As Filed with the Securities and Exchange Commission on December 30, 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. NONQUALIFIED EMPLOYEE STOCK PURCHASE 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
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of
Securities Amount Proposed Maximum Proposed Maximum Amount
to be to be Offering Price Aggregate Of
Registered Registered Per Share(1) Offering Price Registration Fee
<S> <C> <C> <C> <C> <C>
Class A Common Stock, par
value $0.01 per share 150,000 $35.0625 $5,259,375 $1,555
</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 December 23,
1998 which prices were $35.375 and $34.750, 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, as amended (the "Securities
Act").
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Securities and Exchange Commission allows us to "incorporated by
reference" the information we file with them, which means that we can disclose
important information to you by referring to those documents. The information
incorporated by reference is considered to be part of this Registration
Statement, and information that we file later with the Securities and Exchange
Commission will automatically update and supersede this information. Sonic
Automotive, Inc. (the "Company," and sometimes referred to herein as the
ARegistrant") incorporates by reference the documents listed below and any
future filings made with the Securities and Exchange Commission under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"):
(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 Quarterly Report on Form 10-Q for its fiscal
quarter ended September 30, 1998;
(vi) the Company's Current Reports on Form 8-K, filed the following
dates: March 30, 1998, July 9, 1998, and July 24, 1998;
(vii) the Company's Amended Current Report on Form 8-K/A, filed on
July 24, 1998, amending its Current Report on Form 8-K filed
on March 30, 1998;
(viii) the Company's Amended Current Report on Form 8-K/A, filed on
August 20, 1998, amending its Current Report on Form 8-K filed
on July 24, 1998;
(ix) the description of the Company's 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"); and
(x) the Company's Definitive Proxy Materials dated November 2,
1998.
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.
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 attorneys' fees), judgments, fines and
amounts paid in settlements actually and reasonably incurred by them in
connection with any action, suit or proceeding brought by a third party if such
directors or officers acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reason to believe
their conduct was unlawful. In a derivative action, indemnification may be made
only for expenses actually and reasonably incurred by directors and officers in
connection with the defense or settlement of an action or suit and only with
respect to a matter as to which they shall have acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation, except that no indemnification shall be made if such person
shall have been adjudged liable to the corporation, unless and only to the
extent that the court in which the action or suit was brought shall determine
upon application that the defendant officers or directors are reasonably
entitled to indemnity for such expenses despite such adjudication of liability.
Section 102(b)(7) provides that a corporation may eliminate or limit
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 for the benefit of its officers and directors.
Item 8. Exhibits
--------
Exhibit
Number Description
------------------- -----------
4.1 Sonic Automotive, Inc. Nonqualified Employee Stock
Purchase 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 this
Registration Statement;
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or 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 high or low end of the estimated maximum
offering range may be reflected in the form
of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume
and price represent no more that 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
Securities and Exchange 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 of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof; 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, 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 December 30,
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, 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, 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, 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>
/s/ O. BRUTON SMITH
___________________________________ Chief Executive Officer (principle executive officer) and
O. Bruton Smith Chairman December 30, 1998
/s/ B. SCOTT SMITH
___________________________________ President, Chief Operating Officer and Director December 30, 1998
B. Scott Smith
/s/ THEODORE M. WRIGHT
___________________________________ Chief Financial Officer, Vice President-Finance,
Theodore M. Wright Treasurer, Secretary (Principle Financial and Accounting
Officer) and Director December 30, 1998
/s/ DENNIS D. HIGGINBOTHAM
___________________________________ President -- Retail Operations and Director December 30, 1998
Dennis D. Higginbotham
/s/ WILLIAM R. BROOKS
___________________________________ Director December 30, 1998
William R. Brooks
/s/ WILLIAM P. BENTON
___________________________________ Director December 30, 1998
William P. Benton
/s/ WILLIAM I. BELK
___________________________________ Director December 30, 1998
William I. Belk
</TABLE>
5
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------------------- -----------
4.1 Sonic Automotive, Inc. Nonqualified Employee Stock Purchase
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
SONIC AUTOMOTIVE, INC.
NONQUALIFIED EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
SONIC AUTOMOTIVE, INC.
NONQUALIFIED EMPLOYEE STOCK PURCHASE PLAN
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE I PURPOSE; EFFECTIVE DATE; DEFINITIONS; CONSTRUCTION....................................................1
1.1 Purpose of Plan; Effective Date.................................................................1
1.2 Definitions.....................................................................................1
(a) "Account"..............................................................................1
(b) "Base Pay".............................................................................1
(c) "Board of Directors"...................................................................1
(d) "Business Day".........................................................................1
(e) "Cause"................................................................................1
(f) "Code".................................................................................1
(g) "Committee"............................................................................1
(h) "Company"..............................................................................2
(i) "Company Stock"........................................................................2
(j) "Contributions"........................................................................2
(k) "Employee".............................................................................2
(l) "Employer".............................................................................2
(m) "Exercise Date"........................................................................2
(n) "Grant Date"...........................................................................2
(o) "Option"...............................................................................2
(p) "Participant"..........................................................................2
(q) "Plan".................................................................................2
1.3 Construction....................................................................................2
ARTICLE II ADMINISTRATION........................................................................................3
2.1 Appointment and Procedures of Committee.........................................................3
2.2 Authority of Committee..........................................................................3
ARTICLE III PARTICIPATION........................................................................................3
3.1 Eligibility to Participate......................................................................3
3.2 Restrictions on Participation...................................................................3
3.3 Leave of Absence................................................................................4
ARTICLE IV CONTRIBUTIONS.........................................................................................4
4.1 Payroll Deductions..............................................................................4
4.2 Direct Payment..................................................................................4
4.3 Leave of Absence................................................................................4
4.4 Contributions to Accounts.......................................................................5
4.5 Withdrawal of Contributions from Plan...........................................................5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
4.6 Termination of Employment.......................................................................5
ARTICLE V OPTIONS................................................................................................5
5.1 Company Stock Available for Options.............................................................5
5.2 Granting of Options.............................................................................5
5.3 Option Price....................................................................................6
5.4 Option Period...................................................................................6
5.5 Exercise of Options.............................................................................6
(a) Automatic Exercise.....................................................................6
(b) Nontransferability of Options..........................................................6
(c) Effect of Termination of Employment....................................................7
(i) Termination of Employment Related to Cause....................................7
(ii) Termination of Employment Due to Death........................................7
(iii) Other Termination of Employment...............................................7
(d) Leave of Absence.......................................................................7
(e) Delivery of Stock......................................................................8
(f) Acceleration of Exercisability of Options Upon Occurrence
of Certain Events .....................................................................8
(g) Registration, Listing and Qualification of Shares of Stock.............................8
ARTICLE VI MISCELLANEOUS.........................................................................................9
6.1 Adjustments Upon Changes in Capitalization......................................................9
6.2 Amendment, Suspension and Termination...........................................................9
6.3 Not Intended to Comply With Code Section 423....................................................9
6.4 Use of Funds....................................................................................9
6.5 Withholding.....................................................................................9
6.6 Effect of Plan..................................................................................9
6.7 No Employment Rights............................................................................9
6.8 Governing Law..................................................................................10
6.9 Other Actions..................................................................................10
</TABLE>
<PAGE>
SONIC AUTOMOTIVE, INC.
NONQUALIFIED EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE; EFFECTIVE DATE; DEFINITIONS; CONSTRUCTION
1.1 Purpose of Plan; Effective Date. The purpose of the Plan, which
shall be known as the Sonic Automotive, Inc. Nonqualified Employee Stock
Purchase Plan (the "Plan"), is to provide employees of Sonic Automotive, Inc.
(the "Company") and its participating subsidiaries an opportunity to acquire a
proprietary interest in the Company through the purchase of the Class A Common
Stock, $.01 par value, of the Company. The Plan shall be effective as of January
1, 1999, subject to its approval by the Board of Directors.
1.2 Definitions. Throughout this Plan, the following terms shall have
the meanings indicated:
(a) "Account" shall mean a memorandum account maintained to
record each Participant's Contributions pending purchase of Company Stock.
(b) "Base Pay" shall mean the Participant's regular cash
compensation (excluding overtime pay, bonuses, shift premiums, commissions,
fringe benefits, other special payments and imputed income) determined without
reduction for Contributions made under this Plan or contributions to any Code
Section 401(k) or Section 125 Plan.
(c) "Board of Directors" shall mean the Board of Directors of
the Company.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or holiday.
(e) "Cause" shall mean any act, action or series of acts or
actions or any omission, omissions or series of omissions which, in the opinion
of the Committee, result in, or which have the effect of resulting in, (i) the
commission of a crime by the Participant involving moral turpitude, which crime
has a material adverse impact on the Employer, (ii) gross negligence or willful
misconduct which is continuous and results in material damage to the Employer,
or (iii) the continuous, willful failure of the person in question to follow the
reasonable directives of the Employer.
(f) "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.
(g) "Committee" shall mean the committee of directors of the
Company appointed by the Board of Directors in accordance with Section 2.1 to
administer this Plan, or in
<PAGE>
the event that no such committee exists or is appointed, "Committee" shall mean
the Board of Directors.
(h) "Company" shall mean Sonic Automotive, Inc., a corporation
organized and existing under the laws of the State of Delaware.
(i) "Company Stock" shall mean the Class A Common Stock, $.01
par value, of the Company.
(j) "Contributions" shall mean the after-tax payroll
deductions or other permissible contributions made by Participants to the Plan
pursuant to Article IV.
(k) "Employee" shall mean any person who (i) is employed on a
full-time or part-time basis by a participating Employer, (ii) is regularly
scheduled to work more than twenty hours per week, and (iii) is customarily
employed more than five months in any calendar year. Independent contractors and
outside directors shall not be included in the definition of Employee for
purposes of this Plan.
(l) "Employer" shall mean any of the Company's present or
future subsidiaries or related entities not eligible to participate in the Sonic
Automotive, Inc. Employee Stock Purchase Plan which the Committee may designate
from time to time as participating Employers under this Plan.
(m) "Exercise Date" shall mean the last Business Day of
March, June, September and December on which the principal trading market for
Company Stock is open for trading, plus any other interim dates during the year
which the Committee designates as Exercise Dates.
(n) "Grant Date" shall mean January 1 of each year during the
term of the Plan, plus any other interim dates during the year which the
Committee designates as Grant Dates.
(o) "Option" shall mean an option to purchase shares of
Company Stock granted by the Committee to a Participant pursuant to this Plan.
(p) "Participant" shall mean an Employee participating in
this Plan in accordance with Article III.
(q) "Plan" shall mean this Sonic Automotive, Inc.
Nonqualified Employee Stock Purchase Plan, as amended from time to time.
1.3 Construction. The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, unless the context clearly
indicates to the contrary. The words "hereof," "herein," "hereunder" and other
similar compounds of the word "here" shall mean and refer to the entire Plan and
not to any particular provision or Section.
<PAGE>
ARTICLE II
ADMINISTRATION
2.1 Appointment and Procedures of Committee. The Plan shall be
administered by the Committee as appointed from time to time by the Board of
Directors. The Committee shall consist of not fewer than two members of the
Board of Directors. No member of the Board of Directors who serves on the
Committee shall be eligible to participate in the Plan. 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).
2.2 Authority of Committee. The Committee, subject to the terms of the
Plan, shall have plenary authority in its discretion to interpret and construe
the Plan (including, without limitation, any of its terms which are uncertain,
doubtful or disputed); to decide all questions of Employee eligibility
hereunder; to determine the amount, manner and timing of all Options and
purchases of Company Stock hereunder; to establish, amend and rescind rules and
regulations pertaining to the administration of the Plan; and to make
determinations and interpretations and take such other administrative actions as
it deems necessary or advisable for the administration of this Plan. The express
grant in the Plan of any specific power to the Committee shall not be construed
as limiting any power or authority of the Committee. No member of the Committee
shall be liable for any act, determination or omission with respect to his
service on the Committee, if he acts in good faith and in a manner he reasonably
believes to be in or not opposed to the best interest of the Employer. All
expenses of administering this Plan shall be borne by the Employer.
ARTICLE III
PARTICIPATION
3.1 Eligibility to Participate. Subject to the restrictions of Section
3.2 below, an Employee shall be eligible to participate in the Plan as of the
Grant Date coincident with or next following the first anniversary of his date
of employment with the Employer (provided that the Employee is still employed on
such Grant Date). For purposes of the preceding sentence, with respect to the
acquisition of a controlling interest in or substantially all of the assets of
an entity, years of employment with such entity prior to such acquisition by the
Company or a subsidiary (or other related entity) of the Company will be
recognized.
3.2 Restrictions on Participation. Notwithstanding the foregoing
Section 3.1, (a) no Employee shall be eligible to participate in the Plan if
such Employee owns or holds options to purchase (or upon participation in this
Plan would own or hold options to purchase) stock possessing an aggregate of 5%
or more of the total combined voting power or value of all classes of stock of
the Company or any other Employer (as determined in accordance with the rules of
3
<PAGE>
Section 424(d) of the Code relating to attribution of stock ownership); (b) no
Employee who also is an officer or director of the Company or who is an officer
of an Employer who performs "policy-making functions" of the Company shall be
eligible to participate in the Plan; and (c) no Employee who participates in the
Sonic Automotive, Inc. Employee Stock Purchase Plan shall be eligible to
participate in this Plan.
3.3 Leave of Absence. For purposes of participation in the Plan, a
person on an approved leave of absence shall be deemed to be an Employee for the
first ninety days of such leave of absence and such Employee's employment shall
be deemed to have terminated at the close of business on the ninetieth day of
such leave of absence unless such Employee shall have returned to regular
full-time or part-time employment prior to the close of business on such
ninetieth day. Termination of the Employee's leave of absence, other than
termination of such leave of absence on return to regular full-time or part-time
employment, shall terminate an Employee's employment for all purposes of the
Plan.
ARTICLE IV
CONTRIBUTIONS
4.1 Payroll Deductions. By written election, made and filed with the
Committee pursuant to the Committee's rules and procedures, a Participant may
elect to designate a whole percentage between one percent and ten percent (or
such higher or lower percentage as may be allowed by the Committee's rules and
procedures) of his Base Pay to be deferred by payroll deduction as a
Contribution to the Plan. Payroll deductions shall commence as soon as
administratively practicable following the filing of such written election with
the Committee. The Committee in its discretion may develop additional rules and
procedures regarding payroll deduction elections.
A Participant may change or revoke his payroll deduction amount by
filing, on such forms and in accordance with such rules and procedures as the
Committee in its discretion may prescribe, a revised written election with the
Committee. Such modification or revocation shall take effect as soon as
administratively practicable after the Committee's receipt of such revised
election. Notwithstanding the foregoing, a Participant may change his payroll
deduction election only once each calendar quarter, or as otherwise specifically
allowed by the Committee's rules and procedures. If payroll deductions are
discontinued, payroll deductions may not be resumed by the Participant until the
payroll period which begins on or after the next Exercise Date, or as otherwise
specifically allowed by the Committee's rules and procedures. Under no
circumstances may a Participant's payroll deduction election be made, modified
or revoked retroactively.
4.2 Direct Payment. In accordance with such rules and procedures as the
Committee may prescribe in its discretion and in lieu of payroll deductions
pursuant to Section 4.1, a Participant may elect to make Contributions by direct
cash payment (including by check, subject to the Committee's rules and
procedures) to the Plan rather than by payroll deduction. Such direct payments
must be received by the Plan at least ten Business Days prior to an Exercise
Date in order for such payments to be applied in the exercise of an Option for
the purchase of
4
<PAGE>
Company Stock on such Exercise Date.
4.3 Leave of Absence. If a Participant is on a leave of absence, such
Participant shall have the right to elect to (a) withdraw from the Plan and
receive a distribution of the balance in his Account pursuant to Section 4.5,
(b) discontinue Contributions to the Plan but remain a Participant in the Plan,
or (c) remain a Participant in the Plan during such leave of absence,
authorizing deductions to be made from payments by the Company or Employer to
the Participant during such leave of absence, or making direct cash payments to
the Plan pursuant to Section 4.2.
4.4 Contributions to Accounts. A memorandum Account shall be
established by the Committee for each Participant for the purpose of accounting
for Contributions. Contributions shall be credited to Accounts as soon as
administratively practicable following payroll withholding or receipt of other
permissible direct cash payment. Amounts credited to Accounts will not accrue
interest.
4.5 Withdrawal of Contributions from Plan. Prior to the end of a
calendar quarter, a Participant may elect to withdraw the Contributions credited
to his Account for that quarter by filing written notice thereof with the
Committee on such forms and in accordance with such procedures as the Committee
may prescribe. The Participant's Contributions shall be distributed to him as
soon as administratively practicable after the Committee's receipt of his notice
of withdrawal and, if applicable, no further payroll deductions shall be made
from his Base Pay.
4.6 Termination of Employment. Upon termination of a Participant's
employment for any reason, such Participant may no longer make Contributions to
the Plan or be granted Options under the Plan. A Participant's right, if any, to
exercise any unexpired Option he holds as of his termination of employment shall
be determined in accordance with Section 5.5(c).
ARTICLE V
OPTIONS
5.1 Company Stock Available for Options. There shall be available for
Options under the Plan an aggregate maximum of 150,000 shares of Company Stock,
subject to any adjustments which may be made pursuant to Section 6.1 of the Plan
in connection with changes in capitalization of the Company. Shares of Company
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 Company Stock covered by Options which have expired prior to
exercise shall be available for further Options granted hereunder.
5.2 Granting of Options. The Plan shall be implemented by annual
offerings of approximately twelve months duration (except as otherwise provided
in Section 5.4 or in the event of interim Grant Dates designated by the
Committee). As of each Grant Date, all eligible Employees shall be granted an
Option to purchase shares of Company Stock. The Committee shall determine the
number of shares of Company Stock to be available for purchase under each Option
to be granted as of such Grant Date; provided that, the same number of shares
shall be
5
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available under each Option granted as of such Grant Date. No Participant may be
granted an Option which permits his rights to purchase stock under this Plan and
all other employee stock purchase plans of the Company or Employer to accrue at
a rate which exceeds $25,000 of the fair market value of such stock (determined
at the time such Option is granted) for each calendar year in which such Option
is outstanding at any time.
5.3 Option Price. The purchase price at which shares of Company Stock
may be acquired pursuant to the exercise of all or any portion of an Option
granted under this Plan shall be eighty-five percent of the lesser of (a) the
fair market value of the Company Stock on the applicable Grant Date, and (b) the
fair market value of the Company Stock on the applicable Exercise Date. For
purposes of this Section 5.3, the fair market value per share of Company Stock
shall be the closing price on the last Business Day prior to the date of
reference, or in the event that no sales take place on such date, the average of
the closing high bid and low asked prices, in either case on the principal
national securities exchange on which the Company Stock is listed or admitted to
trading, or if the Company 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 Company 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
purposes. 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.
5.4 Option Period. Each Option granted to a Participant under the Plan
shall expire on the earliest of (a) the last Exercise Date of the calendar year
in which the Option was granted, (b) the Participant's voluntary withdrawal from
the Plan following termination of employment, and (c) the date of the
Participant's termination of employment related to Cause, or the Exercise Date
immediately following the Participant's termination of employment for any reason
unrelated to Cause.
5.5 Exercise of Options.
(a) Automatic Exercise. Any Option granted to a Participant
shall be exercised automatically on each Exercise Date during the calendar year
of the Option's Grant Date in whole or in part such that the Participant's
accumulated Contributions as of such Exercise Date shall be applied to the
purchase of the maximum number of whole shares of Company Stock that his
Contributions will allow at the applicable Option price (determined in
accordance with Section 5.3), limited to the number of shares subject to such
Option. In the event that the number of shares of Company Stock that may be
purchased by all Participants in the Plan exceeds the number of shares then
available for issuance under the Plan, the Committee shall make a pro rata
allocation of the available shares in as uniform a manner as it determines to be
practicable and equitable. Any remaining Contributions in the Participant's
Account amounting to less than the Option price of a whole share of Company
Stock shall be carried forward and applied on the next Exercise Date; provided
that, Contributions remaining after the last Exercise Date of the calendar year
may be distributed to the Participant at his election.
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(b) Nontransferability of Options. During a Participant's
lifetime, Options held by such Participant shall be exercisable only by that
Participant. No Option shall be transferable other than by will or the laws of
descent and distribution.
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(c) Effect of Termination of Employment.
(i) Termination of Employment Related to Cause. Upon
termination of a Participant's employment related to Cause, the Participant's
participation in the Plan also shall terminate. Any unexpired Option he holds
will expire as of the date of his termination of employment. Remaining
contributions credited to his Account shall be distributed to the Participant as
soon as administratively practicable following termination of employment.
(ii) Termination of Employment Due to Death. In the event of
the death of the Participant while employed, or during the period following his
termination of employment for any reason unrelated to Cause but prior to the
next Exercise Date, the Participant's estate shall have the right to elect by
written notice to the Committee prior to the earlier of the expiration of sixty
days commencing with the date of the Participant's death and the Exercise Date
next following the date of the Participant's death:
(A)To withdraw all of the Contributions
credited to the Participant's Account under the Plan, or
(B)To exercise any unexercised Option held
by the Participant as of the date of his death for the purchase of Company Stock
on the Exercise Date next following the date of the Participant's death in
accordance with Section 5.5(a) but only to the extent such Option was
exercisable on the date of the Participant's death, with any remaining
Contributions credited to the Participant's Account being distributed to the
Participant's estate as soon as administratively practicable after such Exercise
Date.
In the event that no such written election is timely and properly received by
the Committee, all Contributions credited to the Participant's Account shall be
distributed to the Participant's estate. In no event shall any Option be
exercisable beyond the applicable exercise period specified in Section 5.4 of
the Plan.
(iii) Other Termination of Employment. Upon termination of a
Participant's employment for any reason unrelated to Cause or death, the
Participant may at his election:
(A)Withdraw from the Plan pursuant to
Section 4.5 and request the return of the remaining Contributions then credited
to his Account, or
(B)Continue participation in the Plan,
subject to the provisions of Section 4.6, until the Exercise Date next following
his date of termination of employment for the limited purpose of allowing any
unexpired Option he holds as of his termination of employment to be exercised
automatically in accordance with Section 5.5(a) on the next Exercise Date but
only to the extent such Option was exercisable on the date of the Participant's
termination of employment, with any remaining Contributions credited to the
Participant's Account being distributed to the Participant as soon as
administratively practicable after such Exercise Date.
8
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(d) Leave of Absence. A Participant on an authorized leave of
absence shall, subject to the election made by such Participant pursuant to
Section 4.3, continue to be a Participant in the Plan so long as such
Participant is on continuous leave of absence. A Participant who has been on
leave of absence for more than ninety days and who therefore is not an Employee
for the purposes of the Plan shall not be entitled to participate in any
offering commencing on any Grant Date following the ninetieth day of such leave
of absence. Notwithstanding the foregoing and any other provisions of the Plan,
unless a Participant on a leave of absence returns to eligible regular full-time
or part-time employment with the Employer at the earlier of (i) the termination
of such leave of absence, or (ii) the day after the ninetieth day of such leave
of absence, such Participant's employment shall be deemed to have terminated for
purposes of the Plan on whichever of such dates first occurs (unless the
Participant's right to reemployment is guaranteed by statute or contract).
(e) Delivery of Stock. As soon as administratively practicable
after each Exercise Date, the Company or the Committee will deliver to each
Participant, as applicable, certificates evidencing shares of Company Stock
purchased under this Plan.
(f) 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. 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 Section 5.4.
(g) 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 Company 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
Company 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 Employer 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.
ARTICLE VI
9
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MISCELLANEOUS
6.1 Adjustments Upon Changes in Capitalization. In the event of a
reorganization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering or any other change in the corporate structure of
shares of the Company, corresponding adjustments shall be made to the number and
kind of shares of Company Stock available for issuance under this Plan and the
number and kind of shares of Company Stock covered by outstanding Options under
this Plan. Any adjustments made pursuant to this Section 6.1 remain subject to
the limitations of Section 5.2.
6.2 Amendment, Suspension and Termination. The Board of Directors may
at any time amend, suspend or terminate this Plan. The Plan will continue until
terminated by the Board of Directors or until all of the shares of Company Stock
reserved for issuance under the Plan have been issued, whichever first occurs.
No amendment, suspension or termination of the Plan may, without the consent of
the Participants then holding Options to purchase Company Stock, adversely
affect the rights of such Participants under such Options.
6.3 Not Intended to Comply With Code Section 423. It is not intended
that this Plan qualify as an "employee stock purchase plan" under Section 423 of
the Code.
6.4 Use of Funds. All Contributions received and held by the Employer
under this Plan may be used by the Company and Employer for any corporate
purpose and the Company and Employer shall not be obligated to segregate such
Contributions.
6.5 Withholding. An Employee granted Options under this Plan shall be
conclusively deemed to have authorized the Company and his Employer to withhold
from the salary, commissions or other compensation of such Employee funds in
amounts or property (including Company Stock) in value equal to any federal,
state and local income, employment or other withholding taxes applicable to the
income recognized by such Employee and attributable to the Options as, when and
to the extent, if any, required by law; provided; however, that, in lieu of the
withholding of federal, state and local taxes as herein provided, the Company
may require the Participant (or other person or his estate exercising the
Option) to pay to the Company, upon its demand, such amount as may be requested
by the Company for the purpose of satisfying taxes. If the amount requested is
not paid, the Company may refuse to issue the shares of Company Stock
attributable to the Option's exercise.
6.6 Effect of Plan. This Plan shall be binding upon each Participant
and his successors, including, without limitation, such Participant's estate and
the executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.
6.7 No Employment Rights. Nothing in this Plan or in any Option granted
pursuant to the Plan shall be construed as a contract of employment between the
Employer and any employee, or as a right of any employee to continue in the
employ of the Employer, or as a limitation of the right of the Employer to
discharge any of its employees, with or without cause.
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6.8 Governing Law. This Plan and all rights and obligations hereunder
shall be construed in accordance with and governed by the laws of the State of
North Carolina, except to the extent such laws are preempted by the laws of the
United States.
6.9 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.
11
December 28, 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 150,000 shares (the "Shares") of Class A Common
Stock, par value $.01 per share (the "Common Stock"), reserved for issuance
under the Company's Nonqualified Employee Stock Purchase 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 opinions:
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware; and
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
state securities 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
<PAGE>
General Corporation Law of the State of Delaware and the Act.
Insofar as our opinion relates to the good standing and existence of the
Company, we have relied upon a certificate of good standing from the Secretary
of State of the State of Delaware with respect to the Company, no further
investigation having been performed by or requested of us.
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,
/s/ PARKER, POE, ADAMS & BERNSTEIN LLP
--------------------------------------
Parker Poe, Adams & Bernstein LLP
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 (as amended) of Sonic Automotive, Inc. dated July 9, 1998.
/s/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
December 28, 1998
