As Filed with the Securities and Exchange Commission on October 8, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------------------
SONIC AUTOMOTIVE, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 56-2010790
(State or Other Jurisdiction (I.R.S. Employer
Of Incorporation or Organization) Identification No.)
5401 EAST INDEPENDENCE BOULEVARD 28212
P.O. BOX 18747 (Zip Code)
CHARLOTTE, NORTH CAROLINA
(Address of Principal Executive Offices)
SONIC AUTOMOTIVE, INC. 1997 STOCK OPTION PLAN
(Full Title of Plan)
MR. O. BRUTON SMITH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SONIC AUTOMOTIVE, INC.
5401 E. INDEPENDENCE BOULEVARD
P.O. BOX 18747
CHARLOTTE, NORTH CAROLINA 28212
(704) 532-3320
(Name, Address and Telephone Number, including Area Code, of Agent for Service)
COPIES TO:
PETER J. SHEA, ESQ.
PARKER, POE, ADAMS & BERNSTEIN L.L.P.
2500 CHARLOTTE PLAZA, CHARLOTTE, NORTH CAROLINA 28244
TELEPHONE (704) 372-9000
-----------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Title of
Securities Amount Proposed Maximum Proposed Maximum Amount
to be to be Offering Price Aggregate Of
Registered Registered Per Share Offering Price Registration Fee
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common
Stock, par value
$0.01 per share 1,125,000 $17.28 $19,440,000 $5,735
- -------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 (h) under the Securities Act of 1933, based upon the
average of the high and low prices of the Registrant's Class A Common
Stock reported on the New York Stock Exchange on October 7, 1998 which
prices were $18.1875 and $16.3750, respectively.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I of Form S-8
(plan information and registrant information) will be sent or given to employees
as specified by Securities and Exchange Commission Rule 428(b)(1). Such
documents need not be filed with the Securities and Exchange Commission either
as part of this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424. These documents, which include the statement
of availability required by Item 2 of Form S-8, and the documents incorporated
by reference in this Registration Statement pursuant to Item 3 of Form S-8 (Part
II hereof), taken together, constitute a prospectus that meets the requirements
of Section 10(a) of the Securities Act of 1933
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents of Sonic Automotive, Inc. (the "Company") filed
with the Securities and Exchange Commission are incorporated herein by
reference:
(i) the Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1997 (File No. 1-13395);
(ii) the Company's Amended Annual Report on Form 10-K/A for the year
ended December 31, 1997;
(iii) the Company's Quarterly Report on Form 10-Q for its fiscal quarter
ended March 31, 1998;
(iv) the Company's Quarterly Report on Form 10-Q for its fiscal quarter
ended June 30, 1998;
(v) the Company's Current Reports on Form 8-K, filed the following
dates: March 30, 1998, July 9, 1998, and July 24, 1998;
(vi) the Company's Amended Current Report on Form 8-K/A, filed on July
24, 1998, relating to its Current Report on Form 8-K filed on March
30, 1998;
(vii) the Company's Amended Current Report on Form 8-K/A, filed on August
20, 1998, relating to its Current Report on Form 8-K filed on July
24, 1998; and
(viii) the description of the Class A Common Stock contained in the
Company's Registration Statement on Form 8-A, as amended, filed
with the SEC pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")
All documents subsequently filed by the Registrant pursuant to sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document, all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or amended, to constitute a part of this Registration
Statement.
Item 4. Description of Securities
Not Applicable
Item 5. Interests of Named Experts and Counsel
Not Applicable
2
<PAGE>
Item 6. Indemnification of Officers and Directors
The Registrant's Bylaws effectively provide that the Registrant 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 Registrant'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 interest of the corporation, except
that no indemnification shall be made if such person shall have been adjudged
liable to the corporation, unless and only to the extent that the court in which
the action or suit was brought shall determine upon application that the
defendant officers or directors are reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
Section 102(b) (7) provides that a corporation may eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for willful or negligent conduct
in paying dividends or repurchasing stock out of other than lawfully available
funds or (iv) for any transaction from which the director derived an improper
personal benefit. No such provision shall eliminate or limit the liability of a
director for any act or omission occurring prior to the date when such provision
becomes effective.
The Company maintains insurance against liabilities under the Securities
Act of 1933 for the benefit of its officers and directors.
Item 7. Exemption from Registration Claimed
Not Applicable
Item 8. Exhibits
Exhibit
Number Description
------ -----------
4.1 Sonic Automotive, Inc. 1997 Stock Option Plan
4.2 Form of Incentive Stock Option Agreement
and Grant pursuant to the Sonic
Automotive, Inc. 1997 Stock Option Plan
4.3 Form of Nonstatutory Stock Option
Agreement and Grant pursuant to the
Sonic Automotive, Inc. 1997 Stock Option
Plan
5.1 Opinion of Parker, Poe, Adams &
Bernstein L.L.P. regarding the legality
of securities registered.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Parker, Poe, Adams &
Bernstein L.L.P. (included in Exhibit
5.1 to this Registration Statement).
3
<PAGE>
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration
Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in the
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, Form S-8, or Form F-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the Registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the 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 whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
[Signatures begin on next page]
4
<PAGE>
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on October
8, 1998.
Sonic Automotive, Inc.
BY: /s/ O. Bruton Smith
-------------------------------------------
O. Bruton Smith
Chairman and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Sonic Automotive, Inc., do
hereby constitute and appoint Messrs. O. Bruton Smith, Bryan Scott Smith, and
Theodore M. Wright, each with full power of substitution, our true and lawful
attorney-in-fact and agent to do any and all acts and things in our names and in
our behalf in our capacities stated below, which acts and things either of them
may deem necessary or advisable to enable Sonic Automotive, Inc. to comply with
the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but not limited to, power and
authority to sign for any and all of us in our names, in the capacities stated
below, any and all amendments (including post-effective amendments) hereto and
any subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission; and we do hereby ratify and confirm all that they shall do
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Chief Executive Officer (principle October 8, 1998
/s/ O. Bruton Smith executive officer) and Chairman
- -------------------------------
O. Bruton Smith
President, Chief Operating Officer and October 8, 1998
/s/ B. Scott Smith Director
- -------------------------------
B. Scott Smith
Chief Financial Officer, Vice
President-Finance, Treasurer, Secretary
(Principle Financial and Accounting October 8, 1998
/s/ Theodore M. Wright Officer) and Director
- -------------------------------
Theodore M. Wright
October 8, 1998
/s/ Nelson E. Bowers Executive Vice President and Director
- -------------------------------
Nelson E. Bowers
October 8, 1998
/s/ William R. Brooks Director
- -------------------------------
William R. Brooks
October 8, 1998
/s/ William P. Benton Director
- -------------------------------
William P. Benton
October 8, 1998
/s/ William I. Belk Director
- -------------------------------
William I. Belk
</TABLE>
5
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
4.1 Sonic Automotive, Inc. 1997 Stock Option Plan
4.2 Form of Incentive Stock Option Agreement
and Grant pursuant to the Sonic
Automotive, Inc. 1997 Stock Option Plan
4.3 Form of Nonstatutory Stock Option
Agreement and Grant pursuant to the
Sonic Automotive, Inc. 1997 Stock Option
Plan
5.1 Opinion of Parker, Poe, Adams &
Bernstein L.L.P. regarding the legality
of securities registered.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Parker, Poe, Adams &
Bernstein L.L.P. (included in Exhibit
5.1 to this Registration Statement).
6
Exhibit 4.1
-----------
SONIC AUTOMOTIVE, INC.
1997 STOCK OPTION PLAN
----------------------
1. PURPOSES OF PLAN. The purposes of the Plan, which shall be known as
the Sonic Automotive, Inc. 1997 Stock Option Plan and is hereinafter referred to
as the "Plan", are (i) to provide incentives for key employees, directors,
consultants and other individuals providing services to Sonic Automotive, Inc.
(the "Company") and its subsidiaries (within the meaning of Section 424(f) of
the Internal Revenue Code of 1986, as amended (the "Code"), each of which is
referred to herein as a "Subsidiary") by encouraging their ownership of the
Class A Common Stock, $.01 par value, of the Company (the "Stock") and (ii) to
aid the Company in retaining such key employees, directors, consultants and
other individuals upon whose efforts the Company's success and future growth
depends, and attracting other such employees, directors, consultants and other
individuals.
2. ADMINISTRATION. The Plan shall be administered by a committee of the
Board of Directors of the Company (the "Committee"). The Committee shall be
appointed from time to time by the Board of Directors of the Company (the "Board
of Directors") and shall consist of not fewer than two of its members. Each
Committee member shall be a "non-employee director" within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the
"Act"). In the event that no such Committee exists or is appointed, then the
powers to be exercised by the Committee hereunder shall be exercised by the
Board of Directors.
For purposes of administration, the Committee, subject to the terms of the
Plan, shall have plenary authority to establish such rules and regulations, to
make such determinations and interpretations, and to take such other
administrative actions, as it deems necessary or advisable. All determinations
and interpretations made by the Committee shall be final, conclusive and binding
on all persons, including those granted options hereunder ("Optionees") and
their legal representatives and beneficiaries.
Notwithstanding any other provisions of the Plan, the Committee may impose
such conditions on any options as may be required to satisfy the requirements of
Rule 16b-3 of the Act or Section 162(m) of the Code.
The Committee shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members. Any
decision or determination reduced to writing and signed by all members shall be
as effective as if it had been made by a majority vote at a meeting duly called
and held. The Committee may appoint a secretary (who need not be a member of the
Committee). No member of the Committee shall be liable for any act or omission
with respect to his service on the Committee, if he acts in good faith and in a
manner he reasonably believes to
1
<PAGE>
be in or not opposed to the best interests of the Company.
3. STOCK AVAILABLE FOR OPTIONS. There shall be available for options
under the Plan a total of 1,125,000 shares of Stock, subject to any adjustments
which may be made pursuant to Section 5(f) hereof. Shares of Stock used for
purposes of the Plan may be either authorized and unissued shares, or previously
issued shares held in the treasury of the Company, or both. Shares of Stock
covered by options which have terminated or expired prior to exercise or which
have been tendered as payment upon exercise of other options pursuant to Section
5(c), shall be available for further option grants hereunder.
4. ELIGIBILITY. Options under the Plan may be granted to key employees of
the Company or any Subsidiary, including officers or directors of the Company or
any Subsidiary, and to directors, consultants and other individuals providing
services to the Company or any Subsidiary. Options may be granted to eligible
employees whether or not they hold or have held options previously granted under
the Plan or otherwise granted or assumed by the Company. In selecting employees
for options, the Committee may take into consideration any factors it may deem
relevant, including its estimate of the employee's present and potential
contributions to the success of the Company and its Subsidiaries. Service as a
director, officer or consultant of or to the Company or any Subsidiary shall be
considered employment for purposes of the Plan (and the period of such service
shall be considered the period of employment for purposes of Section 5(d) of the
Plan); provided, however, that incentive stock options may be granted under the
Plan only to an individual who is an "employee" (as such term is used in Section
422 of the Code) of the Company or any Subsidiary.
5. TERMS AND CONDITIONS OF OPTIONS. The Committee shall, in its
discretion, prescribe the terms and conditions of the options to be granted
hereunder, which terms and conditions need not be the same in each case, subject
to the following:
(a) OPTION PRICE. The price at which each share of Stock covered by
an incentive option granted under the Plan may be purchased shall not be
less than the market value per share of Stock on the date of grant of the
option. In the case of any option intended to be an incentive stock option
granted to an individual owning (directly or by attribution as provided in
Section 424(d) of the Code), on the date of grant, stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary (which individual shall hereinafter be referred
to as a "10% Stockholder"), the price at which each share of Stock covered
by the option may be purchased shall not be less than 110% of the market
value per share of Stock on the date of grant of the option. The date of
the grant of an option shall be the date specified by the Committee in its
grant of the option. The price at which each share of Stock covered by an
option granted under the Plan (but not as an incentive stock option) may
be purchased shall be the price determined by the Committee, in its
absolute discretion, to be suitable to attain the purposes of this Plan.
2
<PAGE>
(b) OPTION PERIOD. The period for exercise of an option shall in no
event be more than ten years from the date of grant, or in the case of an
option intended to be an incentive stock option granted to a 10%
Stockholder, more than five years from the date of grant. Options may, in
the discretion of the Committee, be made exercisable in installments
during the option period. Any shares not purchased on any applicable
installment date may be purchased thereafter at any time before the
expiration of the option period.
(c) EXERCISE OF OPTIONS. In order to exercise an option, the
Optionee shall deliver to the Company written notice specifying the number
of shares of Stock to be purchased, together with cash or a certified or
bank cashier's check payable to the order of the Company in the full
amount of the purchase price therefor; provided that, for the purpose of
assisting an Optionee to exercise an option, the Company may make loans to
the Optionee or guarantee loans made by third parties to the Optionee, on
such terms and conditions as the Board of Directors may authorize; and
provided further that such purchase price may be paid in shares of Stock,
or in nonstatutory options granted under the Plan (provided, however, that
the purchase price of Stock acquired under an incentive stock option may
not be paid in options), in either case owned by the Optionee and having a
market value on the date of exercise not less than the aggregate purchase
price, or in any combination of cash, Stock and such options. For purposes
of this Section 5(c), the market value per share of Stock shall be the
last sale price regular way on the date of reference, or, in case no sales
take place on such date, the average of the closing high bid and low asked
prices regular way, in either case on the principal national securities
exchange on which the Stock is listed or admitted to trading, or if the
Stock is not listed or admitted to trading on any national securities
exchange, the last sale price reported on the National Market System of
the National Association of Securities Dealers Automated Quotation system
("NASDAQ") on such date, or the average of the closing high bid and low
asked prices of the Stock in the over-the-counter market reported on
NASDAQ on such date, as furnished to the Committee by any New York Stock
Exchange member selected from time to time by the Committee for such
purpose. If there is no bid or asked price reported on any such date, the
market value shall be determined by the Committee in accordance with the
regulations promulgated under Section 2031 of the Code, or by any other
appropriate method selected by the Committee. For purposes of this Section
5(c), the market value of an option granted under the Plan shall be the
market value of the underlying Stock, determined as aforesaid, less the
exercise price of the option. If the Optionee so requests, shares of Stock
purchased upon exercise of an option may be issued in the name of the
Optionee or another person. An Optionee shall have none of the rights of a
stockholder until the shares of Stock are issued to him.
(d) EFFECT OF TERMINATION OF EMPLOYMENT.
(i) An option may not be exercised after the Optionee has
ceased to be in the employ of the Company or any Subsidiary for any
reason other than the
3
<PAGE>
Optionee's death, Disability or Involuntary Termination Without
Cause. Any cessation of employment, for purposes of incentive stock
options only, shall include any leave of absence in excess of 90
days unless the Optionee's reemployment rights are guaranteed by
law or by contract. "CAUSE" shall mean any act, action or series of
acts or actions or any omission, omissions, or series of omissions
which result in, or which have the effect of resulting in, (i) the
commission of a crime by the Optionee involving moral turpitude,
which crime has a material adverse impact on the Company or any
Subsidiary, (ii) gross negligence or willful misconduct which is
continuous and results in material damage to the Company or any
Subsidiary, or (iii) the continuous, willful failure of the person
in question to follow the reasonable directives of the Board of
Directors. "DISABILITY" shall mean the inability or failure of a
person to perform those duties for the Company or any Subsidiary
traditionally assigned to and performed by such person because of
the person's then-existing physical or mental condition, impairment
or incapacity. The fact of disability shall be determined by the
Committee, which may consider such evidence as it considers
desirable under the circumstances, the determination of which shall
be final and binding upon all parties. "INVOLUNTARY TERMINATION
WITHOUT CAUSE" shall mean either (i) the dismissal of, or the
request for the resignation of, a person, by court order, order of
any court-appointed liquidator or trustee of the Company, or the
order or request of any creditors' committee of the Company
constituted under the federal bankruptcy laws, provided that such
order or request contains no specific reference to Cause; or (ii)
the dismissal of, or the request for the resignation of, a person,
by a duly constituted corporate officer of the Company or any
Subsidiary, or by the Board, for any reason other than for Cause.
(ii) During the three months after the date of the Optionee's
Involuntary Termination Without Cause, the Optionee shall have the
right to exercise the options granted under the Plan, but only to
the extent the option was exercisable on the date of the cessation
of the Optionee's employment.
(iii) During the twelve months after Termination of the
Optionee's employment with the Company or any Subsidiary as a result
of the Optionee's Disability, the Optionee shall have the right to
exercise the options granted under the Plan, but only to the extent
the option was exercisable on the date of the cessation of the
Optionee's employment.
(iv) In the event of the death of the Optionee while employed
or, in the event of the death of the Optionee after cessation of
employment described in subparagraph (ii) or (iii), above, but
within the three-month or twelve-month period described in
subparagraph (ii) or (iii), above, the option shall thereupon become
exercisable in full until the expiration of twelve months following
the Optionee's death. During such extended period, the option may be
exercised by
4
<PAGE>
the person or persons to whom the deceased Optionee's rights under
the Option Agreement shall pass by will or by the laws of descent
and distribution, but only to the extent the option was exercisable
on the date of the cessation of the Optionee's employment. The
provisions of the foregoing sentence shall apply to any outstanding
options which are incentive stock options to the extent permitted
by Section 422(d) of the Code and such outstanding options in
excess thereof shall, immediately upon the occurrence of the event
described in the preceding sentence, be treated for all purposes of
the Plan as nonstatutory stock options and shall be immediately
exercisable as such as provided in the foregoing sentence.
In no event shall any option be exercisable beyond the applicable
exercise period provided in Section 5(b) of the Plan. Nothing in the Plan
or in any option granted pursuant to the Plan (in the absence of an
express provision to the contrary) shall confer on any individual any
right to continue in the employ of the Company or any Subsidiary or
interfere in any way with the right of the Company or Subsidiary to
terminate his employment at any time.
(e) NONTRANSFERABILITY OF OPTIONS. Except as otherwise set forth
herein, during the lifetime of an Optionee, options held by such Optionee
shall be exercisable only by him, and no option shall be transferable
other than by will or the laws of descent and distribution.
Notwithstanding the foregoing, the Committee, in its absolute discretion,
may grant nonstatutory options that are transferable, subject to
applicable law and the terms and restrictions imposed by the Committee.
(f) ADJUSTMENTS FOR CHANGE IN STOCK SUBJECT TO PLAN. In the event
of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering or any other
change in the corporate structure or shares of the Company, corresponding
adjustments automatically shall be made to the number and kind of shares
available for issuance under this Plan and the number and kind of shares
covered by outstanding options under this Plan.
(g) ACCELERATION OF EXERCISABILITY OF OPTIONS UPON OCCURRENCE
OF CERTAIN EVENTS.
In connection with any merger or consolidation in which the Company is
not the surviving corporation and which results in the holders of the
outstanding voting securities of the Company (determined immediately prior
to such merger or consolidation) owning less than a majority of the
outstanding voting securities of the surviving corporation (determined
immediately following such merger or consolidation), or any sale or
transfer by the Company of all or substantially all of its assets or any
tender offer or exchange offer for or the acquisition, directly or
indirectly, by any person or group of all or a majority of the
then-outstanding voting securities of the Company, all outstanding options
under the Plan shall become exercisable in full, notwithstanding any other
provision of the Plan or of any outstanding options granted thereunder, on
and after (i) the fifteenth day prior to the effective date of such
merger, consolidation, sale, transfer or acquisition or (ii) the date of
commencement of such tender offer or exchange offer, as the case may be.
The provisions of the foregoing sentence shall apply to any outstanding
options
5
<PAGE>
which are incentive stock options to the extent permitted by Section
422(d) of the Code and such outstanding options in excess thereof
shall, immediately upon the occurrence of the event described in clause
(i) or (ii) of the foregoing sentence, be treated for all purposes of the
Plan as nonstatutory stock options and shall be immediately exercisable as
such as provided in the foregoing sentence. Notwithstanding the foregoing,
in no event shall any option be exercisable after the date of termination
of the exercise period of such option specified in Sections 5(b) and 5(d).
(h) REGISTRATION, LISTING AND QUALIFICATION OF SHARES OF STOCK.
Each option shall be subject to the requirement that if at any time the
Board of Directors shall determine that the registration, listing or
qualification of shares of Stock covered thereby upon any securities
exchange or under any federal or state law, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, the granting of such option or the purchase of
shares of Stock thereunder, no such option may be exercised unless and
until such registration, listing, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to
the Board of Directors. The Company may require that any person exercising
an option shall make such representations and agreements and furnish such
information as it deems appropriate to assure compliance with the
foregoing or any other applicable legal requirement.
(i) OTHER TERMS AND CONDITIONS. The Committee may impose such other
terms and conditions, not inconsistent with the terms hereof, on the grant
or exercise of options, as it deems advisable.
(j) RELOAD OPTIONS. If upon the exercise of an option granted
under the Plan (the "Original Option") the Optionee pays the purchase
price for the Original Option pursuant to Section 5(c) in whole or in part
in shares of Stock owned by the Optionee for at least six months, the
Company shall grant to the Optionee on the date of such exercise an
additional option under the Plan (the "Reload Option") to purchase that
number of shares of Stock equal to the number of shares of Stock so held
for at least six months transferred to the Company in payment of the
purchase price in the exercise of the Original Option. The price at which
each share of Stock covered by the Reload Option may be purchased shall be
the market value per share of Stock (as specified in Section 5(c)) on the
date of exercise of the Original Option. The Reload Option shall not be
exercisable until one year after the date the Reload Option is granted or
after the expiration date of the Original Option. Upon the payment of the
purchase price for a Reload Option granted hereunder in whole or in part
in shares of Stock held for more than six months pursuant to Section 5(c),
the Optionee is entitled to receive a further Reload Option in accordance
with this Section 5(j). Shares of Stock covered by a Reload Option shall
not reduce the number of shares of Stock available under the Plan pursuant
to Section 3.
6. ADDITIONAL PROVISIONS APPLICABLE TO INCENTIVE STOCK OPTIONS. The
Committee may, in its discretion, grant options under the Plan to eligible
employees which constitute "incentive stock options" within the meaning of
Section 422 of the Code, provided,
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<PAGE>
however, that (a) the aggregate market value of the Stock with respect to which
incentive stock options are exercisable for the first time by the Optionee
during any calendar year shall not exceed the limitation set forth in Section
422(d) of the Code and (b) Section 5(d)(ii) hereof shall not apply to any
incentive stock option.
7. EFFECTIVENESS OF PLAN. The Plan shall be effective when it is adopted
and approved by the Board of Directors, provided that the Plan is approved
within one year of such adoption by a majority of the votes cast thereon by the
stockholders of the Company at a meeting of stockholders duly called and held
for such purpose or by unanimous written consent of such stockholders, and no
option granted hereunder shall be exercisable prior to such approval.
8. AMENDMENT AND TERMINATION. The Board of Directors may at any time
amend the Plan or the term of any option outstanding under the Plan; provided,
however, that, except as contemplated in Section 5(f), the Board of Directors
shall not, without approval by a majority of the votes cast by the stockholders
of the Company at a meeting of stockholders at which a proposal to amend the
Plan is voted upon, (i) increase the maximum number of shares of Stock for which
options may be granted under the Plan, or (ii) except as otherwise provided in
the Plan, amend the requirements as to the class of employees eligible to
receive options. Unless the Plan shall theretofore have been terminated as
hereinafter provided, the Plan shall terminate, and no option shall be granted
hereunder after, ten years from the date the Plan is adopted by the Board of
Directors, which termination date shall be on or about October 10, 2007;
provided, however, that the Board of Directors may at any time prior to that
date terminate the Plan. No amendment or termination of the Plan or any option
outstanding under the Plan may, without the consent of an Optionee, adversely
affect the rights of such Optionee under any option held by such Optionee.
9. WITHHOLDING. It shall be a condition to the obligation of the Company
to issue shares of Stock upon exercise of an option that the Optionee (or any
beneficiary or person entitled to act under Section 5(d) hereof) pay to the
Company, upon its demand, such amount as may be requested by the Company for the
purpose of satisfying any other taxes. If the amount requested is not paid, the
Company may refuse to issue such shares of Stock.
10. OTHER ACTIONS. Nothing contained in the Plan shall be construed to
limit the authority of the Company to exercise its corporate rights and powers,
including, but not by way of limitation, the right of the Company to grant or
assume options for proper corporate purposes other than under the Plan with
respect to any employee or other person, firm, corporation or association.
7
Exhibit 4.2
-----------
STATUTORY INCENTIVE STOCK OPTION AGREEMENT AND GRANT
PURSUANT TO
SONIC AUTOMOTIVE, INC. 1997 STOCK OPTION PLAN
This Statutory Incentive Stock Option Agreement and Grant is entered into
as of this _____ day of _____, 199__ between Sonic Automotive, Inc., a Delaware
corporation (the "Company"), and _____________________________ (the "Optionee").
WHEREAS, the Company and its stockholders have approved the Sonic
Automotive, Inc. 1997 Stock Option Plan (the "Plan") pursuant to which the
Company may, from time to time, make awards of Options (as defined below) and
enter into Statutory Incentive Stock Option Agreements with eligible employees
of the Company or of any Subsidiary (as defined below);
WHEREAS, pursuant to the Plan, the Company has determined to grant to the
Optionee an Option to purchase Common Stock (as defined below) of the Company,
which Option shall be subject to the terms and conditions of this Statutory
Incentive Stock Option Agreement and Grant;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereby agree as follows:
1. DEFINITIONS.
For purposes of this Statutory Incentive Stock Option Agreement and Grant,
the following terms shall have the meanings indicated:
(1) "ACT" shall mean the Securities Act of 1933, as amended.
(2) "BOARD" shall mean the Board of Directors of the Company.
(3) "CAUSE" shall mean any act, action or series of acts or actions
or any omission, omissions, or series of omissions which result in, or which
have the effect of resulting in, (i) the commission of a crime by the Optionee
involving moral turpitude, which crime has a material adverse impact on the
Company or any Subsidiary, (ii) gross negligence or willful misconduct which is
continuous and results in material damage to the Company or any Subsidiary, or
(iii) the continuous, willful failure of the person in question to follow the
reasonable directives of the Board of Directors.
(4) "CODE" shall mean the Internal Revenue Code of 1986, as amended,
any successor revenue laws of the United States and the rules and regulations
promulgated thereunder.
(5) "COMMITTEE" shall mean the committee of members of the Board
that is designated by the Board to administer the Plan. In the event that no
such Committee exists or is appointed, "COMMITTEE" shall mean the Board.
<PAGE>
(6) "COMMON STOCK" shall mean the Class A Common Stock, par value
$.01 per share, of the Company.
(7) "DISABILITY" shall mean the inability or failure of a person to
perform those duties for the Company or any Subsidiary traditionally assigned to
and performed by such person because of the person=s then-existing physical or
mental condition, impairment or incapacity. The fact of disability shall be
determined by the Committee, which may consider such evidence as it considers
desirable under the circumstances, the determination of which shall be final and
binding upon all parties.
(8) "EXERCISE DATE" shall mean the business day, during the Option
Period, upon which the Optionee delivers to the Company the written notice and
consideration contemplated by Section 5(c) of the Plan.
(9) "FAIR MARKET VALUE" shall mean, with respect to the Common Stock
on any day, its market value determined as provided in Section 5(c) of the Plan.
(10) "INVOLUNTARY TERMINATION WITHOUT CAUSE" shall mean either (i)
the dismissal of, or the request for the resignation of, a person, by court
order, order of any court-appointed liquidator or trustee of the Company, or the
order or request of any creditors' committee of the Company constituted under
the federal bankruptcy laws, provided that such order or request contains no
specific reference to Cause; or (ii) the dismissal of, or the request for the
resignation of, a person, by a duly constituted corporate officer of the Company
or any Subsidiary, or by the Board, for any reason other than for Cause.
(11) "NOTICE" shall have the meaning indicated in paragraph 3 below.
(12) "OPTION" shall mean the option to purchase shares of Common
Stock granted to the Optionee pursuant to this Option Agreement.
(13) "OPTION AGREEMENT" shall mean this Statutory Incentive Stock
Option Agreement and Grant between the Company and the Optionee by which the
Option is granted to the Optionee pursuant to the Plan.
(14) "OPTION PERIOD" shall mean the period commencing one year from
the date of this Option Agreement and ending at the close of business ten years
from the date of this Option Agreement (or five years in the case of an
individual owning, directly or by attribution as provided in Section 424(d) of
the Code, on the date of grant, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary)
or such earlier date as when this Option Agreement may be terminated by its
terms.
(15) "OPTION SHARES" shall mean the shares of Common Stock purchased
upon exercise of the Option.
2
<PAGE>
(16) "OPTIONEE" shall mean the individual executing this Option
Agreement and, as applicable, the estate, personal representative or beneficiary
to whom this Option may be transferred pursuant to this Option Agreement by will
or by the laws of descent and distribution.
(17) "PLAN" shall mean the Sonic Automotive, Inc. 1997 Stock Option
Plan and any amendments thereto.
(18) "RETIREMENT" shall mean, with respect to the Optionee,
retirement from the Company and any Subsidiary in accordance with the Company's
and/or Subsidiary's retirement policy as may be in effect from time to time.
(19) "SUBSIDIARY" shall mean any subsidiary corporation of Sonic
Automotive, Inc. as defined in Sections 424(f) and 424(g) of the Code.
(20) "TERMINATION" shall mean the cessation, for any reason, of the
employer-employee relationship between the Company and any Subsidiary and the
Optionee.
(21) "TOTAL OPTION PRICE" shall mean the consideration payable to
the Company by the Optionee upon exercise of the Option pursuant to Section 5(c)
of the Plan.
2. GRANT OF OPTION. Effective upon the date hereof, and subject to the
terms and conditions set forth herein, the Company hereby grants to the Optionee
the Option to purchase from the Company, at an exercise price equal to the
closing price for the Common Stock as last reported on the Composite
Transactions Tape of the New York Stock Exchange immediately preceding the date
of issuance of this Option Agreement, which is $_________ (or, in the case of an
individual owning, directly or by attribution as provided in Section 424(d) of
the Code, on the date of grant, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary,
at an exercise price equal to 110% of the closing price for the Common Stock as
last reported on the Composite Transactions Tape of the New York Stock Exchange
immediately preceding the date of issuance of this Option Agreement, which is
$__________), up to but not exceeding in the aggregate _______________ shares
of Common Stock.
3. EXERCISE OF OPTION. The Option granted in paragraph 2 above may be
exercised as follows:
(1) The Option shall be exercisable during the Option Period in
three equal annual installments, with one-third of the total number of shares
covered by the Option becoming exercisable one year from the date hereof,
another one-third of the total number of shares covered by the Option becoming
exercisable two years from the date hereof, and the final one-third of the total
number of shares covered by the Option becoming exercisable three years from the
date hereof; provided however, that in the first calendar year of the Option
Period, the Option shall become exercisable only to the extent of that number of
shares of Common Stock having an aggregate fair market value of $100,000 based
on the per share value of the Common Stock at the time of the effectiveness of
the grant of the Option (this per share value being equal to the price at which
the Common Stock is offered to the public in the Company's initial public
offering). In each subsequent calendar year of the Option Period, the Option
shall become exercisable to the extent of an additional number of shares of
Common Stock having an aggregate fair market value of $100,000 determined
3
<PAGE>
as provided in the preceding sentence. The Option shall terminate on the
expiration of the Option Period, if not earlier terminated; provided that, in
the event of the Optionee's Retirement, the Committee in its sole and absolute
discretion may accelerate the Exercise Date, which acceleration may, in the sole
discretion of the Committee, be subject to further terms and conditions mandated
by the Committee;
(2) No less than 100 shares of Common Stock may be purchased on any
Exercise Date unless the number of shares purchased at such time is the total
number of shares in respect of which the Option is then exercisable.
(3) If at any time and for any reason the Option covers a fraction
of a share, then, upon exercise of the Option, the Optionee shall receive the
Fair Market Value of such fractional share in cash.
(4) The Option shall be exercised by the Optionee in accordance with
the terms and conditions of Section 5(c) of the Plan.
(5) Within 15 days after the Exercise Date, subject to the receipt
of payment of the Total Option Price and of any payment in cash of federal,
state or local income tax withholding or other employment tax that may be due
upon the issuance of the Option Shares as determined and computed by the Company
pursuant to paragraph 6 below, the Company shall issue to the Optionee the
number of shares with respect to which such Option shall be so exercised and
shall deliver to the Optionee a certificate or certificates therefor.
(6) The Option is not transferable by the Optionee otherwise than by
will or the laws of descent and distribution. No assignment or transfer of this
Option, or of the rights represented thereby, whether voluntary or involuntary,
by operation of law or otherwise, except by will or the laws of descent and
distribution, shall vest in the assignee or transferee any interest or right
herein whatsoever; but immediately upon any attempt to assign or transfer this
Option, except as expressly permitted herein, the same shall terminate and be of
no force or effect.
(7) The Optionee agrees to maintain the status of the entire Option
as an "incentive stock option" as defined under Section 422 of the Code.
4. TERMINATION. The Option granted hereby shall terminate and be of
no force or effect upon and following the occurrence of any of the following
events:
(1) The expiration of the Option Period.
(2) The Termination of the Optionee's employment for any reason
other than the Optionee's death, Disability or Involuntary Termination Without
Cause.
(3) The expiration of three months after the date of the Optionee's
Involuntary Termination Without Cause. During such three-month period, the
Optionee shall have the right to exercise the Option hereby granted in
accordance with the terms of this Option Agreement, but only to the extent the
Option was exercisable on the date of the Termination of the Optionee's
employment.
4
<PAGE>
(4) The expiration of twelve months after Termination of the
Optionee's employment with the Company and any Subsidiary as a result of the
Optionee's Disability. During such twelve-month period, the Optionee shall have
the right to exercise the Option hereby granted in accordance with the terms of
this Option Agreement, but only to the extent the Option was exercisable on the
date of the Termination of the Optionee's employment.
(5) In the event of the death of the Optionee while in the employ of
the Company or any Subsidiary or, in the event of the death of the Optionee
after Termination described in subparagraph (c) or (d), above, but within the
three-month or twelve-month period described in subparagraph (c) or (d), above,
upon the expiration of twelve months following the Optionee's death. During such
extended period, the Option may be exercised by the person or persons to whom
the deceased Optionee's rights under the Option Agreement shall pass by will or
by the laws of descent and distribution, but only to the extent the Option was
exercisable on the date of the Termination of the Optionee's employment.
(6) To the extent set forth in paragraph 7 below, upon the
dissolution, liquidation, consolidation or merger of the Company, and, to the
extent set forth in subparagraph 3(f), above, upon an attempted assignment or
transfer of the Option otherwise than as expressly permitted herein.
Any determination made by the Committee with respect to any matter
referred to in this paragraph 4 shall be final and conclusive on all persons
affected thereby.
5. RIGHTS AS STOCKHOLDER. An Optionee shall have no rights as a
stockholder of the Company with respect to any shares underlying the Option
until the day of the issuance of a stock certificate to him or her for those
shares upon payment of the exercise price in accordance with the terms and
provisions hereof. Subject to paragraph 7 below, no adjustments shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued.
6. PAYMENT OF WITHHOLDING TAXES. Upon the Optionee's exercise of his or
her Option with respect to any of the Option Shares in accordance with the
provisions of paragraph 3 above, the Optionee shall pay to the Company upon
exercise of the Option the amount of any federal, state or local income tax
withholding or other employment tax that may be due upon such exercise. The
determination of the amount of any such federal, state or local income tax
withholding or other employment tax due in such event shall be made by the
Company and shall be binding upon the Optionee.
7. RECAPITALIZATION; REORGANIZATION. The shares underlying this Option are
shares of Common Stock as constituted on the date of this Agreement, but if,
during the Option Period and prior to the delivery by the Company of all of the
shares of Common Stock with respect to which this Option is granted, the Company
shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend or some other increase or decrease
in the number of shares of Common Stock outstanding, without receiving
compensation therefor in money, services or property, then, (a) in the event of
any increase in the number of such shares outstanding, the number of shares of
Common Stock then remaining subject to this Option shall be proportionately
increased (except that any fraction of a share resulting from any such
adjustment
5
<PAGE>
shall be excluded from the operation of this Option Agreement), and the exercise
price per share shall be proportionately reduced, and, (b) in the event of a
reduction in the number of such shares outstanding, the number of shares of
Common Stock then remaining subject to this Option shall be proportionately
reduced (except that any fractional share resulting from any such adjustment
shall be excluded from the operation of this Option Agreement), and the exercise
price per share shall be proportionately increased.
In the event of a merger of one or more corporations into the Company with
respect to which the Company shall be the surviving or resulting corporation,
the Optionee shall, at no additional cost, be entitled upon any exercise of this
Option to receive (subject to any required action by shareholders), in lieu of
the number of shares as to which this Option shall then be so exercised, the
number and class of shares of stock or other securities to which the Optionee
would have been entitled pursuant to the terms of the agreement of merger if,
immediately prior to such merger, the Optionee had been the holder of record of
a number of shares of Common Stock of the Company equal to the number of shares
as to which such Option shall be so exercised; provided, however, that, anything
herein contained to the contrary notwithstanding, upon the occurrence of any
event described in Section 5(g) of the Plan, this Option shall be subject to
acceleration as provided in such Section 5(g).
In the event of a change in the Common Stock as presently constituted,
which change is limited to a change of all of the authorized shares with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of the Plan.
The existence of this Option shall not affect in any way the right or
power of the Company or its shareholders to make or authorize any or all
adjustments, dividends, stock dividends, recapitalization, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
other stocks with preference ahead of or convertible into, or otherwise
affecting, the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
8. NO REGISTRATION RIGHTS. Anything in this Option Agreement to the
contrary notwithstanding, if, at any time specified herein for the issuance of
Option Shares, any law, regulation or requirements of any governmental authority
having jurisdiction in the premises shall require either the Company or the
Optionee, in the opinion of the Company's counsel, to take any action in
connection with the shares then to be issued, the issue of such shares shall be
deferred until such action shall have been taken. Nothing in this Option
Agreement shall be construed to obligate the Company at any time to file or
maintain the effectiveness of a registration statement under the Act, or under
the securities laws of any state or other jurisdiction, or to take or cause to
be taken any action which may be necessary in order to provide an exemption from
the registration requirements of the Act under Rule 144 or any other exemption
with respect to the Option Shares or otherwise for resale or other transfer by
the Optionee (or by the executor or administrator of such Optionee's estate or a
person who acquired the Option or any Option Shares or other rights by bequest
or inheritance or by reason of the death of the Optionee) as a result of the
exercise of an Option granted pursuant to this Option Agreement.
6
<PAGE>
9. RESOLUTION OF DISPUTES. Any dispute or disagreement that arises under,
or as a result of, or pursuant to, this Option Agreement shall be determined by
the Committee in its absolute and uncontrolled discretion, and any such
determination or other determination by the Committee under or pursuant to this
Option Agreement, and any interpretation by the Committee of the terms of this
Option Agreement, shall be final, binding and conclusive on all parties affected
thereby.
10. COMPLIANCE WITH THE ACT. Notwithstanding any provision herein to the
contrary or in the Plan, the Company shall be under no obligation to issue any
shares of Common Stock to the Optionee upon exercise of the Option granted
hereby unless and until the Company has determined that such issuance is either
exempt from registration, or is registered, under the Act and is either exempt
from registration and qualification, or is registered or qualified, as
applicable, under all applicable state securities or "blue sky" laws.
11. MISCELLANEOUS.
(1) BINDING ON SUCCESSORS AND REPRESENTATIVES. This Option Agreement
shall be binding not only upon the parties, but also upon their heirs,
executors, administrators, personal representatives, successors and assigns
(including any transferee of a party to this Agreement); and the parties agree,
for themselves and their successors, assigns and representatives, to execute any
instrument which may be necessary legally to effect the terms and conditions of
this Option Agreement.
(2) ENTIRE AGREEMENT. This Option Agreement, together with the Plan,
constitutes the entire agreement of the parties with respect to the Option and
supersedes any previous agreement, whether written or oral, with respect
thereto. This Option Agreement has been entered into in compliance with the
terms of the Plan; wherever a conflict may arise between the terms of this
Option Agreement and the terms of the Plan, the terms of the Plan shall control.
(3) AMENDMENT. Neither this Option Agreement nor any of the terms
and conditions herein set forth may be altered or amended orally, and any such
alteration or amendment shall be effective only when reduced to writing and
signed by each of the parties or their respective successors and assigns.
(4) CONSTRUCTION OF TERMS. Any reference herein to the singular or
plural shall be construed as plural or singular whenever the context requires.
(5) NOTICES. All notices, requests and amendments under this Option
Agreement shall be in writing, and notices shall be deemed to have been given
when personally delivered or sent prepaid registered mail:
(1) if to the Company, at the following address:
Sonic Automotive, Inc.
5401 East Independence Boulevard
P.O. Box 18747
Charlotte, North Carolina 28218
7
<PAGE>
Attention: Chief Financial Officer
or at such other address as the Company shall designate by notice.
(2) if to the Optionee, to the Optionee's address appearing
in the Company's employment records, or at such other
address as the Optionee shall designate by notice.
(6) GOVERNING LAW. This Option Agreement shall be governed by, and
construed in accordance with, the laws of the State of North Carolina (excluding
the principles of conflict of laws thereof).
(7) SEVERABILITY. The invalidity or unenforceability of any
particular provision of this Option Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provisions were omitted.
(8) AN INCENTIVE STOCK OPTION. The Option granted hereunder is
intended to be an "Incentive Stock Option" under Section 422 of the Code.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the day and year first written above.
SONIC AUTOMOTIVE, INC.
By:___________________________________
OPTIONEE: [NAME]
_______________________________ (SEAL)
8
Exhibit 4.3
-----------
NONSTATUTORY STOCK OPTION AGREEMENT AND GRANT
PURSUANT TO
SONIC AUTOMOTIVE, INC. 1997 STOCK OPTION PLAN
This Nonstatutory Stock Option Agreement and Grant is entered into as of
this ___ day of _____________, 199__ between Sonic Automotive, Inc., a Delaware
corporation (the "Company"), and __________________ (the "Optionee").
WHEREAS, the Company and its stockholders have approved the Sonic
Automotive, Inc. 1997 Stock Option Plan (the "Plan") pursuant to which the
Company may, from time to time, make awards of Options (as defined below) and
enter into Nonstatutory Stock Option Agreements with, eligible employees of the
Company or of any Subsidiary (as defined below);
WHEREAS, pursuant to the Plan, the Company has determined to grant to the
Optionee an Option to purchase Common Stock (as defined below) of the Company,
which Option shall be subject to the terms and conditions of this Nonstatutory
Stock Option Agreement and Grant;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereby agree as follows:
1. Definitions.
For purposes of this Nonstatutory Stock Option Agreement and Grant, the
following terms shall have the meanings indicated:
(1) "Act" shall mean the Securities Act of 1933, as amended.
(2) "Board" shall mean the Board of Directors of the Company.
(3) "Cause" shall mean any act, action or series of acts or actions or any
omission, omissions, or series of omissions which result in, or which have the
effect of resulting in, (i) the commission of a crime by the Optionee involving
moral turpitude, which crime has a material adverse impact on the Company or any
Subsidiary, (ii) gross negligence or willful misconduct which is continuous and
results in material damage to the Company or any Subsidiary, or (iii) the
continuous, willful failure of the person in question to follow the reasonable
directives of the Board of Directors.
(4) "Code" shall mean the Internal Revenue Code of 1986, as amended, any
successor revenue laws of the United States and the rules and regulations
promulgated thereunder.
(5) "Committee" shall mean the committee of members of the Board that is
designated by the Board to administer the Plan. In the event that no such
Committee exists or is appointed, "Committee" shall mean the Board.
<PAGE>
(6) "Common Stock" shall mean the Class A Common Stock, par value $.01 per
share, of the Company.
(7) "Disability" shall mean the inability or failure of a person to perform
those duties for the Company or any Subsidiary traditionally assigned to and
performed by such person because of the person's then-existing physical or
mental condition, impairment or incapacity. The fact of disability shall be
determined by the Committee, which may consider such evidence as it considers
desirable under the circumstances, the determination of which shall be final and
binding upon all parties.
(8) "Exercise Date" shall mean the business day, during the Option Period, upon
which the Optionee delivers to the Company the written notice and consideration
contemplated by Section 5(c) of the Plan.
(9) "Fair Market Value" shall mean, with respect to the Common Stock on any day,
its market value determined as provided in Section 5(c) of the Plan.
(10) "Immediate Family" shall mean the Optionee's spouse, children, present or
former stepchildren, grandchildren, present or former stepgrandchildren,
parents, present or former stepparents, grandparents, siblings (including half
brothers and sisters), in-laws and individuals whose relationship with the
Optionee arises due to legal adoption.
(11) "Involuntary Termination Without Cause" shall mean either (i) the dismissal
of, or the request for the resignation of, a person, by court order, order of
any court-appointed liquidator or trustee of the Company, or the order or
request of any creditors' committee of the Company constituted under the federal
bankruptcy laws, provided that such order or request contains no specific
reference to Cause; or (ii) the dismissal of, or the request for the resignation
of, a person, by a duly constituted corporate officer of the Company or any
Subsidiary, or by the Board, for any reason other than for Cause.
(12) "Option" shall mean the option to purchase shares of Common Stock granted
to the Optionee pursuant to this Option Agreement.
(13) "Option Agreement" shall mean this Nonstatutory Stock Option Agreement and
Grant between the Company and the Optionee by which the Option is granted to the
Optionee pursuant to the Plan.
(14) "Option Period" shall mean the period commencing one year from the date of
this Option Agreement and ending at the close of business ten years from the
date of this Option Agreement or such earlier date as when this Option Agreement
may be terminated by its terms.
(15) "Option Shares" shall mean the shares of Common Stock purchased upon
exercise of the Option.
(16) "Optionee" shall mean the individual executing this Option Agreement and,
as applicable, the estate, personal representative, beneficiary or Permitted
Transferee to whom this Option may be transferred pursuant to this Option
Agreement by will, by the laws of descent and
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distribution, pursuant to a domestic relations order as defined in the Code, or
as otherwise permitted by paragraph 3(f) below.
(17) "Permitted Transferee" shall mean a member of the Optionee's Immediate
Family, a trust established solely for the benefit of one or more members of the
Optionee's Immediate Family or a partnership or limited liability company of
which the only individuals or entities who are or could be partners or
shareholders are members of the Optionee's Immediate Family and/or a trust
established solely for the benefit of one or more members of the Optionee's
Immediate Family.
(18) "Plan" shall mean the Sonic Automotive, Inc. 1997 Stock Option Plan and any
amendments thereto.
(19) "Retirement" shall mean, with respect to the Optionee, retirement from the
Company and any Subsidiary in accordance with the Company's and/or Subsidiary's
retirement policy as may be in effect from time to time.
(20) "Subsidiary" shall mean any subsidiary corporation of Sonic Automotive,
Inc. as defined in Sections 424(f) and 424(g) of the Code.
(21) "Termination" shall mean the cessation, for any reason, of the
employer-employee relationship between the Company and any Subsidiary and the
Optionee.
(22) "Total Option Price" shall mean the consideration payable to the Company by
the Optionee upon exercise of the Option pursuant to Section 5(c) of the Plan.
2. Grant of Option. Effective upon the date hereof, and subject to the terms and
conditions set forth herein, the Company hereby grants to the Optionee the
Option to purchase from the Company, at an exercise price of $____ per share, up
to but not exceeding in the aggregate _________ shares of Common Stock.
3. Exercise of Option. The Option granted in paragraph 2 above may be exercised
as follows:
(1) The Option shall be exercisable during the Option Period in three equal
annual installments, with one-third of the total number of shares covered by the
Option becoming exercisable one year from the date hereof, another one-third of
the total number of shares covered by the Option becoming exercisable two years
from the date hereof, and the final one-third of the total number of shares
covered by the Option becoming exercisable three years from the date hereof. The
Option shall terminate on the expiration of the Option Period, if not earlier
terminated; provided that, in the event of the Optionee's Retirement, the
Committee in its sole and absolute discretion may accelerate the Exercise Date,
which acceleration may, in the sole discretion of the Committee, be subject to
further terms and conditions mandated by the Committee.
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(2) No less than 100 shares of Common Stock may be purchased on any Exercise
Date unless the number of shares purchased at such time is the total number of
shares in respect of which the Option is then exercisable.
(3) If at any time and for any reason the Option covers a fraction of a share,
then, upon exercise of the Option, the Optionee shall receive the Fair Market
Value of such fractional share in cash.
(4) The Option shall be exercised by the Optionee in accordance with the terms
and conditions of Section 5(c) of the Plan.
(5) Within 15 days after the Exercise Date, subject to the receipt of payment of
the Total Option Price and of any payment in cash of federal, state or local
income tax withholding or other employment tax that may be due upon the issuance
of the Option Shares as determined and computed by the Company pursuant to
paragraph 6 below, the Company shall issue to the Optionee the number of shares
with respect to which such Option shall be so exercised and shall deliver to the
Optionee a certificate or certificates therefor.
(6) The Option is not transferable by the Optionee otherwise than (i) by will or
the laws of descent and distribution; (ii) pursuant to a domestic relations
order as defined in the Code; or (iii) by transfer without consideration to a
Permitted Transferee, with the consent and subject to the rules of the Committee
and provided that the Committee is notified in advance in writing of the terms
and conditions of any proposed transfer to a Permitted Transferee and the
Committee determines that the proposed transfer complies with the requirements
of the Plan and this Nonstatutory Stock Option Agreement. No assignment or
transfer of this Option, or of the rights represented thereby, whether voluntary
or involuntary, by operation of law or otherwise, except as described above,
shall vest in the assignee or transferee any interest or right herein
whatsoever; but immediately upon any attempt to assign or transfer this Option,
except as expressly permitted herein, the same shall terminate and be of no
force or effect.
4. Termination. The Option granted hereby shall terminate and be of no
force or effect upon and following the occurrence of any of the following
events:
(1) The expiration of the Option Period.
(2) The Termination of the Optionee's employment for any reason other than the
Optionee's death, Disability or Involuntary Termination Without Cause.
(3) The expiration of three months after the date of the Optionee's Involuntary
Termination Without Cause. During such three-month period, the Optionee shall
have the right to exercise the Option hereby granted in accordance with the
terms of this Option Agreement, but only to the extent the Option was
exercisable on the date of the Termination of the Optionee's employment.
(4) The expiration of twelve months after Termination of the Optionee's
employment with the Company and any Subsidiary as a result of the Optionee's
Disability. During
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such twelve-month period, the Optionee shall have the right to exercise the
Option hereby granted in accordance with the terms of this Option Agreement,
but only to the extent the Option was exercisable on the date of the Termination
of the Optionee's employment.
(5) In the event of the death of the Optionee while in the employ of the Company
or, in the event of the death of the Optionee after Termination described in
subparagraph (c) or (d), above, but within the three-month or twelve-month
period described in subparagraph (c) or (d), above, upon the expiration of
twelve months following the Optionee's death. During such extended period, the
Option may be exercised by the person or persons to whom the deceased Optionee's
rights under the Option Agreement shall pass by will or by the laws of descent
and distribution, but only to the extent the Option was exercisable on the date
of the Termination of the Optionee's employment.
(6) To the extent set forth in paragraph 7 below, upon the dissolution,
liquidation, consolidation or merger of the Company, and, to the extent set
forth in subparagraph 3(f) above, upon an attempted assignment or transfer of
the Option otherwise than as expressly permitted herein.
Any determination made by the Committee with respect to any matter
referred to in this paragraph 4 shall be final and conclusive on all persons
affected thereby.
5. Rights as Stockholder. An Optionee shall have no rights as a stockholder of
the Company with respect to any shares underlying the Option until the day of
the issuance of a stock certificate to him or her for those shares upon payment
of the exercise price in accordance with the terms and provisions hereof.
Subject to paragraph 7 below, no adjustments shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued.
6. Payment of Withholding Taxes. Upon the Optionee's exercise of his or her
Option with respect to any of the Option Shares in accordance with the
provisions of paragraph 3 above, the Optionee shall pay to the Company upon
exercise of the Option the amount of any federal, state or local income tax
withholding or other employment tax that may be due upon such exercise. The
determination of the amount of any such federal, state or local income tax
withholding or other employment tax due in such event shall be made by the
Company and shall be binding upon the Optionee.
7. Recapitalization; Reorganization. The shares underlying this Option are
shares of Common Stock as constituted on the date of this Agreement, but if,
during the Option Period and prior to the delivery by the Company of all of the
shares of Common Stock with respect to which this Option is granted, the Company
shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend or some other increase or decrease
in the number of shares of Common Stock outstanding, without receiving
compensation therefor in money, services or property, then, (a) in the event of
any increase in the number of such shares outstanding, the number of shares of
Common Stock then remaining subject to this Option shall be proportionately
increased (except that any fraction of a share resulting from any such
adjustment shall be excluded from the operation of this Option Agreement), and
the exercise price per share shall be proportionately reduced, and, (b) in the
event of a reduction in the number of such shares
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outstanding, the number of shares of Common Stock then remaining subject to
this Option shall be proportionately reduced (except that any fractional share
resulting from any such adjustment shall be excluded from the operation of this
Option Agreement), and the exercise price per share shall be proportionately
increased.
In the event of a merger of one or more corporations into the Company with
respect to which the Company shall be the surviving or resulting corporation,
the Optionee shall, at no additional cost, be entitled upon any exercise of this
Option to receive (subject to any required action by shareholders), in lieu of
the number of shares as to which this Option shall then be so exercised, the
number and class of shares of stock or other securities to which the Optionee
would have been entitled pursuant to the terms of the agreement of merger if,
immediately prior to such merger, the Optionee had been the holder of record of
a number of shares of Common Stock of the Company equal to the number of shares
as to which such Option shall be so exercised; provided, however, that, anything
herein contained to the contrary notwithstanding, upon the occurrence of any
event described in Section 5(g) of the Plan, this Option shall be subject to
acceleration as provided in such Section 5(g).
In the event of a change in the Common Stock as presently constituted,
which change is limited to a change of all of the authorized shares with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of the Plan.
The existence of this Option shall not affect in any way the right or
power of the Company or its shareholders to make or authorize any or all
adjustments, dividends, stock dividends, recapitalization, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
other stocks with preference ahead of or convertible into, or otherwise
affecting, the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
8. No Registration Rights. Anything in this Option Agreement to the contrary
notwithstanding, if, at any time specified herein for the issuance of Option
Shares, any law, regulation or requirements of any governmental authority having
jurisdiction in the premises shall require either the Company or the Optionee,
in the opinion of the Company's counsel, to take any action in connection with
the shares then to be issued, the issue of such shares shall be deferred until
such action shall have been taken. Nothing in this Option Agreement shall be
construed to obligate the Company at any time to file or maintain the
effectiveness of a registration statement under the Act, or under the securities
laws of any state or other jurisdiction, or to take or cause to be taken any
action which may be necessary in order to provide an exemption from the
registration requirements of the Act under Rule 144 or any other exemption with
respect to the Option Shares or otherwise for resale or other transfer by the
Optionee (or by the executor or administrator of such Optionee's estate or a
person who acquired the Option or any Option Shares or other rights by bequest
or inheritance or by reason of the death of the Optionee) as a result of the
exercise of an Option granted pursuant to this Option Agreement.
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9. Resolution of Disputes. Any dispute or disagreement that arises under, or as
a result of, or pursuant to, this Option Agreement shall be determined by the
Committee in its absolute and uncontrolled discretion, and any such
determination or other determination by the Committee under or pursuant to this
Option Agreement, and any interpretation by the Committee of the terms of this
Option Agreement, shall be final, binding and conclusive on all parties affected
thereby.
10. Compliance with the Act. Notwithstanding any provision herein to the
contrary or in the Plan, the Company shall be under no obligation to issue any
shares of Common Stock to the Optionee upon exercise of the Option granted
hereby unless and until the Company has determined that such issuance is either
exempt from registration, or is registered, under the Act and is either exempt
from registration and qualification, or is registered or qualified, as
applicable, under all applicable state securities or "blue sky" laws.
11. Miscellaneous.
(1) Binding on Successors and Representatives. This Option Agreement shall be
binding not only upon the parties, but also upon their heirs, executors,
administrators, personal representatives, successors and assigns (including any
transferee of a party to this Agreement); and the parties agree, for themselves
and their successors, assigns and representatives, to execute any instrument
which may be necessary legally to effect the terms and conditions of this Option
Agreement.
(2) Entire Agreement. This Option Agreement, together with the Plan, constitutes
the entire agreement of the parties with respect to the Option and supersedes
any previous agreement, whether written or oral, with respect thereto. This
Option Agreement has been entered into in compliance with the terms of the Plan;
wherever a conflict may arise between the terms of this Option Agreement and the
terms of the Plan, the terms of the Plan shall control.
(3) Amendment. Neither this Option Agreement nor any of the terms and conditions
herein set forth may be altered or amended orally, and any such alteration or
amendment shall be effective only when reduced to writing and signed by each of
the parties or their respective successors and assigns.
(4) Construction of Terms. Any reference herein to the singular or plural shall
be construed as plural or singular whenever the context requires.
(5) Notices. All notices, requests and amendments under this Option Agreement
shall be in writing, and notices shall be deemed to have been given when
personally delivered or sent prepaid registered mail:
(1) if to the Company, at the following address:
Sonic Automotive, Inc.
5401 East Independence Boulevard
P.O. Box 18747
Charlotte, North Carolina 28218
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Attention: Chief Financial Officer
or at such other address as the Company shall designate by notice.
(2) if to the Optionee, to the Optionee's address appearing in
the Company's employment records, or at such other address as the
Optionee shall designate by notice.
(6) Governing Law. This Option Agreement shall be governed by, and construed in
accordance with, the laws of the State of North Carolina (excluding the
principles of conflict of laws thereof).
(7) Severability. The invalidity or unenforceability of any particular provision
of this Option Agreement shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provisions were omitted.
(8) Not an Incentive Stock Option. The Option granted hereunder is not intended
to be an "Incentive Stock Option" under Section 422 of the Code.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the day and year first written above.
SONIC AUTOMOTIVE, INC.
By: ________________________________________
OPTIONEE: [NAME]
______________________________________(SEAL)
8
Exhibit 5.1
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October 8, 1998
Board of Directors
Sonic Automotive, Inc.
5401 East Independence Boulevard
Charlotte, North Carolina 28212
Dear Sirs:
We are acting as counsel to Sonic Automotive, Inc., a Delaware corporation
(the "COMPANY"), in connection with the preparation, execution, filing and
processing with the Securities and Exchange Commission (the "COMMISSION"),
pursuant to the Securities Act of 1933, as amended (the "Act"), of a
Registration Statement on Form S-8 (the "REGISTRATION STATEMENT") relating to
the issuance and sale of up to 1,125,000 shares (the "SHARES") of Class A Common
Stock, par value $.01 per share (the "COMMON STOCK"), reserved for issuance
under the Company's 1997 Stock Option Plan (the "PLAN"). This opinion is
furnished to you for filing with the Commission pursuant to Item 601(b)(5) of
Regulation S-K promulgated under the Act.
In our representation of the Company, we have examined the Registration
Statement, the Plan, the Company's Certificate of Incorporation and Bylaws, as
amended to date, all actions of the Company's Board of Directors recorded in the
Company's minute book, the form of certificate evidencing the Shares and such
other documents as we have considered necessary for purposes of rendering the
opinions expressed below.
Based upon the foregoing, we are of the following opinion:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware.
2. The Shares proposed to be offered and sold by the Company under the
Plan have been duly authorized for issuance and, subject to the
Registration Statement becoming effective under the Act and to
compliance with any applicable Blue Sky laws and to the issuance of
such Shares in accordance with the provisions of the Plan, the
Shares will be, when so issued, legally issued, fully paid and
non-assessable shares of Common Stock of the Company.
The opinions expressed herein are limited to the laws of the State of
North Carolina, the General Corporation Law of the State of Delaware and the
Act.
We hereby consent to the use of this opinion letter as Exhibit 5.1 to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
PARKER, POE, ADAMS & BERNSTEIN L.L.P.
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Sonic Automotive, Inc. on Form S-8 of our report dated March 2, 1998 (March 24,
1998 as to Notes 2 and 8), appearing in the Annual Report on Form 10-K of Sonic
Automotive, Inc. for the year ended December 31, 1997, and our reports dated May
11, 1998, May 22, 1998, and June 4, 1998, for Economy Cars, Inc., Hatfield
Automotive Group, and Casa Ford of Houston, Inc., respectively, appearing in the
Form 8-K of Sonic Automotive, Inc. dated July 9, 1998.
/s/ DELOITTE & TOUCHE LLP
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DELOITTE & TOUCHE LLP
Charlotte, North Carolina
October 8, 1998
