Exhibit 4.1
SONIC AUTOMOTIVE, INC.
1997 STOCK OPTION PLAN
Amended and Restated as of June 5, 2000
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 and other related entities (each of which
is referred to herein as a "Subsidiary") by encouraging their ownership of the
Class A Common Stock, $.01 par value per share, 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 or subcommittee thereof (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. 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 Securities Exchange Act of 1934, as amended (the "Act") or
Section 162(m) of the Internal Revenue Code of 1986, as amended (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 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 6,000,000 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
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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 consultants and other individuals providing services to
the Company or any Subsidiary. On and after June 5, 2000, options may no longer
be granted under this Plan to "non-employee directors" within the meaning of
Rule 16b-3 of the Act. Options may be granted to eligible persons whether or not
they hold or have held options previously granted under the Plan or otherwise
granted or assumed by the Company; provided, however, that the maximum number of
shares of Stock with respect to which options may be granted under the Plan to
any person during any calendar year shall be 500,000 shares of Stock (subject to
adjustment in the same manner as provided in Section 5(f) with respect to shares
of Stock subject to options then outstanding). In selecting recipients for
options, the Committee may take into consideration any factors it may deem
relevant, including its estimate of the individual'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 a Subsidiary which constitutes a "subsidiary
corporation" within the meaning of Section 424(f) of the Code.
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 may be
purchased upon exercise of an option granted under the Plan shall be
determined by the Committee in its discretion, but shall not be less than
the fair 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 may be
purchased upon exercise of the option shall not be less than 110% of the
fair 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. Except as otherwise provided in
Section 5(f) of this Plan, the option price of an outstanding option under
this Plan may not be repriced. Notwithstanding the foregoing, an option
may be granted with an exercise price lower than that set forth above if
such option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of
the Code.
For purposes of this Section 5(a), "fair market value" shall mean
the last sale price regular way on the last trading day prior to the date
of option grant, 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
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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
fair 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.
(b) Option Period. The period for exercise of an option shall be
determined by the Committee in its discretion but in no event shall the
exercise period 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, subject to Section 5(d) below.
(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 full payment 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. The purchase price
may be paid in (i) cash (or a certified or bank cashier's check payable to
the order of the Company); (ii) shares of Stock owned by the Optionee,
(iii) nonstatutory options granted under the Plan and held by the Optionee
(provided, however, that the purchase price of Stock acquired under an
incentive stock option may not be paid in options); or (iv) any
combination of the foregoing methods. Shares of Stock tendered in payment
on the exercise of an option shall be valued at their fair market value
determined as described in Section 5(a) above, provided that the date of
determination shall be the date of exercise. The fair market value of
options tendered in payment upon exercise of other options shall be the
fair market value of the underlying Stock, determined as aforesaid, less
the total exercise price of the options. In addition, at the request of
the Optionee, and subject to applicable laws and regulations, the Company
may (but shall not be required to) cooperate in a "cashless exercise" of
an option (i.e., the assignment to the Company of the proceeds from a sale
of Stock acquired upon exercise of the option or from the proceeds of a
loan from a brokerage firm). 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 Optionee's death, Disability or Involuntary
Termination Without Cause. A cessation of employment, for purposes
of incentive stock options only, shall be deemed to occur on the
ninety-first day of a leave of absence 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,
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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 or which is intended
to result in the personal enrichment of the Optionee at the expense
of the Company or one of its Subsidiaries, (ii) a material violation
of the Optionee's responsibilities, or the Optionee's gross
negligence or willful misconduct, 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 options were exercisable on the date of the cessation
of the Optionee's employment.
(iii) During the twelve months after the Optionee's employment
with the Company or any Subsidiary ceases 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
options were 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 options granted under the
Plan shall be exercisable until the expiration of twelve months
following the Optionee's death, but only to the extent the option
was exercisable on the date of the cessation of the Optionee's
employment. 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. The provisions of this subparagraph (iv)
shall apply to any outstanding options which are incentive stock
options to the extent permitted by Sections 421 and 422(d) of the
Code and such outstanding options in excess thereof shall,
immediately upon the death of the Optionee, be treated for all
purposes of the Plan as nonstatutory stock options and shall be
exercisable as such as provided in this subparagraph (iv).
In no event shall any option be exercisable beyond the applicable
exercise period determined pursuant to 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.
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(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 stock options that may be transferred without
consideration, in whole or in part, by the Optionee to (i) the Optionee's
child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including
adoptive relationships, or any person sharing the Optionee's household
(other than a tenant or employee) ("Family Members"); (ii) a trust in
which Family Members have more than 50% of the beneficial interest; (iii)
a foundation in which Family Members (or the Optionee) control the
management of assets; or (iv) any other entity in which Family Members (or
the Optionee) own more than 50% of the voting interests. In all cases, the
Committee must be notified in advance in writing of the terms of any
proposed transfer to a permitted transferee and such transfers may occur
only with the consent of and subject to the rules and conditions imposed
by the Committee. The transferee and the transferred options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to the transfer. The provisions of the Plan, including,
but not limited to, those set forth in Section 5(b) and (d), shall
continue to apply with respect to the Optionee and the option shall be
exercisable by the transferee only to the extent and for the periods
specified herein and in any applicable option agreement. The Optionee
shall remain subject to withholding taxes upon exercise of any transferred
option by the transferee.
(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, unless the
Committee should determine otherwise, corresponding adjustments
automatically shall be made to the number and kind of shares available for
issuance under this Plan, the number and kind of shares covered by
outstanding options under this Plan, and the exercise price per share for
outstanding options. In addition, the Committee may make such other
adjustments as it determines to be equitable.
(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 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
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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 determined pursuant to 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 which constitute
"incentive stock options" within the meaning of Section 422 of the Code to
eligible employees of the Company and its "subsidiary corporations" within the
meaning of Section 424(f) of the Code, provided, however, that the aggregate
market value of the Stock (determined as of the date the incentive stock option
is granted) with respect to which incentive stock options are exercisable for
the first time by the Optionee during any calendar year shall not exceed
$100,000 or such other limitation set forth in Section 422(d) of the Code.
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7. Effectiveness of Plan. The Plan became effective when it was adopted
and approved by the Board of Directors and the stockholders of the Company on
October 9, 1997. The Plan was amended and restated effective as of December 3,
1998 and again amended and restated effective as of June 8, 1999; provided,
however, that the amendments to Section 5(e) contained in the June 8, 1999
restatement also shall apply to all outstanding nonstatutory stock options under
the Plan as of June 8, 1999. This amendment and restatement of the Plan shall be
effective as of June 5, 2000, subject to approval by the stockholders of the
Company at the 2000 Annual Meeting of Stockholders.
8. Amendment and Termination. The Board of Directors may at any time amend
the Plan or the terms 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. The Board of Directors may terminate the Plan at any time.
Unless the Plan shall theretofore have been terminated, the Plan shall
terminate, and no option shall be granted hereunder after, October 9, 2007. 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) remit to the
Company, or make arrangements satisfactory to the Company to pay through payroll
withholding or otherwise, such amount as may be requested by the Company to meet
any federal, state or local tax withholding obligations with respect to such
exercise. 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.
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