contribution ................................................  24
               ------------

SECTION 8.     Representations, Warranties and Agreements to Survive
               -----------------------------------------------------
               Delivery ....................................................  26
               --------

SECTION 9.     Termination of Agreement ....................................  26
               ------------------------

    (a)    Termination; General ............................................  26

    (b)    Liabilities .....................................................  27

SECTION 10.  Default by One or More of the Initial Purchasers ..............  27
             ------------------------------------------------

SECTION 11.  Notices .......................................................  28
             -------

SECTION 12.  Parties .......................................................  28
             -------

SECTION 13.  Governing Law and Time ........................................  28
             ----------------------

SECTION 14.  General Provisions ............................................  29
             ------------------

SECTION 15.  Partial Unenforceability ......................................  29
             ------------------------

SECTION 16.  Effect of Headings ............................................  29
             ------------------



Schedule A--Subsidiaries which are Guarantors
Schedule B--Initial Purchaser Amounts
Schedule C--2% Subsidiaries
Schedule D--Securities

                                      -iv-



                                   $75,000,000

                     11% Senior Subordinated Notes due 2008

                 SONIC AUTOMOTIVE, INC. (a Delaware corporation)
                       The Guarantors Listed on Schedule A

                                       -1-



                               PURCHASE AGREEMENT

                                                                November 8, 2001

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
Banc of America Securities LLC

c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
North Tower
World Financial Center
New York, New York 10281

Ladies and Gentlemen:

         Sonic Automotive, Inc., a Delaware corporation (the "Company"), and
each of the Guarantors listed on Schedule A hereto (the "Guarantors") confirm
their respective agreements with Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and Banc of America Securities LLC (the "Initial
Purchasers"), (which term shall also include any initial purchaser substituted
as hereinafter provided in Section 10 hereof), for whom Merrill Lynch is acting
as representative (in such capacity, the "Representative"), with respect to (i)
the issue and sale by the Company and the purchase by the Initial Purchasers,
acting severally and not jointly, of the respective principal amounts set forth
in Schedule B of $75,000,000 aggregate principal amount of the Company's 11%
Senior Subordinated Notes due 2008 (the "Securities") and (ii) the issue and
sale by the Guarantors and the purchase by the Initial Purchasers, acting
severally and not jointly of the guarantees (the "Guarantees") of the Company's
obligations under the Securities. The Securities and the Guarantees are to be
issued pursuant to an indenture dated as of November 19, 2001 (the "Indenture")
among the Company, the Guarantors and U.S. Bank Trust National Association, as
trustee (the "Trustee"). Securities issued in book-entry form will be issued to
Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant to a
letter agreement, to be dated as of the Closing Time (as defined in Section
2(b)) (the "DTC Agreement"), among the Company, the Trustee and DTC.

         The Company and the Guarantors understand that the Initial Purchasers
propose to make an offering of the Securities (together with the related
Guarantees) on the terms and in the manner set forth herein and agree that the
Initial Purchasers may resell, subject to the conditions set forth herein, all
or a portion of the Securities and the Guarantees to purchasers ("Subsequent
Purchasers") at any time after the date of this Agreement. The Securities and
the Guarantees are to be offered and sold through the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "1933 Act"),
in reliance upon exemptions therefrom. Pursuant to the terms of the Securities,
the Guarantees and the Indenture, investors that acquire Securities

                                       -2-



and Guarantees may only resell or otherwise transfer such Securities and
Guarantees if such Securities and Guarantees are hereafter registered under the
1933 Act or if an exemption from the registration requirements of the 1933 Act
is available (including the exemption afforded by Rule 144A ("Rule 144A")
pursuant to the rules and regulations promulgated under the 1933 Act by the
Securities and Exchange Commission (the "Commission")).

         The Company and the Guarantors have prepared and will deliver to each
Initial Purchaser by November 16, 2001 (by overnight courier), copies of a final
offering memorandum dated November 8, 2001 (the "Final Offering Memorandum"), to
be used by such Initial Purchaser in connection with its solicitation of,
purchases of, or offering of the Securities and the Guarantees. "Offering
Memorandum" means, with respect to any date or time referred to in this
Agreement, all offering memoranda (whether the Final Offering Memorandum, or any
amendment or supplement to such document), including exhibits thereto and any
documents incorporated therein by reference, which has been prepared and
delivered by the Company and the Guarantors to the Initial Purchasers in
connection with their solicitation of, purchases of, or offering of the
Securities and the Guarantees.

         All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which are incorporated by reference in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Offering Memorandum.

         The holders of the Securities and the Guarantees will be entitled to
the benefits of the registration rights agreement to be dated as of the Closing
Time (the "Registration Rights Agreement"), among the Company, the Guarantors
and the Initial Purchasers, pursuant to which the Company and the Guarantors
will agree among other things, to file, as soon as practicable after the Closing
Time but in any event within 60 days of the Closing Time, a registration
statement with the Commission registering the Exchange Securities (as defined in
the Registration Rights Agreement and including the securities exchanged for the
Original Securities (as defined below)) under the 1933 Act and to offer to
exchange the Company's existing $125,000,000 11% Senior Subordinated Notes due
2008 (the "Original Securities") for an equal principal amount of Exchange
Securities.

         SECTION 1.  Representations and Warranties.
                     ------------------------------

         (a)   Representations and Warranties by the Company and the Guarantors.
The Company and each of the Guarantors, jointly and severally, represent and
warrant to the Initial Purchasers as of the date hereof and as of the Closing
Time referred to in Section 2(b) hereof, and agrees with each Initial Purchaser
as follows:


                                       -3-



                  (i)   Similar Offerings. The Company and the Guarantors have
                        -----------------
         not, directly or indirectly, solicited any offer to buy or offered to
         sell, and will not, directly or indirectly, solicit any offer to buy or
         offer to sell, in the United States or to any United States citizen or
         resident, any security which is or would be integrated with the sale of
         the Securities and the Guarantees in a manner that would require the
         Securities or the Guarantees to be registered under the 1933 Act.

                  (ii)  Offering Memorandum. The Offering Memorandum does not,
                        -------------------
         and at the Closing Time will not, include an untrue statement of a
         material fact or omit to state a material fact necessary in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading; provided, that this
                                               --------
         representation, warranty and agreement shall not apply to statements in
         or omissions from the Offering Memorandum made in reliance upon and in
         conformity with information furnished to the Company and the Guarantors
         in writing by any Initial Purchaser through Merrill Lynch expressly for
         use in the Offering Memorandum.

                  (iii) Independent Accountants. The accountants who certified
                        -----------------------
         the financial statements (which term as used in this Agreement includes
         the notes related thereto) and supporting schedules (of (i) the Company
         and (ii) its Subsidiaries (as defined below in Section (a)(vii))
         included in the Offering Memorandum are independent certified public
         accountants within the meaning of Regulation S-X under the 1933 Act
         with respect to the Company, the Guarantors and their respective
         Subsidiaries.

                  (iv)  Financial Statements. The financial statements of the
                        --------------------
         Company, together with the related schedules and notes, included in the
         Offering Memorandum present fairly the financial position of the
         Company and its consolidated Subsidiaries at the dates indicated and
         the combined balance sheets, statements of income, statements of
         stockholders' equity and statements of cash flows of the Company and
         its consolidated Subsidiaries for the periods specified; said financial
         statements have been prepared in conformity with United States
         generally accepted accounting principles ("GAAP") applied on a
         consistent basis throughout the periods involved. The summary financial
         information included in the Offering Memorandum presents fairly the
         information shown therein and have been compiled on a basis consistent
         with that of the audited financial statements included in the Offering
         Memorandum. There are no pro forma financial statements and other pro
         forma financial information (including the summary pro forma financial
         information) of the Company, its Subsidiaries and entities acquired or
         to be acquired by the Company or its Subsidiaries and the related notes
         thereto which would be required to be included in the Offering
         Memorandum if the Offering Memorandum were required to comply with the
         requirements of the 1933 Act for a Form S-3 registration statement and
         securities sold pursuant thereto.

                  (v)   No Material Adverse Change in Business. Since the
                        --------------------------------------
respective dates as of which information is given in the Offering Memorandum,
except as otherwise stated therein, (A) there has been no material adverse
change in the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (B) there have been no transactions entered into,

                                       -4-



         or liabilities or obligations incurred, by the Company or any of its
         Subsidiaries, other than those in the ordinary course of business,
         which are material with respect to the Company and its Subsidiaries
         considered as one enterprise, and (C) there has been no dividend or
         distribution of any kind declared, paid or made by the Company on any
         class of its capital stock.

                  (vi)   Good Standing of the Company. The Company has been duly
                         ----------------------------
         organized and is validly existing as a corporation in good standing
         under the laws of the State of Delaware and has corporate power and
         authority to own, lease and operate its properties and to conduct its
         business as described in the Offering Memorandum and to enter into and
         perform its obligations under this Agreement, the Registration Rights
         Agreement, the Indenture, the Securities, the Exchange Securities, and
         the DTC Agreement and to enter into and consummate all the transactions
         in connection therewith as contemplated in the Offering Memorandum; and
         the Company is duly qualified as a foreign corporation to transact
         business and is in good standing in each other jurisdiction in which
         such qualification is required, whether by reason of the ownership or
         leasing of property or the conduct of business, except where the
         failure so to qualify or to be in good standing would not result in a
         Material Adverse Effect.

                  (vii)  Subsidiaries. Each subsidiary of the Company that is a
                         ------------
         Guarantor (each a "Subsidiary" and collectively the "Subsidiaries") is
         listed on Schedule A attached hereto. Each Subsidiary is a corporation,
         limited liability company or limited partnership duly organized, as the
         case may be, validly existing and in good standing under the laws of
         the jurisdiction of its organization, has corporate, limited liability
         company or limited partnership, as the case may be, power and authority
         to own, lease and operate its properties and to conduct its business as
         described in the Offering Memorandum and is duly qualified as a foreign
         corporation to transact business and is in good standing in each
         jurisdiction in which such qualification is required, whether by reason
         of the ownership or leasing of property or the conduct of business,
         except where the failure so to qualify or to be in good standing would
         not result in a Material Adverse Effect; except as otherwise disclosed
         in the Offering Memorandum, all of the issued and outstanding capital
         stock, membership interests or partnership interests, as the case may
         be, of each such Subsidiary have been duly authorized and validly
         issued, is fully paid and non-assessable and is owned by the Company,
         directly or through the Subsidiaries, free and clear of any security
         interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
         the outstanding shares of capital stock of the Subsidiaries was issued
         in violation of any preemptive or similar rights arising by operation
         of law, or under the charter or by-laws of any Subsidiary or under any
         agreement to which the Company or any Subsidiary is a party. Except as
         set forth on Schedule C, none of the Guarantors or any other Subsidiary
         of the Company produced or accounted for more than 2% of the Company's
         total revenues for the six months ended June 30, 2001 (the "Significant
         Subsidiaries").


                  (viii) Capitalization. The authorized, issued and outstanding
                         --------------
         capital stock of the Company is as set forth in the Offering Memorandum
         in the column entitled "Actual" under the caption "Capitalization"
         (except for subsequent issuances, if any, pursuant to employee benefit
         plans referred to in the Offering Memorandum or pursuant to the

                                       -5-




         exercise of convertible securities or options referred to in the
         Offering Memorandum and subsequent purchases of the Company's Class A
         Common Stock, par value $0.01 per share). The shares of issued and
         outstanding capital stock of the Company have been duly authorized and
         validly issued and are fully paid and non-assessable; and except as
         disclosed in the Offering Memorandum, none of the outstanding shares of
         capital stock of the Company was issued in violation of the preemptive
         or other similar rights of any securityholder of the Company arising by
         operation of law, under the charter or by-laws of the Company, under
         any agreement to which the Company or any of the Subsidiaries is a
         party or otherwise.

                  (ix) Authorization of Agreements. This Agreement and the
                       ---------------------------
         Registration Rights Agreement have each been duly authorized by the
         Company and each of the Guarantors. This Agreement has been, and as of
         the Closing Time the Registration Rights Agreement will have been, duly
         executed and delivered by the Company and each of the Guarantors. Upon
         the execution and delivery thereof by the Company and each of the
         Guarantors, the Registration Rights Agreement will constitute a valid
         and binding obligation of the Company and each of the Guarantors,
         enforceable against the Company and each of the Guarantors in
         accordance with its terms. The DTC Agreement has been duly authorized
         by the Company; as of the Closing Time, the DTC Agreement will have
         been duly executed and delivered by the Company; and, upon the
         execution and delivery thereof by the Company, the DTC Agreement will
         constitute a valid and binding obligation of the Company, enforceable
         against the Company in accordance with its terms.

                  (x)  Authorization of the Indenture. The Indenture has been
                       ------------------------------
         duly authorized by the Company and each of the Guarantors and, at the
         Closing Time, will have been duly executed and delivered by the Company
         and each of the Guarantors and will constitute a valid and binding
         agreement of the Company and each of the Guarantors, enforceable
         against the Company and each of the Guarantors in accordance with its
         terms.

                  (xi) Authorization of the Securities, the Guarantees and the
                       -------------------------------------------------------
                  Exchange Securities. The Securities have been duly authorized
                  -------------------
         by the Company and, at the Closing Time, will have been duly executed
         by the Company and, when authenticated in the manner provided for in
         the Indenture and delivered against payment of the purchase price
         therefor, will constitute valid and binding obligations of the
         Company, enforceable against the Company in accordance with their
         terms and will be in the form contemplated by, and entitled to the
         benefits of, the Indenture. The Guarantees have been duly authorized
         by each of the Guarantors and, at the Closing Time, will have been
         duly executed by each of the Guarantors and, when authenticated in the
         manner provided for in the Indenture and delivered against payment of
         the purchase price therefor, will constitute valid and binding
         obligations of each of the Guarantors, enforceable against each of the
         Guarantors in accordance with their terms, and will be in the form
         contemplated by, and entitled to the benefits of, the Indenture. The
         Exchange Securities, which shall include any securities which may be
         issued in exchange for the Original Securities (as defined in the
         Registration Rights Agreement) have been duly authorized by the
         Company and each

                                       -6-





          of the Guarantors and, when executed and authenticated and issued and
          delivered by the Company and each of the Guarantors in exchange for
          the Securities and the Original Securities and, in each case, the
          related Guarantees pursuant to the Exchange Offer (as defined in the
          Registration Rights Agreement), will constitute valid and binding
          obligations of the Company and each of the Guarantors.

               (xii)  Description of the Securities, the Guarantees, the
                      --------------------------------------------------
               Indenture, the Registration Rights Agreement and the Exchange
               -------------------------------------------------------------
               Securities. The Securities, the Guarantees, the Indenture, the
               ----------
          Registration Rights Agreement, the Company's floor plan facilities,
          credit facilities and mortgage facilities conform and will conform in
          all material respects to the respective statements relating thereto
          contained in the Offering Memorandum and will be in substantially the
          respective forms previously delivered to the Initial Purchasers. The
          Exchange Securities will conform in all material respects to the
          statements relating thereto contained in the Offering Memorandum and
          the Registration Statement (as defined in the Registration Rights
          Agreement) at the time it becomes effective. There are no contracts or
          documents which are required to be described or referred to in a
          registration statement on Form S-1 under the 1933 Act which have not
          been described or referred to in the Offering Memorandum. The terms of
          the Notes and the Original Securities are identical.

               (xiii) Absence of Defaults and Conflicts. (1) Except as disclosed
                      ---------------------------------
          in the Offering Memorandum, neither the Company nor any of the
          Subsidiaries is in violation of its charter or by-laws or in default
          in the performance or observance of any obligation, agreement,
          covenant or condition contained in any contract, indenture, mortgage,
          deed of trust, loan or credit agreement, note, lease or other
          agreement or instrument to which the Company or any of the
          Subsidiaries is a party or by which any of them may be bound, or to
          which any of the property or assets of the Company or any of the
          Subsidiaries is subject (collectively, "Agreements and Instruments")
          or has violated or is in violation of any applicable law, statute,
          rule, regulation, judgment, order, writ or decree of any government,
          government instrumentality or court, domestic or foreign, having
          jurisdiction over the Company or any of the Subsidiaries or any of
          their assets, properties or operations, except in each case for such
          defaults or violations that would not result in a Material Adverse
          Effect. (2) Except as disclosed in the Offering Memorandum, the
          execution, delivery and performance of this Agreement, the
          Registration Rights Agreement, the Indenture, the DTC Agreement, the
          Securities, the Guarantees, the Exchange Securities and any other
          agreement or instrument entered into or issued or to be entered into
          or issued by the Company or any of the Guarantors in connection with
          the transactions contemplated hereby or thereby or in the Offering
          Memorandum or in connection with the consummation of the transactions
          contemplated herein and in the Offering Memorandum (including the
          issuance and sale of the Securities and the Guarantees and the use of
          the proceeds from the sale of the Securities (together with the
          related Guarantees as described in the Offering Memorandum under the
          caption "Use of Proceeds"), the exchange of the Securities and the
          Original Securities for Exchange Securities and compliance by the
          Company and the Guarantors with their respective obligations
          hereunder) have been duly authorized by all necessary corporate,
          limited

                                       -7-




          liability company or partnership action and do not and will not,
          whether with or without the giving of notice or passage of time or
          both, conflict with or constitute a breach of, or default or a
          Repayment Event (as defined below) under, or result in the creation or
          imposition of any lien, charge or encumbrance upon any property or
          assets of the Company or any of the Subsidiaries (other than existing
          liens on properties being acquired in the pending acquisitions)
          pursuant to, the Agreements and Instruments, nor will such action
          result in any violation of the provisions of the charter or by-laws of
          the Company or any of the Subsidiaries or any applicable law, statute,
          rule, regulation, judgment, order, writ or decree of any government,
          government instrumentality or court, domestic or foreign, having
          jurisdiction over the Company or any of the Subsidiaries or any of
          their assets, properties or operations. As used herein, a "Repayment
          Event" means any event or condition which gives the holder of any
          note, debenture or other evidence of indebtedness (or any person
          acting on such holder's behalf) the right to require the repurchase,
          redemption or repayment of all or a portion of such indebtedness by
          the Company or any of the Subsidiaries.

               (xiv) Absence of Labor Disputes. No material labor dispute with
                     -------------------------
          the employees of the Company or any of the Subsidiaries exists or, to
          the knowledge of the Company and the Guarantors, is imminent, and
          except as disclosed in the Offering Memorandum, the Company and the
          Guarantors are not aware of any existing or imminent labor disturbance
          by the employees of any of their or any of the Subsidiaries' principal
          suppliers, manufacturers, customers or contractors, which, in either
          case, may reasonably be expected to result in a Material Adverse
          Effect.

               (xv)  Absence of Proceedings. Except as disclosed in the Offering
                     ----------------------
          Memorandum, there is no action, suit, proceeding, inquiry or
          investigation, in each case before or by any court or governmental
          agency or body, domestic or foreign, now pending, or, to the knowledge
          of the Company or any Guarantor, threatened, against or affecting (i)
          the Company or any Subsidiary thereof or (ii) or property owned or
          leased by, the Company or any of the Subsidiaries which, singly or in
          the aggregate, might reasonably be expected to result in a Material
          Adverse Effect, or which, singly or in the aggregate, might reasonably
          be expected to materially and adversely affect the properties or
          assets of the Company or any of the Significant Subsidiaries or the
          consummation of this Agreement or the performance by the Company and
          the Guarantors of their respective obligations hereunder or under the
          Securities, the Guarantees or the Exchange Securities. The aggregate
          of all pending legal or governmental proceedings to which the Company
          or any Subsidiary thereof is a party or of which any of their
          respective property or assets is the subject which are not described
          in the Offering Memorandum, including ordinary routine litigation
          incidental to the business, could not reasonably be expected to result
          in a Material Adverse Effect.

               (xvi) Possession of Intellectual Property. The Company and the
                     -----------------------------------
          Subsidiaries own, possess or license, or can acquire on reasonable
          terms, adequate patents, patent rights, licenses, inventions,
          copyrights, know-how (including trade secrets and other unpatented
          and/or unpatentable proprietary or confidential information, systems
          or procedures), trademarks, service marks, trade names or other
          intellectual property

                                       -8-




          (collectively, "Intellectual Property") presently employed by them in
          connection with the business now operated by them, and neither the
          Company nor any of the Subsidiaries has received any notice or is
          otherwise aware of any infringement of or conflict with asserted
          rights of others with respect to any Intellectual Property (including
          Intellectual Property which is licensed) or of any facts or
          circumstances which would render any Intellectual Property invalid or
          inadequate to protect the interest of the Company or any of the
          Subsidiaries therein, and which infringement or conflict (if the
          subject of any unfavorable decision, ruling or finding) or invalidity
          or inadequacy, singly or in the aggregate, would reasonably be
          expected to result in a Material Adverse Effect.

               (xvii)  Absence of Further Requirements. Except as may be
                       -------------------------------
          required under state securities laws or to effect the Exchange Offer
          contemplated by the Registration Rights Agreement, no filing with, or
          authorization, approval, consent, license, order, registration,
          qualification or decree of, any court or governmental authority or
          agency is necessary or required for the performance by the Company or
          any of the Guarantors of their respective obligations hereunder, in
          connection with the offering, issuance or sale of the Securities and
          the Guarantees hereunder or the consummation of the transactions
          contemplated by or for the due execution, delivery or performance of
          this Agreement, the Registration Rights Agreement, the Indenture, the
          DTC Agreement, the Securities, the Guarantees, the Exchange Securities
          or any other agreement or instrument entered into or issued or to be
          entered into or issued by the Company or any of the Subsidiaries in
          connection with the consummation of the transactions contemplated
          herein and in the Offering Memorandum (including the issuance and sale
          of the Securities and the Guarantees and the use of the proceeds from
          the sale of the Securities and the Guarantees as described in the
          Offering Memorandum under the caption "Use of Proceeds").

               (xviii) Possession of Licenses and Permits. The Company and the
                       ----------------------------------
          Subsidiaries possess such permits, licenses, approvals, consents,
          certificates and other authorizations (collectively, "Governmental
          Licenses") issued by the appropriate federal, state, local or foreign
          regulatory agencies or bodies necessary to conduct the business now
          operated by them, except where the failure to possess such
          Governmental Licenses would not, singly or in the aggregate, have a
          Material Adverse Effect; the Company and the Subsidiaries are in
          compliance with the terms and conditions of all such Governmental
          Licenses and with the rules and regulations of the regulatory
          authorities and governing bodies having jurisdiction with respect
          thereto, except where the failure so to comply would not, singly or in
          the aggregate, have a Material Adverse Effect; all of the Governmental
          Licenses are valid and in full force and effect, except where the
          invalidity of such Governmental Licenses or the failure of such
          Governmental Licenses to be in full force and effect would not have a
          Material Adverse Effect; and neither the Company nor any of the
          Subsidiaries has received any written notice of proceedings relating
          to the revocation or modification of any such Governmental Licenses,
          nor are there, to the knowledge of the Company or any Guarantor,
          pending or threatened actions, suits, claims or proceedings against
          the Company or any Subsidiary before any court, governmental agency or
          body or otherwise that, if successful, would limit, revoke, cancel,
          suspend or cause not to be renewed any Governmental License, in each
          case, which, singly or in the aggregate, if the subject of an
          unfavorable decision, ruling or finding, would result in a Material
          Adverse Effect.

                                       -9-



               (xix)  Title to Property. The Company and the Subsidiaries have
                      -----------------
          good and marketable title to all real property owned by the Company
          and the Subsidiaries and good title to all other properties owned by
          them, in each case, free and clear of all mortgages, pledges, liens,
          security interests, claims, restrictions or encumbrances of any kind
          except such as (a) are described in the Offering Memorandum or (b) do
          not, singly or in the aggregate, materially affect the value of such
          property and do not interfere with the use made and proposed to be
          made of such property by the Company or any of the Subsidiaries; and
          all of the leases and subleases material to the business of the
          Company and the Subsidiaries, considered as one enterprise, and under
          which the Company or any of the Subsidiaries holds properties
          described in the Offering Memorandum, are in full force and effect,
          and neither the Company nor any of the Subsidiaries has any notice of
          any material claim of any sort that has been asserted by anyone
          adverse to the rights of the Company or any of the Subsidiaries under
          any of the leases or subleases mentioned above, or affecting or
          questioning the rights of the Company or any Subsidiary to the
          continued possession of the leased or subleased premises under any
          such lease or sublease.

               (xx)   Tax Returns. All United States federal income tax returns
                      -----------
          of the Company and the Subsidiaries required by law to be filed have
          been filed (taking into account extensions granted by the applicable
          federal governmental agency) and all taxes shown by such returns or
          pursuant to any assessment received by the Company or any Subsidiary,
          which are due and payable, have been paid, except assessments against
          which appeals have been or will be promptly taken in good faith and as
          to which adequate reserves have been provided. The Company and the
          Subsidiaries have filed all other tax returns that are required to
          have been filed by them pursuant to applicable foreign, federal,
          state, local or other law, and have paid all taxes due pursuant to
          such returns or pursuant to any assessment received by the Company and
          the Subsidiaries, except for such taxes, if any, as are being
          contested in good faith and by appropriate proceedings and as to which
          adequate reserves have been provided. The charges, accruals and
          reserves on the books of the Company in respect of all federal, state,
          local and foreign tax liabilities of the Company and each Subsidiary
          for any years not finally determined are adequate to meet any
          assessments or re-assessments for additional income tax for any years
          not finally determined, except to the extent of any inadequacy that
          would not result in a Material Adverse Effect.

               (xxi)  Insurance. The Company and the Subsidiaries carry or are
                      ---------
          entitled to the benefits of insurance, with financially sound and
          reputable insurers, in such amounts and covering such risks as is
          generally maintained by companies of established repute engaged in the
          same or similar business and all such insurance is in full force and
          effect.

               (xxii) Solvency. The Company and each of the Guarantors is, and
                      --------
          immediately after the Closing will be, Solvent. As used herein, the
          term "Solvent" means, with respect to the Company and each Guarantor,
          as the case may be, on a particular date, that on such date (A) the
          fair market value of the assets of the Company or such Guarantor is
          greater than the total amount of liabilities (including contingent
          liabilities) of the Company or such Guarantor, (B) the present fair
          salable value of the

                                       -10-



     assets of the Company or such Guarantor is greater than the amount that
     will be required to pay the probable liabilities of the Company or such
     Guarantor on its debts as they become absolute and mature, (C) the Company
     or such Guarantor is able to realize upon its assets and pay its debts and
     other liabilities, including contingent obligations, as they mature, and
     (D) the Company or such Guarantor does not have unreasonably small capital.

          (xxiii) Stabilization or Manipulation. Neither the Company nor any
                  -----------------------------
     Guarantor nor any of their respective officers, directors or controlling
     persons has taken, or will take, directly or indirectly, any action
     designed to cause or to result in, or that has constituted or which might
     reasonably be expected to constitute, the stabilization or manipulation of
     the price of any security of the Company or any Guarantor in order to
     facilitate the sale or resale of the Securities or the Guarantees. The
     Company and the Guarantors have not distributed and, prior to the later to
     occur of (i) the Closing Time and (ii) completion of the distribution of
     the Securities and the Guarantees, will not distribute any offering
     material in connection with the offering and sale of the Securities and the
     Guarantees other than the Offering Memorandum or other materials, if any,
     permitted by the 1933 Act and approved by the Representative.

          (xxiv)  Related Party Transactions. No relationship, direct or
                  --------------------------
     indirect, exists between or among any of the Company, the Guarantors or any
     affiliate of the Company or any Guarantor, on the one hand, and any
     director, officer, stockholder, customer or supplier of any of them, on the
     other hand, which is required by the 1933 Act or by the rules and
     regulations enacted thereunder to be described in a registration statement
     on Form S-3 which is not so described or is not described as required in
     the Offering Memorandum.

          (xxv)   Suppliers. No supplier of merchandise to the Company or any of
                  ---------
     the Subsidiaries has ceased shipments of merchandise to the Company or any
     of the Subsidiaries, other than in the normal and ordinary course of
     business consistent with past practices, which cessation would not result
     in a Material Adverse Effect.

          (xxvi)  Environmental Laws. Except as described in the Offering
                  ------------------
     Memorandum and except for such matters as would not, singly or in the
     aggregate, result in a Material Adverse Effect, (A) neither the Company nor
     any of the Subsidiaries is in violation of any federal, state, local or
     foreign statute, law, rule, regulation, ordinance, code, policy or rule of
     common law or any judicial or administrative interpretation thereof,
     including any judicial or administrative order, consent, decree or
     judgment, relating to pollution or protection of human health, the
     environment (including, without limitation, ambient air, surface water,
     groundwater, land surface or subsurface strata) or wildlife, including,
     without limitation, laws and regulations relating to the release or
     threatened release of chemicals, pollutants, contaminants, wastes, toxic
     substances, hazardous substances, petroleum or petroleum products or
     nuclear or radioactive material (collectively, "Hazardous Materials") or to
     the manufacture, processing, distribution, use, treatment, storage,
     disposal, transport or handling of Hazardous Materials (collectively,
     "Environmental Laws"); (B) the Company and the Subsidiaries have all
     permits, licenses,

                                       -11-



     authorizations and approvals required for their respective businesses under
     any applicable Environmental Laws and are each in compliance with their
     requirements, (C) there are no pending or threatened administrative,
     regulatory or judicial actions, suits, demands, demand letters, claims,
     liens, notices of noncompliance or violation, investigation or proceedings
     relating to any Environmental Law against the Company or any of the
     Subsidiaries and (D) there are no events, facts or circumstances that might
     reasonably be expected to form the basis of any liability or obligation of
     the Company or any of the Subsidiaries, including, without limitation, any
     order, decree, plan or agreement requiring clean-up or remediation, or any
     action, suit or proceeding by any private party or governmental body or
     agency, against or affecting the Company or any of the Subsidiaries
     relating to any Hazardous Materials or Environmental Laws.

          (xxvii)  Registration Rights. Except as described in the Offering
                   -------------------
     Memorandum, there are no holders of securities (debt or equity) of the
     Company or any Guarantor, or holders of rights (including, without
     limitation, preemptive rights), warrants or options to obtain securities of
     the Company or any Guarantor, who in connection with the issuance, sale and
     delivery of the Securities, the Guarantees and the Exchange Securities, if
     any, and the execution, delivery and performance of this Agreement and the
     Registration Rights Agreement, have the right to request the Company or any
     Guarantor to register securities held by them under the 1933 Act.

          (xxviii) Accounting Controls. The Company and its consolidated
                   -------------------
     Subsidiaries maintain a system of internal accounting controls sufficient
     to provide reasonable assurances that (A) transactions are executed in
     accordance with management's general or specific authorization; (B)
     transactions are recorded as necessary to permit preparation of financial
     statements in conformity with United States GAAP and to maintain
     accountability for assets; (C) access to assets is permitted only in
     accordance with management's general or specific authorization; and (D) the
     amounts recorded for assets is compared with the existing assets at
     reasonable intervals and appropriate action is taken with respect to any
     differences.

          (xxix)   Investment Company Act. The Company and each of the
                   ----------------------
     Guarantors is not, and upon the issuance and sale of the Securities and the
     Guarantees as herein contemplated and the application of the net proceeds
     therefrom as described in the Offering Memorandum will not be, an
     "investment company" or an entity "controlled" by an "investment company"
     as such terms are defined in the Investment Company Act of 1940, as amended
     (the "1940 Act").

          (xxx)    Rule 144A Eligibility. The Securities and the Guarantees are
                   ---------------------
     eligible for resale pursuant to Rule 144A and will not be, at the Closing
     Time, of the same class as securities listed on a national securities
     exchange registered under Section 6 of the 1934 Act, or quoted in a U.S.
     automated interdealer quotation system.

          (xxxi)   No General Solicitation. None of the Company, the Guarantors,
                   -----------------------
     any of their respective affiliates, as such term is defined in Rule 501(b)
     under the 1933 Act ("Affiliates"), or any person acting on any of their
     behalf (other than the Initial Purchasers, as to whom the Company and the
     Guarantors make no representation) has

                                       -12-




     engaged or will engage, in connection with the offering of the Securities
     and the Guarantees, in any form of general solicitation or general
     advertising within the meaning of Rule 502(c) under the 1933 Act.

          (xxxii)  No Registration Required. Subject to compliance by the
                   ------------------------
     Initial Purchasers with the representations and warranties set forth in
     Section 2, it is not necessary in connection with the offer, sale and
     delivery of the Securities and the Guarantees to the Initial Purchasers and
     to each Subsequent Purchaser in the manner contemplated by this Agreement
     and the Offering Memorandum to register the Securities and the Guarantees
     under the 1933 Act or to qualify the Indenture under the Trust Indenture
     Act of 1939, as amended.

          (xxxiii) PORTAL. There are no securities of the Company or any of the
                   ------
     Guarantors which are of the same class as the Securities or the Guarantees
     that are listed on a national securities exchange registered under Section
     6 of the 1934 Act, or quoted in a United States automated inter dealer
     quotation system. The Company and the Guarantors have been advised by the
     National Association of Securities Dealers, Inc. PORTAL Market that the
     Securities and the Guarantees will be designated Private Offerings, Resales
     and Trading Through Automated Linkages ("PORTAL") eligible securities in
     accordance with the rules and regulations of the National Association of
     Securities Dealers, Inc.

          (xxxiv)  Franchise Agreements. Each franchise agreement, in each case
                   --------------------
     between a Subsidiary and the applicable manufacturer has been duly
     authorized by the Company and such Subsidiaries, and, as of the Closing
     Time, the Company shall have obtained all consents, authorizations and
     approvals from the Manufacturers required to consummate the Offering.

          (xxxv)   Smith Subordination Agreement. The Subordinated Smith Loan
                   -----------------------------
     (as defined in the Offering Memorandum) will be governed by a Subordination
     Agreement to be dated November 19, 2001, which will be in a form agreed to
     by the Representative and shall be binding and enforceable against O.
     Bruton Smith, and under which the debt owed to Mr. Smith is subordinated to
     the Securities and the Exchange Securities.

     (b)  Officer's Certificates. Any certificate signed by any officer of the
Company or any of the Subsidiaries delivered to the Initial Purchasers or to
counsel for the Initial Purchasers shall be deemed a representation and warranty
by the Company or any of the Subsidiaries to the Initial Purchasers as to the
matters covered thereby.

     SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
                ------------------------------------------------

     (a)  Securities and Guarantees. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company and the Guarantors agree to sell to each Initial Purchaser,
severally and not jointly, and each Initial Purchaser, severally and not
jointly, agrees to purchase from the Company and the Guarantors, at the price
set forth in Schedule D, the aggregate principal amount of Securities (including
the Guarantees) set forth in Schedule B opposite the name of such Initial
Purchaser, plus any

                                       -13-



additional principal amount of Securities (including the Guarantees) which such
Initial Purchaser may become obligated to purchase pursuant to the provisions of
Section 10 hereof.

     (b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities and the Guarantees shall be made at the office
of Fried, Frank, Harris, Shriver & Jacobson, or at such other place as shall be
agreed upon by the Representative and the Company and the Guarantors at 9:00
A.M. (New York Time) on November 19, 2001 (unless postponed in accordance with
the provisions of Section 10), or such other time not later than ten business
days after such date as shall be agreed upon by the Representative and the
Company and the Guarantors (such time and date of payment and delivery being
herein called the "Closing Time").

     Payment shall be made to the Company and the Guarantors by wire transfer of
immediately available funds to a bank account designated by the Company and the
Guarantors, against delivery to the respective accounts of the Initial
Purchasers of certificates for the Securities and the Guarantees to be purchased
by them. It is understood that each Initial Purchaser has authorized the
Representative, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Securities and the Guarantees which it
has agreed to purchase. Merrill Lynch, individually and not as representative of
the Initial Purchasers, may (but shall not be obligated to) make payment of the
purchase price for the Securities and the Guarantees to be purchased by any
Initial Purchaser whose funds have not been received by the Closing Time, but
such payment shall not relieve such Initial Purchaser from its obligations
hereunder. The certificates representing the Securities and the Guarantees shall
be registered in the name of Cede & Co. pursuant to the DTC Agreement, or
physical certificates representing the Securities and the Guarantees shall be
registered in the names and denominations requested by each Initial Purchaser,
and in either case shall be made available for examination and packaging by the
Initial Purchasers in The City of New York not later than 9:00 A.M. on the last
business day prior to the Closing Time.

     (c) Qualified Institutional Buyer. Each Initial Purchaser severally and not
jointly represents and warrants to, and agrees with, the Company and each of the
Guarantors that it is a "qualified institutional buyer" within the meaning of
Rule 144A under the 1933 Act (a "Qualified Institutional Buyer").

     (d) Denominations; Registration. Certificates representing the Securities
(including the Guarantees) shall be in such denominations ($1,000 or integral
multiples thereof) and registered in such names as the Representative may
request in writing at least one full business day before the Closing Time.

     SECTION 3. Covenants of the Company and the Guarantors. The Company and the
                -------------------------------------------
Guarantors, jointly and severally, covenant with each Initial Purchaser as
follows:

     (a) Offering Memorandum. The Company and the Guarantors, as promptly as
possible, will furnish to each Initial Purchaser, without charge, such number of
copies of the Offering Memorandum thereto such Initial Purchaser may reasonably
request.

                                       -14-




     (b) Notice and Effect of Material Events. The Company and the Guarantors
will immediately notify each Initial Purchaser, and confirm such notice in
writing, of (x) any filing made by the Company or any Guarantor of information
relating to the offering of the Securities and the Guarantees with any
securities exchange or any other regulatory body in the United States or any
other jurisdiction, and (y) prior to the completion of the placement of the
Securities and the Guarantees by the Initial Purchasers, any material changes in
or affecting the earnings, business affairs or business prospects of the Company
and the Subsidiaries which (i) make any statement in the Offering Memorandum
false or misleading or (ii) are not disclosed in the Offering Memorandum. In
such event or if during such time any event shall occur or condition shall exist
as a result of which it is necessary, in the opinion of the Company and the
Guarantors, their counsel, the Initial Purchasers or counsel for the Initial
Purchasers, to amend or supplement the Offering Memorandum in order that the
Offering Memorandum not include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances then existing, the Company will
forthwith amend or supplement the Offering Memorandum by preparing and
furnishing to each Initial Purchaser an amendment or amendments of, or a
supplement or supplements to, the Offering Memorandum (in form and substance
satisfactory in the opinion of counsel for the Initial Purchasers) so that, as
so amended or supplemented, the Offering Memorandum will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances existing at
the time it is delivered to a Subsequent Purchaser, not misleading.

     (c) Amendment to Offering Memorandum and Supplements. The Company and the
Guarantors will advise each Initial Purchaser promptly of any proposal to amend
or supplement the Offering Memorandum and will not effect such amendment or
supplement without the consent of the Initial Purchasers. Neither the consent of
the Initial Purchasers to, nor the Initial Purchasers' delivery of, any such
amendment or supplement, shall constitute a waiver of any of the conditions set
forth in Section 5 hereof.

     (d) Qualification of Securities and Guarantees for Offer and Sale. The
Company and the Guarantors will endeavor, in cooperation with the Initial
Purchasers, to register or qualify the Securities and the Guarantees for
offering and sale under the applicable securities laws of such jurisdictions as
the Representative may designate and will maintain such qualifications in effect
as long as required for the sale of the Securities and the Guarantees; provided,
however, that the Company and the Guarantors shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is not so qualified or
to subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject.

     (e) Exchange Offer. The Company and the Guarantors will offer the holders
of the Company's 11% Senior Subordinated Notes due 2008 the opportunity to
exchange such notes for the Exchange Securities. Such offer will be on terms
acceptable to Merrill Lynch and shall be made as soon after the date hereof as
is practicable in accordance with the Registration Rights Agreement.

                                       -15-



     (f) Integration. The Company and the Guarantors agree that they will not
and will cause their affiliates not to make any offer or sale of securities of
the Company or any Guarantor of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 promulgated under the 1933 Act, such offer
or sale could be deemed to render invalid (for the purpose of (i) the sale of
the Securities and the Guarantees by the Company and the Guarantors to the
Initial Purchasers, (ii) the resale of the Securities and the Guarantees by the
Initial Purchasers to Subsequent Purchasers or (iii) the resale of the
Securities and the Guarantees by such Subsequent Purchasers to others) the
exemption from the registration requirements of the 1933 Act provided by Section
4(2) thereof or by Rule 144A or by Regulation S thereunder or otherwise.

     (g) Rating of Securities. The Company and the Guarantors shall take all
reasonable action necessary to enable Standard & Poor's Ratings Group, a
division of McGraw Hill, Inc. ("S&P"), and Moody's Investors Service, Inc.
("Moody's"), to provide their respective credit ratings of the Securities and
the Guarantees.

     (h) Rule 144A Information. The Company and the Guarantors agree that, in
order to render the Securities and the Guarantees eligible for resale pursuant
to Rule 144A under the 1933 Act, while any of the Securities and the Guarantees
remain outstanding, it will make available, upon request, to any holder of
Securities and Guarantees or prospective purchasers of Securities and Guarantees
the information specified in Rule 144A(d)(4), unless the Company and the
Guarantors furnish information to the Commission pursuant to Section 13 or 15(d)
of the 1934 Act (such information, whether made available to holders or
prospective purchasers or furnished to the Commission, is hereinafter referred
to as "Additional Information").

     (i) Restriction on Resales. Until the expiration of two years after the
original issuance of the Securities and the Guarantees, the Company and the
Guarantors will not, and will cause their "affiliates" (as such term is defined
in Rule 144(a)(1) under the 1933 Act) not to, resell any Securities and
Guarantees which are "restricted securities" (as such term is defined under Rule
144(a)(3) under the 1933 Act) that have been reacquired by any of them and shall
immediately upon any purchase of any such Securities and Guarantees submit such
Securities and Guarantees to the Trustee for cancellation.

     (j) Use of Proceeds. The Company and the Guarantors will use the net
proceeds received by them from the sale of the Securities and the Guarantees in
the manner specified in the Offering Memorandum under "Use of Proceeds."

     (k) Restriction on Sale of Securities. During a period of 180 days from the
date of the Final Offering Memorandum, the Company and the Guarantors will not,
without the prior written consent of Merrill Lynch, directly or indirectly,
issue, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any debt securities or guarantees of debt securities of the Company
or any of the Guarantors, or any securities convertible or exchangeable into or
exercisable for any debt securities or guarantees of debt securities of the
Company or any of the Guarantors, and will not file a registration statement in
connection therewith (other than a registration statement registering solely the
Securities, the Guarantees and/or the Exchange

                                       -16-



Securities); provided, however, the Company may incur indebtedness under its
existing revolving credit, floor plan and construction/mortgage facilities.


     (l) DTC Clearance. The Company and the Guarantors will use all reasonable
efforts in cooperation with the Initial Purchasers to permit the Securities and
the Guarantees to be eligible for clearance and settlement through DTC.

     (m) Legends. Each certificate representing a Security (including a
Guarantee) will bear the legend contained in "Notices to Investors" in the
Offering Memorandum for the time period and upon the other terms stated in the
Offering Memorandum.

     (n) Interim Financial Statements. Prior to the Closing Time, the Company
shall furnish to the Initial Purchasers any unaudited interim financial
statements of the Company, promptly after they have been completed, for any
periods subsequent to the periods covered by the financial statements appearing
in the Offering Memorandum.

     (o) Periodic Reports. For a period of three years after the Closing Time,
the Company and the Guarantors will furnish to the Initial Purchasers copies of
all annual reports, quarterly reports and current reports (excluding exhibits)
filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar
forms as may be designated by the Commission, and such other documents, reports
and information as shall be furnished by the Company and the Guarantors
generally to the holders of the Securities and the Guarantees or to security
holders of its publicly issued securities generally.

     SECTION 4. Payment of Expenses.
                -------------------

     (a) Expenses. The Company and the Guarantors, jointly and severally, will
pay (or cause to be paid) all expenses incident to the performance of their
respective obligations under this Agreement, including (i) the preparation,
printing and any filing of the Offering Memorandum and the Registration
Statement (including financial statements and any schedules or exhibits) and of
each amendment or supplement thereto, including the Offering Memorandum and the
Exchange Offer prospectus to be contained in the Registration Statement, (ii)
the preparation, printing and delivery to the Initial Purchasers of this
Agreement, the Registration Rights Agreement, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale and
delivery of the Securities and the Guarantees, (iii) the preparation, issuance
and delivery of the certificates for the Securities and the Guarantees to the
Initial Purchasers, including any charges of DTC in connection therewith, (iv)
the fees and disbursements of the Company's and the Guarantors' counsel,
accountants and other advisors, (v) the qualification of the Securities and the
Guarantees under securities laws in accordance with the provisions of Section
3(d) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Initial Purchasers in connection therewith and in connection
with the preparation, printing and delivery to the Initial Purchasers of copies
of any memorandum related to blue sky matters, any supplement thereto or any
survey of investment qualifications, (vi) the fees and expenses of the Trustee,
including the fees and disbursements of

                                       -17-



counsel for the Trustee in connection with the Indenture and the Securities and
the Guarantees, (vii) any fees payable in connection with the rating of the
Securities and the Guarantees and the listing of the Securities and the
Guarantees with the PORTAL market, and (viii) any filing fees incident to, and
any reasonable fees and disbursements of counsel to the Initial Purchasers in
connection with, the review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Securities and the Guarantees.

     (b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section 9(a)(i)
or 9(a)(ii) hereof, the Company and the Guarantors, jointly and severally, shall
reimburse the Initial Purchasers for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Initial
Purchasers.

     SECTION 5. Conditions of Initial Purchasers' Obligations. The obligations
                ---------------------------------------------
of the several Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company and the Guarantors contained in
Section 1 hereof or in certificates of any officer of the Company or any of the
Subsidiaries delivered pursuant to the provisions hereof, to the performance by
the Company and the Guarantors of their covenants and other obligations
hereunder, and to the following further conditions:

     (a) Opinion of Counsel for the Company and the Guarantors. At the Closing
Time, the Initial Purchasers shall have received the favorable opinion, dated as
of the Closing Time, of Moore & Van Allen PLLC, counsel for the Company and the
Guarantors, in form and substance satisfactory to counsel for the Initial
Purchasers, together with signed or reproduced copies of such letters for each
of the other Initial Purchasers, to the effect previously agreed to by the
parties and to such further effect as counsel for the Initial Purchasers may
reasonably request.

     (b) Opinion of Counsel for the Initial Purchasers. At the Closing Time, the
Initial Purchasers shall have received the favorable opinion, dated as of the
Closing Time, of Fried, Frank, Harris, Shriver & Jacobson, counsel for the
Initial Purchasers, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers, with respect to certain matters agreed
upon. In giving such opinion such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New York and the
federal law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to the Representative. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company, the Guarantors and the Subsidiaries and certificates of public
officials.

     (c) Officers' Certificate. At the Closing Time, (i) the Offering
Memorandum, as it may then be amended or supplemented, including any documents
incorporated by reference therein, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) there shall not
have been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition

                                       -18-



(financial or otherwise), earnings, business affairs or business prospects of
the Company and its Subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business; (iii) the Company and the Guarantors
shall have complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Closing Time; and (iv) the
representations and warranties of the Company and the Guarantors in Section 1
shall be accurate and true and correct as though expressly made at and as of the
Closing Time. At the Closing Time, the Initial Purchasers shall have received a
certificate of the Chief Executive Officer of the Company and the Chief
Financial Officer of the Company, and equivalent officials of each Guarantor,
dated as of the Closing Time, to such effect.

     (d) Accountants' Letters and Consents. At the Closing Time, the Initial
Purchasers shall have received from Deloitte & Touche LLP a letter dated such
date, in form and substance satisfactory to the Representative and to counsel
for the Initial Purchasers, together with signed or reproduced copies of such
letters for each of the other Initial Purchasers, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
the Initial Purchasers with respect to the financial statements and certain
financial information contained in the Offering Memorandum and in the form
previously agreed to. To the extent an audit report of Deloitte & Touche LLP is
included in the Offering Memorandum, such accounting firm shall include either
in such letter or in a separate writing a consent to the inclusion of its report
in the Offering Memorandum and to the reference to it under the caption
"Independent Auditors" in the Offering Memorandum.

     (e) Maintenance of Rating. At the Closing Time, the Securities and the
Guarantees shall be rated at least B-2 by Moody's and B+ by S&P, and the Company
and the Guarantors shall have delivered to the Representative a letter dated the
Closing Time, from each such rating agency, or other evidence satisfactory to
the Representative, confirming that the Securities and the Guarantees have such
ratings; and since the date of this Agreement, there shall not have occurred a
downgrading in the rating assigned to the Securities and the Guarantees or any
of the Company's and the Guarantor's other debt securities by any nationally
recognized securities rating agency, and no such securities rating agency shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities and the Guarantees or any of
the Company's and the Guarantor's other debt securities.

     (f) PORTAL. At the Closing Time, the Securities and the Guarantees shall
have been designated for trading on PORTAL.

     (g) Chief Financial Officer's Certificate. At the Closing Time, the Initial
Purchasers shall have received a certificate of the principal financial officer
of the Company and the Guarantors as to certain agreed upon accounting matters.

     (h) Registration Rights Agreement and Indenture. The Company and each of
the Guarantors shall have duly authorized, executed and delivered the
Registration Rights

                                       -19-




Agreement and the Indenture to the Initial Purchasers in a form and substance
satisfactory to the Representative and counsel for the Initial Purchasers.

     (i) Manufacturers' Consents. The Representative shall have received on or
as of the Closing Time, as the case may be, a certificate, in a form and
substance satisfactory to the Representative, of two executive officers of the
Company certifying that each of the Company and its subsidiaries owns, possesses
or has obtained any required consents and approvals from all Manufacturers with
respect to the Offering and such consents and approvals, if any, shall be in a
form satisfactory to the Representative other than those consents not received
as described in the Offering Memorandum.

     (j) Lenders' Consents. Prior to or at the Closing Time, the Company shall
have received any required consents under their existing indebtedness for the
issuance and sale of the Securities pursuant to the terms of this Agreement and
the Indenture.

     (k) Additional Documents. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as they
may require for the purpose of enabling them to pass upon the issuance and sale
of the Securities and the Guarantees as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Guarantors in connection with the issuance and sale
of the Securities and the Guarantees as herein contemplated shall be
satisfactory in form and substance to the Initial Purchasers and counsel for the
Initial Purchasers.

     (l) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Company at
any time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.

     SECTION 6. Indemnification.
                ---------------

     (a) Indemnification of Initial Purchasers. The Company and each of the
Guarantors, jointly and severally, agree to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:

         (i) against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, arising out of any untrue statement or alleged
     untrue statement of a material fact contained in the Offering Memorandum,
     or the omission or alleged omission therefrom of a material fact necessary
     in order to make the statements therein, in the light of the circumstances
     under which they were made, not misleading;

                                       -20-



               (ii)  against any and all loss, liability, claim, damage and
          expense whatsoever, as incurred, to the extent of the aggregate amount
          paid in settlement of any litigation, or any investigation or
          proceeding by any governmental agency or body, commenced or
          threatened, or of any claim whatsoever based upon any such untrue
          statement or omission, or any such alleged untrue statement or
          omission; provided that (subject to Section 6(d) below) any such
          settlement is effected with the written consent of the Company; and

               (iii) against any and all expense whatsoever, as incurred
          (including the fees and disbursements of counsel chosen by the
          Representative), reasonably incurred in investigating, preparing or
          defending against any litigation, or any investigation or proceeding
          by any governmental agency or body, commenced or threatened, or any
          claim whatsoever based upon any such untrue statement or omission, or
          any such alleged untrue statement or omission, to the extent that any
          such expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
- --------  -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company or the
Guarantors by any Initial Purchaser through Merrill Lynch expressly for use in
the Offering Memorandum.

          (b)  Indemnification of Company, Guarantors, and Directors. Each
     Initial Purchaser severally agrees to indemnify and hold harmless the
     Company, the Guarantors and their directors, and each person, if any, who
     controls the Company or the Guarantors within the meaning of Section 15 of
     the 1933 Act or Section 20 of the 1934 Act against any and all loss,
     liability, claim, damage and expense described in the indemnity contained
     in subsection (a) of this Section, as incurred, but only with respect to
     untrue statements or omissions, or alleged untrue statements or omissions,
     made in the Offering Memorandum in reliance upon and in conformity with
     written information furnished to the Company or the Guarantors by such
     Initial Purchasers through Merrill Lynch expressly for use in the Offering
     Memorandum. The Company hereby acknowledges that the only information that
     the Initial Purchasers have furnished to the Company expressly for use in
     the Offering Memorandum are the statements set forth in the third sentence
     in the paragraph directly below the table and all sentences in the fourth
     paragraph below the table under the caption "Plan of Distribution" in the
     Offering Memorandum.

          (c)  Actions against Parties; Notification. Each indemnified party
     shall give notice as promptly as reasonably practicable to each
     indemnifying party of any action commenced against it in respect of which
     indemnity may be sought hereunder, but failure to so notify an indemnifying
     party shall not relieve such indemnifying party from any liability
     hereunder to the extent it is not materially prejudiced as a result thereof
     and in any event shall not relieve it from any liability which it may have
     otherwise than on account of this indemnity agreement. In the case of
     parties indemnified pursuant to Section 6(a) above, counsel to the
     indemnified parties shall be selected by the Representative, and, in the
     case of parties indemnified pursuant to

                                      -21-



Section 6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
                    --------  -------
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.

     (d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

     SECTION 7. Contribution. If the indemnification provided for in Section 6
                ------------
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities and the Guarantees pursuant to this Agreement or (ii)
if the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantors on the one hand and of the Initial Purchasers on the other hand
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

     The relative benefits received by the Company and the Guarantors on the one
hand and the Initial Purchasers on the other hand in connection with the
offering of the Securities and the Guarantees pursuant to this Agreement shall
be deemed to be in the same respective proportions

                                       -22-



as the total net proceeds from the offering of the Securities and the Guarantees
pursuant to this Agreement (before deducting expenses) received by the Company
and the Guarantors and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities and
the Guarantees.

     The relative fault of the Company and the Guarantors on the one hand and
the Initial Purchasers on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Guarantors, or by the Initial
Purchasers, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

     The Company, the Guarantors and the Initial Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 7. The aggregate amount of the losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other fees reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon such untrue or
alleged untrue statement or omission or alleged omission.

     Notwithstanding the provisions of this Section 7, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities (including the Guarantees) purchased by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such Initial Purchaser has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission.

     No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

     For purposes of this Section 7, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each director of the Company and each Guarantor, and each person,
if any, who controls the Company and each Guarantor within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company and each Guarantor. The Initial
Purchasers' respective obligations to contribute pursuant to this Section 7 are
several in proportion to the principal amount of Securities (including the
Guarantees) set forth opposite their respective names in Schedule B hereto and
not joint.

                                       -23-



     SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
                --------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of the Subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Initial Purchaser or
controlling person, or by or on behalf of the Company or any Guarantor, and
shall survive (i) delivery of the Securities (including the Guarantees) to the
Initial Purchasers and (ii) any termination of this Agreement.

     SECTION 9. Termination of Agreement.
                ------------------------

     (a) Termination; General. The Representative may terminate this Agreement,
by notice to the Company and the Guarantors, at any time at or prior to the
Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Final Offering Memorandum (exclusive of any amendment or supplement thereto),
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and the
Subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there shall have occurred a downgrading
in the rating assigned to the Securities or Guarantees or any of the Company's
or any Guarantor's other debt securities by any nationally recognized securities
rating agency, or if such securities rating agency shall have publicly announced
that it has under surveillance or review, with possible negative implications,
its rating of the Securities, the Guarantees or any of the Company's or
Guarantors' other debt securities or guarantees of debt securities, or (iii) if
there has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representative, impracticable or
inadvisable to market the Securities or the Guarantees or to enforce contracts
for the sale of the Securities or the Guarantees, or (iv) if trading in any
securities of the Company or any Guarantor has been suspended or materially
limited by the Commission or the NASDAQ National Market System, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (v) the Company shall have sustained a loss by
strike, fire, flood, earthquake, accident or other calamity of such character as
in the judgment of the Representative may interfere materially with the conduct
of the business and operations of the Company regardless of whether or not such
loss shall have been insured, or (vi) a material disruption has occurred in
commercial banking or securities settlement or clearance services in the United
States, or (vii) if a banking moratorium has been declared by either Federal,
Delaware or New York authorities.

     (b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in

                                       -24-



Section 4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive
suchnation and remain in full force and effect.

     SECTION 10. Default by One or More of the Initial Purchasers. If one or
                 ------------------------------------------------
more of the Initial Purchasers shall fail at Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representative shall have the right, but not the
obligation, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting Initial Purchasers, or any other initial purchasers, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24-hour
period, then

          (a) if the number of Defaulted Securities does not exceed 10% of the
     aggregate principal amount of the Securities to be purchased hereunder,
     each of the non-defaulting Initial Purchasers shall be obligated, severally
     and not jointly, to purchase the full amount thereof in the proportions
     that their respective obligations hereunder bear to the obligations of all
     non-defaulting Initial Purchasers, or

          (b) if the number of Defaulted Securities exceeds 10% of the aggregate
     principal amount of the Securities to be purchased hereunder, this
     Agreement shall terminate without liability on the part of any
     non-defaulting Initial Purchaser.

     No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.

     In the event of any such default which does not result in a termination of
this Agreement, either the Representative, the Company or the Guarantors shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Offering Memorandum or in
any other documents or arrangements. As used herein, the term "Initial
Purchaser" includes any person substituted for an Initial Purchaser under this
Section 10.

     SECTION 11. Notices. All notices and other communications hereunder shall
                 -------
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to (i) the Representative at North Tower, World
Financial Center, New York, New York 10281-1209, attention of Barry Price and
(ii) Banc of America Securities LLC at 9 West 57th Street, New York, New York
10019, attention of Joel Van Dusen, with a copy to Fried, Frank, Harris, Shriver
& Jacobson, 1 New York Plaza, New York, New York 10004, attention of Stuart H.
Gelfond, Esq.; notices to the Company or the Guarantors shall be directed to
them at Sonic Automotive, Inc., 6415 Idlewild Road, Suite 109, Charlotte, North
Carolina 28212, attention of Theodore Wright; with a copy to Barney Stewart,
III, Esq., Moore & Van Allen, PLLC, 100 North Tryon Street, Suite 4700,
Charlotte, North Carolina 28202-4003.

     SECTION 12. Parties. This Agreement shall inure to the benefit of and be
                 -------
binding upon the Initial Purchasers, the Company and the Guarantors and their
respective successors. Nothing

                                       -25-



expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Initial Purchasers, the
Company and the Guarantors and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Initial Purchasers, the Company and the
Guarantors and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities and
Guarantees from any Initial Purchaser shall be deemed to be a successor by
reason merely of such purchase.

         SECTION 13.  Governing Law and Time.  THIS AGREEMENT SHALL BE GOVERNED
                      ----------------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY HEREIN REFER TO NEW YORK CITY TIME.

         SECTION 14.  General Provisions. This Agreement constitutes the entire
                      ------------------
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.

         SECTION 15.  Partial Unenforceability. The invalidity or
                      ------------------------
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.


         SECTION 16.  Effect of Headings.  The Article and Section headings
                      ------------------
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.

         Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 6 and the contribution provisions of
Section 7, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 6 and 7 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in Offering Memorandum.

                                       -26-



         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Guarantors a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement among the Initial Purchasers, the Company and the
Guarantors in accordance with its terms.

                              Very truly yours,

                              SONIC AUTOMOTIVE, INC.


                              By: /s/ Theodore M. Wright
                                 -----------------------------------------------
                                   Name: Theodore M. Wright
                                   Title: Vice President, Treasurer and Chief
                                   Financial Officer

                              AUTOBAHN, 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 CAPITOL N, INC.
                              FAA CONCORD H, INC.
                              FAA CONCORD N, INC.
                              FAA CONCORD T, INC.
                              FA DEALER SERVICES, INC.
                              FAA DUBLIN N, INC.
                              FAA DUBLIN VWD, INC.
                              FAA HOLDING CORP.
                              FAA LAS VEGAS H, INC.
                              FAA MARIN D, INC.
                              FAA MARIN F, INC.
                              FAA MARIN LR, INC.
                              FA  POWAY D, INC.
                              FAA POWAY G, INC.
                              FAA POWAY H, INC.
                              FAA POWAY T, INC.
                              FAA SAN BRUNO, INC.
                              FAA SANTA MONICA V, INC.
                              FAA SERRAMONTE H, INC.
                              FAA SERRAMONTE L, INC.



                            FAA SERRAMONTE, INC.
                            FAA STEVENS CREEK, INC.
                            FAA TORRANCE CPJ, INC.
                            FIRSTAMERICA AUTOMOTIVE, INC.
                            FORT MILL CHRYSLER-PLYMOUTH-DODGE INC.
                            FORT MILL FORD, INC.
                            FRANCISCAN MOTORS, INC.
                            FREEDOM FORD, INC.
                            FRONTIER OLDSMOBILE-CADILLAC, INC.
                            HMC FINANCE ALABAMA, INC.
                            KRAMER MOTORS INCORPORATED
                            LAWRENCE MARSHALL CHEVROLET, LLC
                            LAWRENCE MARSHALL CHEVROLET, L.P.
                            L DEALERSHIP GROUP, INC. (formerly LUCAS DEALERSHIP
                                 GROUP, INC.)
                            MARCUS DAVID CORPORATION
                            PHILPOTT MOTORS, LTD.
                            RIVERSIDE NISSAN, INC.
                            ROYAL MOTOR COMPANY, INC.
                            SANTA CLARA IMPORTED CARS, INC.
                            SMART NISSAN, INC.
                            SONIC AUTOMOTIVE - BONDESEN, INC.
                            SONIC AUTOMOTIVE OF CHATTANOOGA, LLC
                            SONIC AUTOMOTIVE-CLEARWATER, INC.
                            SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER,
                                 INC,
                            SONIC AUTOMOTIVE F&I, LLC
                            SONIC AUTOMOTIVE OF GEORGIA, INC.
                            SONIC AUTOMOTIVE OF NASHVILLE, LLC
                            SONIC AUTOMOTIVE OF NEVADA, INC.
                            SONIC AUTOMOTIVE SERVICING COMPANY, LLC
                            SONIC AUTOMOTIVE OF TENNESSEE, INC.
                            SONIC AUTOMOTIVE OF TEXAS, L.P.
                            SONIC AUTOMOTIVE WEST, LLC
                            SONIC AUTOMOTIVE - 1307 N. DIXIE HWY.,
                                  NSB, 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 - 1720 MASON AVE., DB,
                             INC.
                         SONIC AUTOMOTIVE - 1720 MASON AVE., DB,
                             LLC
                         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 2424 LAURENS RD., GREENVILLE, INC.
                         SONIC AUTOMOTIVE 2752 LAURENS RD., GREENVILLE, INC.
                         SONIC AUTOMOTIVE 2490 SOUTH LEE HIGHWAY, LLC
                         SONIC AUTOMOTIVE - 3401 N. MAIN, TX, L.P.
                         SONIC AUTOMOTIVE-3700 WEST BROAD STREET, COLUMBUS, INC.
                         SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO,
                             INC.
                         SONIC AUTOMOTIVE-4000 WEST BROAD STREET, COLUMBUS, INC.
                         SONIC AUTOMOTIVE - 4701 I-10 EAST, TX, L.P.
                         SONIC AUTOMOTIVE - 5221 I-10 EAST, TX, L.P.
                         SONIC AUTOMOTIVE  5260 PEACHTREE INDUSTRIAL BLVD., LLC
                         SONIC AUTOMOTIVE - 5585 PEACHTREE INDUSTRIAL BLVD., LLC
                         SONIC AUTOMOTIVE - 6008 N. DALE MABRY,
                             FL, INC.
                         SONIC AUTOMOTIVE - 6025 INTERNATIONAL
                             DRIVE, LLC
                         SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE,
                             NC, LLC
                         SONIC - 2185 CHAPMAN RD., CHATTANOOGA,
                             LLC
                         SONIC - BETHANY H, INC.
                         SONIC - BUENA PARK H, INC.
                         SONIC - CAMP FORD, L.P.
                         SONIC - CAPITAL CHEVROLET, INC.
                         SONIC - CARROLLTON V, L.P.



                           SONIC CHRYSLER-PLYMOUTH-JEEP, LLC
                           SONIC-CLASSIC DODGE, INC.
                           SONIC - COAST CADILLAC, INC. (formerly FAA WOODLAND
                               HILLS VW, INC.)
                           SONIC DODGE, LLC
                           SONIC DEVELOPMENT, LLC
                           SONIC - FM AUTOMOTIVE, LLC
                           SONIC - FM, INC.
                           SONIC - FM NISSAN, INC.
                           SONIC - FM VW, INC.
                           SONIC - FORT WORTH T, L.P.
                           SONIC - FREELAND, INC.
                           SONIC - GLOBAL IMPORTS, L.P.
                           SONIC-GLOVER, INC.
                           SONIC - HARBOR CITY H, INC.
                           SONIC - HOUSTON V, L.P.
                           SONIC - INTEGRITY DODGE LV, LLC
                           SONIC - LAS VEGAS C EAST, LLC
                           SONIC - LAS VEGAS C WEST, LLC
                           SONIC - LLOYD NISSAN, INC.
                           SONIC - LLOYD PONTIAC - CADILLAC, INC.
                           SONIC - LUTE RILEY, L. P.
                           SONIC - MANHATTAN FAIRFAX, INC.
                           SONIC - MANHATTAN WALDORF, INC.
                           SONIC-MONTGOMERY FLM, INC.
                           SONIC - NEWSOME CHEVROLET WORLD, INC.
                           SONIC - NEWSOME OF FLORENCE, INC.
                           SONIC - NORTH CHARLESTON, INC.
                           SONIC - NORTH CHARLESTON DODGE, INC.
                           SONIC - PARK PLACE A, L.P. (formerly  SONIC - DALLAS
                               AUTO FACTORY, L.P.)
                           SONIC PEACHTREE INDUSTRIAL BLVD., L.P.
                           SONIC - READING, L.P.
                           SONIC RESOURCES, INC.
                           SONIC - RICHARDSON F, L.P.
                           SONIC-RIVERSIDE, INC.
                           SONIC - RIVERSIDE AUTO FACTORY, INC.
                           SONIC - ROCKVILLE IMPORTS, INC.
                           SONIC - ROCKVILLE MOTORS, INC.
                           SONIC - SAM WHITE NISSAN, L.P.
                           SONIC - SHOTTENKIRK, INC.
                           SONIC -SUPERIOR OLDSMOBILE, LLC
                           SONIC - STEVENS CREEK B, INC.




                              SONIC OF TEXAS, INC.
                              SONIC-VOLVO LV, LLC
                              SONIC - WEST COVINA T, INC.
                              SONIC - WEST RENO CHEVROLET, INC.
                              SONIC-WILLIAMS BUICK, INC.
                              SONIC - WILLIAMS CADILLAC, INC.
                              SONIC - WILLIAMS IMPORTS, INC.
                              SONIC - WILLIAMS MOTORS, LLC
                              SPEEDWAY CHEVROLET, INC.
                              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 FLORIDA - 1, LLC
                              SRE FLORIDA - 2, LLC
                              SRE FLORIDA - 3, LLC
                              SRE GEORGIA - 1, L.P.
                              SRE GEORGIA - 2, L.P.
                              SRE GEORGIA - 3, L.P.
                              SRE HOLDING, LLC
                              SRE NEVADA - 1, LLC
                              SRE NEVADA - 2, LLC
                              SRE NEVADA - 3, LLC
                              SRE SOUTH CAROLINA - 2, LLC
                              SRE TENNESSEE - 1, LLC
                              SRE TENNESSEE - 2, LLC
                              SRE TENNESSEE - 3, LLC
                              SRE TEXAS - 1, L.P.
                              SRE TEXAS - 2, L.P.
                              SRE TEXAS - 3, L.P.
                              SRE VIRGINIA - 1, LLC
                              STEVENS CREEK CADILLAC, INC.
                              TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC
                              TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF
                                ROCK HILL, INC.
                              TOWN AND COUNTRY FORD, INCORPORATED
                              TOWN AND COUNTRY FORD OF CLEVELAND, LLC
                              TOWN AND COUNTRY JAGUAR, LLC
                              TRANSCAR LEASING, INC.
                              VILLAGE IMPORTED CARS, INC.




                                  WINDWARD, INC.

                                  By: /s/ Theodore M. Wright
                                      ------------------------------------------
                                      Name:  Theodore M. Wright
                                      Title: Vice President, Treasurer and Chief
                                      Financial Officer



CONFIRMED AND ACCEPTED,
   as of the date first above written:


MERRILL LYNCH & CO.

MERRILL LYNCH, PIERCE, FENNER & SMITH
            INCORPORATED



By: /s/ signature illegible
   -------------------------------------
            Authorized Signatory





                                   SCHEDULE A

                        Subsidiaries which are Guarantors
                        ---------------------------------

AUTOBAHN, INC. (a California corporation)
CAPITOL CHEVROLET AND IMPORTS, INC. (an Alabama corporation)
COBB PONTIAC CADILLAC, INC. (an Alabama corporation)
FA SERVICE CORPORATION (a California corporation)
FAA AUTO FACTORY, INC. (a California corporation)
FAA BEVERLY HILLS, INC. (a California corporation)
FAA CAPITOL F, INC. (a California corporation)
FAA CAPITOL N, INC. (a California corporation)
FAA CONCORD H, INC. (a California corporation)
FAA CONCORD N, INC. (a California corporation)
FAA CONCORD T, INC. (a California corporation)
FAA DUBLIN N, INC. (a California corporation)
FAA DUBLIN VWD, INC. (a California corporation)
FAA HOLDING CORP. (a California corporation)
FAA LAS VEGAS H, INC. (a Nevada corporation)
FAA MARIN D, INC. (a California corporation)
FAA MARIN F, INC. (a California corporation)
FAA MARIN LR, INC. (a California corporation)
FAA POWAY D, INC. (a California corporation)
FAA POWAY G, INC. (a California corporation)
FAA POWAY H, INC. (a California corporation)
FAA POWAY T, INC. (a California corporation)
FAA SAN BRUNO, INC. (a California corporation)
FAA SANTA MONICA V, INC. (a California corporation)
FAA SERRAMONTE H, INC. (a California corporation)
FAA SERRAMONTE L, INC. (a California corporation)
FAA SERRAMONTE, INC. (a California corporation)
FAA STEVENS CREEK, INC. (a California corporation)
FAA TORRANCE CPJ, INC. (a California corporation)
FIRSTAMERICA AUTOMOTIVE, INC. (a Delaware corporation)
FORT MILL CHRYSLER-PLYMOUTH-DODGE INC. (a South Carolina corporation)
FORT MILL FORD, INC. (a South Carolina corporation)
FRANCISCAN MOTORS, INC. (a California corporation)
FREEDOM FORD, INC. (a Florida corporation)
FRONTIER OLDSMOBILE-CADILLAC, INC. (a North Carolina corporation)
HMC FINANCE ALABAMA, INC. (an Alabama corporation)
KRAMER MOTORS INCORPORATED (a California corporation)
LAWRENCE MARSHALL CHEVROLET, LLC (a Delaware limited liability company)
LAWRENCE MARSHALL CHEVROLET, L.P. (a Texas limited partnership)
L DEALERSHIP GROUP, INC. (a Texas corporation)

                                      -1-



MARCUS DAVID CORPORATION (a North Carolina corporation)
PHILPOTT MOTORS, LTD. (a Texas limited partnership)
RIVERSIDE NISSAN, INC. (an  Oklahoma corporation)
ROYAL MOTOR COMPANY, INC. (an Alabama corporation)
SANTA CLARA IMPORTED CARS, INC. (a California corporation)
SMART NISSAN, INC. (a California corporation)
SONIC AUTOMOTIVE - BONDESEN, INC. (a Florida corporation)
SONIC AUTOMOTIVE OF CHATTANOOGA, LLC (a Tennessee limited liability company)
SONIC AUTOMOTIVE-CLEARWATER, INC. (a Florida corporation)
SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER, INC. (a Florida corporation)
SONIC AUTOMOTIVE F&I, LLC (a Nevada limited liability company)
SONIC AUTOMOTIVE OF GEORGIA, INC. (a Georgia corporation)
SONIC AUTOMOTIVE OF NASHVILLE, LLC (a Tennessee limited liability company)
SONIC AUTOMOTIVE OF NEVADA, INC. (a Nevada corporation)
SONIC AUTOMOTIVE SERVICING COMPANY, LLC (a Nevada limited liability company)
SONIC AUTOMOTIVE OF TENNESSEE, INC. (a Tennessee corporation)
SONIC AUTOMOTIVE OF TEXAS, L.P. (a Texas limited partnership)
SONIC AUTOMOTIVE WEST, LLC (a Nevada limited liability company)
SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC. (a Florida corporation)
SONIC AUTOMOTIVE-1400 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
SONIC AUTOMOTIVE-1455 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
SONIC AUTOMOTIVE-1495 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
SONIC AUTOMOTIVE-1500 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation)
SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC. (a Florida corporation)
SONIC AUTOMOTIVE - 1720 MASON AVE., DB, LLC (a Florida limited liability
     company)
SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC. (a Florida corporation)
SONIC AUTOMOTIVE - 21699 U.S. HWY 19 N., INC. (a Florida corporation)
SONIC AUTOMOTIVE - 241 RIDGEWOOD AVE., HH, INC. (a Florida corporation)
SONIC AUTOMOTIVE 2424 LAURENS RD., GREENVILLE, INC. (a South Carolina
     corporation)
SONIC AUTOMOTIVE - 2490 SOUTH LEE HIGHWAY, LLC (a Tennessee limited liability
     company)
SONIC AUTOMOTIVE 2752 LAURENS RD., GREENVILLE, INC. (a South Carolina
     corporation)
SONIC AUTOMOTIVE - 3401 N. MAIN, TX, L.P. (a Texas limited partnership)
SONIC AUTOMOTIVE-3700 WEST BROAD STREET, COLUMBUS, INC. (an Ohio corporation)
SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC. (a Florida corporation)
SONIC AUTOMOTIVE-4000 WEST BROAD STREET, COLUMBUS, INC. (an Ohio corporation)
SONIC AUTOMOTIVE - 4701 I-10 EAST, TX, L.P. (a Texas limited partnership)
SONIC AUTOMOTIVE - 5221 I-10 EAST, TX, L.P. (a Texas limited partnership)
SONIC AUTOMOTIVE  5260 PEACHTREE INDUSTRIAL BLVD., LLC (a Georgia limited
     liability company)

                                      -2-



SONIC AUTOMOTIVE-5585 PEACHTREE INDUSTRIAL BLVD., LLC (a Georgia limited
    liability company)
SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC. (a Florida corporation)
SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE, LLC (a Tennessee limited liability
    company)
SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE, NC, LLC (a North Carolina limited
    liability company)
SONIC - BETHANY H, INC. (an Oklahoma corporation)
SONIC - 2185 CHAPMAN RD., CHATTANOOGA, LLC (a Tennessee limited liability
    company)
SONIC - BUENA PARK H, INC. (a California corporation)
SONIC - CAMP FORD, L.P. (a Texas limited partnership)
SONIC - CAPITAL CHEVROLET, INC. (an Ohio corporation)
SONIC - CARROLLTON V, L.P. (a Texas limited partnership)
SONIC CHRYSLER-PLYMOUTH-JEEP, LLC (a North Carolina limited liability company)
SONIC - CLASSIC DODGE, INC. (an Alabama corporation)
SONIC - COAST CADILLAC, INC. (a California corporation)
SONIC DODGE, LLC (a North Carolina limited liability company)
SONIC DEVELOPMENT, LLC (a North Carolina limited liability company)
SONIC - FM AUTOMOTIVE, LLC (a Florida limited liability company)
SONIC - FM , INC. (a Florida corporation)
SONIC - FM NISSAN, INC. (a Florida corporation)
SONIC - FM VW, INC. (a Florida corporation)
SONIC - FORT WORTH T, L.P. (a Texas limited partnership)
SONIC - FREELAND, INC. (a Florida corporation)
SONIC - GLOBAL IMPORTS, L.P. (a Georgia limited partnership)
SONIC-GLOVER, INC. (an Oklahoma corporation)
SONIC - HARBOR CITY H, INC. (a California corporation)
SONIC - HOUSTON V, L.P. (a Texas limited partnership)
SONIC - INTEGRITY DODGE LV, LLC (a Nevada limited liability company)
SONIC - LAS VEGAS C EAST, LLC (a Nevada limited liability company)
SONIC - LAS VEGAS C WEST, LLC (a Nevada limited liability company)
SONIC - LLOYD NISSAN, INC. (a Florida corporation)
SONIC - LLOYD PONTIAC - CADILLAC, INC. (a Florida corporation)
SONIC - LUTE RILEY, L. P. (a Texas limited partnership)
SONIC - MANHATTAN FAIRFAX, INC. (a Virginia corporation)
SONIC - MANHATTAN WALDORF, INC. (a Maryland corporation)
SONIC - MONTGOMERY FLM, INC. (an Alabama corporation)
SONIC - NEWSOME CHEVROLET WORLD, INC. (a South Carolina corporation)
SONIC - NEWSOME OF FLORENCE, INC. (a South Carolina corporation)
SONIC - NORTH CHARLESTON, INC. (a South Carolina corporation)
SONIC - NORTH CHARLESTON DODGE, INC. (a South Carolina corporation)
SONIC - PARK PLACE A, L.P. (a Texas limited partnership) (formerly Sonic -
    Dallas Auto Factory, L.P.)

                                      -3-



SONIC PEACHTREE INDUSTRIAL BLVD., L.P. (a Georgia limited partnership)
SONIC - READING, L.P. (a Texas limited partnership)
SONIC RESOURCES, INC. (a Nevada corporation)
SONIC - RICHARDSON F, L.P. (a Texas limited partnership)
SONIC-RIVERSIDE, INC. (an Oklahoma corporation)
SONIC - RIVERSIDE AUTO FACTORY, INC. (an Oklahoma corporation)
SONIC - ROCKVILLE IMPORTS, INC. (a Maryland corporation)
SONIC - ROCKVILLE MOTORS, INC. (a Maryland corporation)
SONIC - SAM WHITE NISSAN, L.P. (a Texas limited partnership)
SONIC - SHOTTENKIRK, INC. (a Florida corporation)
SONIC - STEVENS CREEK B, INC. (a California corporation) (formerly known as Don
    Lucas International, Inc.)
SONIC - SUPERIOR OLDSMOBILE, LLC (a Tennessee limited liability company)
SONIC OF TEXAS, INC. (a Texas corporation)
SONIC-VOLVO LV, LLC (a Nevada limited liability company)
SONIC - WEST COVINA T, INC. (a California corporation)
SONIC - WEST RENO CHEVROLET, INC. (an Oklahoma corporation)
SONIC - WILLIAMS BUICK, INC. (an Alabama corporation)
SONIC - WILLIAMS CADILLAC, INC. (an Alabama corporation)
SONIC - WILLIAMS IMPORTS, INC. (an Alabama corporation)
SONIC - WILLIAMS MOTORS, LLC (an Alabama limited liability company)
SPEEDWAY CHEVROLET, INC. (an Oklahoma corporation)
SRE ALABAMA - 2, LLC (an Alabama limited liability company)
SRE ALABAMA - 3, LLC (an Alabama limited liability company)
SREALESTATE ARIZONA - 1, LLC (an Arizona limited liability company)
SREALESTATE ARIZONA - 2, LLC (an Arizona limited liability company)
SREALESTATE ARIZONA - 3, LLC (an Arizona limited liability company)
SREALESTATE ARIZONA - 4, LLC (an Arizona limited liability company)
SRE FLORIDA - 1, LLC (a Florida limited liability company)
SRE FLORIDA - 2, LLC (a Florida limited liability company)
SRE FLORIDA - 3, LLC (a Florida limited liability company)
SRE GEORGIA - 1, L.P. (a Georgia limited liability partnership)
SRE GEORGIA - 2, L.P. (a Georgia limited liability partnership)
SRE GEORGIA - 3, L.P. (a Georgia limited liability partnership)
SRE HOLDING, LLC (a North Carolina limited liability company)
SRE NEVADA - 1, LLC (a Nevada limited liability company)
SRE NEVADA - 2, LLC (a Nevada limited liability company)
SRE NEVADA - 3, LLC (a Nevada limited liability company)
SRE SOUTH CAROLINA - 2, LLC (a South Carolina limited liability company)
SRE TENNESSEE - 1, LLC (a Tennessee limited liability company)
SRE TENNESSEE - 2, LLC (a Tennessee limited liability company)
SRE TENNESSEE - 3, LLC (a Tennessee limited liability company)
SRE TEXAS - 1, L.P. (a Texas limited partnership)
SRE TEXAS - 2, L.P. (a Texas limited partnership)
SRE TEXAS - 3, L.P. (a Texas limited partnership)

                                      -4-





SRE VIRGINIA - 1, LLC (a Virginia limited liability company)
STEVENS CREEK CADILLAC, INC. (a California corporation)
TRANSCAR LEASING, INC. (a California corporation)
TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC (a Tennessee limited liability
     company]
TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF ROCK HILL, INC. (a South Carolina
     corporation)
TOWN AND COUNTRY DODGE OF CHATTANOOGA, LLC (a Tennessee limited liability
     company)
TOWN AND COUNTRY FORD, INCORPORATED (a North Carolina corporation)
TOWN AND COUNTRY FORD OF CLEVELAND, LLC (a Tennessee limited liability
     company)
TOWN AND COUNTRY JAGUAR, LLC (a Tennessee limited liability company)
VILLAGE IMPORTED CARS, INC. (a Maryland corporation), and
WINDWARD, INC. (a Hawaii corporation)

                                      -5-



                                   SCHEDULE B

 Aggregate Principal Amounts of Securities to be Purchased by each Initial
 -------------------------------------------------------------------------
                                   Purchaser
                                   ---------


Merrill Lynch, Pierce, Fenner & Smith
            Incorporated                                      $45,000,000

Banc of America Securities LLC                                $30,000,000




                                   SCHEDULE C


                                 2% Subsidiaries
                                 ----------------


                                 Autobahn, Inc.

                         Sonic Automotive of Texas, L.P.

                          Sonic - Global Imports, L.P.

                            Sonic - Lute Riley, L.P.

                           Sonic - Richardson F, L.P.






                                   SCHEDULE D


                                   Securities
                                   ----------

     1. The initial offering price of the Securities (including the Guarantees)
shall be 100.5% of the principal amount thereof, plus accrued interest, if any,
from the date of issuance.

     2. The purchase price to be paid by the Initial Purchasers for the
Securities and the Guarantees shall be 98.8% of the principal amount thereof.

                                      -1-

EX-4.13

                                                                    Exhibit 4.13
                             SUBORDINATION AGREEMENT

        This Subordination Agreement (as the same may from time to time be
amended, modified or restated, the "Agreement") is dated as of November 19, 2001
and is entered into by and between O. BRUTON SMITH (the "Junior Creditor") and
U.S. Bank Trust National Association (the "Trustee"), a bank organized under the
laws of the United States, as Trustee under an Indenture dated as of November
19, 2001 (the "Indenture") among Sonic Automotive, Inc. (the "Issuer"), the
Guarantors named therein (the "Guarantors"), and the Trustee, and acting
hereunder for the benefit of the holders (the "Holders") of the Issuer's
$75,000,000 in principal amount of Senior Subordinated Notes Due 2008, Series C
(the "Issuer's Senior Notes") issued pursuant to the Indenture (in such
capacity, "Senior Creditor").

                              W I T N E S S E T H:

        WHEREAS, the Junior Creditor has a financial interest in the Issuer
relating to the Issuer's obligation to repay the Junior Creditor a debt in the
principal amount of $5,500,000 evidenced by the Issuer's Subordinated Promissory
Note dated December 15, 1997 (collectively with any instrument that may be
substituted for such note, the "Subordinated Note");

        WHEREAS, the Issuer and the Trustee have entered into the Indenture for
the benefit of the Holders and providing for the issuance by the Issuer's Senior
Notes;

        WHEREAS, the Junior Creditor acknowledges that the issuance of the
Issuer's Senior Notes and the Issuer's receipt of the proceeds from the sale
thereof is of direct pecuniary value to the Junior Creditor;

        NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged by the Junior Creditor, and in order to induce the
Holders to purchase the Issuer's Senior Notes for the benefit of the Issuer and
to provide the ranking of the Issuer's Senior Notes among the Issuer's debt as
disclosed in the Issuer's Offering Memorandum dated November 8, 2001 relating to
the sale of the Issuer's Senior Notes, the Junior Creditor hereby agrees with
Trustee, for the benefit of the Holders, as hereinafter set forth.

        1.  Certain Defined Terms.  In addition to the terms defined above and
            ---------------------
elsewhere in this Agreement, the following terms used in this Agreement shall
have the following meanings, applicable both to the singular and the plural
forms of the terms defined:

        As used in this Agreement:

        "Issuer" shall mean Sonic Automotive, Inc., a Delaware corporation or
any successor assign or assign of Sonic Automotive, Inc., including, without
limitation, a receiver, trustee or debtor-in-possession.

        "Senior Debt" shall mean (a) the indebtedness evidenced by the Issuer's
Senior Notes and all other obligations, liabilities, and indebtedness issued or
arising pursuant to the Indenture, in each case whether now existing or
hereafter arising (and whether such indebtedness arises or accrues before or
after the commencement of any bankruptcy, insolvency or receivership
proceedings) directly between Issuer and the Senior Creditor, or acquired
outright, conditionally or as collateral security from another by the Senior
Creditor, including, without limitation, interest and fees accruing pre-petition
or post-petition at the rate or rates prescribed in Issuer's Senior Notes and
costs, expenses, and attorneys' and paralegals'



fees, whenever incurred (and whether or not such claims, interest, costs,
expenses or fees are allowed or allowable in any such proceeding); and (b)
amounts disbursed or advanced (including, without limitation in connection with
the provision of any financing or other financial accommodations pursuant to
Section 364 of the Bankruptcy Code) by the Senior Creditor which the Senior
Creditor, in its good faith discretion and to the extent the same may be
permitted under the Indenture, deems necessary or desirable to preserve or
protect any collateral now or hereafter securing all or any portion of the
Senior Debt or to enhance the likelihood or maximize the amount of repayment of
the Senior Debt, including, but not limited to, all protective advances, costs,
expenses, and attorneys' and paralegals' fees, whensoever made, advanced or
incurred by the Senior Creditor in connection with the Senior Debt or the
collateral therefor ("Preservation Debt").

        "Subordinated Debt" shall mean (a) all principal of, and premium, if
any, and interest on, the Subordinated Note, and (b) all other indebtedness,
fees, expenses, obligations and liabilities of the Issuer (or any other person,
firm, partnership or corporation for the benefit of Issuer) to the Junior
Creditor, whether now existing or hereafter incurred or created, under or with
respect to the Subordinated Note, in each case, whether such amounts are due or
not due, direct or indirect, absolute or contingent.

        2. Standby; Subordination. The payment and performance of the
           ----------------------
Subordinated Debt is hereby subordinated to the Senior Debt and, except as set
forth in Section 3 below, the Junior Creditor will not accelerate, ask, demand,
sue for, take or receive from Issuer, by setoff or in any other manner, the
whole or any part of the Subordinated Debt, including, without limitation, the
taking of any negotiable instruments evidencing such amounts, nor any security
for any of the Subordinated Debt, unless and until all of the Senior Debt shall
have been fully and indefeasibly paid and satisfied in cash. The Junior Creditor
also hereby agrees that, regardless of whether the Senior Debt is secured or
unsecured, then the Senior Creditor shall be subrogated for the Junior Creditor
with respect to the Junior Creditor's claims against the Issuer and the Junior
Creditor's rights, liens and security interests, if any, in any of the Issuer's
assets or any other assets securing the Senior Debt and the proceeds thereof
until all of the Senior Debt has been fully and indefeasibly paid and satisfied
in cash.

        3. Permitted Payments. Notwithstanding the provisions of Section 2 of
           ------------------
this Agreement, until the occurrence of a "Default" or an "Event of Default" (as
these terms are defined in the Indenture), and provided that (i) there shall not
then exist any breach of this Agreement by the Junior Creditor which has not
been waived, in writing, by the Senior Creditor, and (ii) the payment described
below, if made, would not give rise to the occurrence of an Event of Default,
Issuer may pay to the Junior Creditor, and the Junior Creditor may accept from
Issuer, regularly scheduled payments of interest, when due, on an unaccelerated
basis, pursuant to the Subordinated Note provided the maximum interest rate at
which such payments shall be permitted shall not exceed the "Prime Rate"
announced from time to time by Bank of America N.A. in Charlotte, North
Carolina, or any successor, plus 0.5% per annum ("Permitted Payments"), it being
understood and agreed by the Junior Creditor that the Subordinated Note may not
be modified or amended without the prior written consent of the Senior Creditor.

        4. Enforcement Rights. Prior to the indefeasible payment in full in
           ------------------
cash of the Senior Debt and the termination of all financing arrangements
between Issuer and the Senior Creditor, the Junior Creditor shall not have any
right to enforce any claim with respect to the Subordinated Debt, including,
without limitation, any Permitted Payment, or otherwise to take any action
against the Issuer or the Issuer's property without the Senior Creditor's prior
written consent.

        5. Liens; Permitted Transfers. The Junior Creditor hereby represents as
           --------------------------
of the date hereof that the Junior Creditor has not been granted or obtained any
liens or security interests in any assets of the Debtor Parties or any other
assets securing the Senior Debt. The Junior Creditor agrees that, without the
prior written consent of the Senior Creditor, the Junior Creditor shall not take
any liens on or security

                                       2



interests in any assets of the Issuer or any other assets securing the Senior
Debt. The Junior Creditor acknowledges and agrees that, to the extent the terms
and provisions of this Agreement are inconsistent with the Subordinated Note,
the Subordinated Note shall be deemed to be subject to this Agreement. The
Junior Creditor agrees that, without the prior written consent of the Senior
Creditor, the Junior Creditor shall not take any liens on or security interests
in any assets of the Issuer or any other assets securing the Senior Debt. In the
event that the Issuer proposes to sell, assign, transfer, lease, convey or
otherwise dispose of any of its property (a "Transfer") and such Transfer is
either permitted pursuant to the Indenture or pursuant to a separate consent
executed by the Senior Creditor, then such Transfer shall be deemed to be
permitted and consented to by the Junior Creditor and shall not constitute a
violation or breach of any terms contained in the Subordinated Note. The Junior
Creditor acknowledges and agrees that, to the extent the terms and provisions of
this Agreement are inconsistent with the Subordinated Note, the Subordinated
Note shall be deemed to be subject to this Agreement.

        6. Subordinated Debt Owed Only to the Junior Creditor. The Junior
           --------------------------------------------------
Creditor warrants and represents that (a) the Junior Creditor has not previously
assigned any interest in the Subordinated Debt or any security interest in
connection therewith, if any; (b) no other party owns an interest in the
Subordinated Debt or security therefor other than the Junior Creditor (whether
as joint holders of the Subordinated Debt, participants or otherwise); and that
the entire Subordinated Debt is owing only to the Junior Creditor. The Junior
Creditor covenants that the entire Subordinated Debt shall continue to be owing
only to the Junior Creditor and all security therefor, if any, shall continue to
be held solely for the benefit of the Junior Creditor.

        7. Senior Creditor Priority. In the event of any distribution, division,
           ------------------------
or application, partial or complete, voluntary or involuntary, by operation of
law or otherwise, of all or any part of the assets of Issuer or the proceeds
thereof to the creditors of Issuer or readjustment of the obligations and
Subordinated Debt of Issuer, whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or any other
action or proceeding involving the readjustment of all or any part of the Senior
Debt or the Subordinated Debt, or the application of the assets of Issuer to the
payment or liquidation thereof, or upon the dissolution or other winding up of
Issuer's business, or upon the sale of all or substantially all of Issuer's
assets (an "Insolvency or Liquidation Proceeding"), then, and in any such event,
(i) the Senior Creditor shall be entitled to receive indefeasible payment in
full in cash of any and all of the Senior Debt prior to the payment of all or
any part of the Subordinated Debt, and (ii) any payment or distribution of any
kind or character, whether in cash, securities or other property, which shall be
payable or deliverable upon or with respect to any or all of the Subordinated
Debt shall be paid or delivered directly to the Senior Creditor for application
on any of the Senior Debt, due or not due, until the Senior Debt shall have
first been fully and indefeasibly paid and satisfied in cash.

        8. Grant of Authority to the Senior Creditor. In the event of the
           -----------------------------------------
occurrence of any Insolvency or Liquidation Proceeding, and in order to enable
the Senior Creditor to enforce its rights hereunder in any of the aforesaid
actions or proceedings, the Senior Creditor is hereby irrevocably authorized and
empowered, in the Senior Creditor's discretion, to file, make and present for
and on behalf of the Junior Creditor such proofs of claims against the Issuer on
account of the Subordinated Debt or other motions or pleadings as the Senior
Creditor may deem expedient or proper and to vote such proofs of claims in any
such proceeding and to receive and collect any and all dividends or other
payments or disbursements made thereon in whatever form the same may be paid or
issued and to apply the same on account of any portion of the Senior Debt. In
voting such proofs of claim in any proceeding, the Senior Creditor may act in a
manner consistent with its sole interest and shall have no duty to take any
action to optimize or maximize the Junior Creditor's recovery with respect to
its claim. The Junior Creditor irrevocably authorizes and empowers the Senior
Creditor to demand, sue for, collect and receive each of the aforesaid payments
and distributions described in Section 7 above and give acquittance therefor and
to file claims and take such other actions, in the Senior Creditor's own name or
in the name of the Junior

                                       3



Creditor or otherwise, as the Senior Creditor may deem necessary or advisable.
To the extent that payments or distributions are made in property other than
cash, the Junior Creditor authorizes the Senior Creditor to sell such property
to such buyers and on such terms as the Senior Creditor, in its sole discretion,
shall determine. The Junior Creditor will execute and deliver to the Senior
Creditor such powers of attorney, assignments and other instruments or
documents, including notes and stock certificates (together with such
assignments or endorsements as the Senior Creditor shall deem necessary), as may
be requested by the Senior Creditor in order to enable the Senior Creditor and
to enforce any and all claims of the Senior Creditor upon or with respect to any
or all of the Subordinated Debt and to collect and receive any and all payments
and distributions which may be payable or deliverable at any time upon or with
respect to the Subordinated Debt, all for the Senior Creditor's own benefit.
Following the indefeasible payment in full in cash of the Senior Debt, the
Senior Creditor shall remit to the Junior Creditor, all dividends or other
payments or distributions paid to and held by the Senior Creditor in excess of
the Senior Debt. Each of the powers and authorizations granted to the Senior
Creditor in this Section 8, being coupled with an interest, is irrevocable.

        9.  Payments Received by the Junior Creditor. Except for Permitted
            ----------------------------------------
Payments received by the Junior Creditor prior to the occurrence of an a
"Default" or "Event of Default" as provided in Section 3 above, should any
payment or distribution or security or instrument or proceeds thereof be
received by the Junior Creditor upon or with respect to the Subordinated Debt or
any other obligations of the Issuer to the Junior Creditor prior to the
indefeasible payment in full in cash of all of the Senior Debt and termination
of all financing arrangements between the Issuer and the Senior Creditor, the
Junior Creditor shall receive and hold the same in a segregated account in
trust, as trustee, for the benefit of the Senior Creditor, and shall forthwith
deliver the same to the Senior Creditor, in precisely the form received (except
for the endorsement or assignment of the Junior Creditor where necessary), for
application on any of Senior Debt, due or not due, and, until so delivered, the
same shall be held in trust by the Junior Creditor as the property of the Senior
Creditor. In the event of the failure of the Junior Creditor to make any such
endorsement or assignment to the Senior Creditor, the Senior Creditor, or any of
its officers or employees, is hereby irrevocably authorized to make the same
(which authorization, being coupled with an interest, is irrevocable).

        10. Instrument Legend. Any instrument evidencing any of the
            -----------------
Subordinated Debt (including, without limitation, the Subordinated Note), or any
portion thereof, will, on the date hereof, be inscribed with a legend
conspicuously indicating that payment thereof is subordinated to the claims of
the Senior Creditor pursuant to the terms of this Agreement, and a copy thereof
will be delivered to the Senior Creditor on the date hereof. Any instrument
evidencing any of the Subordinated Debt, or any portion thereof, which is
hereafter executed by Issuer, will, on the date thereof, be inscribed with the
aforesaid legend and a copy thereof will be delivered to the Senior Creditor on
the date of its execution or within five (5) business days thereafter.

        11. Reimbursements for Expenses and Borrowings from Issuer; Restriction
            -------------------------------------------------------------------
on Assignment of Claims. Except as permitted in Section 3 hereof, the Junior
- -----------------------
Creditor agrees that until the Senior Debt has been indefeasibly paid in full in
cash and satisfied and all financing arrangements between the Debtor Parties and
the Senior Creditor have been terminated, the Junior Creditor will not, directly
or indirectly, accept or receive the benefit of any remuneration or
reimbursement for expenses on account of the Subordinated Debt from or on behalf
of any Debtor Party and will not assign or transfer to others any claim the
Junior Creditor has or may have against Issuer, unless such assignment or
transfer is made expressly subject to this Agreement.

        12. Continuing Nature of Subordination.  This Agreement shall be
            ----------------------------------
effective and may not be terminated or otherwise revoked by the Junior Creditor
until the Senior Debt shall have been indefeasibly paid in full in cash and
satisfied and all financing arrangements among Debtor Parties and the Senior

                                       4



Creditor have been terminated. The Junior Creditor hereby waives to the fullest
extent permitted by applicable law any right it may have to terminate or revoke
this Agreement or any of the provisions of this Agreement. In the event the
Junior Creditor shall have any right under applicable law otherwise to terminate
or revoke this Agreement which right cannot be waived, such termination or
revocation shall not be effective until written notice of such termination or
revocation, signed by the Junior Creditor, is actually received by the Senior
Creditor's officer responsible for such matters In the absence of the
circumstances described in the immediately preceding sentence, this is a
continuing agreement of subordination and the Senior Creditor may continue, at
any time and without notice to the Junior Creditor, to extend credit or other
financial accommodations and loan monies to or for the benefit of a Debtor Party
on the faith hereof. Any termination or revocation described hereinabove shall
not affect this Agreement in relation to (a) any of the Senior Debt which arose
or was committed to prior to receipt thereof, or (b) any of the Senior Debt
created after receipt thereof if such Senior Debt is Preservation Debt.

        13. Additional Agreements between the Senior Creditor and Issuer. The
            ------------------------------------------------------------
Senior Creditor at any time and from time to time, either before or after any
such aforesaid notice of termination or revocation, may enter into such
agreement or agreements with a Issuer as the Senior Creditor may deem proper,
extending the time of payment of or renewing or otherwise altering the terms,
including, without limitation increasing the principal amount thereof, of all or
any portion of the Senior Debt or affecting the security underlying any or all
of the Senior Debt, and may exchange, sell, release, surrender or otherwise deal
with any such security, without in any way thereby impairing or affecting this
Agreement.

        14. Junior Creditor's Waivers. All of the Senior Debt shall be deemed
            -------------------------
to have been made or incurred in reliance upon this Agreement. The Junior
Creditor expressly waives all notice of the acceptance by the Senior Creditor of
the subordination and other provisions of this Agreement and all other notices
not specifically required pursuant to the terms of this Agreement whatsoever,
and the Junior Creditor expressly waives reliance by the Senior Creditor upon
the subordination and other agreements as herein provided. In the event that the
Junior Creditor has or at any time acquires any lien upon or security interest
in the assets securing the Senior Debt, or any part thereof, to the fullest
extent permitted by applicable law, the Junior Creditor hereby waives any right
that the Junior Creditor may have whether such right arises under Sections 9-504
or 9-505 of the Uniform Commercial Code or other applicable law, to receive
notice of the Senior Creditor's intended disposition of such assets (or a
portion thereof) or of the Senior Creditor's proposed retention of such assets
in satisfaction of the Senior Debt (or a portion thereof). The Junior Creditor
further agrees that in the event Issuer consents or fails to object to a
proposed retention of such assets (or a portion thereof) by the Senior Creditor
in satisfaction of the Senior Debt (or a portion thereof), the Junior Creditor
hereby consents to such proposed retention regardless of whether the Junior
Creditor is provided with notice of such proposed retention. The Junior Creditor
agrees that the Junior Creditor will not interfere with or in any manner oppose
a disposition of any assets securing the Senior Debt by the Senior Creditor. The
Junior Creditor agrees that the Senior Creditor has not made any warranties or
representations with respect to the due execution, legality, validity,
completeness or enforceability of the Issuer's Senior Notes, or the
collectibility of the Senior Debt, that the Senior Creditor shall be entitled to
manage and supervise its financial accommodations to Issuer in accordance with
applicable law and its usual practices, modified from time to time as deemed
appropriate under the circumstances, without regard to the existence of any
rights that the Junior Creditor may now or hereafter have in or to any of the
assets of Issuer, and that Senior Creditor shall have no liability to the Junior
Creditor for, and waive any claim which the Junior Creditor may now or hereafter
have against, the Senior Creditor arising out of any and all actions which the
Senior Creditor, in good faith, takes or omits to take (including, without
limitation, actions with respect to the creation, perfection or continuation of
liens or security interests in any collateral now or hereafter securing any of
the Senior Debt, actions with respect to the occurrence of an Event of Default,
actions with respect to the foreclosure upon, sale, release, or depreciation of,
or failure to realize upon, any of the Collateral and actions with respect to
the collection of any claim for all or any part of the Senior Debt from any
account debtor, guarantor or any

                                       5



other party) with respect to the Senior Debt or any agreement related thereto or
to the collection of the Senior Debt or the valuation, use, protection or
release of the collateral now or hereafter securing any of the Senior Debt for
the Senior Debt.

        15. Invalidated Payments. To the extent that the Senior Creditor
            --------------------
receives payments on, or proceeds of collateral for, the Senior Debt which are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
avoided and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law, equitable cause or
pursuant to the Indenture, then, to the extent of such payment or proceeds
received, the Senior Debt, or part thereof, intended to be satisfied shall be
revived and continue in full force and effect as if such payments or proceeds
had not been received by the Senior Creditor.

        16. Bankruptcy Issues. The Junior Creditor agrees that the Senior
            -----------------
Creditor may consent to the use of cash collateral or provide financing to a
Issuer (under Section 363 or Section 364 of the Bankruptcy Code or otherwise) on
such terms and conditions and in such amounts as the Senior Creditor, in its
sole discretion, may decide and that, in connection with such cash collateral
usage or such financing, the Issuer (or a trustee appointed for the estate of
the Issuer) may grant to the Senior Creditor liens and security interests upon
all assets of the Issuer, which liens and security interests (i) shall secure
payment of all Senior Debt (whether such Senior Debt arose prior to the filing
of the petition for relief or arise thereafter); and (ii) shall be superior in
priority to the liens and security interests, if any, held by the Junior
Creditor on the assets of the Debtor Parties. All allocations of payments
between the Senior Creditor and the Junior Creditor shall, subject to any court
order, continue to be made after the filing or other commencement of any
Insolvency or Liquidation Proceeding on the same basis that the payments were to
be allocated prior to the date of such filing or commencement. The Junior
Creditor agrees that he will not object to or oppose a sale or other disposition
of any assets securing the Senior Debt (or any portion thereof) free and clear
of security interests, liens or other claims of the Junior Creditor, if any,
under Section 363 of the Bankruptcy Code or any other provision of the
Bankruptcy Code if the Senior Creditor has consented to such sale or disposition
of such assets. In the event that the Junior Creditor has or at any time
acquires any security for the Subordinated Debt, the Junior Creditor agrees not
to assert any right it may have to "adequate protection" of its interest in such
security in any Insolvency or Liquidation Proceeding and agrees that he will not
seek to have the automatic stay lifted with respect to such security, without
the prior written consent of the Senior Creditor. The Junior Creditor waives any
claim he may now or hereafter have arising out of the Senior Creditor's
election, in any proceeding instituted under Chapter 11 of the Bankruptcy Code,
of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any
borrowing or grant of a security interest under Section 364 of the Bankruptcy
Code by a Issuer, as debtor in possession. The Junior Creditor agrees not to
initiate or prosecute or encourage any other person to initiate or prosecute any
claim, action or other proceeding (i) challenging the enforceability of the
Senior Creditor's claim, (ii) challenging the enforceability of any liens or
security interests in assets securing the Senior Debt or (iii) asserting any
claims which the Issuer may hold with respect to the Senior Creditor. The Junior
Creditor agrees that he will not seek participation or participate on any
creditors' committee without the Senior Creditor's prior written consent. In the
event that the Senior Creditor consents to such participation, at the request of
the Senior Creditor, the Junior Creditor will resign from his position on such
committee. To the extent that the Senior Creditor receives payments on, or
proceeds of collateral for, the Senior Debt which are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law, or equitable cause, then, to the extent of such
payment or proceeds received, the Senior Debt, or part thereof, intended to be
satisfied shall be revived and continue in full force and effect as if such
payments or proceeds had not been received by the Senior Creditor.

                                       6



         17.  Senior Creditor's Waivers. No right of the Senior Creditor to
              -------------------------
enforce the subordination or other terms as provided in this Agreement shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of Issuer or by any act or failure to act by the Senior Creditor, or by
any noncompliance by Issuer with the terms, provisions and covenants of this
Agreement, or the Subordinated Note, regardless of any knowledge thereof which
the Senior Creditor may have or be otherwise charged with. No waiver shall be
deemed to be made by the Senior Creditor of any of the Senior Creditor's rights
hereunder, unless the same shall be in writing signed on behalf of the Senior
Creditor, and each waiver, if any, shall be a waiver only with respect to the
specific instance involved and shall in no way impair the rights of the Senior
Creditor or the obligations of the Junior Creditor to the Senior Creditor in any
other respect at any other time. The failure of the Senior Creditor to enforce
at any time any provision of this Agreement shall not be construed to be a
waiver of such provisions, nor in any way to affect the validity of this
Agreement or any part hereof or the right of the Senior Creditor thereafter to
enforce each and every such provision. No waiver by the Senior Creditor of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.

         18.  Information Concerning Financial Condition of Issuer. The Junior
              ----------------------------------------------------
Creditor hereby assumes responsibility for keeping informed of the financial
condition of Issuer, any and all endorsers and any and all guarantors of the
Senior Debt and of all other circumstances bearing upon the risk of nonpayment
of the Senior Debt and/or Subordinated Debt that diligent inquiry would reveal,
and the Junior Creditor hereby agrees that the Senior Creditor shall not have
any duty to advise the Junior Creditor of information known to the Senior
Creditor regarding such condition or any such circumstances. In the event the
Senior Creditor, in its sole discretion, undertakes, at any time or from time to
time, to provide any such information to the Junior Creditor, the Senior
Creditor shall be under no obligation (i) to provide any such information to the
Junior Creditor on any subsequent occasion, or (ii) to undertake any
investigation not a part of Senior Creditor's regular business routine and shall
be under no obligation to disclose any information which, pursuant to accepted
or reasonable commercial finance practices, the Senior Creditor wishes to
maintain confidential. The Junior Creditor hereby agrees that all payments
received by the Senior Creditor may be applied, reversed, and reapplied, in
whole or in part, to any portion of the Senior Debt, as the Senior Creditor, in
its sole discretion, deem appropriate and assent to any extension or
postponement of the time of payment of the Senior Debt or to any other
indulgence with respect thereto, to any substitution, exchange or release of
collateral which may at any time secure the Senior Debt and to the addition or
release of any other party or person primarily or secondarily liable therefor.

         Without in any way limiting the generality of the foregoing paragraph,
the Senior Creditor, may, at any time and from time to time, without the consent
of, or notice to, the Junior Creditor without incurring any liabilities to the
Junior Creditor and without impairing or releasing the subordination and other
benefits provided in this Agreement (even if any right of subrogation or other
right or remedy of the Junior Creditor is affected, impaired or extinguished
thereby) do any one or more of the following:

         (i)  change the manner, place or terms of payment or change or extent
the time of payment of, or renew, exchange, amend, increase or alter, the terms
of any of the Senior Debt or any lien in any of any collateral now or hereafter
securing all or any portion of the Senior Debt or guaranty thereof or any
liability of a Issuer or any guarantor, or any liability incurred directly or
indirectly in respect thereof (including, without limitation, any extension of
the Senior Debt, without any restriction as to the tenor or terms of any such
extension), or otherwise amend, renew, exchange, extend, modify, supplement in
any manner the Senior Debt or any related documents.

         (ii) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any part of the Collateral or
other property securing the Senior Debt or any liability of a Issuer or any
guarantor to such holder, or any liability incurred directly or indirectly in
respect thereof;

                                       7



         (iii) settle or compromise any Senior Debt or any other liability of a
Issuer or any guarantor or any security therefor or any liability incurred
directly or indirectly in respect thereof and apply any sums by whomsoever paid
and however realized to any liability (including, without limitation, the Senior
Debt) in any manner or order; and

         (iv)  exercise or delay in or refrain from exercising any right or
remedy against a Issuer or any security or any guarantor or any other Person,
elect any remedy and otherwise deal freely with a Issuer and the collateral and
any security and any guarantor or any liability of a Issuer or any guarantor to
such holder or any liability incurred directly or indirectly in respect thereof.

         The Senior Creditor shall have no duty to the Junior Creditor with
respect to the preservation or maintenance of any collateral now or hereafter
securing all or any portion of the Senior Debt or the manner in which Senior
Creditor enforces its rights in such collateral or to preserve or maintain the
rights of any Person in such collateral, and the Junior Creditor hereby waive
any and all claims which the Junior Creditor may now or hereafter have against
the Senior Creditor which relate to such preservation, maintenance or
enforcement. The Junior Creditor agrees not to assert and hereby waives, to the
fullest extent permitted by law: any right to demand, request, plead or
otherwise assert or otherwise claim the benefit of, any marshalling,
appraisement, valuation or other similar right that may otherwise be available
under applicable law or any other similar rights a junior creditor may have
under applicable law.

         19.   CONSENT TO JURISDICTION; SERVICE OF PROCESS.

         (A) THE JUNIOR CREDITOR CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN NEW YORK AND WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO THE JUNIOR CREDITOR AT THE ADDRESS STATED BELOW AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED THREE (3) DAYS AFTER THE SAME
SHALL HAVE BEEN POSTED AS AFORESAID. THE JUNIOR CREDITOR WAIVES ANY OBJECTION
BASED UPON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER. NOTHING IN THIS SECTION 17 SHALL AFFECT THE RIGHT OF THE
SENIOR CREDITOR TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF THE SENIOR CREDITOR TO BRING ANY ACTION OR PROCEEDING
AGAINST THE JUNIOR CREDITOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.

         (B) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
             -----------------
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF SECTIONS 17, 18, 19 AND 21, WITH COUNSEL OF ITS CHOICE AND IS
FULLY AWARE OF THE LEGAL CONSEQUENCES AND EFFECTS OF AND HAS KNOWINGLY AGREED TO
THE PROVISIONS HEREOF.

         20.   ARM'S LENGTH AGREEMENT.  EACH OF THE PARTIES TO THIS AGREEMENT
               ----------------------
AGREES AND ACKNOWLEDGES THAT THIS AGREEMENT HAS BEEN NEGOTIATED IN GOOD FAITH,
AT ARM'S LENGTH, AND NOT BY ANY MEANS FORBIDDEN BY LAW.

         21.   INJUNCTIVE RELIEF.  THE JUNIOR CREDITOR ACKNOWLEDGES AND AGREES
               -----------------
THAT ITS COVENANTS AND OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER DOCUMENTS,
INSTRUMENTS AND AGREEMENTS EXECUTED IN CONNECTION HEREWITH ARE INTEGRAL TO THE
SENIOR CREDITOR'S REALIZATION OF ITS RIGHTS AGAINST, AND THE VALUE OF ITS
INTEREST IN, THE ASSETS OF A DEBTOR PARTY AND

                                       8



ITS AFFILIATES, THAT A BREACH OF ANY OF THE COVENANTS AND OBLIGATIONS OF THE
JUNIOR CREDITOR HEREUNDER OR UNDER THE OTHER DOCUMENTS, INSTRUMENTS AND
AGREEMENTS EXECUTED IN CONNECTION HEREWITH SHALL ENTITLE THE SENIOR CREDITOR TO
INJUNCTIVE RELIEF AND SPECIFIC PERFORMANCE WITHOUT THE NECESSITY OF PROVING
IRREPARABLE INJURY TO THE SENIOR CREDITOR OR THAT THE SENIOR CREDITOR DO NOT
HAVE AN ADEQUATE REMEDY AT LAW IN RESPECT OF SUCH BREACH (EACH OF WHICH ELEMENTS
THE JUNIOR CREDITOR ADMITS EXIST) AND, AS A CONSEQUENCE, THE JUNIOR CREDITOR
AGREES THAT EACH AND EVERY COVENANT AND OBLIGATION APPLICABLE TO IT AND
CONTAINED IN THIS AGREEMENT OR THE OTHER DOCUMENTS INSTRUMENTS AND AGREEMENTS
EXECUTED IN CONNECTION HEREWITH SHALL BE SPECIFICALLY ENFORCEABLE AGAINST IT.
THE JUNIOR CREDITOR HEREBY WAIVES AND AGREES NOT TO ASSERT ANY DEFENSES AGAINST
AN ACTION FOR SPECIFIC PERFORMANCE OF ITS RESPECTIVE COVENANTS AND OBLIGATIONS
HEREUNDER AND/OR UNDER THE OTHER DOCUMENTS, INSTRUMENTS AND AGREEMENTS EXECUTED
IN CONNECTION HEREWITH.

         22.  Notices. Except as otherwise provided for herein, whenever it is
              -------
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon either of the
parties by the other, or whenever either of the parties desires to give or serve
upon the other communication with respect to this Agreement, such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing (including, but not limited to, facsimile communication), and shall
either be delivered in person, telecopied, telegraphed, sent by reputable
overnight courier or mailed by first class mail, or registered or certified
mail, return receipt requested, postage prepaid or provided for, addressed as
follows:

         (i)  If to the Senior Creditor at:

         c/o U.S. Bank Trust National Association
         Corporate Trust Services
         U.S. Bank Trust Center
         Mail Code SPFT0210
         180 East Fifth Street
         St. Paul, Minnesota 55101

         (ii) If to the Junior Creditor at:

         O. Bruton Smith
         5401 East Independence Boulevard
         P.O. Box 18747
         Charlotte, North Carolina  78218

or to such other address as any party designates to the other parties in the
manner herein prescribed.

         23.  GOVERNING LAW. ANY DISPUTE BETWEEN ANY OF THE JUNIOR CREDITOR AND
              -------------
THE SENIOR CREDITOR ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR
ANY OF THE OTHER DOCUMENTS, INSTRUMENTS OR AGREEMENTS EXECUTED IN CONNECTION
HEREWITH AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK.

                                       9



         24.  Counterparts; Facsimile Effectiveness. This Agreement may be
              -------------------------------------
executed in one or more counterparts, each of which shall be considered an
original counterpart, and shall become a binding agreement when the Senior
Creditor and the Junior Creditor and Issuer have each executed one counterpart.
Each of the parties hereto agrees that a signature transmitted to the Senior
Creditor or its counsel by facsimile transmission shall be effective to bind the
party so transmitting its signature.

         25.  Complete Agreement; Merger. This Agreement, including the
              --------------------------
schedules and exhibits hereto, contain the entire understanding of the parties
hereto with regard to the subject matter contained herein. This Agreement
supersedes all prior or contemporaneous negotiations, promises, covenants,
agreements and representations of every nature whatsoever with respect to the
matters referred to in this Agreement, all of which have become merged and
finally integrated into this Agreement. Each of the parties understands that in
the event of any subsequent litigation, controversy or dispute concerning any of
the terms, conditions or provisions of this Agreement, no party shall be
entitled to offer or introduce into evidence any oral promises or oral
agreements between the parties relating to the subject matter of this Agreement
not included or referred to herein and not reflected by a writing included or
referred to herein.

         26.  No Third Party Beneficiaries.  This Agreement is solely for the
              ----------------------------
benefit of the Senior Creditor and its respective successors and assigns and the
Junior Creditor and its successors and is not intended to confer upon the Issuer
or any other third party any rights or benefits.

         27.  Severability. Wherever possible, each provision of this Agreement
              ------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

         28.  Section Titles.  The section titles contained in this Agreement
              --------------
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.

         29.  No Strict Construction. The parties (directly and through their
              ----------------------
counsel) hereto have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.

                      [Signatures begin on following page]

                                       10




     IN WITNESS WHEREOF, this Subordination Agreement has been signed as of this
19th day of November, 2001.

                                                    /s/ O. Bruton Smith
                                              ----------------------------------
                                                    O. BRUTON SMITH




Acknowledged and accepted as of
this 19th day of November 2001, by:


U.S. BANK TRUST NATIONAL ASSOCIATION
AS TRUSTEE UNDER THAT CERTAIN INDENTURE
DATED AS OF NOVEMBER 19, 2001 FOR THE BENEFIT OF
THE HOLDERS OF SONIC AUTOMOTIVE, INC.
SENIOR SUBORDINATED NOTE DUE 2008


By:    /s/ Lori Anne Rosenberg
    -------------------------------------------------
Name:  Lori Anne Rosenberg
      -----------------------------------------------
Title: Assistant Vice President
       ----------------------------------------------


Without in any way establishing any rights with respect to the terms thereof on
behalf of any of the undersigned, the undersigned acknowledges receipt of a copy
of the foregoing Subordination Agreement this 19th day of November, 2001, and
agrees to take no action or refrain from taking action inconsistent with the
terms thereof.

SONIC AUTOMOTIVE, INC.



By:     /s/ Theodore M. Wright
    -------------------------------------------------
Name:  Theodore M. Wright
      -----------------------------------------------
Title: Vice President and CFO
       ----------------------------------------------

EX-23.1

                                                                    EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement of
Sonic Automotive, Inc. on Form S-4 of our report dated February 26, 2001,
appearing in the Annual Report on Form 10-K of Sonic Automotive, Inc. for the
year ended December 31, 2000, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.


- -------------------------------
/s/ Deloitte & Touche L.L.P.

Deloitte $ Touche L.L.P.

Charlotte, North Carolina
December 14, 2001

EX-25.1

                                                                    Exhibit 25.1
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   ----------

                                    FORM T-1

                       Statement of Eligibility Under the
                  Trust Indenture Act of 1939 of a Corporation
                          Designated to Act as Trustee

                      U.S. BANK TRUST NATIONAL ASSOCIATION
               (Exact name of Trustee as specified in its charter)

         United States                                                41-0257700
(State of Incorporation)                                        (I.R.S. Employer
                                                             Identification No.)

         U.S. Bank Trust Center
         180 East Fifth Street
         St. Paul, Minnesota                                               55101
(Address of Principal Executive Offices)                              (Zip Code)



                             SONIC AUTOMOTIVE, INC.
             (Exact name of Registrant as specified in its charter)

         Delaware                                                     56-2010790
(State of Incorporation)                                        (I.R.S. Employer
                                                             Identification No.)

        5401 East Independence Boulevard
        P.O. Box 18747
        Charlotte, North Carolina                                          28212
(Address of Principal Executive Offices)                              (Zip Code)



                11% Senior Subordinated Notes due 2008, Series D
                (Title of the Indenture Securities)







                                     GENERAL
                                     -------

1.     General Information  Furnish the following information as to the Trustee.
       -------------------

       (a)    Name and address of each examining or supervising authority
              to which it is subject.
                  Comptroller of the Currency
                  Washington, D.C.

       (b)    Whether it is authorized to exercise corporate trust powers.
                  Yes

2.     AFFILIATIONS  WITH OBLIGOR AND  UNDERWRITERS  If the obligor or any
       --------------------------------------------
       underwriter for the obligor is an affiliate of the Trustee, describe each
       such affiliation.
                  None

       See Note following Item 16.

       Items 3-15 are not applicable because to the best of the Trustee's
       knowledge the obligor is not in default under any Indenture for which the
       Trustee acts as Trustee.

16.    LIST OF EXHIBITS  List below all exhibits filed as a part of this
       ----------------
       statement of eligibility and qualification.


       1.     Copy of Articles of Association.*

       2.     Copy of Certificate of Authority to Commence Business.*

       3.     Authorization of the Trustee to exercise corporate trust powers
              (included in Exhibits 1 and 2; no separate instrument).*

       4.     Copy of existing By-Laws.*

       5.     Copy of each Indenture referred to in Item 4.  N/A.

       6.     The consents of the Trustee required by Section 321(b) of the
              act.

       7.     Copy of the latest report of condition of the Trustee  published
              pursuant to law or the  requirements of its supervising or
              examining authority.

       * Incorporated by reference to Registration Number 22-27000.




                                      NOTE

      The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors, or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.

                                    SIGNATURE

      Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank Trust National Association, an Association organized and
existing under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Saint Paul and State of Minnesota on the 11th day of December,
2001.

                                            U.S. BANK TRUST NATIONAL ASSOCIATION



                                            /s/ Lori-Anne Rosenberg
                                            -----------------------
                                            Lori-Anne Rosenberg
                                            Assistant Vice President



/s/ Julie Eddington
- -------------------
Julie Eddington
Assistant Secretary





                                    EXHIBIT 6

                                     CONSENT

      In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, U.S. BANK TRUST NATIONAL ASSOCIATION hereby consents that
reports of examination of the undersigned by Federal, State, Territorial or
District authorities may be furnished by such authorities to the Securities and
Exchange Commission upon its request therefor.

Dated:   December 11, 2001


                                            U.S. BANK TRUST NATIONAL ASSOCIATION



                                            /s/ Lori-Anne Rosenberg
                                            -----------------------
                                            Lori-Anne Rosenberg
                                            Assistant Vice President







                                                                                                     
RI-1.a.1.a                 RIAD4011 RE Loans                                                                2817427
RI-1.a.1.b                 RIAD4024 Ag/Farmer Loans                                                           92589
RI-1.a.1.c                 RIAD4012 Coml/Indl Loans                                                         2228230
RI-1.a.1.d.1               RIADB485 Credit Card Loans                                                        503365
RI-1.a.1.d.2               RIADB486 Other(Sngl Pymt,Instl,Stdnt,Rev Crdt)                                    766319
RI-1.a.1.e                 RIAD4056 Loans to Foreign Govts                                                       11
RI-1.a.1.f                 RIADB487 All Other Loans in Domestic                                              171574
RI-1.a.2                   RIAD4059 Foreign Loans                                                              4335
RI-1.a.3                   RIAD4010 Total Interest & Fee Inc                                                6583850
RI-1.b                     RIAD4065 Inc from Lease Financing Recv                                            616090
RI-1.c                     RIAD4115 Interest on Balances Due                                                   5017
RI-1.d.1                   RIADB488 U.S. Treas Securities/US Gvt Agncy Ob                                     57916
RI-1.d.2                   RIADB489 Mortgage-backed securities                                               757370
RI-1.d.3                   RIAD4060 All Other Securities                                                     111704
RI-1.e                     RIAD4069 Interest on Trading Assets                                                 3058
RI-1.f                     RIAD4020 Interest on Fed Funds Sold Etc                                            64022
RI-1.g                     RIAD4518 Other Interest Inc                                                        33066
RI-1.h                     RIAD4107 Total Interest Income                                                   8232093
RI-2.a.1.a                 RIAD4508 Transaction Accounts                                                      89183
RI-2.a.1.b.1               RIAD0093 Savings Deposits                                                         719038
RI-2.a.1.b.2               RIADA517 Int Exp: Time Deposits (greater than)=$100,000                           433887
RI-2.a.1.b.3               RIADA518 Int Exp: Time Deposits (less than)$100,000                               964914
RI-2.a.2                   RIAD4172 Interest on For Deposits                                                 156683
RI-2.b                     RIAD4180 Fed Funds Purchased Etc                                                  305267
RI-2.c                     RIAD4185 Interest on Demand Notes to US Treasu                                    676585
RI-2.d                     RIAD4200 Interest on Subordinated Notes/Debent                                    236601
RI-2.e                     RIAD4073 Total Interest Expense                                                  3582158
RI-3                       RIAD4074 Net Interest Income                                                     4649935
RI-4                       RIAD4230 Provision (Loan/Lease)                                                  2165311
RI-5.a                     RIAD4070 Income from Fiduciary Activities                                         561756
RI-5.b                     RIAD4080 Service Charges on Deposit Accounts                                      727299
RI-5.c                     RIADA220 Trading Revenue                                                           23274
RI-5.d                     RIADB490 Investment Banking                                                        68869
RI-5.e                     RIADB491 Venture Capital Revenue                                                       0
RI-5.f                     RIADB492 Net Servicing Fees                                                        94255
RI-5.g                     RIADB493 Net Securitization Inc                                                    54153
RI-5.h                     RIADB494 Insurance Comm/Fees                                                       15353
RI-5.i                     RIAD5416 Other non-interest income (RI-5.f.2)                                     112967
RI-5.j                     RIAD5415 Other non-interest income (RI-5.f.2)                                       2642
RI-5.k                     RIADB496 Net Gains (losses) on Other Assets                                        66742
RI-5.l                     RIADB497 Other Noninterest Inc                                                   1134867
RI-5.m                     RIAD4079 Total Noninterest Income                                                2862177
RI-6.a                     RIAD3521 Gain/Loss Sec Held to Maturities                                              0
RI-6.b                     RIAD3196 Gain/Loss Sec Available-for-sale                                         298069
RI-7.a                     RIAD4135 Salaries and Benefits                                                   1304362
RI-7.b                     RIAD4217 Expense on Premises/Fixed Assets                                         405915
RI-7.c                     RIAD4531 Amortization Exp of Intangible Assets                                    318901
RI-7.d                     RIAD4092 Other Noninterest Expense                                               1918649
RI-7.e                     RIAD4093 Total Noninterest Expense                                               3947827
RI-8                       RIAD4301 Income (loss) Before Income Taxes                                       1697043
RI-9                       RIAD4302 Income Taxes                                                             599089
RI-10                      RIAD4300 Income (loss) Before Extraordinary                                      1097954
RI-11                      RIAD4320 Extraordinary Items Net Of Taxes                                              0
RI-12                      RIAD4340 Net Income/Loss                                                         1097954
RI-M.1                     RIAD4513 Interest Exp on Exempt After 8/7/86                                        6992
RI-M.2                     RIAD8431 Memoranda: Income Sale Mutuals                                            68790





                                                                                                        
RI-M.3                     RIAD4313 Memoranda: Inc. Tax-exempt loans/leases                                   17723
RI-M.4                     RIAD4507 Exempt State/Local Securities                                             70377
RI-M.5                     RIAD4150 Number of Full-Time Employees                                             38782
RI-M.7                     RIAD9106 Balance Sheet Restate - Bank's Acq Date                                     N/A
RI-M.8.a                   RIAD8757 Memoranda: Trading Rev - Interest                                          6016
RI-M.8.b                   RIAD8758 Memoranda: Trading Rev - Foreign Exch                                     17259
RI-M.8.c                   RIAD8759 Memoranda: Trading Rev - Equity/Index                                         0
RI-M.8.d                   RIAD8760 Memoranda: Trading Rev - Commodity                                            0
RI-M.9.a                   RIAD8761 Memoranda: Impact - Interest Income                                       32425
RI-M.9.b                   RIAD8762 Memoranda: Impact - Interest Expense                                      36599
RI-M.9.c                   RIAD8763 Memoranda: Impact - Other Allocations                                      7283
RI-M.10                    RIADA251 Memo: Credit losses on derivatives                                            0
RI-M.11                    RIADA530 Does Bank have Subchapter-S Y/N                                              NO
RIA-1                      RIAD3217 Total Equity Capital                                                    5446052
RIA-2                      RIADB507 Restate/Changes in Accting Principles                                         0
RIA-3                      RIADB508 Balance-End of Previous Calendar Year                                   5446052
RIA-4                      RIAD4340 Net Income/Loss                                                         1097954
RIA-5                      RIADB509 Net-Cap Stock(Sale,Conv,Acq,or Retire)                                        0
RIA-6                      RIADB510 Net-Treasury Stock Transactions                                               0
RIA-7                      RIAD4356 Changes Incident to Combinations                                       13080285
RIA-8                      RIAD4470 LESS: Cash Dividends on Preferred                                             0
RIA-9                      RIAD4460 LESS: Cash Dividends on Common                                          1300000
RIA-10                     RIADB511 Other Comprehensive Income                                               270369
RIA-11                     RIAD4415 Other Parent H/C Transactions                                           -572394
RIA-12                     RIAD3210 Total Eq/Cap End of Period                                             18022266
RIB(P1)-1.a(a)             RIAD3582 Memo: Charge-offs: Loans sec construc                                      7466
RIB(P1)-1.a(b)             RIAD3583 Memo: Recoveries: Loans sec construct                                       742
RIB(P1)-1.b(a)             RIAD3584 Memo: Charge-offs: Loans sec farmland                                      7138
RIB(P1)-1.b(b)             RIAD3585 Memo: Recoveries: Loans sec farmland                                         20
RIB(P1)-1.c.1(a)           RIAD5411 Memo: Charge-offs: Revolv loans 1-4 r                                     13250
RIB(P1)-1.c.1(b)           RIAD5412 Memo: Recoveries: Revolv loans 1-4 rs                                      2947
RIB(P1)-1.c.2(a)           RIAD5413 Memo: Charge-offs: Other loans 1-4 rs                                     63303
RIB(P1)-1.c.2(b)           RIAD5414 Memo: Recoveries: Other loans 1-4 res                                      9606
RIB(P1)-1.d(a)             RIAD3588 Memo: Charge-offs: Loans sec multifam                                      1231
RIB(P1)-1.d(b)             RIAD3589 Memo: Recoveries: Loans sec multifaml                                       255
RIB(P1)-1.e(a)             RIAD3590 Memo: Charge-offs: Loans sec nonfarm                                      34192
RIB(P1)-1.e(b)             RIAD3591 Memo: Recoveries: Loans sec nonfarm                                        7939
RIB(P1)-1.f(a)             RIADB512 Memo: Charge-offs: Foreign                                                    0
RIB(P1)-1.f(b)             RIADB513 Memo: Recoveries: Foreign                                                     0
RIB(P1)-2.a(a)             RIAD4653 Loans to US Banks: Charge-Offs                                                0
RIB(P1)-2.a(b)             RIAD4663 Loans to US Banks: Recoveries                                                 0
RIB(P1)-2.b(a)             RIAD4654 Loans to For Banks: Charge-Offs                                               0
RIB(P1)-2.b(b)             RIAD4664 Loans to For Banks: Recoveries                                                0
RIB(P1)-3(a)               RIAD4655 Ag/Farm Loans: Charge-Offs                                                39858
RIB(P1)-3(b)               RIAD4665 Ag/Farm Loans: Recoveries                                                   383
RIB(P1)-4.a(a)             RIAD4645 Coml/Indl Loans  US: Charge-Offs                                         820472
RIB(P1)-4.a(b)             RIAD4617 Coml/Indl Loans  US: Recoveries                                           35257
RIB(P1)-4.b(a)             RIAD4646 Coml/Indl Loans  non-US: Charge-Offs                                          0
RIB(P1)-4.b(b)             RIAD4618 Coml/Indl Loans  non-US: recoveries                                           0
RIB(P1)-5.a(a)             RIADB514 Memo: Charge-Offs: Loans-Credit Cards                                    186825
RIB(P1)-5.a(b)             RIADB515 Memo:Recoveries: Loans-Credit Cards                                       45679
RIB(P1)-5.b(a)             RIADB516 Memo:Charge-offs: Loans-Other                                            178927
RIB(P1)-5.b(b)             RIADB517 Memo: Recoveries: Loans-Other                                             28785
RIB(P1)-6(a)               RIAD4643 Loans to For Govts: Charge-Offs                                               0
RIB(P1)-6(b)               RIAD4627 Loans to For Govts: Recoveries                                                0
RIB(P1)-7(a)               RIAD4644 Other Loans: Charge-Offs                                                  75722





                                                                                                       
RIB(P1)-7(b)               RIAD4628 Other Loans: Recoveries                                                    1913
RIB(P1)-8.a(a)             RIAD4658 Leases  US: Charge-Offs                                                  152507
RIB(P1)-8.a(b)             RIAD4668 Leases  US: Recovereies                                                   25356
RIB(P1)-8.b.(a)            RIAD4659 Leases  non-US: Chatge-Offs                                                   0
RIB(P1)-8.b.(b)            RIAD4669 Leases  non-US: Recoveries                                                    0
RIB(P1)-9(a)               RIAD4635 Total Charge-offs (year-to-date)                                        1580891
RIB(P1)-9(b)               RIAD4605 Total Recoveries (year-to-date)                                          158882
RIB(P1)-M.1(a)             RIAD5409 Memo: Charge-offs: Loans to fin comm.                                      5730
RIB(P1)-M.1(b)             RIAD5410 Memo: Recoveries: Loans to fin commcl                                       866
RIB(P1)-M.2(a)             RIAD4652 RE Loans: non-US: Charge-Offs                                                 0
RIB(P1)-M.2(b)             RIAD4662 RE Loans: non-US: Recoveries                                                  0
RIB(P2)-1                  RIADB522 Balance                                                                  639811
RIB(P2)-2                  RIAD4605 Recoveries                                                               158882
RIB(P2)-4                  RIAD4230 Provision (Loan/Lease)                                                  2165311
RIB(P2)-5                  RIAD4815 Adjustments (Loan/Lease)                                                 747138
RIB(P2)-6                  RIAD3123 Balance - End of Current                                                2341530
RID-1.a                    RIADB523 Int. Inc/International Ops - Gross Inc                                      N/A
RID-1.b                    RIADB524 Int. Inc/International Ops - Gross Exp                                      N/A
RID-2.                     RIADB525 Net Inc Income - International                                              N/A
RID-3.a                    RIAD4097 Noninterest Intl Income                                                     N/A
RID-3.b                    RIAD4235 Provision for Intl Loan/Lease Losses                                        N/A
RID-3.c                    RIAD4239 Other Intl Nonint Expense                                                   N/A
RID-3.d                    RIAD4843 Net Non-Int Income                                                          N/A
RID-4                      RIAD4844 Est. Pre-Tax Inc - Intl before cap                                          N/A
RID-5                      RIAD4845 Adjustment to Pretax Income Etc                                             N/A
RID-6                      RIAD4846 Est. Pre-Tax Inc - Intl after cap                                           N/A
RID-7                      RIAD4797 Intl Income Taxes                                                           N/A
RID-8                      RIAD4341 Estimated Net Inc - Intl Ops                                                N/A
RIE-1.a                    RIADC013 Other non-interest income (RI-5.l)                                        11497
RIE-1.b                    RIADC014 Other non-interest income (RI-5.l)                                         1130
RIE-1.c                    RIADC016 Other non-interest income (RI-5.l)                                        88119
RIE-1.d                    RIAD4042 Other non-interest income (RI-5.l)                                            0
RIE-1.e                    RIADC015 Other non-interest income (RI-5.l)                                        17267
RIE-1.f                    RIAD4461 Other non-interest income (RI-5.l)                                        95488
RIE-1.g                    RIAD4462 Other non-interest income (RI-5.l)                                       194009
RIE-1.h                    RIAD4463 Other non-interest income (RI-5.l)                                       311300
RIE-2.a                    RIADC017 Other non-interest expense (RI-7.d)                                      106023
RIE-2.b                    RIAD0497 Other non-interest expense (RI-7.d)                                      176422
RIE-2.c                    RIAD4136 Other non-interest expense (RI-7.d)                                        1854
RIE-2.d                    RIADC018 Other non-interest expense (RI-7.d)                                       39829
RIE-2.e                    RIAD8403 Other non-interest expense (RI-7.d)                                       40070
RIE-2.f                    RIAD4141 Other non-interest expense (RI-7.d)                                       13199
RIE-2.g                    RIAD4146 Other non-interest expense (RI-7.d)                                       14390
RIE-2.h                    RIAD4464 Other non-interest expense (RI-7.d)                                      583671
RIE-2.I                    RIAD4467 Other non-interest expense (RI-7.d)                                      123905
RIE-2.j                    RIAD4468 Other non-interest expense (RI-7.d)                                      100756
RIE-3.a.1                  RIAD6373 Effect of adopting FAS 133                                                    0
RIE-3.a.2                  RIAD4486 Applicable tax effect (RI-11)                                                 0
RIE-3.b.1                  RIAD4487 Applicable tax effect (RI-11)                                                 0
RIE-3.b.2                  RIAD4488 Applicable tax effect (RI-11)                                                 0
RIE-3.c.1                  RIAD4489 Applicable tax effect (RI-11)                                                 0
RIE-3.c.2                  RIAD4491 Applicable tax effect (RI-11)                                                 0
RIE-4.a                    RIADB526 Restatements Due (RI-A.2)                                                     0
RIE-4.b                    RIADB527 Restatements Due (RI-A.2)                                                     0
RIE-5.a                    RIAD4498 Transactions w/parent (RIA-11)                                         -1350000
RIE-5.b                    RIAD4499 Transactions w/parent (RIA-11)                                           777547





                                                                                                      
RIE-6.b                    RIAD4522 Adjs. to allow for l & l loss (RIB.2.5)                                  -62786
RIE-7                      RIAD4769 RI-E  Other Explanations (Y/N)                                                Y
RC-1.a                     RCFD0081 Cash and Noninterest-bearing Balances                                   7424578
RC-1.b                     RCFD0071 Interest-bearing Balances                                                 98102
RC-2.a                     RCFD1754 Securities Held-to-Maturity                                              278690
RC-2.b                     RCFD1773 Total Avail-for-sale - Fair Value                                      25107852
RC-3                       RCFD1350 Fed Funds Sold & Secs Purchased                                         1509608
RC-4.a                     RCFD5369 Loans & leases held for sale                                            3300036
RC-4.b                     RCFDB528 Loans & leases, net Unearned Inc                                      110352733
RC-4.c                     RCFD3123 LESS: Allowance for Loan and Lease Lo                                   2341530
RC-4.d                     RCFDB529 Loans & leases, net Unearned Inc & Allow                              108011203
RC-5                       RCFD3545 Total Trading Assets                                                     179817
RC-6                       RCFD2145 Premises and Fixed Assets                                               1455348
RC-7                       RCFD2150 Othr Real Estate - Total                                                  55170
RC-8                       RCFD2130 Investmnts in unconsold subs - Total                                     707366
RC-9                       RCFD2155 Customers' Liability on Acceptances                                      184931
RC-10.a                    RCFD3163 Goodwill                                                                4519721
RC-10.b                    RCFD0426 Other intangible assets                                                 3669399
RC-11                      RCFD2160 Total Other Assets                                                      6597674
RC-12                      RCFD2170 Total Assets                                                          163099495
RC-13.a                    RCON2200 Deposits: Domestic Offices                                            101929065
RC-13.a.1                  RCON6631 Domestic Deposits: Noninterest-bearin                                  26037605
RC-13.a.2                  RCON6636 Domestic Deposits: Interest-bearing                                    75891460
RC-13.b                    RCFN2200 Total Deps in Foreign Offices                                           4799676
RC-13.b.1                  RCFN6631 Foreign Deposits: Noninterest-bearing                                         0
RC-13.b.2                  RCFN6636 Foreign Deposits: Interest-bearing                                      4799676
RC-14                      RCFD2800 Fed Funds Purchased & Secs Sold                                         3823703
RC-15                      RCFD3548 Total trading liabilities                                                168430
RC-16                      RCFD3190 Other borrowed money                                                   24037743
RC-18                      RCFD2920 Bank's Liability on Acceptances                                          184931
RC-19                      RCFD3200 Subordinated Notes and Debentures                                       5477870
RC-20                      RCFD2930 Total Other Liabilities                                                 3711905
RC-21                      RCFD2948 Total Liabilities                                                     144133323
RC-22                      RCFD3000 Minority Interest in Subsidiaries                                        943906
RC-23                      RCFD3838 Perpetual Preferred Stock & Surplus                                           0
RC-24                      RCFD3230 Common Stock                                                             310004
RC-25                      RCFD3839 Surplus                                                                11775689
RC-26.a                    RCFD3632 Undivided Profits/Capital Reserves                                      5573045
RC-26.b                    RCFDB530 Accumulated other comprehensive Inc                                      363528
RC-27                      RCFDA130 Other equity captial components                                               0
RC-28                      RCFD3210 Total Equity Capital                                                   18022266
RC-29                      RCFD3300 Total Liabs, Pref. Stck, & Equity Cap                                 163099495
RC-M.1                     RCFD6724 Auditor memo                                                                N/A
RCA-1                      RCFD0022 Cash - process collect, debits, currency                                6585338
RCA-1.a                    RCON0020 Cash Items in Process of Collection                                     5385157
RCA-1.b                    RCON0080 Currency and Coin                                                       1198140
RCA-2                      RCON0082 Bal Due - Dep Inst (US)                                                  698446
RCA-2.a                    RCFD0083 Due from US Dep'y/Foreign Banks                                               0
RCA-2.b                    RCFD0085 Due from Other US Dep'y                                                  698607
RCA-3                      RCON0070 Bal Due - Foreign                                                         40823
RCA-3.a                    RCFD0073 Due from For Branches/US Banks                                                0
RCA-3.b                    RCFD0074 Due from Other For Banks/Countries                                        53862
RCA-4(a)                   RCFD0090 Due from Fed Rsv Banks - Cons                                            184873
RCA-4(b)                   RCON0090 Due from Fed Rsv Banks - Domestic                                        184873
RCA-5(a)                   RCFD0010 Consolidated Bank - Total                                               7522680
RCA-5(b)                   RCON0010 Domestic Office - Total                                                 7507439





                                                                                                        
RCB-1(a)                   RCFD0211 Held: Cost: US Treasury Securities                                            0
RCB-1(b)                   RCFD0213 Held: Value: US Treasury Securities                                           0
RCB-1(c)                   RCFD1286 Sale: Cost: US Treasury Securities                                       367457
RCB-1(d)                   RCFD1287 Sale: Value: US Treasury Securities                                      371002
RCB-2.a(a)                 RCFD1289 Held: Cost: Obligations US agencies                                           0
RCB-2.a(b)                 RCFD1290 Held: Value: Obligations US agencies                                          0
RCB-2.a(c)                 RCFD1291 Sale: Cost: Obligations US agencies                                      127484
RCB-2.a(d)                 RCFD1293 Sale: Value: Obligations US agencies                                     129881
RCB-2.b(a)                 RCFD1294 Held: Cost: Obligations US sponsored                                          0
RCB-2.b(b)                 RCFD1295 Held: Value: Obligations US sponsored                                         0
RCB-2.b(c)                 RCFD1297 Sale: Cost: Obligations US sponsored                                     984938
RCB-2.b(d)                 RCFD1298 Sale: Value: Obligations US sponsored                                   1002381
RCB-3(a)                   RCFD8496 Held: Cost: Sec-States/Pol subdiv in US                                  252144
RCB-3(b)                   RCFD8497 Held: Value: Sec-States/Pol subdiv in US                                 261263
RCB-3(c)                   RCFD8498 Sale: Cost: Sec-States/Pol subdiv in US                                  992400
RCB-3(d)                   RCFD8499 Sale: Value: Sec-States/Pol subdiv in US                                1021664
RCB-4.a.1(a)               RCFD1698 Held: Cost: Security Guaranteed GNMA                                          0
RCB-4.a.1(b)               RCFD1699 Held: Value: Security Guaranteed GNMA                                         0
RCB-4.a.1(c)               RCFD1701 Sale: Cost: Security Guaranteed GNMA                                     445563
RCB-4.a.1(d)               RCFD1702 Sale: Value: Security Guaranteed GNMA                                    459546
RCB-4.a.2(a)               RCFD1703 Held: Cost: Security Issued FNMA                                              0
RCB-4.a.2(b)               RCFD1705 Held: Value: Security Issued FNMA                                             0
RCB-4.a.2(c)               RCFD1706 Sale: Cost: Security Issued FNMA                                        8733965
RCB-4.a.2(d)               RCFD1707 Sale: Value: Security Issued FNMA                                       8871120
RCB-4.a.3(a)               RCFD1709 Held: Cost: Other Pass-Through Secs                                       26546
RCB-4.a.3(b)               RCFD1710 Held: Value: Other Pass-Through Secs                                      26546
RCB-4.a.3(c)               RCFD1711 Sale: Cost: Other Pass-Through Secs                                        1249
RCB-4.a.3(d)               RCFD1713 Sale: Value: Other Pass-Through Secs                                       1230
RCB-4.b.1(a)               RCFD1714 Held: Cost: Issued/Guar. FNMA, Etc.                                           0
RCB-4.b.1(b)               RCFD1715 Held: Value: Issued/Guar. FNMA, Etc.                                          0
RCB-4.b.1(c)               RCFD1716 Sale: Cost: Issued/Guar. FNMA, Etc.                                    11635388
RCB-4.b.1(d)               RCFD1717 Sale: Value: Issued/Guar. FNMA, Etc.                                   11830050
RCB-4.b.2(a)               RCFD1718 Held: Cost: Collateralized MBS -FNMA                                          0
RCB-4.b.2(b)               RCFD1719 Held: Value: Collateralized MBS -FNMA                                         0
RCB-4.b.2(c)               RCFD1731 Sale: Cost: Collateralized MBS -FNMA                                        171
RCB-4.b.2(d)               RCFD1732 Sale: Value: Collateralized MBS -FNMA                                       172
RCB-4.b.3(a)               RCFD1733 Held: Cost: All Other MBS                                                     0
RCB-4.b.3(b)               RCFD1734 Held: Value: All Other MBS                                                    0
RCB-4.b.3(c)               RCFD1735 Sale: Cost: All Other MBS                                                555874
RCB-4.b.3(d)               RCFD1736 Sale: Value: All Other MBS                                               562318
RCB-5.a(a)                 RCFDB838 Held: Cost: Credit card rec                                                   0
RCB-5.a(b)                 RCFDB839 Held: Value: Credit card rec                                                  0
RCB-5.a(c)                 RCFDB840 Sale: Cost: Credit card rec                                                4635
RCB-5.a(d)                 RCFDB841 Sale: Value: Credit card rec                                               4760
RCB-5.b(a)                 RCFDB842 Held: Cost: Home equity lines                                                 0
RCB-5.b(b)                 RCFDB843 Held: Value: Home equity lines                                                0
RCB-5.b(c)                 RCFDB844 Sale: Cost: Home equity lines                                              1307
RCB-5.b(d)                 RCFDB845 Sale: Value: Home equity lines                                             1308
RCB-5.c(a)                 RCFDB846 Held: Cost: Automobile Loans                                                  0
RCB-5.c(b)                 RCFDB847 Held: Value: Automobile Loans                                                 0
RCB-5.c(c)                 RCFDB848 Sale: Cost: Automobile Loans                                               5835
RCB-5.c(d)                 RCFDB849 Sale: Value: Automobile Loans                                              5840
RCB-5.d(a)                 RCFDB850 Held: Cost: Other Consumer Loans                                              0
RCB-5.d(b)                 RCFDB851 Held: Value: Other Consumer Loans                                             0
RCB-5.d(c)                 RCFDB852 Sale: Cost: Other Consumer Loans                                              0
RCB-5.d(d)                 RCFDB853 Sale: Value: Other Consumer Loans                                             0





                                                                                                        
RCB-5.e(a)                 RCFDB854 Held: Cost: Coml/Indust Loans                                                 0
RCB-5.e(b)                 RCFDB855 Held: Value: Coml/Indust Loans                                                0
RCB-5.e(c)                 RCFDB856 Sale: Cost: Coml/Indust Loans                                            146495
RCB-5.e(d)                 RCFDB857 Sale: Value: Coml/Indust Loans                                           150287
RCB-5.f(a)                 RCFDB858 Held: Cost: Other ABS                                                         0
RCB-5.f(b)                 RCFDB859 Held: Value: Other ABS                                                        0
RCB-5.f(c)                 RCFDB860 Sale: Cost: Other ABS                                                         0
RCB-5.f(d)                 RCFDB861 Sale: Value: Other ABS                                                        0
RCB-6.a(a)                 RCFD1737 Held: Cost: Other Domestic Debt Sec.                                          0
RCB-6.a(b)                 RCFD1738 Held: Value: Other Domestic Debt Sec.                                         0
RCB-6.a(c)                 RCFD1739 Sale: Cost: Other Domestic Debt Sec.                                     455331
RCB-6.a(d)                 RCFD1741 Sale: Value: Other Domestic Debt Sec.                                    435775
RCB-6.b(a)                 RCFD1742 Held: Cost: Foreign Debt Securities                                           0
RCB-6.b(b)                 RCFD1743 Held: Value: Foreign Debt Securities                                          0
RCB-6.b(c)                 RCFD1744 Sale: Cost: Foreign Debt Securities                                       19620
RCB-6.b(d)                 RCFD1746 Sale: Value: Foreign Debt Securities                                      19550
RCB-7(c)                   RCFDA510 Sale: Cost: Securities Mutual Funds                                      240968
RCB-7(d)                   RCFDA511 Sale: Value: Securities Mutual Funds                                     240968
RCB-8(a)                   RCFD1754 Total Held-to-maturity - Amort Cost                                      278690
RCB-8(b)                   RCFD1771 Total Held-to-maturity - Fair Value                                      287809
RCB-8(c)                   RCFD1772 Total Avail-for-sale - Amort Cost                                      24718680
RCB-8(d)                   RCFD1773 Total Avail-for-sale - Fair Value                                      25107852
RCB-M.1                    RCFD0416 Memoranda: Pledged                                                     16647938
RCB-M.2.a.1                RCFDA549 Memoranda: Non-Mort Debt (less than) 3 MO                               1003595
RCB-M.2.a.2                RCFDA550 Memoranda: Non-Mort Debt 3-12 MO                                         253188
RCB-M.2.a.3                RCFDA551 Memoranda: Non-Mort Debt 1-3 YRS                                        1140126
RCB-M.2.a.4                RCFDA552 Memoranda: Non-Mort Debt 3-5 YRS                                         281052
RCB-M.2.a.5                RCFDA553 Memoranda: Non-Mort Debt 5-15 YRS                                        593590
RCB-M.2.a.6                RCFDA554 Memoranda: Non-Mort Debt (greater than) 15 YRS                           123041
RCB-M.2.b.1                RCFDA555 Memoranda: Mort Pass Thru (less than) 3 MO                               604577
RCB-M.2.b.2                RCFDA556 Memoranda: Mort Pass Thru 3-12 MO                                         38894
RCB-M.2.b.3                RCFDA557 Memoranda: Mort Pass Thru 1-3 YRS                                         18890
RCB-M.2.b.4                RCFDA558 Memoranda: Mort Pass Thru 3-5 YRS                                         87357
RCB-M.2.b.5                RCFDA559 Memoranda: Mort Pass Thru 5-15 YRS                                      7579512
RCB-M.2.b.6                RCFDA560 Memoranda: Mort Pass Thru (greater than) 15 YRS                         1029212
RCB-M.2.c.1                RCFDA561 Memoranda: Other Mort-backed (less than) 3 YRS                           325470
RCB-M.2.c.2                RCFDA562 Memoranda: Other Mort-backed (greater than) 3 YRS                      12067070
RCB-M.2.d                  RCFDA248 Memoranda: Tot Debt (less than) 1 YR                                     754288
RCB-M.3                    RCFD1778 Amortized Cost Held Securities Sold                                           0
RCB-M.4.a                  RCFD8782 Structured Notes - Amortized Cost                                          2668
RCB-M.4.b                  RCFD8783 Structured Notes - Fair Value                                              2673
RCC(P1)-1                  RCFD1410 Loans Sec by Real Estate                                               45814357
RCC(P1)-1.a                RCON1415 Construction and Land Development                                       6647302
RCC(P1)-1.b                RCON1420 Secured by Farmland                                                      636144
RCC(P1)-1.c.1              RCON1797 Secured by 1-4: Revolving                                               5362063
RCC(P1)-1.c.2.a            RCON5367 Secured by 1-4: Other (first liens)                                     9558902
RCC(P1)-1.c.2.b            RCON5368 Secured by 1-4: Other (junior liens)                                    5667551
RCC(P1)-1.d                RCON1460 Secured by 5+                                                           2142922
RCC(P1)-1.e                RCON1480 Secured by Nonfarm Nonresidential                                      15799473
RCC(P1)-2.a                RCONB531 Commercial Banks - US                                                     24841
RCC(P1)-2.a.1              RCFDB532 US branches/agencies of foreign banks                                         0
RCC(P1)-2.a.2              RCFDB533 US branches/agencies of foreign banks                                     24841
RCC(P1)-2.b(a)             RCFDB534 Other commerc banks in US                                                 59731
RCC(P1)-2.b(b)             RCONB534 Other deposit inst in US                                                  59731
RCC(P1)-2.c                RCONB535 Foreign Banks                                                            158622
RCC(P1)-2.c1               RCFDB536 Foreign branches of other US banks                                          187





                                                                                                      
RCC(P1)-2.c2               RCFDB537 Other banks in foreign countries                                         158435
RCC(P1)-3(a)               RCFD1590 Consolidated  to Farmers                                                1002615
RCC(P1)-3(b)               RCON1590 Domestic to Farmers                                                     1002615
RCC(P1)-4.a(a)             RCFD1763 Consolidated US Coml                                                   34830339
RCC(P1)-4.a(b)             RCON1763 Domestic US Coml                                                       34790784
RCC(P1)-4.b(a)             RCFD1764 Consolidated non-US Coml                                                 137882
RCC(P1)-4.b(b)             RCON1764 Domestic non-US Coml                                                      39590
RCC(P1)-6.a(a)             RCFDB538 Loans to individuals - CC (Cons)                                        4802936
RCC(P1)-6.a(b)             RCONB538 Loans to individuals - CC (Dom)                                         4802936
RCC(P1)-6.b(a)             RCFDB539 Loans to individuals-Other (Cons)                                       2492691
RCC(P1)-6.b(b)             RCONB539 Loans to individuals-Other (Dom)                                        2492691
RCC(P1)-6.c(a)             RCFD2011 Cons Other Consumer (Cons)                                              8666443
RCC(P1)-6.c(b)             RCON2011 Cons Other Consumer (Dom)                                               8666443
RCC(P1)-7(a)               RCFD2081 Consolidated Loans to For Govts                                               0
RCC(P1)-7(b)               RCON2081 Domestic Loans to For Govts                                                   0
RCC(P1)-8(a)               RCFD2107 Consolidated Obligations US                                             1436737
RCC(P1)-8(b)               RCON2107 Domestic Obligations US                                                 1436737
RCC(P1)-9                  RCFD1563 Consolidated Other                                                      3592044
RCC(P1)-9.a                RCON1545 Domestic Loans for Securities                                            614681
RCC(P1)-9.b                RCON1564 Domestic Other                                                          2977363
RCC(P1)-10                 RCON2165 Domestic Leases                                                        10632598
RCC(P1)-10.a               RCFD2182 Consolidated US Leases                                                 10631346
RCC(P1)-10.b               RCFD2183 Consolidated For Leases                                                    2185
RCC(P1)-11(a)              RCFD2123 LESS: Consolidated Unearned Income                                            0
RCC(P1)-11(b)              RCON2123 LESS: Domestic Unearned Income                                                0
RCC(P1)-12(a)              RCFD2122 Total Loans & Leases (Consolidated)                                   113652769
RCC(P1)-12(b)              RCON2122 Total Loans & Leases (Domestic)                                       113513989
RCC(P1)-M.1                RCFD1616 Loans and leases restructured                                                 0
RCC(P1)-M.2.a.1            RCONA564 Memo: Loans Secd by Real Est (less than) 3 MO                           1040370
RCC(P1)-M.2.a.2            RCONA565 Memo: Loans Secd by Real Est 3-12 MO                                    1093349
RCC(P1)-M.2.a.3            RCONA566 Memo: Loans Secd by Real Est 1-3 YRS                                    1604784
RCC(P1)-M.2.a.4            RCONA567 Memo: Loans Secd by Real Est 3-5 YRS                                     624339
RCC(P1)-M.2.a.5            RCONA568 Memo: Loans Secd by Real Est 5-15 YRS                                   1470139
RCC(P1)-M.2.a.6            RCONA569 Memo: Loans Secd by Real Est (greater than) 15 YRS                      3640443
RCC(P1)-M.2.b.1            RCFDA570 Memo: Other Loans/Leases (less than) 3 MO                              53307237
RCC(P1)-M.2.b.2            RCFDA571 Memo: Other Loans/Leases 3-12 MO                                        4987987
RCC(P1)-M.2.b.3            RCFDA572 Memo: Other Loans/Leases 1-3 YRS                                       17428625
RCC(P1)-M.2.b.4            RCFDA573 Memo: Other Loans/Leases 3-5 YRS                                       15090640
RCC(P1)-M.2.b.5            RCFDA574 Memo: Other Loans/Leases 5-15 YRS                                      10599986
RCC(P1)-M.2.b.6            RCFDA575 Memo: Other Loans/Leases (greater than) 15 YRS                          1755143
RCC(P1)-M.2.c              RCFDA247 Memo: Tot Remg Loans/Leases (less than) 1 YR                           26155640
RCC(P1)-M.3                RCFD2746 Loans to fin. comm. real est., constr                                   1152164
RCC(P1)-M.4                RCON5370 Adj. rate closed-end loans secured                                      2741964
RCC(P1)-M.5                RCFDB837 Loan secured by real estate to non-US                                         0
RCC(P2)-1                  RCON6999 YES/NO - RCC01.E & RCC04 (greater than)= $ 100,000                          N/A
RCC(P2)-2.a                RCON5562 Number of Loans RCC01.E                                                     N/A
RCC(P2)-2.b                RCON5563 Number of Loans RCC04                                                       N/A
RCC(P2)-3.a(a)             RCON5564 Number of Loans RCC01.E Orig (less than)= $100K                             N/A
RCC(P2)-3.a(b)             RCON5565 Amount of Loans RCC01.E Orig (less than)= $100K                             N/A
RCC(P2)-3.b(a)             RCON5566 # of Loans RCC01.E $100K(less than)Orig(less than)=$250K                    N/A
RCC(P2)-3.b(b)             RCON5567 $ of Loans RCC01.E $100K(less than)Orig(less than)=$250K                    N/A
RCC(P2)-3.c(a)             RCON5568 # of Loans RCC01.E $250K (less than) Orig (less than)=$1M                   N/A
RCC(P2)-3.c(b)             RCON5569 $ of Loans RCC01.E $250K (less than) Orig (less than)=$1M                   N/A
RCC(P2)-4.a(a)             RCON5570 Number of Loans RCC04 Orig (less than)= $100K                               N/A
RCC(P2)-4.a(b)             RCON5571 Amount of Loans RCC04 Orig (less than)= $100K                               N/A
RCC(P2)-4.b(a)             RCON5572 # of Loans RCC04 $100K(less than) Orig (less than)= $250K                   N/A





                                                                                                         
RCC(P2)-4.b(b)             RCON5573 $ of Loans RCC04 $100K(less than) Orig (less than)= $250K                   N/A
RCC(P2)-4.c(a)             RCON5574 # of Loans RCC04 $250K (less than) Orig (less than)= $1M                    N/A
RCC(P2)-4.c(b)             RCON5575 $ of Loans RCC04 $250K (less than) Orig (less than)= $1M                    N/A
RCC(P2)-5                  RCON6860 YES/NO - RCC01.B & RCC03 (greater than)= $ 100,000                          N/A
RCC(P2)-6.a                RCON5576 Number of Loans RCC01.B                                                     N/A
RCC(P2)-6.b                RCON5577 Number of Loans RCC03                                                       N/A
RCC(P2)-7.a(a)             RCON5578 Number of Loans RCC01.B Orig (less than)= $100K                             N/A
RCC(P2)-7.a(b)             RCON5579 Amount of Loans RCC01.B Orig (less than)= $100K                             N/A
RCC(P2)-7.b(a)             RCON5580 # of Loans RCC01.B $100K(less than)Orig(less than)=$250K                    N/A
RCC(P2)-7.b(b)             RCON5581 $ of Loans RCC01.B $100K(less than)Orig(less than)=$250K                    N/A
RCC(P2)-7.c(a)             RCON5582 # of Loans RCC01.B $250K(less than)Orig(less than)=$500K                    N/A
RCC(P2)-7.c(b)             RCON5583 $ of Loans RCC01.B $250K(less than)Orig(less than)=$500K                    N/A
RCC(P2)-8.a(a)             RCON5584 Number of Loans RCC03 - Orig (less than)= $100K                             N/A
RCC(P2)-8.a(b)             RCON5585 Amount of Loans RCC03 - Orig (less than)= $100K                             N/A
RCC(P2)-8.b(a)             RCON5586 # of Loans RCC03 - $100K(less than)Orig(less than)=$250K                    N/A
RCC(P2)-8.b(b)             RCON5587 $ of Loans RCC03 - $100K(less than)Orig(less than)=$250K                    N/A
RCC(P2)-8.c(a)             RCON5588 # of Loans RCC03 - $250K(less than)Orig(less than)=$500K                    N/A
RCC(P2)-8.c(b)             RCON5589 $ of Loans RCC03 - $250K(less than)Orig(less than)=$500K                    N/A
RCD-1                      RCON3531 US Treasury securities                                                        0
RCD-2                      RCON3532 US Govt agency obligations                                                    0
RCD-3                      RCON3533 Securities issued by State and Subdiv                                         0
RCD-4.a                    RCON3534 Pass-through secs by FNMA/FHLMC/GNMA                                          0
RCD-4.b                    RCON3535 CMOs and REMICs issued by FNMA/FHLMC                                          0
RCD-4.c                    RCON3536 All other mortgage-backed securities                                          0
RCD-5                      RCON3537 Other debt securities                                                         0
RCD-9                      RCON3541 Other trading assets domestic                                                 0
RCD-10                     RCFN3542 Trading assets foreign                                                        0
RCD-11.a                   RCON3543 Gains on rate & contracts domestic                                       179246
RCD-11.b                   RCFN3543 Gains on rate & contracts foreign                                           571
RCD-12                     RCFD3545 Total Trading Assets                                                     179817
RCD-13                     RCFD3546 Liability for short positions                                                 0
RCD-14                     RCFD3547 Losses on rate & contracts                                               168430
RCD-15                     RCFD3548 Total trading liabilities                                                168430
RCE(P1)-1(a)               RCONB549 Indv, partner, & corp - Transaction                                    25503598
RCE(P1)-1(c)               RCONB550 Indv,partner,& corp - Non-Transaction                                  70522655
RCE(P1)-2(a)               RCON2202 USG Transaction                                                           27442
RCE(P1)-2(c)               RCON2520 USG Nontransaction                                                        13870
RCE(P1)-3(a)               RCON2203 State/Local Transaction                                                 1161614
RCE(P1)-3(c)               RCON2530 State/Local Nontransaction                                              4167297
RCE(P1)-4(a)               RCONB551 Cml banks/Other US - Transaction                                         439227
RCE(P1)-4(c)               RCONB552 Cml banks/Other US - Transaction                                          15886
RCE(P1)-5(a)               RCON2213 Banks in Foreign Count - Transaction                                      77442
RCE(P1)-5(c)               RCON2236 Banks in Foreign Count - Nontransaction                                       8
RCE(P1)-6(a)               RCON2216 For Govt Transaction                                                          0
RCE(P1)-6(c)               RCON2377 For Govt Nontransaction                                                      26
RCE(P1)-7(a)               RCON2215 Total Transaction Accounts                                             27209323
RCE(P1)-7(b)               RCON2210 Total Demand Deposits                                                  18990535
RCE(P1)-7(c)               RCON2385 Total Nontransaction Accounts                                          74719742
RCE(P1)-M.1.a              RCON6835 IRA/Keogh                                                               1925328
RCE(P1)-M.1.b              RCON2365 Brokered                                                                3619639
RCE(P1)-M.1.c.1            RCON2343 Brokered (less than) $100K                                                  526
RCE(P1)-M.1.c.2            RCON2344 Brokered Participated to (less than) $100K                               273408
RCE(P1)-M.1.d.1            RCONA243 Matur data:denom (less than) 100k,matur(less than)= 1 yr                    477
RCE(P1)-M.1.d.2            RCONA244 Matur data:denom =(greater than)100k,matur(less than)= 1 yr             3389178
RCE(P1)-M.1.e              RCON5590 Memoranda: Preferred Deposits                                               N/A
RCE(P1)-M.2.a.1            RCON6810 MMDAs                                                                  39023412





                                                                                                       
RCE(P1)-M.2.a.2            RCON0352 Other Savings                                                           4596659
RCE(P1)-M.2.b              RCON6648 Time Deposits (less than) $100K                                        21431239
RCE(P1)-M.2.c              RCON2604 Memoranda: Time Deposits (greater than)=$100 000                        9668433
RCE(P1)-M.3.a.1            RCONA579 Memo: Time Deps (less than) 100K (less than) 3 MO                       4816082
RCE(P1)-M.3.a.2            RCONA580 Memo: Time Deps (less than) 100K 3-12 MO                                9580148
RCE(P1)-M.3.a.3            RCONA581 Memo: Time Deps (less than) 100K 1-3 YRS                                5708209
RCE(P1)-M.3.a.4            RCONA582 Memo: Time Deps (less than) 100K (greater than) 3 YRS                   1326800
RCE(P1)-M.3.b              RCONA241 Memo: Time Deps (less than) 100K (less than) 1 YR                      14289477
RCE(P1)-M.4.a.1            RCONA584 Memo: Time Deps (greater than) 100K (less than) 3 MO                    4321570
RCE(P1)-M.4.a.2            RCONA585 Memo: Time Deps (greater than) 100K 3-12 MO                             3710204
RCE(P1)-M.4.a.3            RCONA586 Memo: Time Deps (greater than) 100K 1-3 YRS                             1120045
RCE(P1)-M.4.a.4            RCONA587 Memo: Time Deps (greater than) 100K (greater than) 3 YRS                 516614
RCE(P1)-M.4.b              RCONA242 Memo: Time Deps (greater than) 100K (less than) 1 YR                    7898845
RCE(P2)-1                  RCFNB553 Deposits: Individual, partner, corp.                                    1446867
RCE(P2)-2                  RCFNB554 Deposits: US Banks                                                      3352809
RCE(P2)-3                  RCFN2625 Deposits: Foreign Banks                                                       0
RCE(P2)-4                  RCFN2650 Deposits: Foreign Govts.                                                      0
RCE(P2)-5                  RCFNB555 Deposits: US Govt.,states,political                                           0
RCE(P2)-6                  RCFN2200 Total Deps in Foreign Offices                                           4799676
RCE(P2)-M.1                RCFNA245 Memo:TD with remaining maturity(less than)=1 yr"                        4799676
RCF-1                      RCFDB556 Accrued interest receivable                                              841290
RCF-2                      RCFD2148 Net Deferred Tax Assets                                                       0
RCF-3.a                    RCFDA519 Interest Only Strip: Mortgage Loans                                           0
RCF-3.b                    RCFDA520 Interest Only Strip: Other Assets                                         30560
RCF-4                      RCFD1752 Sale: Cost: Other Equity Securities                                      779245
RCF-5                      RCFD2168 Other Assets                                                            4946579
RCF-5.a                    RCFD2166 Other Assets - Line A                                                         0
RCF-5.b                    RCFDC009 Other Assets - Line B                                                   1387482
RCF-5.c                    RCFD1578 Other Assets - Line C                                                         0
RCF-5.d                    RCFDC010 Other Assets - Line D                                                    525403
RCF-5.e                    RCFD3549 Other Assets - Line E                                                   1633351
RCF-5.f                    RCFD3550 Other Assets - Line F                                                         0
RCF-5.g                    RCFD3551 Other Assets - Line G                                                         0
RCF-6                      RCFD2160 Total Other Assets                                                      6597674
RCG-1.a                    RCON3645 Expenses Accrued and Unpaid on deposi                                    448454
RCG-1.b                    RCFD3646 Other Expenses Accrued and Unpaid                                       1268983
RCG-2.                     RCFD3049 Net Deferred Tax Liabilities                                            1097898
RCG-3                      RCFDB557 Allowance for credit losses                                                5550
RCG-4.                     RCFD2938 Other Liabilities                                                        891020
RCG-4.a                    RCFD3066 Other Liabilities - Line A                                                    0
RCG-4.b                    RCFDC011 Other Liabilities - Line B                                                    0
RCG-4.c                    RCFD2932 Other Liabilities - Line C                                                    0
RCG-4.d                    RCFDC012 Other Liabilities - Line D                                                 1017
RCG-4.e                    RCFD3552 Other Liabilities - Line E                                               626576
RCG-4.f                    RCFD3553 Other Liabilities - Line F                                                    0
RCG-4.g                    RCFD3554 Other Liabilities - Line G                                                    0
RCG-5.                     RCFD2930 Total Other Liabilities                                                 3711905
RCH-1                      RCON2155 Customers' Liability on Acceptances                                      184931
RCH-2                      RCON2920 Bank's Liability on Acceptances                                          184931
RCH-3                      RCON1350 Fed Funds Sold                                                          1509608
RCH-4                      RCON2800 Fed Funds Purchased                                                     3823703
RCH-5                      RCON3190 Other Borrowed Money                                                   24037743
RCH-6                      RCON2163 Net Due from Own For Offices                                                N/A
RCH-7                      RCON2941 Net Due to Own For Offices                                              4799676
RCH-8                      RCON2192 Total Assets                                                          163099495
RCH-9                      RCON3129 Total Liabilities                                                     139333647





                                                                                                      
RCH-10                     RCON1039 US Treasury Securities                                                   367457
RCH-11                     RCON1041 US Government agency obligations                                        1112422
RCH-12                     RCON1042 Securities issued by states in the US                                   1244544
RCH-13.a.1                 RCON1043 MBS:  Pass-Through:  FNMA/FHLMC/GNMA                                    9179528
RCH-13.a.2                 RCON1044 MBS:  Pass-Through:  Other Pass-Through                                   26546
RCH-13.b.1                 RCON1209 MBS:  Other MBS:  FNMA/FHLMC/GNMA                                      11635388
RCH-13.b.2                 RCON1280 MBS:  Other MBS:  All Other MBS                                          556045
RCH-14                     RCON1281 Other Domestic Debt Securities                                           613603
RCH-15                     RCON1282 Foreign Debt Securities                                                   19620
RCH-16                     RCONA510 Equity Securities:  Mutual Fund/Eq Sec                                   240968
RCH-17                     RCON1374 Total Securities Held and Sale                                         24996121
RCH-18                     RCON1752 Equity Securities:  All others                                           779245
RCI-1                      RCFN2133 Total IBF Assets                                                            N/A
RCI-2                      RCFN2898 Total IBF Liabilities                                                       N/A
RCK-1                      RCFD3381 Interest-bearing Balances                                                106426
RCK-2                      RCFDB558 US-Treasury securities/agency oblig                                     1426735
RCK-3                      RCFDB559 Mortgage-backed securities                                             19347829
RCK-4                      RCFDB560 All other securities                                                    1902630
RCK-5                      RCFD3365 Fed Funds Sold                                                          1147025
RCK-6.a.1                  RCON3360 Total Loans                                                           105790026
RCK-6.a.2                  RCON3385 RE Loans                                                               47208833
RCK-6.a.3                  RCON3386 Agricultural & Farm Loans                                               1043645
RCK-6.a.4                  RCON3387 Commercial/Industrial Loans                                            38263404
RCK-6.a.5.a                RCONB561 Indv. Loans-Credit cards                                                4789597
RCK-6.a.5.b                RCONB562 Indv. Loans-Other                                                      11167032
RCK-6.b                    RCFN3360 Foreign Office Loans                                                     148847
RCK-7                      RCFD3401 Assets Held in Trading Accounts                                          139982
RCK-8                      RCFD3484 Lease Fin'g Receivables                                                10541768
RCK-9                      RCFD3368 Total Assets                                                          157674051
RCK-10                     RCON3485 Domestic Transaction Accounts                                           7806466
RCK-11.a                   RCONB563 Savings Deposits                                                       42125835
RCK-11.c                   RCONA514 Time Deposits (greater than)= $100,000                                 13001116
RCK-11.d                   RCONA529 Time Deposits (less than) $100,000                                     22143566
RCK-12                     RCFN3404 Interest-bearing Deposits in For Offi                                   3294118
RCK-13                     RCFD3353 Fed Funds Purchased                                                     7949047
RCK-14                     RCFD3355 Other Borrowed Money                                                   17641270
RCL-1.a                    RCFD3814 Unused Commits: Revolv Lines Secured                                    6946016
RCL-1.b                    RCFD3815 Unused Commits: Credit Card Lines                                      38480547
RCL-1.c.1                  RCFD3816 Unused Commits: Fund loans secured                                      4904632
RCL-1.c.2                  RCFD6550 Unused Commits: Fund loans not secure                                   1466903
RCL-1.d                    RCFD3817 Unused Commits: Securities Underwrit                                          0
RCL-1.e                    RCFD3818 Unused Commits: Other Unused Commits                                   43880070
RCL-2                      RCFD3819 Fincl Standby Letters of Credit                                         7300978
RCL-2.a                    RCFD3820 Amount Fincl Standby Letters Conveyed                                    520927
RCL-3.                     RCFD3821 Perfm Standby Letters of Credit                                          454070
RCL-3.a                    RCFD3822 Amount Perfm Standby Letters Conveyed                                     58136
RCL-4                      RCFD3411 Commercl & Similar Letters of Credit                                     438402
RCL-5                      RCFD3428 Participations in Acceptncs Conveyed                                      12226
RCL-6                      RCFD3433 Securities Lent                                                         1023763
RCL-7.a                    RCFDA534 Credit Derivatives: Guarantor                                                 0
RCL-7.b                    RCFDA535 Credit Derivatives: Beneficiary                                               0
RCL-8                      RCFD8765 Spot Foreign Exchange Contracts                                          261569
RCL-9                      RCFD3430 All Other Off-Balance Sheet Liabs                                             0
RCL-9.a                    RCFD3432 Other Off-Balance Sheet Liabilities-A                                         0
RCL-9.b                    RCFD3434 Other Off-Balance Sheet Liabilities-B                                         0
RCL-9.c                    RCFD3555 Other Off-Balance Sheet Liabilities-C                                         0





                                                                                                           
RCL-9.d                    RCFD3556 Other Off-Balance Sheet Liabilities-D                                         0
RCL-9.e                    RCFD3557 Other Off-Balance Sheet Liabilities-E                                         0
RCL-10                     RCFD5591 All Other Off-Balance Sheet Assets                                            0
RCL-10.a                   RCFD3435 Other Off-Balance Sheet Assets - A                                            0
RCL-10.b                   RCFD5592 Other Off-Balance Sheet Assets - B                                            0
RCL-10.c                   RCFD5593 Other Off-Balance Sheet Assets - C                                            0
RCL-10.d                   RCFD5594 Other Off-Balance Sheet Assets - D                                            0
RCL-10.e                   RCFD5595 Other Off-Balance Sheet Assets - E                                            0
RCL-11.a(a)                RCFD8693 Int Rate Contracts - Gross Futures                                            0
RCL-11.a(b)                RCFD8694 Forgn Exch Contracts - Gross Futures                                          0
RCL-11.a(c)                RCFD8695 Equity Contracts - Gross Futures                                              0
RCL-11.a(d)                RCFD8696 Commodity Contracts - Gross Futures                                           0
RCL-11.b(a)                RCFD8697 Int Rate Contracts - Gross Forwards                                           0
RCL-11.b(b)                RCFD8698 Forgn Exch Contracts - Gross Forwards                                   3702314
RCL-11.b(c)                RCFD8699 Equity Contracts - Gross Forwards                                             0
RCL-11.b(d)                RCFD8700 Commodity Contracts - Gross Forwards                                          0
RCL-11.c.1(a)              RCFD8701 Int Rate Contracts - Exchg Trad Wrttn                                         0
RCL-11.c.1(b)              RCFD8702 Forgn Exch Contracts - Exchg Trad Wrt                                         0
RCL-11.c.1(c)              RCFD8703 Equity Contracts - Exchg Trad Written                                         0
RCL-11.c.1(d)              RCFD8704 Commodity Contracts - Exchg Trad Wrtn                                         0
RCL-11.c.2(a)              RCFD8705 Int Rate Contracts - Exchg Trad Purch                                         0
RCL-11.c.2(b)              RCFD8706 Forgn Exch Contracts - Exchg Trad Pur                                         0
RCL-11.c.2(c)              RCFD8707 Equity Contracts - Exchg Trad Purchas                                         0
RCL-11.c.2(d)              RCFD8708 Commodity Contracts - Exchg Trade Pur                                         0
RCL-11.d.1(a)              RCFD8709 Int Rate Contracts - OTC Written Optn                                    651725
RCL-11.d.1(b)              RCFD8710 Forgn Exch Contracts - OTC Wrtn Optns                                    392373
RCL-11.d.1(c)              RCFD8711 Equity Contracts - OTC Written Option                                         0
RCL-11.d.1(d)              RCFD8712 Commodity Contracts - OTC Written Opt                                         0
RCL-11.d.2(a)              RCFD8713 Int Rate Contracts - OTC Purchased Op                                    658125
RCL-11.d.2(b)              RCFD8714 Forgn Exch Contracts - OTC Purchased                                     392373
RCL-11.d.2(c)              RCFD8715 Equity Contracts - OTC Purchased Optn                                         0
RCL-11.d.2(d)              RCFD8716 Commodity Contracts - OTC Purch Optn                                          0
RCL-11.e(a)                RCFD3450 Int Rate Contracts - Gross Swaps                                       19007234
RCL-11.e(b)                RCFD3826 Forgn Exch Contracts - Gross Swaps                                            0
RCL-11.e(c)                RCFD8719 Equity Contracts - Gross Swaps                                             4740
RCL-11.e(d)                RCFD8720 Commodity Contracts - Gross Swaps                                             0
RCL-12(a)                  RCFDA126 Int Rate Contracts - Gross Held Trade                                   6168534
RCL-12(b)                  RCFDA127 Forgn Exch Contracts - Gross Held Trd                                   4487061
RCL-12(c)                  RCFD8723 Equity Contracts - Gross Held Trading                                         0
RCL-12(d)                  RCFD8724 Commodity Contracts - Gross Held Trad                                         0
RCL-13(a)                  RCFD8725 Int Rate Contracts - Marked to Market                                  14148550
RCL-13(b)                  RCFD8726 Forgn Exch Contracts - Marked to Mrkt                                         0
RCL-13(c)                  RCFD8727 Equity Contracts - Marked to Market                                        4740
RCL-13(d)                  RCFD8728 Commodity  Contracts - Marked to Mrkt                                         0
RCL-13.a(a)                RCFDA589 Int Rate Contracts - Bank Pays Fixed                                          0
RCL-14.a.1(a)              RCFD8733 Int Rate Contracts Held - Pos Values                                     112153
RCL-14.a.1(b)              RCFD8734 Forgn Exch Contracts Held - Pos Value                                     55560
RCL-14.a.1(c)              RCFD8735 Equity Contracts Held - Pos Values                                            0
RCL-14.a.1(d)              RCFD8736 Commodity Contracts Held - Pos Value                                          0
RCL-14.a.2(a)              RCFD8737 Int Rate Contracts Held - Neg Values                                     103049
RCL-14.a.2(b)              RCFD8738 Forgn Exch Contracts Held - Neg Value                                     53477
RCL-14.a.2(c)              RCFD8739 Equity Contracts Held - Neg Values                                            0
RCL-14.a.2(d)              RCFD8740 Commodity Contracts Held - Neg Value                                          0
RCL-14.b.1(a)              RCFD8741 Int Rate Contracts Markd- Pos Values                                     524499
RCL-14.b.1(b)              RCFD8742 Forgn Exch Contracts Markd- Pos Value                                         0
RCL-14.b.1(c)              RCFD8743 Equity Contracts Markd- Pos Values                                          904





                                                                                                           
RCL-14.b.1(d)              RCFD8744 Commodity Contracts Markd- Pos Value                                          0
RCL-14.b.2(a)              RCFD8745 Int Rate Contracts Markd- Neg Values                                        113
RCL-14.b.2(b)              RCFD8746 Forgn Exch Contracts Markd- Neg Value                                         0
RCL-14.b.2(c)              RCFD8747 Equity Contracts Markd- Neg Values                                          904
RCL-14.b.2(d)              RCFD8748 Commodity Contracts Markd- Neg Value                                          0
RCM-1.a                    RCFD6164 Credit to Executives/Principals                                             673
RCM-1.b                    RCFD6165 Number of Execs Who Borrowed $500K/5%                                         0
RCM-2.a                    RCFD3164 Mtge Servicing Rights                                                    325904
RCM-2.a.1                  RCFDA590 Mort Serv Rights - Est Fair Value                                        308000
RCM-2.b                    RCFDB026 Other intangible - Purch cc rels                                          48906
RCM-2.c                    RCFD5507 Other Intangible - All Other                                            3294589
RCM-2.d                    RCFD0426 Other Intangible - Total                                                3669399
RCM-3.a                    RCFD5372 Othr Real Estate - Direct & Indirect                                          0
RCM-3.b.1                  RCON5508 Othr Real Estate - All other Real Est                                      2005
RCM-3.b.2                  RCON5509 Othr Real Estate - Farmland                                               17224
RCM-3.b.3                  RCON5510 Othr Real Estate - 1-4 Family Residnt                                     29114
RCM-3.b.4                  RCON5511 Othr Real Estate - Multifamily Resid                                        116
RCM-3.b.5                  RCON5512 Othr Real Estate - Nonfarm Nonresiden                                      6711
RCM-3.b.6                  RCFN5513 Othr Real Estate - In Foreign Offices                                         0
RCM-3.c                    RCFD2150 Othr Real Estate - Total                                                  55170
RCM-4.a                    RCFD5374 Inves - Direct & Indirect invest R/E                                          0
RCM-4.b                    RCFD5375 Inves - All othr invest unconsol subs                                    707366
RCM-4.c                    RCFD2130 Investmnts in unconsold subs - Total                                     707366
RCM-5.a.1                  RCFD2651 FHLB advance -maturity (less than)1 year                                1956525
RCM-5.a.2                  RCFDB565 FHLB advance -maturity 1 to 3 years                                     4233086
RCM-5.a.3                  RCFDB566 FHLB advance -maturity (greater than)3 years                            2990755
RCM-5.b.1                  RCFDB571 Other borrowings -maturity (less than)1 year                           11230726
RCM-5.b.2                  RCFDB567 Other borrowings -maturity 1 to 3 years                                 2268808
RCM-5.b.3                  RCFDB568 Other borrowings -maturity (greater than)3 years                        1357843
RCM-5.c                    RCFD3190 Other Borrowed Money - Total                                           24037743
RCM-6                      RCFDB569 Sell prvt party mutual funds/annuit?Y/N                                     YES
RCM-7                      RCFDB570 Assets - mutual funds/annuities                                        50943162
RCN-1.a(a)                 RCON2759 Secured Loans - Const: 30-89 Days                                         70690
RCN-1.a(b)                 RCON2769 Secured Loans - Const: 90+ Days                                           33221
RCN-1.a(c)                 RCON3492 Secured Loans - Const: Nonaccrual                                         55735
RCN-1.b(a)                 RCON3493 Secured Loans - Farmland: 30-89 Days                                       5287
RCN-1.b(b)                 RCON3494 Secured Loans - Farmland: 90+ Days                                          952
RCN-1.b(c)                 RCON3495 Secured Loans - Farmland: Nonaccrual                                       9907
RCN-1.c.1(a)               RCON5398 Secd Loans 1-4 Fam-Revol: 30-89 Days                                      26418
RCN-1.c.1(b)               RCON5399 Secd Loans 1-4 Fam-Revol: 90+ Days                                        10142
RCN-1.c.1(c)               RCON5400 Secd Loans 1-4 Fam-Revol: Nonaccrual                                       3841
RCN-1.c.2(a)               RCON5401 Secd Loans 1-4 Fam-Other: 30-89 Days                                     208870
RCN-1.c.2(b)               RCON5402 Secd Loans 1-4 Fam-Other: 90+ Days                                        90961
RCN-1.c.2(c)               RCON5403 Secd Loans 1-4 Fam-Other: Nonaccrual                                      85478
RCN-1.d(a)                 RCON3499 Secured Loans - Multifam: 30-89 Days                                      23214
RCN-1.d(b)                 RCON3500 Secured Loans - Multifam: 90+ Days                                         1295
RCN-1.d(c)                 RCON3501 Secured Loans - Multifam: Nonaccrual                                       5076
RCN-1.e(a)                 RCON3502 Secured Loans - Non Farm: 30-89 Days                                      91316
RCN-1.e(b)                 RCON3503 Secured Loans - Non Farm: 90+ Days                                         9736
RCN-1.e(c)                 RCON3504 Secured Loans - Non Farm: Nonaccrual                                     108955
RCN-1.f(a)                 RCFNB572 Secured Loans - Foreign: 30-89 Days                                           0
RCN-1.f(b)                 RCFNB573 Secured Loans - Foreign: 90+ Days                                             0
RCN-1.f(c)                 RCFNB574 Secured Loans - Foreign: Nonaccrual                                           0
RCN-2.a(a)                 RCFD5377 Loans US Deps: US Banks: 30-89 Days                                        2250
RCN-2.a(b)                 RCFD5378 Loans US Deps: US Banks: 90+ Days                                           750
RCN-2.a(c)                 RCFD5379 Loans US Deps: US Banks: Nonaccrual                                           0





                                                                                                          
RCN-2.b(a)                 RCFD5380 Loans US Deps: Foreign:  30-89 Days                                           0
RCN-2.b(b)                 RCFD5381 Loans US Deps: Foreign:  90+ Days                                             0
RCN-2.b(c)                 RCFD5382 Loans US Deps: Foreign:  Nonaccrual                                           0
RCN-3(a)                   RCFD1594 Ag  US: 30-89 Days                                                        30393
RCN-3(b)                   RCFD1597 Ag  US: 90+ Days                                                           4627
RCN-3(c)                   RCFD1583 Ag  US: Nonaccrual                                                        51347
RCN-4.a(a)                 RCFD1251 Coml/Indl  US: 30-89 Days                                                479218
RCN-4.a(b)                 RCFD1252 Coml/Indl  US: 90+ Days                                                   61935
RCN-4.a(c)                 RCFD1253 Coml/Indl  US: Nonaccrual                                                523593
RCN-4.b(a)                 RCFD1254 Coml/Indl  non-US: 30-89 Days                                              1072
RCN-4.b(b)                 RCFD1255 Coml/Indl  non-US: 90+ Days                                                 182
RCN-4.b(c)                 RCFD1256 Coml/Indl  non-US: Nonaccrual                                                 0
RCN-5.a(a)                 RCFDB575 Indv. Loans-Credit cards: 30-89 Days                                     101160
RCN-5.a(b)                 RCFDB576 Indv. Loans-Credit cards: 90+ Days                                        83009
RCN-5.a(c)                 RCFDB577 Indv. Loans-Credit cards: Nonaccrual                                          0
RCN-5.b(a)                 RCFDB578 Indv. Loans-Other: 30-89 Days                                            358465
RCN-5.b(b)                 RCFDB579 Indv. Loans-Other: 90+ Days                                               91272
RCN-5.b(c)                 RCFDB580 Indv. Loans-Other: Nonaccrual                                             18338
RCN-6(a)                   RCFD5389 Foreign:  30-89 Days                                                          0
RCN-6(b)                   RCFD5390 Foreign:  90+ Days                                                            0
RCN-6(c)                   RCFD5391 Foreign:  Nonaccrual                                                          0
RCN-7(a)                   RCFD5459 Other: 30-89 Days                                                        156129
RCN-7(b)                   RCFD5460 Other: 90+ Days                                                            1793
RCN-7(c)                   RCFD5461 Other: Nonaccrual                                                          5588
RCN-8.a(a)                 RCFD1257 Leases  US: 30-89 Days                                                   355115
RCN-8.a(b)                 RCFD1258 Leases  US: 90+ Days                                                      37503
RCN-8.a(c)                 RCFD1259 Leases  US: Nonacrual                                                    141867
RCN-8.b(a)                 RCFD1271 Leases  non-US: 30-89 Days                                                  175
RCN-8.b(b)                 RCFD1272 Leases  non-US: 90+ Days                                                      0
RCN-8.b(c)                 RCFD1791 Leases  non-US: Nonaccrual                                                    0
RCN-9(a)                   RCFD3505 Debt Securities: 30-89 Days                                                   0
RCN-9(b)                   RCFD3506 Debt Securities: 90+ Days                                                     0
RCN-9(c)                   RCFD3507 Debt Securities: Nonaccrual                                                   0
RCN-10(a)                  RCFD5612 Loans/Leases US Guaranteed-30-89 Days                                     13337
RCN-10(b)                  RCFD5613 Loans/Leases US Guaranteed- 90+ Days                                       4072
RCN-10(c)                  RCFD5614 Loans/Leases US Guaranteed-Nonaccrual                                     43718
RCN-10.a(a)                RCFD5615 Loans/Leases Guaranteed: 30-89 Days                                        7801
RCN-10.a(b)                RCFD5616 Loans/Leases Guaranteed: 30-89 Days                                         862
RCN-10.a(c)                RCFD5617 Loans/Leases Guaranteed: 30-89 Days                                       33017
RCN-M.1(a)                 RCFD1658 Restruc'd Loans: 30-89 Days                                                   0
RCN-M.1(b)                 RCFD1659 Restruc'd Loans: 90+ Days                                                     0
RCN-M.1(c)                 RCFD1661 restruc'd Loans: Nonaccrual                                                   0
RCN-M.2(a)                 RCFD6558 Comm Real Estate Loans: 30-89 Days                                        29943
RCN-M.2(b)                 RCFD6559 Comm Real Estate Loans: 90+ Days                                           1757
RCN-M.2(c)                 RCFD6560 Comm Real Estate Loans: Nonaccrual                                        21068
RCN-M.3(a)                 RCFD1248 RE  non-US: 30-89 Days                                                        0
RCN-M.3(b)                 RCFD1249 RE  non-US: 90+ Days                                                          0
RCN-M.3(c)                 RCFD1250 RE  non-US: Nonaccrual                                                        0
RCN-M.5(a)                 RCFD3529 Rate/Contract: Replacement:30-89 Days                                         0
RCN-M.5(b)                 RCFD3530 Rate/Contract: Replacement: 90+ Days                                          0
RCO-1.a                    RCON0030 Unposted Debits                                                               0
RCO-1.b.1                  RCON0031 Unposted Debits: Demand                                                     N/A
RCO-1.b.2                  RCON0032 Unposted Debits: Time/Savings                                               N/A
RCO-2.a                    RCON3510 Unposted Credits                                                              0
RCO-2.b.1                  RCON3512 Unposted Credits: Demand                                                    N/A
RCO-2.b.2                  RCON3514 Unposted Credits: Time/Savings                                              N/A





                                                                                                           
RCO-3                      RCON3520 Uninvested Trust Fund Cash                                                    0
RCO-4.a                    RCON2211 Demand Deposits of Unconsolidaed Subs                                    248700
RCO-4.b                    RCON2351 Time/Savings Deposits of Unconsolida                                          0
RCO-4.c                    RCON5514 Int accrued/unpaid on deps of con sub                                         0
RCO-5.a                    RCON2229 Demand Deposits: Insured Branches                                             0
RCO-5.b                    RCON2383 Time/Savings Deposits: Insured Branc                                          0
RCO-5.c                    RCON5515 Int accrued/unpaid on deps in ins brc                                         0
RCO-6.a                    RCON2314 Pass-through Reserve Balances: Demand                                         0
RCO-6.b                    RCON2315 Pass-through-Reserve Balances: Time/S                                         0
RCO-7.a                    RCON5516 Unamortized premiums                                                          0
RCO-7.b                    RCON5517 Unamortized discounts                                                     11939
RCO-8.a.1                  RCONA531 OAKAR: Total Deposits Purchased                                        53718084
RCO-8.a.2                  RCONA532 OAKAR: Amt of Purchased Deposits                                        6204534
RCO-8.b                    RCONA533 OAKAR: Total Deposits Sold                                                    0
RCO-10                     RCON8432 Deposit Institution Invest. Contracts                                         0
RCO-11.a                   RCON8785 Reciprocal Demand Bals - Savings Asc.                                         0
RCO-11.b                   RCONA181 Reciprocal Demand Bals - Foreign Brch                                         0
RCO-11.c                   RCONA182 Reciprocal Demand Bals - Cash Items                                           0
RCO-12.a                   RCONA527 Amt of Assets Netted agst Dem Deps                                            0
RCO-12.b                   RCONA528 Amt of Assets Netted agst Tim/Svg Dep                                         0
RCO-M.1.a.1                RCON2702 Amount of Deposit Accounts (less than) $100K                           58029395
RCO-M.1.a.2                RCON3779 (June Only) Number of Deposit Accts (less than)                             N/A
RCO-M.1.b.1                RCON2710 Amount of Deposit Accounts (greater than) $100K                        43899670
RCO-M.1.b.2                RCON2722 Number of Deposit Accounts (greater than) $100K                          109853
RCO-M.2.a                  RCON6861 Yes/No: Bank has a better method/proc                                        NO
RCO-M.2.b                  RCON5597 Uninsured Deposits Amount                                                   N/A
RCO-M.3                    RCONA545 Cert No of consolidated inst.                                               N/A
RCR-1                      RCFD3210 Total Equity Capital                                                   18022266
RCR-2                      RCFD8434 Unrealized holding gain(loss) secur.                                     241313
RCR-3                      RCFDA221 LESS: loss on avail-for-sale securities                                       0
RCR-4                      RCFD4336 Accm net gains(loss) on cash flow hedges                                 125010
RCR-5                      RCFDB588 LESS: nonqual perpetual preferred stock                                       0
RCR-6                      RCFDB589 Qualifying minority interests                                            943906
RCR-7                      RCFDB590 LESS:Disallowed goodwill/intangbl assets                                7630725
RCR-8                      RCFDB591 LESS:Disallowd svc assets/purchased cca                                   48704
RCR-9                      RCFD5610 LESS:Disallowed deferred tax assets                                           0
RCR-10                     RCFDB592 Other add to(deduct from)Tier 1 capt                                          0
RCR-11                     RCFD8274 Tier 1 capital                                                         10920420
RCR-12                     RCFD5306 Qual subord debt/redeem preferred stock                                 4881580
RCR-13                     RCFDB593 Cml perpetual preferred stock                                                 0
RCR-14                     RCFD5310 Allowance for loan/lease losses                                         1964477
RCR-15                     RCFD2221 Unrealized gains on avail-for-sale sec                                        0
RCR-16                     RCFDB594 Other Tier 2 cptl components                                               1400
RCR-17                     RCFD5311 Tier 2 Capital                                                          6847457
RCR-18                     RCFD8275 Allowable Tier 2 cptl                                                   6847457
RCR-19                     RCFD1395 Tier 3 cptl allocated for market risk                                         0
RCR-20                     RCFDB595 LESS: Deductions for ttl risk-based cptl                                      0
RCR-21                     RCFD3792 Total risk-based capital                                               17767877
RCR-22                     RCFD3368 Avg total assets                                                      157674051
RCR-23                     RCFDB590 LESS:Disallowed goodwill/intangbl assets                                7630725
RCR-24                     RCFDB591 LESS:Disallowd svc assets/purchased cca                                   48704
RCR-25                     RCFD5610 LESS:Disallowed deferred tax assets                                           0
RCR-26                     RCFDB596 LESS:Other deduct from assets/lev cptl                                        0
RCR-27                     RCFDA224 Avg total assets for leverage cptl                                    149994622
RCR-28                     RCFDB503 Adj to total risk-based cptl reported                                         0
RCR-29                     RCFDB504 Adj to risk-weighted assets reported                                          0





                                                                                                           
RCR-30                     RCFDB505 Adj to avg total assers reported                                              0
RCR-31(a)                  RCFD7273 Tier 1 leverage ratio-financial subs                                        N/A
RCR-31(b)                  RCFD7204 Tier 1 leverag -All Banks                                                 7.28%
RCR-32(a)                  RCFD7274 T1 risk-based cptl ratio-financial subs                                     N/A
RCR-32(b)                  RCFD7206 T1 risk-based cptl ratio-All banks                                        6.97%
RCR-33(a)                  RCFD7275 Ttl risk-based cptl-financial subs                                          N/A
RCR-33(b)                  RCFD7205 Ttl risk-based cptl-All banks                                            11.34%
RCR-34(a)                  RCFD0010 Ttl: Cash & bal due from deposit inst                                   7522680
RCR-34(c)                  RCFDB600 0% Risk Weight: Cash & bal due                                          1365556
RCR-34(d)                  RCFDB601 20% Risk Weight: Cash & bal due                                         6157124
RCR-34(f)                  RCFDB602 100% Risk Weight: Cash & bal due                                              0
RCR-35(a)                  RCFD1754 Ttl: Securities Held-to-Maturity                                         278690
RCR-35(b)                  RCFDB603 No Risk-Weighting: Sec Held-to-Maturity                                       0
RCR-35(c)                  RCFDB604 0% Risk Weight: Sec Held-to-Maturity                                          0
RCR-35(d)                  RCFDB605 20% Risk Weight: Sec Held-to-Maturity                                         0
RCR-35(e)                  RCFDB606 50% Risk Weight: Sec Held-to-Maturity                                         0
RCR-35(f)                  RCFDB607 100% Risk Weight: Sec Held-to-Maturity                                   278690
RCR-36(a)                  RCFD1773 Ttl: Available-for-sale                                                25107852
RCR-36(b)                  RCFDB608 No Risk-Weighting: Available-for-sale                                    389152
RCR-36(c)                  RCFDB609 0% Risk Weight: Available-for-sale                                      1986888
RCR-36(d)                  RCFDB610 20% Risk Weight: Available-for-sale                                    21149687
RCR-36(e)                  RCFDB611 50% Risk Weight: Available-for-sale                                      723509
RCR-36(f)                  RCFDB612 100% Risk Weight: Available-for-sale                                     858616
RCR-37(a)                  RCFD1350 Ttl: Fed Funds Sold & Secs Purchased                                    1509608
RCR-37(c)                  RCFDB613 0% Risk Weight: Fed Funds Sold & Sec                                          0
RCR-37(d)                  RCFDB614 20% Risk Weight: Fed Funds Sold & Sec                                   1509608
RCR-37(f)                  RCFDB616 100% Risk Weight: Fed Funds Sold & Sec                                        0
RCR-38(a)                  RCFD5369 Loans & leases held for sale                                            3300036
RCR-38(b)                  RCFDB617 No Risk-Weighting:Loans & leases held                                         0
RCR-38(c)                  RCFDB618 0% Risk Weight: Loans & leases held                                           0
RCR-38(d)                  RCFDB619 20% Risk Weight: Loans & leases held                                     856602
RCR-38(e)                  RCFDB620 50% Risk Weight: Loans & leases held                                    1677078
RCR-38(f)                  RCFDB621 100% Risk Weight: Loans & leases held                                    766356
RCR-39(a)                  RCFDB528 Ttl: Loans & leases,net of unearned Inc                               110352733
RCR-39(b)                  RCFDB622 No Risk-Weighting:Loans & leases,net                                          0
RCR-39(c)                  RCFDB623 0% Risk Weight:Loans & leases,net                                        734674
RCR-39(d)                  RCFDB624 20% Risk Weight:Loans & leases,net                                      1143878
RCR-39(e)                  RCFDB625 50% Risk Weight:Loans & leases,net                                      7646408
RCR-39(f)                  RCFDB626 100% Risk Weight:Loans & leases,net                                   100827773
RCR-40(a)                  RCFD3123 LESS:Allow for Ln and Lse Loss-Total                                    2341530
RCR-40(b)                  RCFD3123 LESS:Allow for Ln & Lse Loss-No Rsk Wght                                2341530
RCR-41(a)                  RCFD3545 Ttl: Trading assets                                                      179817
RCR-41(b)                  RCFDB627 No Risk-Weighting: Trading assets                                        179817
RCR-41(c)                  RCFDB628 0% Risk Weight: Trading assets                                                0
RCR-41(d)                  RCFDB629 20% Risk Weight: Trading assets                                               0
RCR-41(e)                  RCFDB630 50% Risk Weight: Trading assets                                               0
RCR-41(f)                  RCFDB631 100% Risk Weight: Trading assets                                              0
RCR-42(a)                  RCFDB639 Ttl: All other assets                                                  17189609
RCR-42(b)                  RCFDB640 No Risk-Weighting: All other assets                                     7706627
RCR-42(c)                  RCFDB641 0% Risk Weight: All other assets                                         321593
RCR-42(d)                  RCFDB642 20% Risk Weight: All other assets                                       2013009
RCR-42(e)                  RCFDB643 50% Risk Weight: All other assets                                         17314
RCR-42(f)                  RCFD5339 100% Risk Weight: All other assets                                      7131066
RCR-43(a)                  RCFD2170 Ttl: Total assets                                                     163099495
RCR-43(b)                  RCFDB644 No Risk-Weighting: Total assets                                         5934066
RCR-43(c)                  RCFD5320 0% Risk Weight: Total assets                                            4408711





                                                                                                       
RCR-43(d)                  RCFD5327 20% Risk Weight: Total assets                                          32829908
RCR-43(e)                  RCFD5334 50% Risk Weight: Total assets                                          10064309
RCR-43(f)                  RCFD5340 100% Risk Weight: Total assets                                        109862501
RCR-44(a)                  RCFD3819 Value/Amount: Fncl Stndby Ltrs of Crdt                                  7300978
RCR-44(b)                  RCFDB645 Credit Equiv: Fncl Stndby Ltrs of Crdt                                  7300978
RCR-44(c)                  RCFDB646 0% Risk Weight: Fncl Stndby Ltrs of Crdt                                      0
RCR-44(d)                  RCFDB647 20% Risk Weight:Fncl Stndby Ltrs of Crdt                                      0
RCR-44(e)                  RCFDB648 50% Risk Weight:Fncl Stndby Ltrs of Crdt                                      0
RCR-44(f)                  RCFDB649 100% Risk Weight:Fncl Stndby Ltr of Crdt                                7300978
RCR-45(a)                  RCFD3821 Value/Amount: Prf Stndby Ltrs of Crdt                                    454070
RCR-45(b)                  RCFDB650 Credit Equiv: Prf Stndby Ltrs of Crdt                                    227035
RCR-45(c)                  RCFDB651 0% Risk Weight: Prf Stndby Ltrs of Crdt                                       0
RCR-45(d)                  RCFDB652 20% Risk Weight:Prf Stndby Ltrs of Crdt                                       0
RCR-45(e)                  RCFDB653 50% Risk Weight:Prf Stndby Ltrs of Crdt                                       0
RCR-45(f)                  RCFDB654 100% Risk Weight:Prf Stndby Ltr of Crdt                                  227035
RCR-46(a)                  RCFD3411 Value/Amount: Cml & Similar Ltrs of Crdt                                 438402
RCR-46(b)                  RCFDB655 Credit Equiv: Cml & Similar Ltrs of Crdt                                  87680
RCR-46(c)                  RCFDB656 0% Risk Weight: Cml & Sim Ltrs of Crdt                                        0
RCR-46(d)                  RCFDB657 20% Risk Weight: Cml & Sim Ltrs of Crdt                                     469
RCR-46(e)                  RCFDB658 50% Risk Weight: Cml & Sim Ltrs of Crdt                                       0
RCR-46(f)                  RCFDB659 100% Risk Weight: Cml & Sim Ltrs of Crdt                                  87211
RCR-47(a)                  RCFD3429 Value/Amount: Prts in Accpt Acquired                                        250
RCR-47(b)                  RCFDB660 Credit Equiv: Prts in Accpt Acquired                                        250
RCR-47(c)                  RCFDB661 0% Risk Weight: Prts in Accpt Acquired                                        0
RCR-47(d)                  RCFDB662 20% Risk Weight: Prts in Accpt Acquired                                       0
RCR-47(f)                  RCFDB663 100% Risk Weight: Prts in Accpt Acquired                                    250
RCR-48(a)                  RCFD3433 Value/Amount: Securities lent                                           1023763
RCR-48(b)                  RCFDB664 Credit Equiv: Securities lent                                           1023763
RCR-48(c)                  RCFDB665 0% Risk Weight: Securities lent                                         1023763
RCR-48(d)                  RCFDB666 20% Risk Weight: Securities lent                                              0
RCR-48(e)                  RCFDB667 50% Risk Weight: Securities lent                                              0
RCR-48(f)                  RCFDB668 100% Risk Weight: Securities lent                                             0
RCR-49(a)                  RCFDA250 Value/Amount:Rtnd recse on SB oblig                                           0
RCR-49(b)                  RCFDB669 Credit Equiv:Rtnd recse on SB oblig                                           0
RCR-49(c)                  RCFDB670 0% Risk weight:Rtnd recse on SB oblig                                         0
RCR-49(d)                  RCFDB671 20% Risk weight:Rtnd recse on SB oblig                                        0
RCR-49(e)                  RCFDB672 50% Risk weight:Rtnd recse on SB oblig                                        0
RCR-49(f)                  RCFDB673 100% Risk weight:Rtnd recse on SB oblig                                       0
RCR-50(a)                  RCFD1727 Value/Amount: Rtnd recse on fin assets                                    27198
RCR-50(b)                  RCFD2243 Credit Equiv: Rtnd recse on fin assets                                   239829
RCR-50(f)                  RCFDB674 100% Rsk wght:Rtnd recse on fin assets                                   239829
RCR-51(a)                  RCFDB675 Value/Amount: All other fin assets                                      7552444
RCR-51(b)                  RCFDB676 Credit Equiv: All other fin assets                                      7552444
RCR-51(c)                  RCFDB677 0% Risk weight: All other fin assets                                          0
RCR-51(d)                  RCFDB678 20% Risk weight: All other fin assets                                         0
RCR-51(e)                  RCFDB679 50% Risk weight: All other fin assets                                     19603
RCR-51(f)                  RCFDB680 100% Risk weight: All other fin assets                                  7532841
RCR-52(a)                  RCFDB681 Value/Amount: All other off-bal liab                                          0
RCR-52(b)                  RCFDB682 Credit Equiv: All other off-bal liab                                          0
RCR-52(c)                  RCFDB683 0% Risk Weight: All other off-bal liab                                        0
RCR-52(d)                  RCFDB684 20% Risk Weight: All other off-bal liab                                       0
RCR-52(e)                  RCFDB685 50% Risk Weight: All other off-bal liab                                       0
RCR-52(f)                  RCFDB686 100% Risk Weight: All other off-bal liab                                      0
RCR-53(a)                  RCFD3833 Value/Amount: Unused Commit (greater than) 1 yr                        42978066
RCR-53(b)                  RCFDB687 Credit Equiv: Unused Commit (greater than) 1 yr                        21489033
RCR-53(c)                  RCFDB688 0% Risk Weight: Unused Commit (greater than) 1 yr                             0





                                                                                                       
RCR-53(d)                  RCFDB689 20% Risk Weight: Unused Commit (greater than) 1 yr                      1900303
RCR-53(e)                  RCFDB690 50% Risk Weight: Unused Commit (greater than) 1 yr                        63620
RCR-53(f)                  RCFDB691 100% Risk Weight: Unused Commit (greater than) 1 yr                    19525110
RCR-54(b)                  RCFDA167 Credit Equiv: Derivative contracts                                       794695
RCR-54(c)                  RCFDB693 0% Risk Weight: Derivative contracts                                          0
RCR-54(d)                  RCFDB694 20% Risk Weight: Derivative contracts                                    449922
RCR-54(e)                  RCFDB695 50% Risk Weight: Derivative contracts                                    344773
RCR-55(c)                  RCFDB696 0% Rsk Wght: Ttl assets,derv, off bal                                   5432474
RCR-55(d)                  RCFDB697 20% Rsk Wght: Ttl assets,derv, off bal                                 35180602
RCR-55(e)                  RCFDB698 50% Rsk Wght: Ttl assets,derv, off bal                                 10492305
RCR-55(f)                  RCFDB699 100% Rsk Wght: Ttl assets,derv, off bal                               144775755
RCR-57(c)                  RCFDB700 0% Rsk Wght: Rsk Weighted Assets                                              0
RCR-57(d)                  RCFDB701 20% Rsk Wght: Rsk Weighted Assets                                       7036120
RCR-57(e)                  RCFDB702 50% Rsk Wght: Rsk Weighted Assets                                       5246153
RCR-57(f)                  RCFDB703 100% Rsk Wght: Rsk Weighted Assets                                    144775755
RCR-58                     RCFD1651 Regulatory capt ratios:  Mrkt Risk-equiv                                      0
RCR-59                     RCFDB704 Rsk weighted before deduct for excess                                 157058028
RCR-60                     RCFDA222 Regulatory capt ratios:Excess allownc                                    382603
RCR-61                     RCFD3128 LESS: Allocated Transfer Risk Reserve                                         0
RCR-62                     RCFDA223 Regulatory capt ratios:Risk-wtd assts                                 156675425
RCR-M.1                    RCFD8764 Credit Exp - Off-Bal Sheet Derivative                                    610530
RCR-M.2.a(a)               RCFD3809 Derivative Int Rate Contracts (less than) 1 YR                          4106118
RCR-M.2.a(b)               RCFD8766 Derivative Int Rate Contracts 1-5 YRS                                  11691170
RCR-M.2.a(c)               RCFD8767 Derivative Int Rate Contracts (greater than) 5 YRS                      3868071
RCR-M.2.b(a)               RCFD3812 Derivative Fgn Exch Contracts (less than) 1 YR                          3325932
RCR-M.2.b(b)               RCFD8769 Derivative Fgn Exch Contracts 1-5 YRS                                    768755
RCR-M.2.b(c)               RCFD8770 Derivative Fgn Exch Contracts (greater than) 5 YRS                            0
RCR-M.2.c(a)               RCFD8771 Derivative   Gold   Contracts (less than) 1 YR                                0
RCR-M.2.c(b)               RCFD8772 Derivative   Gold   Contracts 1-5 YRS                                         0
RCR-M.2.c(c)               RCFD8773 Derivative   Gold   Contracts (greater than) 5 YRS                            0
RCR-M.2.d(a)               RCFD8774 Derivative P Metals Contracts (less than) 1 YR                                0
RCR-M.2.d(b)               RCFD8775 Derivative P Metals Contracts 1-5 YRS                                         0
RCR-M.2.d(c)               RCFD8776 Derivative P Metals Contracts (greater than) 5 YRS                                         0
RCR-M.2.e(a)               RCFD8777 Derivative Commodity Contrcts (less than) 1 YR                                0
RCR-M.2.e(b)               RCFD8778 Derivative Commodity Contrcts 1-5 YRS                                         0
RCR-M.2.e(c)               RCFD8779 Derivative Commodity Contrcts (greater than) 5 YRS                            0
RCR-M.2.f(a)               RCFDA000 Derivative  Equity  Contracts (less than) 1 YR                                0
RCR-M.2.f(b)               RCFDA001 Derivative  Equity  Contracts 1-5 YRS                                         0
RCR-M.2.f(c)               RCFDA002 Derivative  Equity  Contracts (greater than) 5 YRS                            0
RCS-1(a)                   RCFDB705 BSA-Outstndng prncpl: 1-4 Res                                                 0
RCS-1(b)                   RCFDB706 BSA-Outstndng prncpl: Hme Equity                                              0
RCS-1(c)                   RCFDB707 BSA-Outstndng prncpl: C Card Rcv                                              0
RCS-1(d)                   RCFDB708 BSA-Outstndng prncpl: Auto Loans                                         536931
RCS-1(e)                   RCFDB709 BSA-Outstndng prncpl: Other Cons                                              0
RCS-1(f)                   RCFDB710 BSA-Outstndng prncpl: Cml/Indus                                         7532841
RCS-1(g)                   RCFDB711 BSA-Outstndng prncpl: All Other                                               0
RCS-2.a(a)                 RCFDB712 BSA-Max amount(Retained inst):1-4 Res                                         0
RCS-2.a(b)                 RCFDB713 BSA-Max amount(Retained inst):Hme Equity                                      0
RCS-2.a(c)                 RCFDB714 BSA-Max amount(Retained inst):C Card Rcv                                      0
RCS-2.a(d)                 RCFDB715 BSA-Max amount(Retained inst):Auto Loans                                      0
RCS-2.a(e)                 RCFDB716 BSA-Max amount(Retained inst):Other Cons                                      0
RCS-2.a(f)                 RCFDB717 BSA-Max amount(Retained inst):Cml/Indus                                       0
RCS-2.a(g)                 RCFDB718 BSA-Max amount(Retained inst):All Other                                       0
RCS-2.b(a)                 RCFDB719 BSA-Max amount(Stndby Lttrs):1-4 Res                                          0
RCS-2.b(b)                 RCFDB720 BSA-Max amount(Stndby Lttrs):Hme Equity                                       0
RCS-2.b(c)                 RCFDB721 BSA-Max amount(Stndby Lttrs):C Card Rcv                                       0





                                                                                                        
RCS-2.b(d)                 RCFDB722 BSA-Max amount(Stndby Lttrs):Auto Loans                                   27683
RCS-2.b(e)                 RCFDB723 BSA-Max amount(Stndby Lttrs):Other Cons                                       0
RCS-2.b(f)                 RCFDB724 BSA-Max amount(Stndby Lttrs):Cml/Indus                                  7532841
RCS-2.b(g)                 RCFDB725 BSA-Max amount(Stndby Lttrs):All Other                                        0
RCS-3(a)                   RCFDB726 BSA-Rpt Bnk's unused commit: 1-4 Res                                          0
RCS-3(b)                   RCFDB727 BSA-Rpt Bnk's unused commit: Hme Equity                                       0
RCS-3(c)                   RCFDB728 BSA-Rpt Bnk's unused commit: C Card Rcv                                       0
RCS-3(d)                   RCFDB729 BSA-Rpt Bnk's unused commit: Auto Loans                                       0
RCS-3(e)                   RCFDB730 BSA-Rpt Bnk's unused commit: Other Cons                                       0
RCS-3(f)                   RCFDB731 BSA-Rpt Bnk's unused commit: Cml/Indus                                  7532841
RCS-3(g)                   RCFDB732 BSA-Rpt Bnk's unused commit: All Other                                        0
RCS-4.a(a)                 RCFDB733 BSA-Pst  due loans,30-89 days:1-4 Res                                         0
RCS-4.a(b)                 RCFDB734 BSA-Pst due loans,30-89 days:Hme Equity                                       0
RCS-4.a(c)                 RCFDB735 BSA-Pst due loans,30-89 days:C Card Rcv                                       0
RCS-4.a(d)                 RCFDB736 BSA-Pst due loans,30-89 days:Auto Loans                                   16214
RCS-4.a(e)                 RCFDB737 BSA-Pst due loans,30-89 days:Other Cons                                       0
RCS-4.a(f)                 RCFDB738 BSA-Pst due loans,30-89 days:Cml/Indus                                        0
RCS-4.a(g)                 RCFDB739 BSA-Pst due loans,30-89 days:All Other                                        0
RCS-4.b(a)                 RCFDB740 BSA-Pst  due loans,90+ days:1-4 Res                                           0
RCS-4.b(b)                 RCFDB741 BSA-Pst due loans,90+ days:Hme Equity                                         0
RCS-4.b(c)                 RCFDB742 BSA-Pst due loans,90+ days:C Card Rcv                                         0
RCS-4.b(d)                 RCFDB743 BSA-Pst due loans,90+ days:Auto Loans                                      3596
RCS-4.b(e)                 RCFDB744 BSA-Pst due loans,90+ days:Other Cons                                         0
RCS-4.b(f)                 RCFDB745 BSA-Pst due loans,90+ days:Cml/Indus                                          0
RCS-4.b(g)                 RCFDB746 BSA-Pst due loans,90+ days:All Other                                          0
RCS-5.a(a)                 RIADB747 BSA-C/O & Rcv on assets(C/O):1-4 Res                                          0
RCS-5.a(b)                 RIADB748 BSA-C/O & Rcv on assets(C/O):Hme Equity                                       0
RCS-5.a(c)                 RIADB749 BSA-C/O & Rcv on assets(C/O):C Card Rcv                                       0
RCS-5.a(d)                 RIADB750 BSA-C/O & Rcv on assets(C/O):Auto Loans                                   12034
RCS-5.a(e)                 RIADB751 BSA-C/O & Rcv on assets(C/O):Other Cons                                       0
RCS-5.a(f)                 RIADB752 BSA-C/O & Rcv on assets(C/O):Cml/Indus                                        0
RCS-5.a(g)                 RIADB753 BSA-C/O & Rcv on assets(C/O):All Other                                        0
RCS-5.b(a)                 RIADB754 BSA-C/O & Rcv on assets(Rcvs):1-4 Res                                         0
RCS-5.b(b)                 RIADB755 BSA-C/O & Rcv on assets(Rcvs):Hme Equity                                      0
RCS-5.b(c)                 RIADB756 BSA-C/O & Rcv on assets(Rcvs):C Card Rcv                                      0
RCS-5.b(d)                 RIADB757 BSA-C/O & Rcv on assets(Rcvs):Auto Loans                                   2744
RCS-5.b(e)                 RIADB758 BSA-C/O & Rcv on assets(Rcvs):Other Cons                                      0
RCS-5.b(f)                 RIADB759 BSA-C/O & Rcv on assets(Rcvs):Cml/Indus                                       0
RCS-5.b(g)                 RIADB760 BSA-C/O & Rcv on assets(Rcvs):All Other                                       0
RCS-6.a(b)                 RCFDB761 BSA-Amt of ownrshp-Securities:Hme Equity                                      0
RCS-6.a(c)                 RCFDB762 BSA-Amt of ownrshp-Securities:C Card Rcv                                      0
RCS-6.a(f)                 RCFDB763 BSA-Amt of ownrshp-Securities:Cml/Indus                                       0
RCS-6.b(b)                 RCFDB500 BSA-Amt of ownrshp-Loans:Hme Equity                                           0
RCS-6.b(c)                 RCFDB501 BSA-Amt of ownrshp-Loans:C Card Rcv                                           0
RCS-6.b(f)                 RCFDB502 BSA-Amt of ownrshp-Loans:Cml/Indus                                            0
RCS-7.a(b)                 RCFDB764 BSA-Pst due loans,30-89 days:Hme Equity                                       0
RCS-7.a(c)                 RCFDB765 BSA-Pst due loans,30-89 days:C Card Rcv                                       0
RCS-7.a(f)                 RCFDB766 BSA-Pst due loans,30-89 days:Cml/Indus                                        0
RCS-7.b(b)                 RCFDB767 BSA-Pst due loans,90+ days:Hme Equity                                         0
RCS-7.b(c)                 RCFDB768 BSA-Pst due loans,90+ days:C Card Rcv                                         0
RCS-7.b(f)                 RCFDB769 BSA-Pst due loans,90+ days:Cml/Indus                                          0
RCS-8.a(b)                 RIADB770 BSA-C/O & Rcv on loans(C/O):Hme Equity                                        0
RCS-8.a(c)                 RIADB771 BSA-C/O & Rcv on loans(C/O):C Card Rcv                                        0
RCS-8.a(f)                 RIADB772 BSA-C/O & Rcv on loans(C/O):Cml/Indus                                         0
RCS-8.b(b)                 RIADB773 BSA-C/O & Rcv on loans(Rcvs):Hme Equity                                       0
RCS-8.b(c)                 RIADB774 BSA-C/O & Rcv on loans(Rcvs):C Card Rcv                                       0





                                                                                                           
RCS-8.b(f)                 RIADB775 BSA-C/O & Rcv on loans(Rcvs):Cml/Indus                                        0
RCS-9(a)                   RCFDB776 Sec Fac-Max amt credit expose:1-4 Res                                         0
RCS-9(b)                   RCFDB777 Sec Fac-Max amt credit expose:Hme Equity                                      0
RCS-9(c)                   RCFDB778 Sec Fac-Max amt credit expose:C Card Rcv                                      0
RCS-9(d)                   RCFDB779 Sec Fac-Max amt credit expose:Auto Loans                                      0
RCS-9(e)                   RCFDB780 Sec Fac-Max amt credit expose:Other Cons                                      0
RCS-9(f)                   RCFDB781 Sec Fac-Max amt credit expose:Cml/Indus                                       0
RCS-9(g)                   RCFDB782 Sec Fac-Max amt credit expose:All other                                       0
RCS-10(a)                  RCFDB783 Sec Fac-Rpt bank's unusd cmt:1-4 Res                                          0
RCS-10(b)                  RCFDB784 Sec Fac-Rpt bank's unusd cmt:Hme Equity                                       0
RCS-10(c)                  RCFDB785 Sec Fac-Rpt bank's unusd cmt:C Card Rcv                                       0
RCS-10(d)                  RCFDB786 Sec Fac-Rpt bank's unusd cmt:Auto Loans                                       0
RCS-10(e)                  RCFDB787 Sec Fac-Rpt bank's unusd cmt:Other Cons                                       0
RCS-10(f)                  RCFDB788 Sec Fac-Rpt bank's unusd cmt:Cml/Indus                                        0
RCS-10(g)                  RCFDB789 Sec Fac-Rpt bank's unusd cmt:All Other                                        0
RCS-11(a)                  RCFDB790 Bnk Assts-Assets sold w/recourse:1-4 Res                                  30061
RCS-11(b)                  RCFDB791 Bnk Assts-Assets sold w/rcrse:Hme Equity                                      0
RCS-11(c)                  RCFDB792 Bnk Assts-Assets sold w/rcrse:C Card Rcv                                      0
RCS-11(d)                  RCFDB793 Bnk Assts-Assets sold w/rcrse:Auto Loans                                      0
RCS-11(e)                  RCFDB794 Bnk Assts-Assets sold w/rcrse:Other Cons                                      0
RCS-11(f)                  RCFDB795 Bnk Assts-Assets sold w/rcrse:Cml/Indus                                       0
RCS-11(g)                  RCFDB796 Bnk Assts-Assets sold w/rcrse:All Other                                       0
RCS-12(a)                  RCFDB797 Bnk Assts-Max amt crdt expose:1-4 Res                                     21961
RCS-12(b)                  RCFDB798 Bnk Assts-Max amt crdt expose:Hme Equity                                      0
RCS-12(c)                  RCFDB799 Bnk Assts-Max amt crdt expose:C Card Rcv                                      0
RCS-12(d)                  RCFDB800 Bnk Assts-Max amt crdt expose:Auto Loans                                      0
RCS-12(e)                  RCFDB801 Bnk Assts-Max amt crdt expose:Other Cons                                      0
RCS-12(f)                  RCFDB802 Bnk Assts-Max amt crdt expose:Cml/Indus                                       0
RCS-12(g)                  RCFDB803 Bnk Assts-Max amt crdt expose:All Other                                       0
RCS-M.1.a                  RCFDA249 Sml busns obligations:Outstanding bal                                         0
RCS-M.1.b                  RCFDA250 Sml busns obligations:retaind recours                                         0
RCS-M.2.a                  RCFDB804 OPB:1-4 Fam Res with recourse                                             10458
RCS-M.2.b                  RCFDB805 OPB:1-4 Fam Res w/o recourse                                           20825351
RCS-M.2.c                  RCFDA591 OPB: Other financial assets                                             7532841
RCS-M.3.a.1                RCFDB806 Asset-backed,max amt-Cndts spnsrd by bnk                               17283525
RCS-M.3.a.2                RCFDB807 Asset-bckd,max amt-Cndts spnsrd by other                                      0
RCS-M.3.b.1                RCFDB808 Asset-bckd,unused-Cndts spnsrd by bnk                                  17283525
RCS-M.3.b.2                RCFDB809 Asset-bckd,unused-Cndts spnsrd by other                                       0
RCT-1                      RCFDA345 Y/N-Does inst have fiduciary powers?                                        N/A
RCT-2                      RCFDA346 Y/N-Does inst exercise fid pwrs granted?                                    N/A
RCT-3                      RCFDB867 Y/N-Does inst have any act to report?                                       N/A
RCT-4(a)                   RCFDB868 Assets-Prsnl Trust: Managed Assts                                           N/A
RCT-4(b)                   RCFDB869 Assets-Prsnl Trust: Non-Managed Assts                                       N/A
RCT-4(c)                   RCFDB870 Assets-Prsnl Trust: # Managed Accts                                         N/A
RCT-4(d)                   RCFDB871 Assets-Prsnl Trust: # Non-Mngd Accts                                        N/A
RCT-5.a(a)                 RCFDB872 Assets-Ret Rel,Emp contr: Mngd Assts                                        N/A
RCT-5.a(b)                 RCFDB873 Assets-Ret Rel,Emp contr: Non-Mngd Assts                                    N/A
RCT-5.a(c)                 RCFDB874 Assets-Ret Rel,Emp contr:# Mngd Accts                                       N/A
RCT-5.a(d)                 RCFDB875 Assets-Ret Rel,Emp cont:# Non-Mngd Accts                                    N/A
RCT-5.b(a)                 RCFDB876 Assets-Ret Rel,Emp benft:Mngd Assts                                         N/A
RCT-5.b(b)                 RCFDB877 Assets-Ret Rel,Emp benft:Non-Mngd Assts                                     N/A
RCT-5.b(c)                 RCFDB878 Assets-Ret Rel,Emp benft:# Mngd Accts                                       N/A
RCT-5.b(d)                 RCFDB879 Assets-Ret Rel,Emp benft:# Non-Mgd Accts                                    N/A
RCT-6(a)                   RCFDB880 Assets-Ret Rel,Other ret: Mngd Assts                                        N/A
RCT-6(b)                   RCFDB881 Assets-Ret Rel,Other ret: Non-Mngd Assts                                    N/A
RCT-6(c)                   RCFDB882 Assets-Ret Rel,Other ret:# Mngd Accts                                       N/A





                                                                                                          
RCT-6(d)                   RCFDB883 Assets-Ret Rel,Other ret:# Non-Mgd Accts                                    N/A
RCT-(a)                    RCFDB884 Assets-Corp trust/agency:Mngd Assts                                         N/A
RCT-(b)                    RCFDB885 Assets-Corp trust/agency:Non-Mngd Assts                                     N/A
RCT-(c)                    RCFDC001 Assets-Corp trust/agency:#  Mngd Accts                                      N/A
RCT-(d)                    RCFDC002 Assets-Corp trust/agency:# Non-Mgd Accts                                    N/A
RCT-7(a)                   RCFDB886 Assets-Invst Mgmnt Accts:Mngd Assts                                         N/A
RCT-7(c)                   RCFDB888 Assets-Invst Mgmnt Accts:# Mngd Accts                                       N/A
RCT-8(a)                   RCFDB890 Assets-Other Fiduciary Accts:Mngd Assts                                     N/A
RCT-8(b)                   RCFDB891 Assets-Other Fid Accts:Non-Mngd Assts                                       N/A
RCT-8(c)                   RCFDB892 Assets-Other Fid Accts:# Mngd Accts                                         N/A
RCT-8(d)                   RCFDB893 Assets-Other Fid Accts:# Non-Mngd Accts                                     N/A
RCT-9(a)                   RCFDB894 Assets-Total Fid Accts:Mngd Assts                                           N/A
RCT-9(b)                   RCFDB895 Assets-Total Fid Accts:Non-Mngd                                             N/A
RCT-9(c)                   RCFDB896 Assets-Total Fid Accts:# Mngd Accts                                         N/A
RCT-9(d)                   RCFDB897 Assets-Total Fid Accts:# Non-Mngd Accts                                     N/A
RCT-10(b)                  RCFDB898 Assets-Cust/Safekpng:Non-Mngd Assts                                         N/A
RCT-10(d)                  RCFDB899 Assets-Cust/Safekpng:# Non-Mngd Assts                                       N/A
RCT-11(a)                  RCFDB900 Assets-Fid Accts Foreign:Mngd Assts                                         N/A
RCT-11(b)                  RCFDB901 Assets-Fid Accts For:Non-Mngd Assts                                         N/A
RCT-11(c)                  RCFDB902 Assets-Fid Accts For:# Mngd Assts                                           N/A
RCT-11(d)                  RCFDB903 Assets-Fid Accts For:# Non-Mngd Assts                                       N/A
RCT-12                     RIADB904 Income-Personal Trust/Agency Accts                                          N/A
RCT-13.a                   RIADB905 Income-Ret Rel,Emp benefit-def contr                                        N/A
RCT-13.b                   RIADB906 Income-Ret Ret,Emp benefit-def benefit                                      N/A
RCT-13.c                   RIADB907 Income-Ret Rel,Other Retirement Accts                                       N/A
RCT-14                     RIADA479 Income-Corporate Trust/Agency Accts                                         N/A
RCT-15                     RIADB908 Income-Investment Mngmnt Agency Accts                                       N/A
RCT-16                     RIADA480 Income-Other Fiduciary Accts                                                N/A
RCT-17                     RIADB909 Income-Custody/Safekeeping Accts                                            N/A
RCT-18                     RIADB910 Income-Other Fid/Related                                                    N/A
RCT-19                     RIAD4070 Income-Total Gross Fid/Related                                              N/A
RCT-19.a                   RIADB912 Income-Total Gross Fid/Related - For                                        N/A
RCT-21                     RIADA488 Income-Less:Net losses from Fid/Related                                     N/A
RCT-22                     RIADB911 Income-Plus:Intracompany Inc Credits                                        N/A
RCT-23                     RIADA491 Income-Net Fiduciary/Related Inc                                            N/A
RCT-M.1.a                  RCFDB913 Memo-Mngd Assets:Non-Int Bearing Dep                                        N/A
RCT-M.1.b                  RCFDB914 Memo-Mngd Assets:Int-Bearing Deposits                                       N/A
RCT-M.1.c                  RCFDB915 Memo-Mngd Asets:Treas/Gov (US) Oblig                                        N/A
RCT-M.1.d                  RCFDB916 Memo-Mngd Assets:Sate,Cnty,Muni Oblig                                       N/A
RCT-M.1.e                  RCFDB917 Memo-Mngd Assets:Money Mkt Mutual Funds                                     N/A
RCT-M.1.f                  RCFDB918 Memo-Mngd Assets:Other short-term oblig                                     N/A
RCT-M.1.g                  RCFDB919 Memo-Mngd Assets:Other notes/bonds                                          N/A
RCT-M.1.h                  RCFDB920 Memo-Mngd Assets:Common/Preferred Stock                                     N/A
RCT-M.1.i                  RCFDB921 Memo-Mngd Assets:Real Estate Mortgages                                      N/A
RCT-M.1.j                  RCFDB922 Memo-Mngd Assets:Real Estate                                                N/A
RCT-M.1.k                  RCFDB923 Memo-Mngd Assets:Miscellaneous Assets                                       N/A
RCT-M.1.l                  RCFDB868 Memo-Mngd Assets:Total Mngd Assets held                                     N/A
RCT-M.2.a(a)               RCFDB927 Corp Trust-Corp/Muni:# of Issues                                            N/A
RCT-M.2.a(b)               RCFDB928 Corp Trust-Corp/Muni:Prncpl Amt                                             N/A
RCT-M.2.b(a)               RCFDB929 Corp Trust - xfer agent:# of Issues                                         N/A
RCT-M.3.a(a)               RCFDB931 Memo-Collective,Dom Equity:# of Funds                                       N/A
RCT-M.3.a(b)               RCFDB932 Memo-Collective,Dom Equity:Mkt Value                                        N/A
RCT-M.3.b(a)               RCFDB933 Memo-Collective,Inter/Global:# of Funds                                     N/A
RCT-M.3.b(b)               RCFDB934 Memo-Collective,Inter/Global:Mkt Value                                      N/A
RCT-M.3.c(a)               RCFDB935 Memo-Collective,Stock/Bond:# of Funds                                       N/A
RCT-M.3.c(b)               RCFDB936 Memo-Collective,Stock/Bond:Mkt Value                                        N/A





                                                                                                          
RCT-M.3.d(a)               RCFDB937 Memo-Collective,Taxable Bond:# of Funds                                     N/A
RCT-M.3.d(b)               RCFDB938 Memo-Collective,Taxable Bond:Mkt Value                                      N/A
RCT-M.3.e(a)               RCFDB939 Memo-Collective,Muni Bond:# of Funds                                        N/A
RCT-M.3.e(b)               RCFDB940 Memo-Collective,Muni Bond:Mkt Value                                         N/A
RCT-M.3.f(a)               RCFDB941 Memo-Collective,ShtTrm/Mny Mkt:# of Fnds                                    N/A
RCT-M.3.f(b)               RCFDB942 Memo-Collective,ShtTrm/Mny Mkt:Mkt Value                                    N/A
RCT-M.3.g(a)               RCFDB943 Memo-Collective,Special/Other:# of Funds                                    N/A
RCT-M.3.g(b)               RCFDB944 Memo-Collective,Special/Other:Mkt Value                                     N/A
RCT-M.3.h(a)               RCFDB945 Memo-Collective,Total Collect:# of Funds                                    N/A
RCT-M.3.h(b)               RCFDB946 Memo-Collective,Total Collect:Mkt Value                                     N/A
RCT-M.4.a(a)               RIADB947 Memo-Fid/Other,Prsnl:Gross Mngd Accts                                       N/A
RCT-M.4.a(b)               RIADB948 Memo-Fid/Other,Prsnl:Gross Non-Mgd Accts                                    N/A
RCT-M.4.a(c)               RIADB949 Memo-Fid/Other,Prsnl:Recoveries                                             N/A
RCT-M.4.b(a)               RIADB950 Memo-Fid/Other,Retire:Gross Mngd Accts                                      N/A
RCT-M.4.b(b)               RIADB951 Memo-Fid/Other,Ret:Gross Non-Mngd Accts                                     N/A
RCT-M.4.b(c)               RIADB952 Memo-Fid/Other,Ret:Recoveries                                               N/A
RCT-M.4.c(a)               RIADB953 Memo-Fid/Other,Invst:Gross Mngd Accts                                       N/A
RCT-M.4.c(b)               RIADB954 Memo-Fid/Other,Invst:Gross Non-Mgd Accts                                    N/A
RCT-M.4.c(c)               RIADB955 Memo-Fid/Other,Invst:Recoveries                                             N/A
RCT-M.4.d(a)               RIADB956 Memo-Fid/Other,Other Fid:Gross Mngd                                         N/A
RCT-M.4.d(b)               RIADB957 Memo-Fid/Other,Other Fid:Gross Non-Mngd                                     N/A
RCT-M.4.d(c)               RIADB958 Memo-Fid/Other,Other Fid:Recoveries                                         N/A
RCT-M.4.e(a)               RIADB959 Memo-Fid/Other,Total Fid:Gross Mngd                                         N/A
RCT-M.4.e(b)               RIADB960 Memo-Fid/Other,Total Fid:Gross Non-Mngd                                     N/A
RCT-M.4.e(c)               RIADB961 Memo-Fid/Other,Total Fid:Recoveries                                         N/A
RC(OPTIONAL)               RCON6979 X/Y - Comment/No Comment                                                      Y
RC(LOANS)a                 RCFD3561 Number Of Loans To Executive Officers                                         2
RC(LOANS)b                 RCFD3562 Amount Of Loans To Executive Officers                                       220
RC(LOANS)c(a)              RCFD7701 Start Rate (####.##%) Loans To Execs.                                    14.65%
RC(LOANS)c(b)              RCFD7702 Top Rate (####.##%) Loans To Execs.                                      16.50%
RC-R.50.p                  RCONDPSC Credit Conversion Factor                                                     M%
RIE-6.a                    RIAD5523 Adjs. to allow for l & l loss (RIB.2.5)                                 -211279
RCT-20                     RIADC058 Income-Less:Expenses                                                        N/A
RIB(P2)-3                  RIADC079 LESS: Charge-offs                                                       1369612

EX-99.1

                                                                    Exhibit 99.1

                             SONIC AUTOMOTIVE, INC.

                                OFFER TO EXCHANGE

                          11% Senior Subordinated Notes
                               Due 2008, Series D,
     Which Have Been Registered Under The Securities Act of 1933, As Amended
                           For Any And All Outstanding
                          11% Senior Subordinated Notes
                               Due 2008, Series B
                        and 11% Senior Subordinated Notes
                               Due 2008, Series C

               Pursuant to the Prospectus dated January __, 2002.

- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON FEBRUARY __,
2002, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON FEBRUARY __, 2002.
- --------------------------------------------------------------------------------

                   By Messenger, Mail, or Overnight Delivery:

                      U.S. Bank Trust National Association
                              180 East Fifth Street
                            St. Paul, Minnesota 55101
                         Attention: Specialized Finance Group

                             Facsimile Transmission:
                               (651) 244-1537 (MN)

                              Confirm by Telephone:
                               (800) 934-6802 (MN)
                         Attention: Specialized Finance Group

         DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.

         The undersigned acknowledges receipt of the Prospectus, dated January
__, 2002 (the "Prospectus"), of Sonic Automotive, Inc., a Delaware corporation
(the "Company"), and this Letter of Transmittal (this "Letter"), which together
constitute the offer (the "Exchange Offer") to exchange an aggregate principal
amount of up to $200,000,000 11% Senior Subordinated Notes Due 2008, Series D
(the "New Notes") for an equal principal amount of the outstanding 11% Senior
Subordinated Notes Due 2008, Series B (the "Series B Notes") and 11% Senior
Subordinated Notes Due 2008, Series C (the "Series C Notes") (the Series B Notes
and the Series C Notes are collectively referred to as the "Old Notes").

         For each Old Note accepted for exchange, the holder of such Old Note
will receive a New Note having a principal amount at maturity equal to that of
the surrendered Old Note. The New Notes will bear interest at a rate equal to
11% per annum. Interest on the New Notes is payable semiannually, commencing
August 1, 2002, on February 1 and August 1 of each year (each, an "Interest
Payment Date") and shall accrue from November 19, 2001, or from the most recent
Interest Payment Date with respect to the Old Notes to which interest was paid
or for which interest was duly provided. The New Notes will mature on August 1,
2008.




         Subject to certain exceptions, in the event of a Registration Default
(as defined below), the interest rate borne by the Series C Notes shall be
increased by one-quarter of one percent per annum upon the occurrence of each
Registration Default, which rate (as increased aforesaid) will increase by an
additional one quarter of one percent each 90-day period that such additional
interest continues to accrue under any such circumstance, with an aggregate
maximum increase in the interest rate equal to one percent (1%) per annum. A
"Registration Default" with respect to the Exchange Offer shall occur if: (a)
the Exchange Offer Registration Statement is not filed with the Commission on or
prior to the 60th calendar day following the date of original issue of the
Series C Notes, (b) the Exchange Offer Registration Statement has not been
declared effective on or prior to the 135th calendar day following the date of
original issue of the Series C Notes, (c) the Exchange Offer is not consummated
or a Shelf Registration Statement is not declared effective, in either case, on
or prior to the 165th calendar day following the date of original issue of the
Series C Notes or (d) the Shelf Registration Statement is declared effective but
shall thereafter become unusable for more than 30 days in the aggregate. The
Shelf Registration Statement will be required to remain effective until the
second anniversary of the issuance of the Series C Notes. Following the cure of
all Registration Defaults, the accrual of additional interest will cease and the
interest rate will revert to the original rate; provided, however, that, if
after any such reduction in interest rate, a different Registration Default
occurs, the interest rate shall again be increased pursuant to the foregoing
provisions. Holders of New Notes will not be and, upon consummation of the
Exchange Offer, holders of Old Notes will no longer be, entitled to (i) the
right to receive the increased interest specified above or (ii) certain other
rights under the Registration Rights Agreement intended for holders of Old
Notes. The Exchange Offer shall be deemed consummated upon the occurrence of the
delivery by the Company to the Registrar under the Indenture of New Notes in the
same aggregate principal amount as the aggregate principal amount of Old Notes
that are tendered by holders thereof pursuant to the Exchange Offer.

         The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, (ii) to extend the Exchange Offer, in which event the
term "Expiration Date" shall mean the latest time and date to which the Exchange
Offer is extended, (iii) if the Commission does not declare the Registration
Statement effective, to terminate the Exchange Offer, by giving oral or written
notice of such delay, extension, or termination to the Exchange Agent, and (iv)
to amend the terms of the Exchange Offer in any manner. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,
the Company will promptly disclose such amendments by means of a prospectus
supplement that will be distributed to the registered holders of the Old Notes.
Modifications of the Exchange Offer, including but not limited to (i) extension
of the period during which the Exchange Offer is open and (ii) satisfaction of
the conditions set forth under the caption "The Exchange Offer - Conditions of
the Exchange Offer" in the Prospectus, may require that at least ten business
days remain in the Exchange Offer. In order to extend the Exchange Offer, the
Company will notify the Exchange Agent of any extension by oral or written
notice and will make a public announcement thereof, each prior to 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.

         This Letter must be completed and delivered by a holder of Old Notes
if: (i) such holder is not a member of the ATOP system ("ATOP") of the
Depository Trust Company (the "Book-Entry Transfer Facility"), (ii) such holder
is an ATOP member but chooses not to use ATOP or (iii) the Old Notes are to be
tendered in accordance with the guaranteed delivery procedures set forth in
Instruction 1 to this Letter. Holders of Old Notes whose Notes are not
immediately available, or who are unable to delivery their Notes or confirmation
of the book-entry tender of their Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility (a "Book-Entry Confirmation"), as the case may
be, and all other documents required by this Letter to the Exchange Agent on or
prior to the Expiration Date, must tender their Old Notes according to the
guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus. See Instruction 1 to this
Letter. Delivery of documents to the Book Entry Transfer Facility does not
constitute delivery to the Exchange Agent.

         The undersigned has completed the appropriate boxes below and signed
this Letter to indicate the action the undersigned desires to take with respect
to the Exchange Offer.

         Listed below the Old Notes to which this Letter relates. If the space
provided below is inadequate, the Note numbers and principal amount of Old Notes
should be listed on a separate signed schedule affixed hereto.

- --------------------------------------------------------------------------------
            DESCRIPTION OF
               OLD NOTES             1               2             3
- --------------------------------------------------------------------------------



                                       2




- ----------------------------------------------------------------------------------------------------------------------
      Name(s) and Address(es) of               Aggregate Note           Principal Amount         Principal Amount
         Registered Holder(s)                    Number(s)*              Of Old Note(s)             Tendered**
      (Please fill in, if blank)
                                                                                        
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------

                                        Total
- ----------------------------------------------------------------------------------------------------------------------


   *     Need not be complete if Old Notes are being tendered by book-entry
         transfer.

  **     Unless otherwise indicated in this column, a holder will be deemed to
         have tendered the entire principal amount represented by the Old Note
         indicated in column 2. See Instruction 2. Old Notes tendered hereby
         must be in denominations of principal amount of $1,000 and any integral
         multiple thereof. See Instruction 1.

 [_]     CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
         TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
         BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

         Name of Tendering Institution _________________________________________

         Account Number ______________  Transaction Code Number ________________

 [_]     CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
         NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
         COMPLETE THE FOLLOWING:

         Name of Registered Holder(s) __________________________________________

         Window Ticket Number (if any) _________________________________________

         Date of Execution of Notice of Guaranteed Delivery ____________________

         Name of Institution which guaranteed delivery _________________________

         IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:

         Account Number _______________  Transaction Code Number _______________

 [_]     CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
         COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
         THERETO.

         Name: _________________________________________________________________

         Address: ______________________________________________________________

                                       3



               PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

         Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Notes as are being tendered hereby.

         The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that any New Notes acquired in exchange
for Old Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, that neither the holder of such Old Notes nor any such other
person is engaged in, or intends to engage in, a distribution of such New Notes,
or has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and that neither the holder of such Old Notes
nor any such other person is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"), of the Company.

         The undersigned also acknowledges that this Exchange Offer is being
made based upon the Company's understanding of an interpretation by the staff of
the Securities and Exchange Commission (the "Commission") as set forth in
no-action letters issued to third parties, including Exxon Capital Holdings
Corporation, SEC No-Action Letter (available April 13, 1989), Morgan Stanley &
Co., Incorporated, SEC No-Action Letter (available June 5, 1991), Mary Kay
Cosmetics, Inc., SEC No-Action Letter (available June 5, 1991), Warnaco, Inc.,
SEC No-Action Letter (available October 11, 1991) and Shearman & Sterling, SEC
No-Action Letter (available July 2, 1993), that the New Notes issued in exchange
for the Old Notes pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by holders thereof (other than a broker-dealer
who acquires such New Notes directly from the Company for resale pursuant to
Rule 144A under the Securities Act or any other available exemption under the
Securities Act or any such holder that is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such holders'
business and such holders are not engaged in, and do not intend to engage in, a
distribution of such New Notes and have no arrangement with any person to
participate in the distribution of such New Notes. If a holder of Old Notes is
engaged in or intends to engage in a distribution of the New Notes or has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, [which] holder could not rely on
the applicable interpretations of the staff of the Commission and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any secondary resale transaction. If the undersigned is a
broker-dealer that will receive New Notes for its own account in exchange for
Old Notes, it represents that the Old Notes to be exchanged for the New Notes
were acquired by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus in connection with
any resale of such New Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

         The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer - Withdrawal Rights"
section of the Prospectus.

         Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute Notes representing the remaining principal balance of any Old Note
exchanged only in part) in the name of the undersigned or, in the case of a
book-entry delivery of Old Notes, please credit the account indicated above
maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise

                                       4



indicated under the box entitled "Special Delivery Instructions" below, please
send the New Notes (and, if applicable, substitute Notes representing the
remaining principal balance of any Old Note exchanged only in part) to the
undersigned at the address shown above in the box entitled "Description of Old
Notes."

                                       5



         THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD
NOTES ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD
NOTES AS SET FORTH IN SUCH BOX ABOVE.

- --------------------------------------------------------------------------------

                          SPECIAL ISSUANCE INSTRUCTIONS
                           (See Instructions 3 and 4)

To be completed ONLY if Notes for Old Notes not exchanged and/or New Notes are
to be issued in the name of and sent to someone other than the person(s) whose
signature(s) appear(s) on this Letter above, or if Old Notes delivered by
book-entry transfer which are not accepted for exchange are to be returned by
credit to an account maintained at the Book-Entry Transfer Facility other than
the account indicated above.

Issue New Notes and/or Old Notes to:

Name(s): _______________________________________________________________________
                                   (Please Type or Print)

________________________________________________________________________________
                                   (Please Type or Print)

Address: _______________________________________________________________________

________________________________________________________________________________
                                   (Including Zip Code)

(Complete accompanying Substitute Form W-9)

Credit unexchanged Old Notes delivered by book-entry transfer to the Book-Entry
Transfer Facility account set forth below.

(Book-Entry Transfer Facility Account Number, if applicable): __________________

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

                          SPECIAL DELIVERY INSTRUCTIONS
                           (See Instructions 3 and 4)

To be completed ONLY if Notes or Old Notes not exchanged and/or New Notes are to
be sent to someone other than the person(s) whose signature(s) appear(s) on this
Letter above or to such person(s) at an address other than shown in the box
entitled "Description of Old Notes" on this Letter above.

Mail New Notes and/or Old Notes to: ____________________________________________

Name(s): _______________________________________________________________________
                               (Please Type or Print)

________________________________________________________________________________
                               (Please Type or Print)

Address: _______________________________________________________________________

________________________________________________________________________________
                               (Including Zip Code)

- --------------------------------------------------------------------------------

IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE OLD NOTES AND
ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY), OR A
BOOK-ENTRY CONFIRMATION, AS THE CASE MAY BE, MUST BE RECEIVED BY THE EXCHANGE
AGENT PRIOR TO 5:00 P.M., NEW YORK TIME, ON THE EXPIRATION DATE.

                     PLEASE READ THIS LETTER OF TRANSMITTAL
                    CAREFULLY BEFORE COMPLETING ANY BOX ABOVE


                                       6



- -------------------------------------------------------------------------------
                                PLEASE SIGN HERE
                   (TO BE COMPLETED BY ALL TENDERING HOLDERS)
                   (COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)

Dated: _________________________________________________________________, 2002

__________________________________________________________________________  X

__________________________________________________________________________  X
                                                                         (Date)

Area Code and Telephone:_______________________________________________________

If a holder is tendering any Old Notes, this letter must be signed by the
registered holder(s) as the name(s) appear(s) on the Note(s) for the Old Notes
or by any person(s) authorized to become registered holder(s) by endorsements
and documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, officer or other person acting in a fiduciary or
representative capacity, please set forth full title. See Instructions 3.

Name(s):_______________________________________________________________________

_______________________________________________________________________________
                             (Please Type or Print)

Capacity:______________________________________________________________________

Address:_______________________________________________________________________

_______________________________________________________________________________
                              (Including Zip Code)

                               SIGNATURE GUARANTEE
                         (IF REQUIRED BY INSTRUCTION 3)


Signature(s) Guaranteed by
an Eligible Institution:_______________________________________________________
                             (Authorized Signature)

_______________________________________________________________________________
                                     (Title)

_______________________________________________________________________________
                                 (Name and Firm)

Dated:__________________________________________________________________, 2002

- -------------------------------------------------------------------------------

                                       7



                                  INSTRUCTIONS

        FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER TO EXCHANGE
        11% SENIOR SUBORDINATED NOTES DUE 2008, SERIES D, WHICH HAVE BEEN
    REGISTERED UNDER THE SECURITIES ACT OF 1993, AS AMENDED, FOR ANY AND ALL
      OUTSTANDING 11% SENIOR SUBORDINATED NOTES DUE 2008, SERIES B AND ALL
          OUTSTANDING 11% SENIOR SUBORDINATED NOTES DUE 2008, SERIES C
                            OF SONIC AUTOMOTIVE, INC.

         1. Delivery of this Letter and Old Notes; Guaranteed Delivery
Procedures. Certificates for Old Notes as well as a properly completed and duly
executed copy of this Letter (or facsimile thereof) and any other documents
required by this Letter, or a Book Entry Confirmation, as the case may be, must
be received by the Exchange Agent at its address set forth herein on or before
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. This Letter must be used: (i) by all
holders who are not ATOP members, (ii) by holders who are ATOP members but
choose not to use ATOP or (iii) if the Old Notes are to be tendered in
accordance with the guaranteed delivery procedures set forth below. Old Notes
tendered hereby must be in denominations of principal amount of $1,000 or any
integral multiple thereof.

         Holders whose Old Notes are not immediately available or who cannot
deliver their Notes or a Book-Entry Confirmation, as the case may be, and all
other required documents to the Exchange Agent on or prior to the Expiration
Date, may tender their Old Notes pursuant to the guaranteed delivery procedures
set forth in "The Exchange Offer- Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made by or
through an Eligible Institution (as defined below) and a Notice of Guaranteed
Delivery in the Form of Exhibit 99.2 to the Registration Statement of which the
Prospectus forms a part, a copy of which may be obtained from the Exchange Agent
(a "Notice of Guaranteed Delivery"), must be signed by such holder, (ii) on or
prior to the Expiration Date, the Exchange Agent must receive from such Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes, the certificate number or numbers of the
tendered Old Notes and the principal amount of Old Notes tendered, stating that
the tender is being made thereby and guaranteeing that within four business days
after the date of delivery of the Notice of Guaranteed Delivery, this Letter
together with the certificates representing the tendered Old Notes or a
Book-Entry Confirmation, as the case may be, as well as all other documents
required by this Letter will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) the certificates for all tendered Old Notes or a
Book-Entry Confirmation, as the case may be, as well as all other documents
required by this Letter (properly completed and duly executed), must be received
by the Exchange Agent within four business days after the date of delivery of
such Notice of Guaranteed Delivery.

         The method of delivery of this Letter, certificates for the Old Notes
or a Book-Entry Confirmation, as the case may be, and all other required
documents is at the election and risk of the tendering holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is recommended that the mailing be made
by registered mail, properly insured, with return receipt requested, and that
such mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date. Instead of delivery by mail, it is recommended that the holder
use an overnight or hand delivery service. In all cases, sufficient time should
be allowed for timely delivery. See "The Exchange Offer" section of the
Prospectus.

         2. Partial Tenders (Not Applicable to Holders of Old Notes Who Tender
by Book-entry Transfer). If less than the entire principal amount of any
submitted Note is to be tendered, the tendering holder(s) should fill in the
aggregate principal amount to be tendered in the box above entitled "Description
of Old Notes -- Principal Amount Tendered." A reissued Note representing the
balance of nontendered principal of any submitted Old Notes will be sent to such
tendering holder, unless otherwise provided in the appropriate box on this
Letter, promptly after the Expiration Date. THE ENTIRE PRINCIPAL AMOUNT OF ANY
OLD NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED
UNLESS OTHERWISE INDICATED.




         3. Signatures on this letter; Assignments and Endorsement; Guarantee of
Signatures. If this Letter is signed by the registered holder of the Old Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the Notes without any change whatsoever.

If any tendered Old Notes are owned of record by two or more joint owners, all
such owners must sign this Letter. If any tendered Old Notes are registered in
different names on several Notes, it will be necessary to complete, sign and
submit as many separate copies of this Letter as there are different
registrations of Notes.

         When this Letter is signed by the registered holder of the Old Notes
specified herein and tendered hereby, no endorsements of the submitted Notes or
separate instruments of assignment are required. If, however, the New Notes are
to be issued, or any untendered Old Notes are to be reissued, to a person other
than the registered holder, then endorsements of any Notes transmitted hereby or
separate instruments of assignment are required. Signatures on such Notes must
be guaranteed by an Eligible Institution.

         If this Letter is signed by a person other than the registered holder
of any Notes specified herein, such Notes must be endorsed or accompanied by
appropriate instruments of assignment, in either case signed exactly as the name
of the registered holder appears on the Notes and the signatures on such Notes
must be guaranteed by an Eligible Institution.

         If this Letter or any Notes or instruments of assignment are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.

         Endorsements on Old Notes or signatures on instruments of assignment
required by this Instruction 3 must be guaranteed by a firm which is a member of
a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., by a commercial bank or trust company
having an office or correspondent in the United States or by an "eligible
guarantor" institution within the meaning of Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (an "Eligible Institution").

         Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Notes are tendered: (i) by a registered holder of
Old Notes (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such Old Notes) tendered who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.

         4. Special Issuance and Delivery Instructions. Tendering holders of Old
Notes should indicate in the applicable box the name and address to which New
Notes issued pursuant to the Exchange Offer and/or substitute Notes evidencing
Old Notes not exchanged are to be issued or sent, if different from the name or
address of the person signing this Letter. In the case of issuance in a
different name, the employer identification or social security number of the
person named must also be indicated. A holder of Old Notes tendering Old Notes
by book-entry transfer may request that Old Notes not exchanged be credited to
such account maintained at the Book-Entry Transfer Facility as such holder of
Old Notes may designate hereon. If no such instructions are given, such Old
Notes not exchanged will be returned to the name or address of the person
signing this Letter.

         5. Tax Identification Number. Federal income tax law generally requires
that a tendering holder whose Old Notes are accepted for exchange must provide
the Company (as payor) with such Holder's correct Taxpayer Identification Number
("TIN") on Substitute Form W-9 below, which, in the case of a tendering holder
who is an individual, is his or her social security number. If the Company is
not provided with the current TIN or an adequate basis for an exemption, such
tendering holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, delivery of New Notes to such tendering holder may be
subject to backup withholding in an amount equal to 31% of all reportable
payments made after the exchange. If withholding results in an overpayment of
taxes, a refund may be obtained.

                                        9



         Exempt holders of Old Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.

         To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing "Substitute Form W-9"set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder is exempt from backup withholding, (ii) the holder
has not been notified by the Internal Revenue Service that such holder is
subject to a backup withholding as a result of a failure to report all interest
or dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Notice of
Foreign Status. These forms may be obtained from the Exchange Agent. If the Old
Notes are in more than one name or are not in the name of the actual owner, such
holder should consult the W-9 Guidelines for information on which TIN to report.
If such holder does not have a TIN, such holder should consult the W-9
Guidelines for instructions on applying for a TIN, check the box in Part 2 of
the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
checking-this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to the Company.

         6.  Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, a transfer tax is imposed for any reason other than the exchange of Old
Notes pursuant to the Exchange Offer, the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted herewith, the amount of such transfer taxes
will be billed directly to such tendering holder.

         EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT IS NOT NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES SPECIFIED IN THIS LETTER.

         7.  Waiver of Conditions. The Company reserves the absolute right to
waive satisfaction of any or all conditions enumerated in the Prospectus.

         8.  No Conditional Tenders. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Old Notes, by
execution of this Letter, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange. Neither the Company, the Exchange
Agent nor any other person is obligated to give notice of any defeat or
irregularity with respect to any tender of Old Notes nor shall any of them incur
any liability for failure to give any such notice.

         9.  Mutilated, Lost, Stolen or Destroyed Old Notes. Any holder whose
Old Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated above for further instructions.

         10. Requests for Assistance or Additional Copies. Questions relating to
the procedure for tendering, as well as requests for additional copies of the
Prospectus, this Letter and other related documents, should be directed to the
Exchange Agent, at the address and telephone number indicated above.

                                       10



                    TO BE COMPLETED BY ALL TENDERING HOLDERS
                               (See Instruction 5)

                      PAYOR'S NAME: SONIC AUTOMOTIVE, INC.


- -----------------------------------------------------------------------------------------------------------------------------
                             
SUBSTITUTE                      Part 1 - PLEASE PROVIDE YOUR TIN IN THE BOX AT        TIN:________________________________
                                RIGHT AND CERTIFY BY SIGNING AND DATING BELOW.               (Social Security Number or
                                                                                           Employer Identification Number)
                                ---------------------------------------------------------------------------------------------
Form W-9                        Part 2 - TIN Applied for [_]
                                ---------------------------------------------------------------------------------------------
Department of the Treasury      Certification: Under the penalties of perjury, I certify that:
Internal Revenue Services       (1) the number shown on this form is my correct Taxpayer Identification Number (or I am
                                writing for a number to be issued to me),
                                (2) I am not subject to backup withholding either because (a) I am exempt from backup
                                withholding, or (b) I have not been notified by the Internal Revenue Service ("IRS") that I
Payer's Request for             am subject to backup withholding as a result of a failure to report all interest or
Taxpayer Identification         interest or dividends, or (c) the IRS has notified me that I am no longer
Number ("TIN")                  longer subject to backup withholding, and
and Certification               (3)  any other information provided on this form is true and correct.

                                Signature:_________________________________________________________________________________
                                Date:______________________________________________________________________________________

                                You must cross out item (ii) above if you have been notified by the IRS that you are subject
                                to backup withholding because of underreporting of interest or dividends on your tax return
                                and you have not been notified by the IRS that you are no longer subject to backup
                                withholding.

- ------------------------------- ---------------------------------------------------------------------------------------------


- --------------------------------------------------------------------------------

           YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
                    THE BOX IN PART 2 OF SUBSTITUTE FORM W-9

             CERTIFICATE OF AWAITING TAXPAPER IDENTIFICATION NUMBER

     I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of the
exchange, thirty-one percent (31%) of all reportable payments made to me
thereafter will be withheld until provide a number.

_________________________________             __________________________________
Signature                                     Date

- --------------------------------------------------------------------------------

                                       11

EX-99.2

                                                                    Exhibit 99.2

                             SONIC AUTOMOTIVE, INC.

     This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Sonic Automotive, Inc. (the "Company") made pursuant to the
Prospectus, dated January __, 2002 (the "Prospectus"), and the enclosed Letter
of Transmittal (the "Letter of Transmittal") if Old Notes are not immediately
available or if time will not permit all documents required by the Letter of
Transmittal to reach the U.S. Bank Trust National Association (the "Exchange
Agent") prior to the Expiration Date of the Exchange Offer. Such form may be
delivered or transmitted by facsimile transmission, mail, overnight or hand
delivery to the Exchange Agent as set forth below. In addition, in order to
utilize the guaranteed delivery procedure to tender Old Notes pursuant to the
Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent on or prior to
5:00 P.M., New York City time, on the Expiration Date. Capitalized terms not
defined herein are defined in the Prospectus.

                                  Delivery To:
              U.S. Bank Trust National Association, Exchange Agent

                     By Messenger, Mail, Overnight Delivery:
                      U.S. Bank Trust National Association
                              180 East Fifth Street
                            St. Paul, Minnesota 55101
                         Attention: Specialized Finance Group

                             Facsimile Transmission:
                               (651) 244-1537 (MN)

                              Confirm By Telephone:
                               (800) 934-6802 (MN)
                         Attention: Specialized Finance Group

Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute a valid delivery.

Ladies and Gentlemen:

     Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.






                                                           
_______________________________________________________________________________________________________________
Principal Amount of Old Notes Tendered                            Name(s) of Record Holder(s):

$_______________________________________________________      _________________________________________________

Note Certificate Nos. (if available):                         _________________________________________________

________________________________________________________      Address(es):_____________________________________

________________________________________________________      _________________________________________________

________________________________________________________      _________________________________________________

________________________________________________________      _________________________________________________

If Old Notes will be delivered by book-entry transfer to      Area Code and Telephone Number(s):
The Depository Trust Company, provide account number.         _________________________________________________

                                                              _________________________________________________

Account Number:_________________________________________      Signature(s):____________________________________

_______________________________________________________________________________________________________________




_______________________________________________________________________________

                  THE ACCOMPANYING GUARANTEE MUST BE COMPLETED.

                                    GUARANTEE
                    (NOT TO BE USED FOR SIGNATURE GUARANTEE)

       The undersigned, a firm that is a member firm of a registered national
   securities exchange or of the National Association of Securities Dealers,
   Inc., a commercial bank or trust company having an office correspondent in
   the United States or any "eligible guarantor" institution within the meaning
   of Rule 17Ad-15 of the Exchange Act of 1934, as amended, hereby guarantees to
   deliver to the Exchange Agent, at its address set forth above, the Old Notes
   described above, in proper form for transfer, together with a properly
   completed and duly executed Letter of Transmittal (or facsimile thereof),
   with any required signature guarantees, and any other documents required by
   the Letter of Transmittal within four business days after the date of
   execution of this Notice of Guaranteed Delivery.

Name of Firm:__________________________________________________________________

           ____________________________________________________________________
                             (Authorized Signature)

           Title:______________________________________________________________

           Name:_______________________________________________________________

           Date:_______________________________________________________________

Address:_______________________________________________________________________

      _________________________________________________________________________

Area Code and
Telephone Number:______________________________________________________________

_______________________________________________________________________________