Exhibit 10.20

SECURITIES PLEDGE AGREEMENT

THIS SECURITIES PLEDGE AGREEMENT (this “Pledge Agreement”) is made and entered
into as of February 17, 2006 by SONIC AUTOMOTIVE, INC., a Delaware corporation
(a “Company” and a “Pledgor”), EACH OF THE UNDERSIGNED SUBSIDIARIES OF THE
COMPANY AND EACH OTHER PERSON WHO SHALL BECOME A PARTY HERETO BY EXECUTION OF A
JOINDER AGREEMENT (each a “Pledgor” and, collectively with the Company, the
“Pledgors”) and BANK OF AMERICA, N.A., a national banking association, as
administrative agent (in such capacity, the “Administrative Agent”) for each of
the Lenders now or hereafter party to the Credit Agreement defined below,
collectively with the Administrative Agent and certain other Persons parties to
Related Swap Contracts as more particularly described in Section 17 hereof, the
“Secured Parties”). All capitalized terms used but not otherwise defined herein
shall have the respective meanings assigned thereto in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, the Secured Parties have agreed to provide to the Company and certain
Subsidiaries of the Company (each a “New Vehicle Borrower”, and collectively
with the Company, the “Borrowers”) certain credit facilities, including a
revolving credit facility with letter of credit and swing line sublimits, a new
vehicle floorplan facility with a swing line sublimit, and a used vehicle
floorplan facility with a swing line sublimit, pursuant to that certain Credit
Agreement dated as of the date hereof among the Borrowers, the Administrative
Agent and the Lenders (as from time to amended, restated, supplemented or
otherwise modified, the “Credit Agreement”); and

WHEREAS, each Borrower will materially benefit from the Loans to be made, and
the Letters of Credit to be issued, under the Credit Agreement and each Borrower
is a party (as signatory or by joinder) to a Guaranty pursuant to which such
Borrower guarantees the Obligations of the other Borrowers; and

WHEREAS, each of the Persons set forth on Schedule III (collectively the “Silo
Subsidiaries”, and each individually, a “Silo Subsidiary”) will materially
benefit from the Loans (other than New Vehicle Floorplan Loans) to be made, and
the Letters of Credit to be issued, under the Credit Agreement and each Silo
Subsidiary is a party (as signatory or by joinder) to a Guaranty pursuant to
which such Silo Subsidiary guarantees the Obligations (other than Obligations in
respect of the New Vehicle Facility) of the Borrowers; and

WHEREAS, each of (i) the Borrowers party hereto (including by way of a Joinder
Agreement), as collateral security for the payment and performance of the
Obligations and the obligations and liabilities of any Loan Party now existing
or hereafter arising under Related Swap Contracts, and (ii) each other Pledgor
(including each Silo Subsidiary party hereto or to a Joinder Agreement), as
collateral security for the payment and performance of its Guarantor’s
Obligations (as defined in the Guaranty to which it is a party), and the payment
and performance of its obligations and liabilities (whether now existing or
hereafter arising) hereunder or under any of the other Loan Documents to which
it is now or hereafter becomes a party (such

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obligations and liabilities of the Pledgors described in clauses (i) and
(ii) being referred to as “Secured Obligations”), is willing to pledge and grant
to the Administrative Agent for the benefit of the Secured Parties a security
interest in all of the Equity Interests of certain of its Subsidiaries as more
particularly described on Schedule I attached hereto (collectively, the “Pledged
Interests”), and certain related property (such Subsidiaries, together with all
other Subsidiaries whose Equity Interests may be required to be subject to this
Pledge Agreement from time to time, are hereinafter referred to collectively as
the “Pledged Subsidiaries”); and

WHEREAS, the Secured Parties are unwilling to enter into the Loan Documents and
make available or maintain the credit facilities under the Credit Agreement
unless each Pledgor enters into this Pledge Agreement;

NOW, THEREFORE, in order to induce the Secured Parties to enter into the Loan
Documents and to make or maintain the credit facilities provided for therein
available to or for the account of the Borrowers, and in consideration of the
premises and the mutual covenants contained herein, the parties hereto agree as
follows:

1. Pledge of Pledged Interests; Other Collateral.

(a) As collateral security for the payment and performance by each Pledgor of
its now or hereafter existing Secured Obligations, each Pledgor hereby grants,
pledges and collaterally assigns to the Administrative Agent for the benefit of
the Secured Parties a first priority security interest in all of the following
items of property in which it now has or may at any time hereafter acquire an
interest or the power to transfer rights therein, and wheresoever located:

(i) the Pledged Interests; and

(ii) all money, securities, security entitlements and other investment property,
dividends, rights, general intangibles and other property at any time and from
time to time (x) declared or distributed in respect of or in exchange for or on
conversion of any Pledged Interest, or (y) by its or their terms exchangeable or
exercisable for or convertible into any Pledged Interest; and

(iii) all other property of whatever character or description, including money,
securities, security entitlements and other investment property, and general
intangibles hereafter delivered to the Administrative Agent in substitution for
or as an addition to any of the foregoing; and

(iv) all securities accounts to which may at any time be credited any or all of
the foregoing or any proceeds thereof and all certificates and instruments
representing or evidencing any of the foregoing or any proceeds thereof; and

(v) all proceeds of any of the foregoing.

All such Pledged Interests, certificates, instruments, cash, securities,
interests, dividends, rights and other property referred to in clauses
(i) through (v) of this Section 1 are herein collectively referred to as the
“Collateral.”

 

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(b) Subject to Section 10(a), each Pledgor agrees to deliver all certificates,
instruments or other documents representing any Collateral to the Administrative
Agent at such location as the Administrative Agent shall from time to time
designate by written notice pursuant to Section 22 for its custody at all times
until termination of this Pledge Agreement, together with such instruments of
assignment and transfer as requested by the Administrative Agent.

(c) Each Pledgor agrees to execute and deliver, or cause to be executed and
delivered by other Persons, at Pledgor’s expense, all share certificates,
documents, instruments, agreements, financing statements (and amendments thereto
and continuations thereof), assignments, control agreements, or other writings
as the Administrative Agent may reasonably request from time to time to carry
out the terms of this Pledge Agreement or to protect or enforce the
Administrative Agent’s Lien and security interest in the Collateral hereunder
granted to the Administrative Agent for the benefit of the Secured Parties and
further agrees to do and cause to be done upon the Administrative Agent’s
request, at Pledgor’s expense, all things determined by the Administrative Agent
to be necessary or advisable to perfect and keep in full force and effect the
Lien in the Collateral hereunder granted to the Administrative Agent for the
benefit of the Secured Parties, including the prompt payment of all
out-of-pocket fees and expenses incurred in connection with any filings made to
perfect or continue the Lien and security interest in the Collateral hereunder
granted in favor of the Administrative Agent for the benefit of the Secured
Parties.

(d) All filing fees, advances, charges, costs and expenses (including fees,
charges and disbursements of counsel (“Attorney Costs”)), incurred or paid by
the Administrative Agent or any Lender in exercising any right, power or remedy
conferred by this Pledge Agreement, or in the enforcement thereof, shall become
a part of the Secured Obligations secured hereunder and shall be paid to the
Administrative Agent for the benefit of the Secured Parties by the Pledgor in
respect of which the same was incurred immediately upon demand therefor, and any
amounts not so paid on demand (in addition to other rights and remedies
resulting from such nonpayment) shall bear interest from the date of demand
until paid in full at the Default Rate.

(e) Each Pledgor agrees to register and cause to be registered the interest of
the Administrative Agent, for the benefit of the Secured Parties, in the
Collateral on its own books and records and the registration books of each of
the Pledged Subsidiaries.

2. Status of Pledged Interests. Each Pledgor hereby represents, warrants and
covenants to the Administrative Agent for the benefit of the Secured Parties,
with respect to itself and the Collateral as to which it has or acquires any
interest, that:

(a) All of the Pledged Interests are, as of the date of execution of this Pledge
Agreement or Joinder Agreement by each Pledgor pledging such Pledged Interests
(such date as applicable with respect to each Pledgor, its “Applicable Date”),
and shall at all times thereafter be validly issued and outstanding, fully paid
and non-assessable, are accurately described on Schedule I, and (except as set
forth on Schedule I) constitute all of the issued and outstanding Equity
Interests of each Pledged Subsidiary.

 

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(b) The Pledgor is as at its Applicable Date and shall at all times thereafter
(subject to Dispositions permitted under the Credit Agreement) be the sole
registered and record and beneficial owner of the Pledged Interests, free and
clear of all Liens, charges, equities, options, hypothecations, encumbrances and
restrictions on pledge or transfer, including transfer of voting rights (other
than the pledge hereunder and applicable restrictions pursuant to federal and
state and applicable foreign securities laws). Without limiting the foregoing,
the Pledged Interests are not and will not be subject to any voting trust,
shareholders agreement, right of first refusal, voting proxy, power of attorney
or other similar arrangement (other than the rights hereunder in favor of the
Administrative Agent).

(c) At no time shall any Pledged Interests (i) be held or maintained in the form
of a security entitlement or credited to any securities account and (ii) which
constitute a “security” (or as to which the related Pledged Subsidiary has
elected to have treated as a “security”) under Article 8 of the Uniform
Commercial Code of the State of North Carolina or of any other jurisdiction
whose laws may govern (the “UCC”) be maintained in the form of uncertificated
securities. With respect to Pledged Interests that are “securities” under the
UCC, or as to which the issuer has elected at any time to have such interests
treated as “securities” under the UCC, such Pledged Interests are, and shall at
all times be, represented by the share certificates listed on Schedule I hereto,
which share certificates, with stock powers duly executed in blank by the
Pledgor, have been delivered to the Administrative Agent or are being delivered
to the Administrative Agent simultaneously herewith or, in the case of
Additional Interests as defined in Section 21, shall be delivered pursuant to
Section 21. In addition, with respect to all Pledged Interests, including
Pledged Interests that are not “securities” under the UCC and as to which the
applicable Pledged Subsidiary has not elected to have such interests treated as
“securities” under the UCC, the Pledgor has at its Applicable Date delivered to
the Administrative Agent (or has previously delivered to the Administrative
Agent or, in case of Additional Interests shall deliver pursuant to Section 21)
Uniform Commercial Code financing statements (or appropriate amendments thereto)
duly authorized by the Pledgor and naming the Administrative Agent for the
benefit of the Secured Parties as “secured party,” in form, substance and number
sufficient in the reasonable opinion of the Administrative Agent to be filed in
all UCC filing offices and in all jurisdictions in which filing is necessary or
advisable to perfect in favor of the Administrative Agent for the benefit of the
Secured Parties the Lien on such Pledged Interests, together with all required
filing fees. Without limiting the foregoing provisions of this Section 2(c),
with respect to any Pledged Interests issued by any Subsidiary organized under
the laws of a jurisdiction other than the United States (a “Foreign
Subsidiary”), Pledgor shall deliver or cause to be delivered, (i) in addition to
or in substitution for all or any of the foregoing items, as the Administrative
Agent may elect, such other instruments, certificates, agreements, notices,
filings, and other documents, and take or cause to be taken such other action,
as the Administrative Agent may determine to be necessary or advisable under the
laws of the jurisdiction of formation of such Foreign Subsidiary, to grant,
perfect and protect as a first priority lien in such Collateral in favor of the
Administrative Agent for the benefit of the Secured Parties, and (ii) an opinion
of counsel acceptable in form and substance to the Administrative Agent issued
by a law firm acceptable to the Administrative Agent licensed to practice law in
such foreign jurisdiction, addressing

 

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with respect to such Pledged Interests the matters described in Section 6.14 of
the Credit Agreement.

(d) It has full corporate power, legal right and lawful authority to execute
this Pledge Agreement (and any Joinder Agreement applicable to it) and to
pledge, assign and transfer its Pledged Interests in the manner and form hereof.

(e) The pledge, assignment and delivery of its Pledged Interests (along with
undated stock powers executed in blank, financing statements and other
agreements referred to in Section 2(c) hereof) to the Administrative Agent for
the benefit of the Secured Parties pursuant to this Pledge Agreement (or any
Joinder Agreement) creates or continues, as applicable, a valid and perfected
first priority security interest in such Pledged Interests in favor of the
Administrative Agent for the benefit of the Secured Parties, securing the
payment of the Secured Obligations, assuming, in the case of the Pledged
Interests which constitute certificated “securities” under the UCC, continuous
and uninterrupted possession by or on behalf of the Administrative Agent. The
Pledgor will at its own cost and expense defend the Secured Parties’ right,
title and security interest in and to the Collateral against the claims and
demands of all persons whomsoever.

(f) Except as otherwise expressly provided herein pursuant to a Disposition
permitted under the Credit Agreement, none of the Pledged Interests (nor any
interest therein or thereto) shall be sold, transferred or assigned without the
Administrative Agent’s prior written consent, which may be withheld for any
reason.

(g) It shall at all times cause the Pledged Interests of such Pledgor that
constitute “securities” (or as to which the issuer elects to have treated as
“securities”) under the UCC to be represented by the certificates now and
hereafter delivered to the Administrative Agent in accordance with Sections 1, 2
and 21 hereof and that it shall cause each of the Pledged Subsidiaries as to
which it is the Pledgor not to issue any Equity Interests, or securities
convertible into, or exchangeable or exercisable for, Equity Interests, at any
time during the term of this Pledge Agreement unless the Pledged Interests of
such Pledge Subsidiary are issued solely to either (y) such Pledgor who shall
immediately comply with Sections 2 and 21 hereof with respect to such property
or (z) the Borrowers or another Guarantor who shall immediately pledge such
additional Equity Interests to the Administrative Agent for the benefit of the
Secured Parties pursuant to Section 21 or 23 hereof, as applicable, on
substantially identical terms as are contained herein and deliver or cause to be
delivered the appropriate documents described in Section 2(c) hereof to the
Administrative Agent and take such further actions as the Administrative Agent
may deem necessary in order to perfect a first priority security interest in
such Equity Interests.

(h) The exact legal name and address, type of Person, jurisdiction of formation,
jurisdiction of formation identification number (if any), and location of the
chief executive office of such Pledgor are (i) with respect to each Pledgor
granting a Lien to the Administrative Agent under a Security Instrument at the
Closing Date, as specified on Schedule 5.13 to the Credit Agreement, and
(ii) with respect to each other Pledgor, as

 

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specified on Schedule II attached hereto. No Pledgor shall change its name,
jurisdiction of formation (whether by reincorporation, merger or otherwise), or
the location of its chief executive office, except upon giving not less than
thirty (30) days’ prior written notice to the Administrative Agent and taking or
causing to be taken all such action at such Pledgor’s expense as may be
reasonably requested by the Administrative Agent to perfect or maintain the
perfection of the Lien of the Administrative Agent in Collateral.

3. Preservation and Protection of Collateral.

(a) The Administrative Agent shall be under no duty or liability with respect to
the collection, protection or preservation of the Collateral, or otherwise,
beyond the use of reasonable care in the custody and preservation thereof while
in its possession.

(b) Each Pledgor agrees to pay when due all taxes, charges, Liens and
assessments against the Collateral in which it has an interest, unless being
contested in good faith by appropriate proceedings diligently conducted and
against which adequate reserves have been established in accordance with GAAP
applied on a basis consistent with that used in preparing the Audited Financial
Statements and evidenced to the satisfaction of the Administrative Agent and
provided that all enforcement proceedings in the nature of levy or foreclosure
are effectively stayed. Upon the failure of any Pledgor to so pay or contest
such taxes, charges, Liens or assessments, or upon the failure of any Pledgor to
pay any amount pursuant to Section 1(c), the Administrative Agent at its option
may pay or contest any of them (the Administrative Agent having the sole right
to determine the legality or validity and the amount necessary to discharge such
taxes, charges, Liens or assessments) but shall not have any obligation to make
any such payment or contest. All sums so disbursed by the Administrative Agent,
including Attorney Costs, court costs, expenses and other charges related
thereto, shall be payable on demand by the applicable Pledgor to the
Administrative Agent and shall be additional Secured Obligations secured by the
Collateral, and any amounts not so paid on demand (in addition to other rights
and remedies resulting from such nonpayment) shall bear interest from the date
of demand until paid in full at the Default Rate.

(c) Each Pledgor hereby (i) irrevocably authorizes the Administrative Agent to
file (with, or to the extent permitted by applicable law, without the signature
of the Pledgor appearing thereon) financing statements (including amendments
thereto and continuations and copies thereof) showing such Pledgor as “debtor”
at such time or times and in all filing offices as the Administrative Agent may
from time to time reasonably determine to be necessary or advisable to perfect
or protect the rights of the Administrative Agent and the Secured Parties
hereunder, or otherwise to give effect to the transactions herein contemplated,
and (ii) irrevocably ratifies and acknowledges all such actions taken by or on
behalf of the Administrative Agent prior to the Applicable Date.

4. Default. Upon the occurrence and during the continuance of any Event of
Default, the Administrative Agent is given full power and authority, then or at
any time thereafter, to sell, assign, deliver or collect the whole or any part
of the Collateral, or any substitute therefor or any addition thereto, in one or
more sales, with or without any previous

 

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demands or demand of performance or, to the extent permitted by law, notice or
advertisement, in such order as the Administrative Agent may elect; and any such
sale may be made either at public or private sale at the Administrative Agent’s
place of business or elsewhere, either for cash or upon credit or for future
delivery, at such price or prices as the Administrative Agent may reasonably
deem fair; and the Administrative Agent or any other Secured Party may be the
purchaser of any or all Collateral so sold and hold the same thereafter in its
own right free from any claim of any Pledgor or right of redemption. Demands of
performance, advertisements and presence of property and sale and notice of sale
are hereby waived to the extent permissible by law. Any sale hereunder may be
conducted by an auctioneer or any officer or agent of the Administrative Agent.
Each Pledgor recognizes that the Administrative Agent may be unable to effect a
public sale of the Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the “Securities Act”), and applicable state
law, and may be otherwise delayed or adversely affected in effecting any sale by
reason of present or future restrictions thereon imposed by governmental
authorities, and that as a consequence of such prohibitions and restrictions the
Administrative Agent may be compelled (i) to resort to one or more private sales
to a restricted group of purchasers who will be obliged to agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view to the distribution or resale thereof, or (ii) to seek regulatory
approval of any proposed sale or sales, or (iii) to limit the amount of
Collateral sold to any Person or group. Each Pledgor agrees and acknowledges
that private sales so made may be at prices and upon terms less favorable to
such Pledgor than if such Collateral was sold either at public sales or at
private sales not subject to other regulatory restrictions, and that the
Administrative Agent has no obligation to delay the sale of any of the
Collateral for the period of time necessary to permit the Pledged Subsidiary to
register or otherwise qualify the Collateral, even if such Pledged Subsidiary
would agree to register or otherwise qualify such Collateral for public sale
under the Securities Act or applicable state law. Each Pledgor further agrees,
to the extent permitted by applicable law, that the use of private sales made
under the foregoing circumstances to dispose of the Collateral shall be deemed
to be dispositions in a commercially reasonable manner. Each Pledgor hereby
acknowledges that a ready market may not exist for the Pledged Interests if they
are not traded on a national securities exchange or quoted on an automated
quotation system and agrees and acknowledges that in such event the Pledged
Interests may be sold for an amount less than a pro rata share of the fair
market value of the Pledged Subsidiary’s assets minus its liabilities. In
addition to the foregoing, the Secured Parties may exercise such other rights
and remedies as may be available under the Loan Documents, at law (including
without limitation the UCC) or in equity.

5. Proceeds of Sale. The net cash proceeds resulting from the collection,
liquidation, sale, or other disposition of the Collateral shall be applied first
to the expenses (including all Attorney Costs) of retaking, holding, storing,
processing and preparing for sale, selling, collecting, liquidating and the
like, and then to the satisfaction of all Secured Obligations in accordance with
the terms of Section 8.06 of the Credit Agreement. Each Grantor shall be liable
to the Administrative Agent, for the benefit of the Secured Parties, and shall
pay to the Administrative Agent, for the benefit of the Secured Parties, on
demand any deficiency which may remain after such sale, disposition, collection
or liquidation of the Collateral.

6. Presentments, Demands and Notices. The Administrative Agent shall not be
under any duty or obligation whatsoever to make or give any presentments,
demands for performances, notices of nonperformance, protests, notice of protest
or notice of dishonor in

 

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connection with any obligations or evidences of indebtedness held thereby as
collateral, or in connection with any obligations or evidences of indebtedness
which constitute in whole or in part the Secured Obligations secured hereunder.

7. Attorney-in-Fact. Each Pledgor hereby appoints the Administrative Agent as
the Pledgor’s attorney-in-fact for the purposes of carrying out the provisions
of this Pledge Agreement and taking any action and executing any instrument
which the Administrative Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment is irrevocable and coupled with an interest;
provided, that the Administrative Agent shall have and may exercise rights under
this power of attorney only upon the occurrence and during the continuance of an
Event of Default. Without limiting the generality of the foregoing, upon the
occurrence and during the continuance of an Event of Default, the Administrative
Agent shall have the right and power to receive, endorse and collect all checks
and other orders for the payment of money made payable to any Pledgor
representing any dividend, interest payment, principal payment or other
distribution payable or distributable in respect to the Collateral or any part
thereof and to give full discharge for the same.

8. Reinstatement. The granting of a security interest in the Collateral and the
other provisions hereof shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Secured Obligations is
rescinded or must otherwise be returned by any Secured Party or is repaid by any
Secured Party in whole or in part in good faith settlement of a pending or
threatened avoidance claim, whether upon the insolvency, bankruptcy or
reorganization of any Pledgor or any other Loan Party or otherwise, all as
though such payment had not been made. The provisions of this Section 8 shall
survive repayment of all of the Secured Obligations and the termination or
expiration of this Pledge Agreement in any manner, including but not limited to
termination upon occurrence of the Facility Termination Date.

9. Waiver by the Pledgors. Each Pledgor waives to the extent permitted by
applicable law (a) any right to require any Secured Party or any other obligee
of the Secured Obligations to (i) proceed against any Person or entity,
including without limitation any Loan Party, (ii) proceed against or exhaust any
Collateral or other collateral for the Secured Obligations, or (iii) pursue any
other remedy in its power, (b) any defense arising by reason of any disability
or other defense of any other Person, or by reason of the cessation from any
cause whatsoever of the liability of any other Person or entity, (c) any right
of subrogation, (d) any right to enforce any remedy which any Secured Party or
any other obligee of the Secured Obligations now has or may hereafter have
against any other Person and any benefit of and any right to participate in any
collateral or security whatsoever now or hereafter held by the Administrative
Agent for the benefit of the Secured Parties. Each Pledgor authorizes each
Secured Party and each other obligee of the Secured Obligations without notice
(except notice required by applicable law) or demand and without affecting its
liability hereunder or under the Loan Documents from time to time to: (x) take
and hold security, other than the Collateral herein described, for the payment
of such Secured Obligations or any part thereof, and exchange, enforce, waive
and release the Collateral herein described or any part thereof or any such
other security; and (y) apply such Collateral or other security and direct the
order or manner of sale thereof as such Secured Party or obligee in its
discretion may determine.

 

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The Administrative Agent may at any time deliver (without representation,
recourse or warranty) the Collateral or any part thereof to a Pledgor and the
receipt thereof by such Pledgor shall be a complete and full acquittance for the
Collateral so delivered, and the Administrative Agent shall thereafter be
discharged from any liability or responsibility therefor.

10. Dividends and Voting Rights.

(a) All dividends and other distributions with respect to any of the Pledged
Interests shall be subject to the pledge hereunder, provided, however, that cash
dividends paid to a Pledgor as record owner of the Pledged Interests, to the
extent permitted by the Credit Agreement to be declared and paid, may be
retained by such Pledgor so long as no Event of Default shall have occurred and
be continuing, free from any Liens hereunder.

(b) So long as no Event of Default shall have occurred and be continuing, the
registration of the Collateral in the name of a Pledgor as record and beneficial
owner shall not be changed and such Pledgor shall be entitled to exercise all
voting and other rights and powers pertaining to the Collateral for all purposes
not inconsistent with the terms of the Loan Documents.

(c) Upon the occurrence and during the continuance of any Event of Default, all
rights of the Pledgors to receive and retain cash dividends and other
distributions upon the Collateral pursuant to subsection (a) above shall cease
and shall thereupon be vested in the Administrative Agent for the benefit of the
Secured Parties, and each Pledgor shall promptly deliver, or shall cause to be
promptly delivered, all such cash dividends and other distributions with respect
to the Pledged Interests to the Administrative Agent (together, if the
Administrative Agent shall request, with the documents described in Sections
1(c) and 2(c) hereof or other negotiable documents or instruments so
distributed) to be held by it hereunder or, at the option of the Administrative
Agent, to be applied to the Secured Obligations. Pending delivery to the
Administrative Agent of such property, each Pledgor shall keep such property
segregated from its other property and shall be deemed to hold the same in trust
for the benefit of the Secured Parties.

(d) Upon the occurrence and during the continuance of any Event of Default, at
the option of the Administrative Agent, all rights of each of the Pledgors to
exercise the voting or consensual rights and powers which it is authorized to
exercise pursuant to subsection (b) above shall cease and the Administrative
Agent may thereupon (but shall not be obligated to), at its request, cause such
Collateral to be registered in the name of the Administrative Agent or its
nominee or agent for the benefit of the Secured Parties and/or exercise such
voting or consensual rights and powers as appertain to ownership of such
Collateral, and to that end each Pledgor hereby appoints the Administrative
Agent as its proxy, with full power of substitution, to vote and exercise all
other rights as a shareholder with respect to such Pledged Interests hereunder
upon the occurrence and during the continuance of any Event of Default, which
proxy is coupled with an interest and is irrevocable until the Facility
Termination Date, and each Pledgor hereby agrees to provide such further proxies
as the Administrative Agent may request; provided, however, that the
Administrative Agent in its discretion may from time to time refrain

 

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from exercising, and shall not be obligated to exercise, any such voting or
consensual rights or such proxy.

11. Continued Powers. Until the Facility Termination Date shall have occurred,
the power of sale and other rights, powers and remedies granted to the
Administrative Agent for the benefit of the Secured Parties hereunder shall
continue to exist and may, at any time after the occurrence and during the
continuance of an Event of Default, be exercised by the Administrative Agent at
any time and from time to time irrespective of the fact that any of the Secured
Obligations or any part thereof may have become barred by any statute of
limitations or that any part of the liability of any Pledgor may have ceased.

12. Other Rights. The rights, powers and remedies given to the Administrative
Agent for the benefit of the Secured Parties by this Pledge Agreement shall be
in addition to all rights, powers and remedies given to the Administrative Agent
or any Secured Party under any other Loan Document or by virtue of any statute
or rule of law. Any forbearance or failure or delay by the Administrative Agent
in exercising any right, power or remedy hereunder shall not be deemed to be a
waiver of such right, power or remedy, and any single or partial exercise of any
right, power or remedy hereunder shall not preclude the further exercise
thereof; and every right, power and remedy of the Secured Parties shall continue
in full force and effect until such right, power or remedy is specifically
waived in accordance with the terms of the Credit Agreement.

13. Anti-Marshaling Provisions. The right is hereby given by each Pledgor to the
Administrative Agent, for the benefit of the Secured Parties, to make releases
(whether in whole or in part) of all or any part of the Collateral agreeable to
the Administrative Agent without notice to, or the consent, approval or
agreement of other parties and interests, including junior lienors, which
releases shall not impair in any manner the validity of or priority of the Liens
and security interests in the remaining Collateral conferred hereunder, nor
release any Pledgor from personal liability for the Secured Obligations.
Notwithstanding the existence of any other security interest in the Collateral
held by the Administrative Agent, for the benefit of the Secured Parties, the
Administrative Agent shall have the right to determine the order in which any or
all of the Collateral shall be subjected to the remedies provided in this Pledge
Agreement. Each Pledgor hereby waives any and all right to require the
marshaling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or in any Loan Document.

14. Entire Agreement. This Pledge Agreement and each Joinder Agreement, together
with the Credit Agreement and other Loan Documents, constitutes and expresses
the entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior negotiations, agreements and
understandings, inducements, commitments or conditions, express or implied, oral
or written, except as herein contained. The express terms hereof and of the
Joinder Agreements control and supersede any course of performance or usage of
the trade inconsistent with any of the terms hereof and thereof. Neither this
Pledge Agreement nor any Joinder Agreement nor any portion or provision hereof
or thereof may be changed, altered, modified, supplemented, discharged,
canceled, terminated, or amended orally or in any manner other than as provided
in the Credit Agreement.

 

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15. Further Assurances. Each Pledgor agrees at its own expense to do such
further acts and things, and to execute and deliver, and cause to be executed
and delivered as may be necessary or advisable to give effect thereto, such
additional conveyances, assignments, financing statements, control agreements,
documents, certificates, stock powers, agreements and instruments, as the
Administrative Agent may at any time reasonably request in connection with the
administration or enforcement of this Pledge Agreement or any Joinder Agreement
or related to the Collateral or any part thereof or in order better to assure
and confirm unto the Administrative Agent its rights, powers and remedies for
the benefit of the Secured Parties hereunder or thereunder. Each Pledgor hereby
consents and agrees that the Pledged Subsidiaries and all other Persons, shall
be entitled to accept the provisions hereof and of the Joinder Agreements as
conclusive evidence of the right of the Administrative Agent, on behalf of the
Secured Parties, to exercise its rights, privileges, and remedies hereunder and
thereunder with respect to the Collateral, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by any Pledgor or any
other Person to any of such Pledged Subsidiaries or other Persons.

16. Binding Agreement; Assignment. This Pledge Agreement and each Joinder
Agreement, and the terms, covenants and conditions hereof and thereof, shall be
binding upon and inure to the benefit of the parties hereto, and to their
respective successors and assigns, except that no Pledgor shall be permitted to
assign this Pledge Agreement, any Joinder Agreement or any interest herein or
therein or in the Collateral, or any part thereof or interest therein, or
otherwise pledge, encumber or grant any option with respect to the Collateral,
or any part thereof, or any cash or property held by the Administrative Agent as
Collateral under this Pledge Agreement. Without limiting the generality of the
foregoing sentence of this Section 16, any Lender may assign to one or more
Persons, or grant to one or more Persons participations in or to, all or any
part of its rights and obligations under the Credit Agreement (to the extent
permitted by the Credit Agreement); and to the extent of any such permitted
assignment or participation such other Person shall, to the fullest extent
permitted by law, thereupon become vested with all the benefits in respect
thereof granted to such Lender herein or otherwise, subject however, to the
provisions of the Credit Agreement, including Article IX thereof (concerning the
Administrative Agent) and Section 10.06 thereof (concerning assignments and
participations). All references herein to the Administrative Agent and to the
Secured Parties shall include any successor thereof or permitted assignee, and
any other obligees from time to time of the Secured Obligations.

17. Related Swap Contracts. All obligations of any Pledgor under or in respect
of Related Swap Contracts (which are not prohibited under the terms of the
Credit Agreement) to which any Lender or any Affiliate of any Lender is a party,
shall be deemed to be Secured Obligations secured hereby, and each Lender or
Affiliate of a Lender party to any such Related Swap Contract shall be deemed to
be a Secured Party hereunder with respect to such Secured Obligations; provided,
however, that such obligations shall cease to be Secured Obligations at such
time, prior to the Facility Termination Date, as such Person (or Affiliate of
such Person) shall cease to be a “Lender” under the Credit Agreement.

No Person who obtains the benefit of any Lien by virtue of the provisions of
this Section shall have any right to notice of any action or to consent to,
direct or object to any action hereunder or under any other Loan Document or
otherwise in respect of the Collateral (including

 

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the release or impairment of any Collateral) other than in its capacity as a
Lender and only to the extent expressly provided in the Loan Documents. Each
Secured Party not a party to the Credit Agreement who obtains the benefit of
this Pledge Agreement by virtue of the provisions of this Section shall be
deemed to have acknowledged and accepted the appointment of the Administrative
Agent pursuant to the terms of the Credit Agreement, and that with respect to
the actions and omissions of the Administrative Agent hereunder or otherwise
relating hereto that do or may affect such Secured Party, the Administrative
Agent and each of its Related Parties shall be entitled to all the rights,
benefits and immunities conferred under Article IX of the Credit Agreement.

18. Severability. The provisions of this Pledge Agreement are independent of and
separable from each other. If any provision hereof shall for any reason be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity or enforceability of any other provision hereof, but this Pledge
Agreement shall be construed as if such invalid or unenforceable provision had
never been contained herein.

19. Counterparts. This Pledge Agreement may be executed in any number of
counterparts each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Pledge Agreement
to produce or account for more than one such counterpart executed by the Pledgor
against whom enforcement is sought. Without limiting the foregoing provisions of
this Section 19, the provisions of Section 10.10 of the Credit Agreement shall
be applicable to this Pledge Agreement.

20. Termination. Subject to the provisions of Section 8, this Pledge Agreement
and each Joinder Agreement, and all obligations of the Pledgors hereunder
(excluding those obligations and liabilities that expressly survive such
termination) shall terminate without delivery of any instrument or performance
of any act by any party on the Facility Termination Date. Upon such termination
of this Pledge Agreement, the Administrative Agent shall, at the sole expense of
the Pledgors, promptly deliver to the Pledgors the certificates evidencing its
shares of Pledged Interests (and any other property received as a dividend or
distribution or otherwise in respect of such Pledged Interests to the extent
then held by the Administrative Agent as additional Collateral hereunder),
together with any cash then constituting the Collateral not then sold or
otherwise disposed of in accordance with the provisions hereof, and take such
further actions at the request of the Pledgors as may be necessary to effect the
same.

21. Additional Interests. If any Pledgor shall at any time acquire or hold any
additional Pledged Interests, including any Pledged Interests issued by any
Subsidiary not listed on Schedule I hereto which are required to be subject to a
Lien pursuant to a Pledge Agreement by the terms hereof or of any provision of
the Credit Agreement (any such shares being referred to herein as the
“Additional Interests”), such Pledgor shall deliver to the Administrative Agent
for the benefit of the Secured Parties (i) a Pledge Agreement Supplement in the
form of Exhibit A hereto with respect to such Additional Interests duly
completed and executed by such Pledgor and (iii) any other document required in
connection with such Additional Interests as described in Section 2(c). Each
Pledgor shall comply with the requirements of this Section 21 concurrently with
the acquisition of any such Additional Interests or, in the case of Additional
Interests to which Section 6.14 of the Credit Agreement applies, within the time
period specified in such Section or elsewhere in the Credit Agreement with
respect to such Additional Interests; provided,

 

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however, that the failure to comply with the provisions of this Section 21 shall
not impair the Lien on Additional Interests conferred hereunder.

22. Notices. Any notice required or permitted hereunder shall be given (a) with
respect to the Borrowers and each Subsidiary which is a Pledgor hereunder, at
the address of the Company indicated in Schedule 10.02 of the Credit Agreement,
(b) with respect to the Administrative Agent or a Lender, at the Administrative
Agent’s address indicated in Schedule 10.02 of the Credit Agreement. All such
addresses may be modified, and all such notices shall be given and shall be
effective, as provided in Section 10.02 of the Credit Agreement for the giving
and effectiveness of notices and modifications of addresses thereunder.

23. Joinder. Each Person who shall at any time execute and deliver to the
Administrative Agent a Joinder Agreement shall thereupon irrevocably, absolutely
and unconditionally become a party hereto and obligated hereunder as a Pledgor
and shall have thereupon pursuant to Section 1 hereof granted a security
interest in and collaterally assigned and pledged to the Administrative Agent
for the benefit of the Secured Parties all Pledged Interests which it has at its
Applicable Date or thereafter acquires any interest or the power to transfer,
and all references herein and in the other Loan Documents to the Pledgors or to
the parties to this Pledge Agreement shall be deemed to include such Person as a
Pledgor hereunder. Each Joinder Agreement shall be accompanied by the
Supplemental Schedules referred to therein, appropriately completed with
information relating to the Pledgor executing such Joinder Agreement and its
property. Each of the applicable Schedules attached hereto shall be deemed
amended and supplemented without further action by such information reflected on
the Supplemental Schedules to each Joinder Agreement.

24. Rules of Interpretation. The rules of interpretation contained in Sections
1.02 and 1.05 of the Credit Agreement shall be applicable to this Pledge
Agreement and each Joinder Agreement and are hereby incorporated by reference.
All representations and warranties contained herein shall survive the delivery
of documents and any Credit Extensions referred to herein or secured hereby.

25. Governing Law; Waivers.

(a) THIS PLEDGE AGREEMENT AND EACH JOINDER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE
TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

(b) EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT
OR ANY JOINDER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN MAY
BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN MECKLENBURG COUNTY, STATE
OF NORTH CAROLINA, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY
OF THIS PLEDGE AGREEMENT OR A JOINDER

 

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AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO
THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

(c) EACH PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE
OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT,
ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO
THE ADDRESS OF SUCH PLEDGOR PROVIDED IN SECTION 22 OR BY ANY OTHER METHOD OF
SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NORTH
CAROLINA.

(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE THE
ADMINISTRATIVE AGENT FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS PLEDGE AGREEMENT OR ANY JOINDER AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY PLEDGOR OR ANY OF SUCH PLEDGOR’S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE
APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH PLEDGOR HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT
OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH
NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY
BE AVAILABLE UNDER APPLICABLE LAW.

(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES
UNDER OR RELATED TO THIS PLEDGE AGREEMENT OR ANY JOINDER AGREEMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY
JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING.

(f) EACH PLEDGOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY HAVE THAT ANY
COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO THE TERMS HEREOF IS AN
INCONVENIENT FORUM.

 

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[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties have duly executed this Pledge Agreement on the
day and year first written above.

 

PLEDGORS:

 

SONIC AUTOMOTIVE, INC.

By:

 

/s/ Greg Young

Name:

 

Greg Young

Title:

 

Vice President/Chief Accounting Officer

CORNERSTONE ACCEPTANCE CORPORATION

FAA HOLDING CORP.

FIRSTAMERICA AUTOMOTIVE, INC.

L DEALERSHIP GROUP, INC.

SONIC AUTOMOTIVE WEST, LLC

SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC.

SONIC AUTOMOTIVE OF GEORGIA, INC.

SONIC PEACHTREE INDUSTRIAL BLVD., L.P.

SONIC AUTOMOTIVE OF NEVADA, INC.

SONIC AUTOMOTIVE OF TENNESSEE, INC.

SONIC OF TEXAS, INC.

SONIC – LS, LLC

SONIC – VOLVO LV, LLC

SRE HOLDING, LLC

Z MANAGEMENT, INC.

By:

 

/s/ Joseph O’Connor

Name:

 

Joseph O’Connor

Title:

 

Assistant Treasurer

 

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ADMINISTRATIVE AGENT:

 

BANK OF AMERICA, N.A., as Administrative Agent

By:

  /s/ Anne M. Zeschke

Name:

  Anne M. Zeschke

Title:

  Assistant Vice President

 

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