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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Speedway Motorsports, Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[LOGO OF SPEEDWAY MOTORSPORTS, INC.]
U.S. Highway 29 North
Concord, North Carolina 28026
March 22, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 10:00 a.m. on May 3, 2000, at Lowe's Motor Speedway in Concord, North
Carolina. We look forward to greeting personally those stockholders who are
able to attend.
The accompanying formal Notice of Meeting and Proxy Statement describe the
matters on which action will be taken at the meeting.
Whether or not you plan to attend the meeting on May 3, it is important that
your shares be represented. To ensure that your vote will be received and
counted, please sign, date and mail the enclosed proxy at your earliest
convenience. Your vote is important regardless of the number of shares you own.
On behalf of the Board of Directors
Sincerely,
/s/ O. Bruton Smith
-------------------
O. Bruton Smith
Chairman and Chief Executive
Officer
<PAGE>
VOTING YOUR PROXY IS IMPORTANT
PLEASE SIGN AND DATE YOUR PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
SPEEDWAY MOTORSPORTS, INC.
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NOTICE OF MEETING
--------------------
Concord, NC
March 22, 2000
The Annual Meeting of Stockholders of Speedway Motorsports, Inc. ("SMI")
will be held at Lowe's Motor Speedway, located on U.S. Highway 29 North,
Concord, North Carolina on May 3, 2000, at 10:00 a.m., for the following
purposes as described in the accompanying Proxy Statement:
1. To elect two (2) directors.
2. To consider and vote upon a proposal to amend the May 5, 1998 Amended
and Restated Speedway Motorsports, Inc. Employee Stock Purchase Plan
("ESPP").
3. To consider and vote upon a proposal to ratify the selection by the
Board of Directors of Deloitte & Touche LLP as the principal
independent auditors of SMI and its subsidiaries for the year 2000.
4. To transact such other business as may properly come before the
meeting.
Only holders of record of SMI's common stock at the close of business on
March 9, 2000 will be entitled to vote at such meeting.
Whether or not you plan to attend the meeting, you are urged to complete,
sign, date and return the enclosed proxy promptly in the envelope provided.
Returning your proxy does not deprive you of your right to attend the meeting
and to vote your shares in person.
Marylaurel E. Wilks
Secretary
Important Note: To vote shares of common stock at the Annual Meeting (other
than in person at the meeting), a stockholder must return a proxy. The return
envelope enclosed with the proxy card requires no postage if mailed in the
United States of America.
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SPEEDWAY MOTORSPORTS, INC.
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PROXY STATEMENT
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March 22, 2000
GENERAL
Introduction
The Annual Meeting of Stockholders of Speedway Motorsports, Inc. ("SMI")
will be held on May 3, 2000 at 10:00 a.m., at Lowe's Motor Speedway, (the
"Annual Meeting"), for the purposes set forth in the accompanying notice. SMI's
principal executive offices are located at Lowe's Motor Speedway at U.S.
Highway 29 North, Concord, North Carolina, 28026. Only holders of record of
common stock of SMI, par value $.01 per share (the "Common Stock"), at the
close of business on March 9, 2000 (the "Record Date") will be entitled to
notice of, and to vote at, such meeting. This Proxy Statement is furnished in
connection with the solicitation by the Board of Directors of proxies to be
used at such meeting and at any and all adjournments thereof and is first being
sent to stockholders on or about the date hereof. Proxies in the accompanying
form, properly executed and duly returned and not revoked, will be voted at the
meeting (including adjournments). Where a specification is made by means of the
ballot provided in the proxies regarding any matter presented at the Annual
Meeting, such proxies will be voted in accordance with such specification. If
no specification is made, proxies will be voted (i) in favor of electing SMI's
two (2) nominees to the Board of Directors, (ii) in favor of the amendments to
the ESPP, and (iii) in favor of the selection of Deloitte & Touche LLP as the
principal independent auditors of SMI for the year 2000.
Proxies should be sent to First Union Bank, Client Services Group, 1525 W.T.
Harris Boulevard, Charlotte, North Carolina 28288-1153.
This Proxy Statement is being furnished by SMI to stockholders of SMI in
connection with the upcoming Annual Meeting, as of March 24, 2000.
Ownership of Capital Securities
The following table sets forth certain information regarding ownership of
SMI's Common Stock as of March 9, 2000, by (i) each person or entity known to
SMI and its subsidiaries (collectively, the "Company") who beneficially owns
five percent or more of the Common Stock, (ii) each director and nominee to the
Board of Directors of SMI, (iii) each executive officer of SMI (including the
Chief Executive Officer), and (iv) all directors and executive officers of SMI
as a group. Except as otherwise indicated below, each of the persons named in
the table has sole voting and investment power with respect to the securities
beneficially owned by him or it as set forth opposite his or its name.
<TABLE>
<CAPTION>
Amount & Nature of
Beneficial Owner Beneficial Ownership Percent
- ---------------- -------------------- -------
<S> <C> <C>
O. Bruton Smith (1)(2)........................... 29,000,000 66.3%
Sonic Financial Corporation (2).................. 23,700,000 54.2
H. A. "Humpy" Wheeler (3)(8)..................... 616,500 1.4
William R. Brooks (4)(8)......................... 291,000 *
Edwin R. Clark (5)(8)............................ 106,300 *
William P. Benton (6)(8)......................... 80,000 *
Mark M. Gambill (7)(8)........................... 104,200 *
Jack L. Kemp (6)(8).............................. 35,000 *
All directors and executive officers as a group
(six persons) (1)............................... 30,233,000 69.1
</TABLE>
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* Less than one percent
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(1) The shares of Common Stock shown as owned by such person or group include,
without limitation, all of the shares shown as owned by Sonic Financial
Corporation ("Sonic Financial") elsewhere in the table. Mr. Smith owns the
substantial majority of the common stock of Sonic Financial.
(2) The address of such person is P.O. Box 18747, Charlotte, North Carolina
28218.
(3) All the shares shown as owned by Mr. Wheeler, other than 10,400 shares
owned by him directly, underlie options granted by the Company.
(4) All the shares shown as owned by Mr. Brooks, other than 1,000 shares owned
by him directly, underlie options granted by the Company.
(5) All the shares shown as owned by Mr. Clark, other than 6,300 shares owned
by him directly, underlie options granted by the Company.
(6) All the shares shown as owned by Messrs. Benton and Kemp underlie options
granted by the Company.
(7) All the shares shown as owned by Mr. Gambill, other than 4,200 shares owned
by him directly, underlie options granted by the Company.
(8) All such options are currently exercisable except for 20,000 shares owned
by Mr. Clark. For additional information concerning options granted to the
Company's executive officers, see "Executive Compensation" below.
Number of Shares Outstanding and Voting
SMI currently has authorized under its Certificate of Incorporation
200,000,000 shares of Common Stock, of which 41,646,997 shares are currently
issued and outstanding and entitled to be voted at the Annual Meeting. At the
meeting, holders of Common Stock will have one vote per share for an aggregate
total of 41,646,997 votes. A quorum being present, directors will be elected by
majority vote, and the actions proposed in the remaining items referred to in
the accompanying Notice of Meeting, will become effective if a majority of the
votes cast by shares entitled to vote on the subject matter is cast in favor
thereof. Abstentions and broker non-votes will not be counted in determining
the number of shares voted for any director-nominee or for any proposal.
A holder of Common Stock who signs a proxy card may withhold votes as to any
director-nominee by writing the name of such nominee in the space provided on
the proxy card.
Revocation of Proxy
Stockholders who execute proxies may revoke them at any time before they are
exercised by delivering a written notice to Marylaurel E. Wilks, the Secretary
of SMI, either at the Annual Meeting or prior to the meeting date at the
Company's offices at U.S. Highway 29 North, Concord, North Carolina 28026, by
executing and delivering a later-dated proxy, or by attending the meeting and
voting in person.
Expenses of Solicitation
The Company will pay the cost of solicitation of proxies, including the cost
of assembling and mailing this Proxy Statement and the materials enclosed
herewith. In addition to the use of the mails, proxies may be solicited
personally, or by telephone or telegraph, by corporate officers and employees
of the Company without additional compensation. The Company intends to request
brokers and banks holding stock in their names or in the names of nominees to
solicit proxies from their customers who own such stock, where applicable, and
will reimburse them for their reasonable expenses of mailing proxy materials to
their customers.
2001 Stockholder Proposals
In order for stockholder proposals intended to be presented at the 2001
Annual Meeting of Stockholders to be eligible for inclusion in the Company's
proxy statement and the form of proxy for such meeting, they must be received
by the Company at its principal offices in Concord, North Carolina no later
than November 24, 2000. Regarding stockholder proposals intended to be
presented at the year 2001 Annual Meeting but not
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included in SMI's proxy statement, stockholders must give SMI advance notice of
their proposals in order to be considered timely under SMI's bylaws. The bylaws
state that written notice of such proposals must be delivered to the principal
executive office of SMI (i) in the case of an annual meeting that occurs within
30 days of the anniversary of the 2000 Annual Meeting, not less than 60 days
nor more than 90 days prior to such anniversary date, and (ii) in the case of
an annual meeting that is called for a date that is not within thirty (30) days
before or after the anniversary date that occurs more than 30 days from the
anniversary date of the 2000 Annual Meeting, or in the case of a special
meeting of stockholders called for the purpose of electing directors, not later
than the close of business on the tenth day following the day on which notice
of the date of the meeting was mailed or public disclosure of the date of the
meeting was made, whichever occurs first. All such proposals for which timely
notice is not received in the manner described above will be ruled out of order
at the meeting resulting in the proposal's underlying business not being
eligible for transaction at the meeting.
ELECTION OF DIRECTORS
Nominees for Election as Directors of SMI
Directors of SMI are elected at the Annual Meetings of Stockholders of SMI
to serve staggered terms of three years and until their successors are elected
and qualified. The Board of Directors of SMI currently consists of seven (7)
directors, two of whom must be elected at the 2000 Annual Meeting. The terms of
Messrs. Wheeler and Clark expire at the 2000 Annual Meeting; the terms of
Messrs. Smith and Benton expire at the 2001 Annual Meeting; and the terms of
Messrs. Brooks, Gambill and Kemp expire at the 2002 Annual Meeting. Messrs.
Wheeler and Clark are standing for reelection at the 2000 Annual Meeting.
It is intended that the proxies in the accompanying form will be voted at
the meeting for the election to the Board of Directors of the following
nominees, each of whom has consented to serve if elected: H.A. Wheeler and
Edwin R. Clark, each to serve a three year term until the 2003 Annual Meeting
and until his successor shall be elected and shall qualify, except as otherwise
provided in SMI's Certificate of Incorporation and Bylaws. Both of the nominees
are presently directors of SMI. If for any reason either nominee named above is
not a candidate when the election occurs, it is intended that proxies in the
accompanying form will be voted for the election of the other nominee named
above and may be voted for any substitute nominee or, in lieu thereof, the
Board of Directors may reduce the number of directors in accordance with SMI's
Certificate of Incorporation and Bylaws.
The name, age, present principal occupation or employment and the material
occupations, positions, offices or employments for the past five years of each
SMI director, director-nominee, executive officer and executive manager are set
forth below.
O. Bruton Smith, 73, has been Chief Executive Officer and a director of
Charlotte Motor Speedway, Inc. ("CMS"), a wholly-owned subsidiary of SMI, since
1975. He was a founder of CMS in 1959 and was an executive officer and director
of CMS until 1961, when it entered reorganization proceedings under the
bankruptcy laws. Mr. Smith became Chairman and Chief Executive Officer,
President and a director of Atlanta Motor Speedway, Inc. ("AMS") upon acquiring
it in 1990. He became Chief Executive Officer of SMI upon its organization in
December 1994 and became the Chairman and CEO of Bristol Motor Speedway, Inc.
("BMS") upon its acquisition in January 1996, Sears Point Raceway ("SPR") upon
its acquisition in November 1996, and Texas Motor Speedway ("TMS") in 1995. Mr.
Smith became the President of Las Vegas Motor Speedway ("LVMS") upon its
acquisition on December 1, 1998. Mr. Smith also is the Chairman, Chief
Executive Officer, a director and controlling stockholder of Sonic Automotive,
Inc. ("SAI"), (NYSE: symbol SAH), and serves as the president and a director of
each of SAI's operating subsidiaries. SAI is believed to be one of the ten
largest automobile retail dealership groups in the United States and is engaged
in the acquisition and operation of automobile dealerships principally in the
"Sunbelt" and southeastern United States. Mr. Smith has entered into an
employment agreement with SAI pursuant to which he has agreed to devote 50% of
his business time to the affairs of SAI. Mr. Smith also owns and operates Sonic
Financial, among other private businesses.
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H.A. "Humpy" Wheeler, 61, was hired by CMS in 1975 and has been a director
and General Manager of CMS since 1976. Mr. Wheeler was named President of CMS
in 1980 and became a director of AMS upon its acquisition in 1990. He became
President, Chief Operating Officer and a director of SMI upon its organization
in December 1994. Mr. Wheeler has been a Vice President and a director of BMS
and SPR since their acquisition in 1996, and of TMS since its formation in
1995. Mr. Wheeler also became Vice President of LVMS upon its acquisition on
December 1, 1998.
William R. Brooks, 50, joined Sonic Financial from PriceWaterhouseCoopers in
1983. Mr. Brooks has been Vice President of CMS for more than five years and
has been Vice President and a director of AMS, BMS, LVMS and SPR since their
acquisition, and TMS since its formation. Mr. Brooks became Vice President of
LVMS upon its acquisition in December 1998. Mr. Brooks has been Vice President,
Treasurer, Chief Financial Officer and a director of SMI since its organization
in December 1994 and has been the President and a director of Speedway Funding
Corp., the Company's financing subsidiary, since 1995. Mr. Brooks has also
served as a director of SAI since its formation in 1997 and served as its Chief
Financial Officer from February to April 1997.
Edwin R. Clark, 45, became Vice President and General Manager of AMS in 1992
and was promoted to President and General Manager of AMS in 1995. Prior to that
appointment, he had been LMSC's Vice President of Events since 1981. Mr. Clark
became Executive Vice President of SMI upon its organization in December 1994
and became a director of SMI in 1995.
William P. Benton, 76, became a director of SMI in 1995. Since January 1997,
Mr. Benton has been the Executive Director of Ogilvy & Mather, a world-wide
advertising agency. He is also a consultant to the Chairman and Chief Executive
Officers of TI Group and serves on the Board of Directors of Allied Holdings,
Inc. Prior to his appointment at Ogilvy & Mather, Mr. Benton served as Vice
Chairman of Wells, Rich, Greene/BDDP Inc., an advertising agency with offices
in New York and Detroit. Mr. Benton retired from Ford Motor Company as its Vice
President of Marketing Worldwide in 1984 after a 37-year career with that
company. In addition, Mr. Benton serves as a director of SAI.
Mark M. Gambill, 49, became a director of SMI in 1995 and is currently a
managing partner of McKenzie Holdings, LLC, a consulting firm. Mr. Gambill was
employed continuously from 1972 until 1999 by First Union Capital Markets and
its predecessor entities. First Union Capital Markets is an investment banking
firm and a wholly-owned subsidiary of First Union Corporation. In 1996, he was
named President of First Union Capital Markets. Previously, Mr. Gambill acted
as head of the Capital Markets division, including Corporate and Public
Finance, Taxable Fixed Income, Municipal Sales and Trading, Equity Sales,
Trading and Research. Mr. Gambill has served on the Board of Directors of First
Union Capital Markets since 1983.
Jack L. Kemp, 64, became a director of SMI in May 1999. Mr. Kemp is co-
director of Empower America, a public policy advocacy organization founded in
1993. Prior to Empower America, Mr. Kemp served for four years as Secretary of
Housing and Urban Development and was a New York representative to the United
States House of Representatives. He served for seven years as Chairman of the
House Republican Conference after a 13-year career as a professional football
quarterback with the San Diego Chargers and the Buffalo Bills.
William E. Gossage, 38, became Vice President and General Manager of TMS in
August 1995. Before that appointment, he was Vice President of Public Relations
at CMS from 1989 to 1995. Mr. Gossage previously worked with Miller Brewing
Company in its motorsports public relations program and served in various
public relations and managerial capacities at two other NASCAR-sanctioned
speedways.
M. Jeffrey Byrd, 48, was hired March 1, 1996 as Vice President and General
Manager of BMS. Prior to working at BMS, Mr. Byrd had been continuously
employed by RJR Nabisco for 23 years in various sports marketing positions,
most recently as Vice President of business development for its Sports
Marketing Enterprises affiliate.
Steven Page, 44, was hired effective November 18, 1996 as President and
General Manager of SPR. Prior to being hired by SMI, Mr. Page had been
continuously employed for several years as President of Brenda
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Raceway Corporation, which owned and operated SPR before its acquisition by the
Company. Mr. Page also spent eleven years working for the Oakland A's baseball
franchise in various marketing positions.
R. Christopher Powell, 40, was hired effective December 16, 1998 as
Executive Vice President and General Manager of LVMS. Mr. Powell spent eleven
years working for Sports Marketing Enterprises, a division of R. J. Reynolds
Tobacco Co. ("RJR"). Since 1994, he served as manager of media relations and
publicity on the NASCAR Winston Cup program. Mr. Powell's previous duties
include publicity and event operations on other RJR initiatives, including NHRA
Drag Racing and the Vantage and Nabisco golf sponsorships.
Joseph Phelps, 40, currently the President and General Manager of Speedway
Systems LLC d/b/a Finish Line Events, has been with the Company since September
1993. Mr. Phelps spent over ten years in the hotel and hospitality services
industry. His experience includes food and beverage services, and the design,
construction and operations of major hotels.
Committees of the Board of Directors and Meetings
There are two standing committees of the Board of Directors of SMI, the
Audit Committee and the Compensation Committee. The Audit Committee currently
consists of Messrs. Benton, Gambill and Kemp. The Compensation Committee is
comprised of Messrs. Benton, Gambill and Smith. Set forth below is a summary of
the principal functions of each committee and the number of meetings held
during 1999.
Audit Committee. The Audit Committee, which held two meetings in 1999,
recommends the appointment of the Company's independent auditors, determines
the scope of the annual audit to be made, reviews the conclusions of the
auditors and reports the findings and recommendations thereof to the Board,
reviews with the Company's auditors the adequacy of the Company's system of
internal control and procedures and the role of management in connection
therewith, reviews transactions between the Company and its officers, directors
and principal stockholders, and performs such other functions and exercises
such other powers as the Board from time to time may determine.
Compensation Committee. The Compensation Committee, which held two meetings
in 1999, administers certain compensation and employee benefit plans of the
Company, annually reviews and determines executive officer compensation,
including annual salaries, bonus performance goals, bonus plan allocations,
stock option grants and other benefits, direct and indirect, of all executive
officers and other senior officers of the Company. The Compensation Committee
administers the 1994 Stock Option Plan and the Employee Stock Purchase Plan,
and periodically reviews the Company's executive compensation programs and
takes action to modify programs that yield payments or benefits not closely
related to Company or executive performance. The policy of the Compensation
Committee's program for executive officers is to link pay to business strategy
and performance in a manner which is effective in attracting, retaining and
rewarding key executives while also providing performance incentives and
awarding equity-based compensation to align the long-term interests of
executive officers with those of Company stockholders. It is the Compensation
Committee's objective to offer salaries and incentive performance pay
opportunities that are competitive in the marketplace.
The Company currently has no standing nominating committee.
During 1999, there were five meetings of the Board of Directors of SMI, with
each director attending at least seventy-five percent of the meetings (and, as
applicable, committees thereof).
PROPOSED AMENDMENTS TO EMPLOYEE STOCK PURCHASE PLAN
The ESPP was adopted by the Board of Directors of SMI as of April 1, 1996
and approved by the stockholders on May 8, 1996. The ESPP was subsequently
amended and restated as of May 5, 1998. The Board of Directors has now further
amended and restated the ESPP. Three of the amendments to the ESPP require
stockholder approval and are described below. The ESPP is intended to promote
the interests of the Company
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by providing its employees the opportunity to acquire a proprietary interest in
the Company through the purchase of Common Stock at a discount from the market
value at the time of purchase.
Amendments to the ESPP Requiring Stockholder Approval. The Board of
Directors of SMI has determined that the interests of the Company and its
stockholders can be better served by amending and restating the ESPP to enhance
the Company's efforts to continue providing competitive stock incentives that
attract and retain employees and also to facilitate plan administration. The
three ESPP amendments that require stockholder approval are being presented as
a single proposal submitted to our stockholders for their approval at the
Annual Meeting. These three amendments are as follows:
(1) The ESPP is proposed to be amended to reduce the service requirement for
eligibility to participate in the ESPP from one year to six months. This
amendment is expected to better enable the Company to compete for and attract
valuable employees by reducing the waiting period for participation in the
ESPP. Previously, it was possible that some employees would not be able to
participate in a grant date under the ESPP for almost two years from their date
of hire. This amendment also makes the service requirement under the ESPP more
comparable to the six month service requirement currently applicable under the
Company's 401(k) plan.
(2) The ESPP is proposed to be amended to simplify the stockholder approval
requirements for amendments to the ESPP. The ESPP provides that the Board of
Directors of SMI can amend the ESPP at any time. However, shareholder approval
is currently required for any ESPP amendment that (a) increases the maximum
number of shares reserved for issuance under the ESPP, (b) makes a material
modification of the requirements as to the class of employees eligible to
participate in the ESPP or (c) results in a material increase in the benefits
accruing to participants in the ESPP. After stockholder approval, the ESPP as
amended would provide that amendments to the ESPP by the Board of Directors
would require shareholder approval to the extent necessary to comply with
applicable laws or regulations or the rules of any self-regulatory organization
applicable to the Company or the ESPP. This amendment will provide additional
flexibility in administration of the ESPP and allow the Company to make desired
changes to the ESPP from time to time in order to remain competitive as the
Company's business grows.
(3) The ESPP is proposed to be amended to recognize service with SAI and its
subsidiaries for purposes of the eligibility service requirement and to clarify
that service with an entity prior to its acquisition or the acquisition of
substantially all of its assets by the Company also is recognized for purposes
of the eligibility service requirement. This amendment is expected to ease the
transition of employees who come from certain related or acquired companies.
This amendment also makes the ESPP's service recognition provisions more
comparable to the service recognition provisions currently applicable under the
Companys 401(k) Plan.
Summary Description of the ESPP. The following is a summary of the ESPP, as
amended, and is qualified in its entirety by reference to the ESPP, a copy of
which has been submitted with this Proxy Statement to the Securities and
Exchange Commission. The ESPP is administered by the Compensation Committee
which, subject to the terms of the ESPP, has plenary authority in its
discretion to interpret and construe the ESPP, to decide all questions of
employee eligibility, to determine the amount, manner and timing of options and
option exercises, and to make all other determinations and take all other
actions it deems necessary or desirable for the administration of the ESPP.
Options generally are granted under the ESPP as of each January 1. Under the
amended plan, the Board of Directors or the Compensation Committee also can
designate other interim grant dates during the year. All employees of SMI and
of each participating subsidiary under the ESPP who are eligible for each such
grant date will be given the opportunity to participate in the ESPP. In order
to be eligible, an employee must be employed by SMI or one of its participating
subsidiaries on a full-time or part-time basis, regularly scheduled to work
more than twenty hours per week, and customarily employed more than five months
in a calendar year. As amended, an employee also must have completed six months
of continuous service with the Company. In determining whether an employee has
met the six month service requirement, the following service will be recognized
under the ESPP as amended: (i) service with SAI and its subsidiaries, and (ii)
service with an entity
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prior to its acquisition, or the acquisition of substantially all of its
assets, by the Company. Employees who own or hold options to purchase stock (or
who would upon participation in the ESPP own or hold options to purchase stock)
possessing 5% or more of the total combined voting power or value of all
classes of stock of SMI or any subsidiary are not eligible to participate in
the ESPP. For purposes of this 5% limitation, employees may be considered to
own or hold options to purchase stock through attribution from relatives or
from entities in which the employees have an ownership interest.
As of each grant date during the term of the ESPP, all eligible employees
electing to participate in the ESPP ("Participants") will be granted an option
to purchase shares of Common Stock at an exercise price per share equal to the
lesser of 90% of the fair market value per share of Common Stock on the date of
grant or 90% of such fair market value on the date of exercise. The
Compensation Committee will determine the number of shares of Common Stock
available for purchase under each option, with the same number of shares to be
available under each option granted on the same grant date. Fair market value
generally is the closing price per share of the Common Stock on the New York
Stock Exchange on the last trading date 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. No Participant may be granted an option which
would permit him or her to purchase stock under the ESPP and all other employee
stock purchase plans of SMI 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. Furthermore, no
Participant may be granted options in any calendar year which permit such
Participant to purchase more than 500 shares of Common Stock under the ESPP.
A total of 400,000 shares of Common Stock have been reserved for purchase
under the ESPP. The number of shares of Common Stock reserved for issuance
under the ESPP is subject to adjustment in the event of a reorganization, stock
split, stock dividend, merger, or other similar event.
In January 2000, each of the approximate 900 eligible employees, based on
the one-year continuous service requirement then in effect, who elected to
participate in the ESPP were granted an option to purchase up to 500 shares of
Common Stock at an exercise price equal to the lesser of 90% of the fair market
value per share of Common Stock on the date of grant or 90% of such fair market
value on the date of exercise. If the stockholders approve the amendment
reducing the eligibility service requirement from one year to six months, a
special grant date of June 1, 2000 will be designated by the Board of Directors
for those employees who would have been eligible to participate in the ESPP for
the January 2000 grant date had the amendment allowing eligibility based upon
six-months continuous service been effective at that time. On March 16, 2000,
the closing price of a share of Common Stock as reported on the New York Stock
Exchange was $25.81.
A Participant may elect to designate a limited percentage of compensation
(as defined in the ESPP) to be deferred by after-tax payroll deduction as a
contribution to the ESPP. A Participant instead may elect to make contributions
by direct cash payment to the ESPP rather than by payroll deduction. If a
Participant has made contributions to the ESPP, his or her option will be
exercised automatically to purchase Common Stock on each exercise date during
the rest of the calendar year in which the option is granted. The exercise
dates are the last business day of March, June, September and December on which
the principal trading market for the Common Stock is open for trading and any
other interim dates during the year which the Compensation Committee designates
for such purpose. The Participant's accumulated and unused contributions as of
each exercise date will be applied to the purchase of the maximum number of
whole shares of Common Stock that such contributions will permit at the
applicable option price, limited to the number of shares available for purchase
under the option. Contributions which are not enough to purchase a whole share
of Common Stock will be carried forward and applied on the next exercise date
in that calendar year.
Any option granted to a Participant will expire on the last exercise date of
the calendar year in which granted. However, if a Participant withdraws from
the ESPP or terminates employment prior to such exercise date, the option may
expire earlier.
7
<PAGE>
Once a Participant's employment terminates, the Participant may not make any
more contributions to the ESPP. If a Participant's employment terminates for
any reason other than cause, the Participant (or the Participant's estate if
termination of employment is caused by death) has the election to request the
return of contributions not yet used to purchase Common Stock. Alternatively,
the Participant (or the Participant's estate if termination of employment is
caused by death) can elect to continue participation in the ESPP until the next
exercise date following termination of employment so that any unexpired option
held by the Participant will be exercised automatically on that exercise date
to the extent the Participant's remaining contributions will allow.
In connection with any merger or consolidation in which SMI is not the
surviving corporation, and which results in the holders of the outstanding
voting securities of SMI owning less than a majority of the outstanding voting
securities of the surviving corporation, or any sale or transfer by SMI of all
or substantially all its assets or any tender offer or exchange offer for or
the acquisition, directly or indirectly, of all or a majority of the then-
outstanding voting securities of SMI, all outstanding options under the ESPP
will become exercisable in full on and after (i) the 15th 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 Board of Directors of SMI may at any time amend, suspend or terminate
this Plan, subject to the following: (i) no amendment, suspension or
termination may, without the consent of a Participant, adversely affect the
rights of the Participant under any option he or she then holds, and (ii)
approval by the stockholders of SMI is required for an amendment, suspension or
termination to the extent necessary to comply with any applicable law or
regulation or the rules of any self-regulatory organization that are applicable
to the Company or the ESPP.
Set forth below is information with respect to ESPP options that have been
granted, and will be granted if the ESPP amendments are approved by our
stockholders at the Annual Meeting, in 2000.
New Plan Benefits
Employee Stock Purchase Plan
<TABLE>
<CAPTION>
Name and Position Dollar Value ($) Number of Units (#)
- ----------------- --------------- ------------------
<S> <C> <C>
O. Bruton Smith
Chairman and Chief Executive Officer of
SMI (1) (1)
H. A. "Humpy" Wheeler
President and Chief Operating Officer of
SMI;
President and General Manager of CMS (2) --
William R. Brooks
Vice President, Treasurer and Chief
Financial Officer of SMI (2) 1,000
Edwin R. Clark
Executive Vice President of SMI;
President and General Manager of AMS (2) 1,000
All current executive officers as a group (2) 2,000
All current non-executive officer
directors as a group (3) (3)
All current non-executive officer
employees as a group (2) 1,640
</TABLE>
- --------
(1) As a holder of more than 5% of the Common Stock, Mr. Smith is not eligible
to participate in the ESPP.
(2) Dollar amounts of units received in 2000 by the persons or groups indicated
in the above-referenced table are not readily determinable since the value
of options granted will depend on fluctuating market prices. At present, no
options have been exercised to date in 2000, and there are approximately
900 participants. Options to purchase approximately 60,000 shares of Common
Stock were purchased at an average exercise price of $25.48 per share for
approximately 410 plan participants in 1999.
(3) Non-executive officer directors of the Company are ineligible to
participate in the ESPP.
8
<PAGE>
Federal Income Tax Consequences. The following summary generally describes
the federal income tax consequences to Participants and the Company under the
ESPP and is based on current laws and regulations. The summary is general in
nature and is not intended to cover all tax consequences that could apply to a
particular employee or the Company.
The ESPP is intended to meet the requirements of an employee stock purchase
plan under Section 423 of the Internal Revenue Code. Accordingly, there are no
federal income tax consequences to the Participant or the Company upon the
grant of an option to purchase Common Stock under the ESPP. The Participant
will not recognize federal taxable income on the exercise of an option granted
under the ESPP, but instead will take a tax basis in the Common Stock received
equal to the option exercise price. The Company will not receive a tax
deduction for federal income tax purposes when an option is exercised under the
ESPP.
If the Participant holds the shares of Common Stock acquired upon the
exercise of an option under the ESPP until a date that is more than two years
from the grant date of the relevant option and one year from the option
exercise date (or dies while holding such shares), the Participant will
recognize ordinary income for federal income tax purposes at the time of
disposition of the shares of Common Stock (or at death) equal to the lesser of
(i) the excess of the fair market value of the shares when the option was
granted over the option exercise price and (ii) the excess of the fair market
value of the shares at the date of such disposition (or death) over the option
exercise price. For this purpose, the option exercise price is deemed to be 90%
of the fair market value of the shares of Common Stock on the date the relevant
option was granted (assuming the shares are purchased at a 10% discount). The
amount of ordinary income recognized will increase the Participants basis in
the shares for federal income tax purposes, and any additional gain (or loss)
realized on the disposition of the shares of Common Stock will be taxed as
capital gain (or loss). In the case where the holding requirements are met, the
Company will not be entitled to a deduction with respect to any income
recognized by the Participant.
If the Participant disposes of the shares of Common Stock acquired upon the
exercise of an option under the ESPP within two years after the grant date of
the relevant option or within one year after the option exercise date, the
Participant will recognize ordinary income for federal income tax purposes at
the time of disposition equal to the amount by which the fair market value of
the shares of Common Stock on the option exercise date exceeds the option
exercise price, and an amount equal to such ordinary income generally is
deductible by the Company. The Participants tax basis in such shares will be
the option exercise price plus the amount of taxable ordinary income recognized
(i.e., fair market value of the shares on the exercise date). Any gain in
excess of the Participants tax basis in the shares of Common Stock will be
taxed as capital gain and is not deductible by the Company. Any loss recognized
on the disposition of the shares of Common Stock generally will be treated as a
capital loss.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche LLP to
serve as the principal independent auditors of the Company for the year 2000.
Deloitte & Touche LLP has acted in such capacity for the Company since its
organization in December 1994. This selection is submitted for approval by the
stockholders at the Annual Meeting.
Representatives of Deloitte & Touche LLP will attend the Annual Meeting.
They will have an opportunity to make a statement if they so desire, and to
respond to appropriate questions.
MANAGEMENT
Directors of SMI
For information with respect to the Board of Directors of SMI, see "Election
of Directors."
9
<PAGE>
Executive Officers of SMI
Messrs. Smith, Wheeler, Brooks, and Clark are the executive officers of SMI.
Each executive officer serves as such until his successor is elected and
qualified. No executive officer of SMI was selected pursuant to any arrangement
or understanding with any person other than SMI. For further information with
respect to Messrs. Smith, Wheeler, Brooks and Clark as officers of SMI, see
"Election of Directors."
EXECUTIVE COMPENSATION
Compensation Committee Report
The following is an explanation of the Company's executive officer
compensation program as in effect for 1999:
1999 Officer Compensation Program
The 1999 executive officer compensation program of the Company had three
primary components: (i) base salary, (ii) short-term incentives under the
Company's executive bonus plan, and (iii) long-term incentives which consisted
solely of stock option grants made under the 1994 Stock Option Plan (for
officers other than the Chief Executive Officer). Executive officers (including
the Chief Executive Officer) were also eligible in 1999 to participate in
various benefits plans similar to those provided to other employees of the
Company. Such benefits plans are intended to provide a safety net of coverage
against various events, such as death, disability and retirement.
Base salaries (including that of the Chief Executive Officer) were
established on the basis of non-quantitative factors such as positions of
responsibility and authority, years of service and annual performance
evaluations. They were targeted to be competitive principally in relation to
other motorsports racing companies (such as some of those included in the Peer
Group Index in the performance graph elsewhere herein), although the
Compensation Committee also considered the base salaries of certain other
amusement, sports and recreation companies not included in the Peer Group Index
because the Compensation Committee considered those to be relatively comparable
industries.
The Company's executive bonus plan established a potential bonus pool for
the payment of year-end bonuses to Company officers and other key personnel
based on 1999 performance and operating results. Under this plan, aggressive
revenue and profit target levels were established by the Compensation Committee
as incentives for superior individual, group and Company performance. Each
executive officer was eligible to receive a discretionary bonus based upon
individually established subjective performance goals. The Compensation
Committee approved cash incentive bonuses in amounts ranging from 0.14% to .55%
of the Company's 1999 operating income.
Awards of stock options under SMI's 1994 Stock Option Plan are based on a
number of factors in the discretion of the Compensation Committee, including
various subjective factors primarily relating to the responsibilities of the
individual officers for and contribution to the Company's operating results (in
relation to the Company's other optionees), their expected future contributions
and the levels of stock options currently held by the executive officers
individually and in the aggregate. Stock option awards to executive officers
have been at then-current market prices in order to align a portion of an
executive's net worth with the returns to the Company's stockholders. For
details concerning the grant of options to the executive officers named in the
Summary Compensation Table below, see "Executive Compensation -- Fiscal Year-
End Option Values."
As noted above, the Company's compensation policy is primarily based upon
the practice of pay-for-performance. Section 162(m) of the Internal Revenue
Code imposes a limitation on the deductibility of nonperformance-based
compensation in excess of $1 million paid to named executive officers. The 1994
Stock Option Plan was created with the intention that all compensation
attributable to stock option exercises should qualify as deductible
performance-based compensation. The Committee currently believes that,
generally, the Company should be able to continue to manage its executive
compensation program to preserve federal income tax deductions.
10
<PAGE>
Chief Executive Officer Compensation
The Committee's members other than Mr. Smith annually review and approve the
compensation of Mr. Smith, the Company's Chief Executive Officer. Mr. Smith
also participates in the executive bonus plan, with his bonus tied to corporate
revenue and profit goals. His maximum possible bonus is 2.5% of the Company's
1999 operating income. The Committee believes that Mr. Smith is paid a
reasonable salary. Mr. Smith is the only employee of the Company not eligible
for stock options. Since he is a significant stockholder in the Company, his
rewards as Chief Executive Officer reflect increases in value enjoyed by all
other stockholders.
Compensation Committee
William P. Benton, Chairman
Mark M. Gambill
O. Bruton Smith
Compensation of Officers
The following table sets forth compensation paid by or on behalf of the
Company to the Chief Executive Officer of the Company and to its other
executive officers for services rendered during the Company's fiscal years
ended December 31, 1999, 1998 and 1997:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation (1) Awards
----------------------- ------------
Number of
Shares
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus (2) Compensation Options (3) Compensation (4)
------------------ ---- ------ -------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
O. Bruton Smith 1999 $375,000 $ 546,000 $118,163(5) -- -0-
Chairman and Chief 1998 350,000 1,092,000 103,256(5) -- -0-
Executive Officer of
SMI 1997 350,000 1,039,000 108,313(5) -- -0-
H.A. "Humpy" Wheeler 1999 275,000 488,000 (6) 50,000 $2,600
President and Chief 1998 250,000 764,000 (6) -- 2,600
Operating Officer of
SMI; 1997 250,000 727,000 (6) -- 2,600
President and General
Manager of CMS
William R. Brooks 1999 200,000 170,000 (6) 50,000 2,600
Vice President,
Treasurer 1998 175,000 340,000 (6) -- 2,600
and Chief Financial
Officer of SMI 1997 175,000 294,000 (6) -- 2,600
Edwin R. Clark 1999 102,500 141,000 (6) 20,000 2,600
Executive Vice
President 1998 102,500 150,000 (6) -- 2,600
of SMI; President and 1997 102,500 309,600 (6) -- 2,600
General Manager of AMS
</TABLE>
- --------
(1) Does not include the dollar value of perquisites and other personal
benefits.
(2) The amounts shown are cash bonuses earned in the specified year and paid in
the first quarter of the following year.
(3) The 1994 Stock Option Plan was adopted in December 1994. The number of
shares underlying options is, in the case of each executive officer, the
sum of shares available upon exercise of incentive stock options and non-
statutory stock options, giving effect to the two for one stock split
effected as of March 15, 1996 in the form of a 100% Common Stock dividend
(the "Stock Split"). No options were granted to the Company's executive
officers in 1998 or 1997.
(4) Includes Company match to 401(k) plan.
11
<PAGE>
(5) Amount represents share of split-dollar insurance premium treated as
compensation to Mr. Smith. See "Smith Life Insurance Arrangements." Mr.
Smith also received certain perquisites and other personal benefits
totaling not more than $50,000.
(6) The aggregate amount of perquisites and other personal benefits received
did not exceed the lesser of $50,000 or 10% of the total annual salary and
bonus reported for such executive officer.
Fiscal Year-End Option Values
The following table sets forth information concerning outstanding options to
purchase Common Stock held by executive officers of the Company at December 31,
1999 adjusted to reflect the Stock Split.
Aggregated Option Exercises in Lastest Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Shares Acquired on Value Realized on
Options Exercised Options Exercised
Name in 1999 in 1999
- ---- -------------------------- -------------------------
<S> <C> <C>
H.A. "Humpy" Wheeler....... 25,150 $ 438,500
William R. Brooks.......... -- --
Edwin R. Clark............. -- --
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options In-the-Money Options at
Name at Fiscal Year-End (#) Fiscal Year-End ($)(1)
- ---- -------------------------- -------------------------
Excercisable/Unexercisable Exercisable/Unexercisable
-------------------------- -------------------------
<S> <C> <C>
H.A. "Humpy" Wheeler....... 556,024/0 $13,058,000/0
William R. Brooks.......... 240,000/0 3,535,000/0
Edwin R. Clark............. 80,000/20,000 1,715,000/0
</TABLE>
- --------
(1) Year-end value is based on the December 31, 1999 closing sales price for
the Company's common stock of $27.81 per share, less the applicable
aggregate option exercise price(s) of in-the-money options, multiplied by
the number of unexercised in-the-money options which are exercisable and
unexercisable, respectively.
Smith Life Insurance Arrangements
In 1995, the Compensation Committee (excluding Mr. Smith) approved the
establishment of a "split-dollar" life insurance plan for the benefit of Mr.
Smith. Pursuant to such plan, the Company entered into split-dollar insurance
agreements whereby split-dollar life insurance policies in the total face
amount of $17,094,000 (individually, a "Policy" or together the "Policies")
would be purchased and held in trust for the benefit of Mr. Smith's lineal
descendants. The Company has agreed to pay the annual (or shorter period)
premium payments on the Policies.
Upon payment of the death benefit or upon the surrender of a Policy for its
cash value, the Company will receive an amount equal to the Company's Split-
Dollar Interest (as defined below). The Company's Split-Dollar Interest equals,
in the case of the payment of the death benefit, the cumulative payments made
by the Company towards the premiums under a Policy less any portion of such
payments charged as compensation to Mr. Smith (the "Reimbursable Payment"). The
Company's Split-Dollar Interest equals, in the case of surrender of a Policy
for its cash value, the lesser of (i) the net cash value of such Policy and
(ii) the Reimbursable Payment.
In the event a Policy is surrendered or terminated prior to his death, Mr.
Smith has agreed to reimburse the Company for the positive amount, if any, by
which the Reimbursable Payment exceeds the net cash value of such Policy. Mr.
Smith's promise is evidenced by a promissory note in favor of the Company,
which note includes a limited guaranty by Sonic Financial whereby Sonic
Financial will permit amounts owed by Mr. Smith to the Company to be offset by
amounts owed to Sonic Financial by AMS.
12
<PAGE>
Compensation Committee Interlocks and Insider Participation
Messrs. Benton, Gambill and Smith served on the Company's Compensation
Committee during 1999. Mr. Smith serves as the Chief Executive Officer of the
Company. Mark M. Gambill has been the President of First Union Capital Markets,
the investment banking firm which co-managed the Company's offering of 8 1/2%
senior subordinated notes in August 1997 and May 1999.
The Company pays the annual (or shorter period) premiums on split-dollar
life insurance policies for the benefit of Mr. Smith. See "Executive
Compensation -- Smith Life Insurance Arrangements."
Mr. Smith is the only officer of SMI to have served on the compensation
committee of another entity during 1999. He served as a member of the Board of
Directors and the Compensation Committee for SAI during 1999. Mr. Smith
received aggregate salary and other annual compensation of $929,900 from SAI
during 1999. Mr. Brooks served as a member of the Board of Directors for SAI
during 1999.
Director Compensation
Members of the Board of Directors who are not employees of the Company
received options to purchase shares of the Company's common stock in 1999 as
follows: for Messrs. Benton and Gambill 20,000 shares each at $27.88, and for
Mr. Kemp 15,000 shares at $26.88. The Company also reimburses all directors for
their expenses incurred in connection with their activities as directors of
SMI. Directors who are also employees of the Company receive no additional
compensation for serving on the Board of Directors. For additional information
concerning the Formula Stock Option Plan for SMI's outside directors, see Note
11 of the Company's December 31, 1999 Audited Consolidated Financial
Statements.
13
<PAGE>
Stockholder Return Performance Graph
Set forth below is a line graph comparing the cumulative stockholder return
on the Company's Common Stock against the cumulative total return of each of
the Standard & Poor's 500 Stock Index, the Russell 2000 Stock Index, and a Peer
Group Index for the period commencing February 24, 1995 and ending December 31,
1999. The Russell 2000 Index was included beginning in 1998 because management
believes, as a small-cap index, it more closely represents companies with
market capitalization similar to the Company's than the Standard & Poor's 500
Stock Index. The companies used in the Peer Group Index in 1995 consist of
Churchill Downs Incorporated, International Speedway Corporation, and Walt
Disney Co.; in 1996 also include Penske Motorsports and Dover Downs
Entertainment; in 1997 also include Grand Prix of Long Beach; in 1998 also
include Action Performance; and in 1999 also include Championship Auto Racing
Teams, which are all publicly traded companies known by the Company to be
involved in the amusement, sports and recreation industries. Churchill Downs
Incorporated, Gaylord Entertainment Company, Hollywood Park, Inc.,
International Family Entertainment, which is no longer a publicly traded
company, Grand Prix of Long Beach, which was acquired by Dover Downs
Entertainment, and Penske Motorsports, which was acquired by International
Speedway Corporation, are no longer included in the Peer Group Index. The graph
assumes that $100 was invested on February 24, 1995 in each of the Company's
Common Stock, the Standard & Poor's 500 Stock Index, the Russell 2000 Index,
and the Peer Group Index companies and that all dividends were reinvested.
[5-YEAR CUMULATIVE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
SPEEDWAY
MOTORSPORTS 100.00 157.89 221.05 261.18 300.00 292.76
1998 PEER GROUP 100.00 110.60 132.03 188.11 174.79 173.40
1999 PEER GROUP 100.00 110.60 132.03 188.11 174.79 173.07
S&P 500 INDEX 100.00 129.08 158.71 211.66 272.15 329.42
RUSSELL 2000 INDEX 100.00 124.88 145.62 178.15 173.16 207.08
</TABLE>
ASSUMES $100 INVESTED FEB 24, 1995
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC 31, 1999
14
<PAGE>
CERTAIN TRANSACTIONS
CMS holds a note from a partnership in which Mr. Smith, the Company's
Chairman and Chief Executive Officer, is a partner. The outstanding balance due
thereunder was $848,000 at December 31, 1999, including accrued interest. The
note due from such partnership is collateralized by certain land owned by the
partnership and is payable on demand. The note bears interest at 1% over prime.
Sonic Financial, an affiliate of the Company through common ownership by Mr.
Smith, has made several loans and cash advances to AMS prior to 1996. Such
loans and advances stood at approximately $2.6 million at December 31, 1999. Of
such amount, approximately $1.8 million bears interest at 3.83% per annum. The
remainder of the amount bears interest at 1% over prime.
From time to time during 1999, the Company paid certain expenses and made
cash advances for various corporate purposes on behalf of Sonic Financial. At
December 31, 1999, the Company had no outstanding amounts due from Sonic
Financial.
At December 31, 1999, the Company had a note receivable from Mr. Smith for
approximately $2,103,000 including accrued interest. The principal balance of
the note represents premiums paid by the Company under the split-dollar life
insurance trust arrangement on behalf of Mr. Smith, in excess of cash surrender
value, see "Smith Life Insurance Arrangements." The note bears interest at 1%
over prime.
For information concerning certain transactions in which Messrs. Smith and
Gambill have an interest, see "Compensation Committee Interlocks and Insider
Participation."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
SMI's executive officers, directors and persons who own more than ten percent
(10%) of SMI's Common Stock to file initial reports of ownership and changes in
ownership with the SEC. Additionally, SEC regulations require that SMI identify
any individuals for whom one of the referenced reports was not filed on a
timely basis during the most recent fiscal year or prior fiscal years. To SMI's
knowledge, based solely on review of reports furnished to it, all Section 16(a)
filing requirements applicable to its executive officers, directors and more
than 10% beneficial owners were complied with.
OTHER MATTERS
In the event that any matters other than those referred to in the
accompanying Notice should properly come before and be considered at the Annual
Meeting, it is intended that proxies in the accompanying form will be voted
thereon in accordance with the judgment of the person or persons voting such
proxies.
15
<PAGE>
SPEEDWAY MOTORSPORTS, INC.
P R O X Y
Concord, North Carolina
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mr. William R. Brooks and Mr. O. Bruton Smith as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and vote, as designated below, all the shares of the Common
Stock of Speedway Motorsports, Inc. held of record by the undersigned on March
9, 2000 at the Annual Meeting of Stockholders to be held on May 3, 2000 or any
adjournment thereof.
1. ELECTION OF DIRECTORS
Nominees: Mr. H.A. Wheeler and Mr. Edwin R. Clark (Mark only one of the
following boxes).
M VOTE FOR both nominees listed above, except vote withheld as to the
following nominee (if any):
M VOTE WITHHELD as to all nominees.
2. AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN
To amend the Employee Stock Purchase Plan of SMI. (Mark only one of the
following boxes).
M FOR
M AGAINST
M ABSTAIN
3. SELECTION OF AUDITORS
To ratify the selection of Deloitte & Touche LLP as the principal
independent auditors of SMI and its subsidiaries for the year 2000 (Mark
only one of the following boxes).
M FOR
M AGAINST
M ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before this meeting.
13
<PAGE>
PLEASE MARK, SIGN BELOW, DATE AND RETURN THIS
PROXY PROMPTLY IN THE ENVELOPE FURNISHED.
Please sign exactly as name appears below.
When shares are held by joint tenants, both should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
Shares
Dated , 2000
Signature
Signature if held jointly
M Please mark here if you
intend to attend the Meeting
of Stockholders.
14
<PAGE>
Appendix B
SPEEDWAY MOTORPORTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
AMENDED AND RESTATED
AS OF
MAY 3, 2000
<PAGE>
SPEEDWAY MOTORSPORTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
AMENDED AND RESTATED
AS OF
MAY 3, 2000
TABLE OF CONTENTS
Page
ARTICLE I. PURPOSE; DEFINITIONS; CONSTRUCTION.............................1
1.1 Purpose of Plan................................................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"..............................................2
(h) "Company"................................................2
(i) "Company Stock"..........................................2
(j) "Contributions"..........................................2
(k) "Effective Date".........................................2
(1) "Employee"...............................................2
(m) "Employer"...............................................2
(n) "Exercise Date"..........................................2
(o) "Grant Date".............................................2
(p) "Option".................................................2
(q) "Participant"............................................2
(r) "Plan"...................................................2
1.3 Construction...................................................2
ARTICLE II. ADMINISTRATION.................................................3
2.1 Appointment and Procedure of Committee.........................3
2.2 Authority of Committee.........................................3
ARTICLE III. PARTICIPATION..................................................3
3.1 Eligibility to Participate.....................................3
3.2 Restrictions on Participation..................................4
3.3 Leave of Absence...............................................4
i
<PAGE>
ARTICLE IV. CONTRIBUTIONS ...................................................4
4.1 Payroll Deductions.............................................4
4.2 Direct Payment.................................................4
4.3 Leave of Absence...............................................5
4.4 Contributions to Accounts......................................5
4.5 Withdrawal of Contributions from Plan..........................5
4.6 Termination of Employment......................................5
ARTICLE V. OPTIONS..........................................................5
5.1 Company Stock Available for Options............................5
5.2 Granting of Options............................................6
5.3 Option Price...................................................6
5.4 Option Period..................................................6
5.5 Exercise of Options............................................7
(a) Automatic Exercise.......................................7
(b) Nontransferability of Options............................7
(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.................8
(d) Leave of Absence.........................................8
(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.......................................9
ARTICLE VI . MISCELLANEOUS..................................................9
6.1 Adjustments Upon Changes in Capitalization.....................9
6.2 Approval of Stockholders.......................................9
6.3 Amendment, Suspension and Termination..........................9
6.4 Intent to Comply With Code Section 423.........................10
6.5 Equal Rights and Privileges....................................10
6.6 Use of Funds. ................................................10
6.7 Withholding....................................................10
6.8 Effect of Plan.................................................10
6.9 No Employment Rights...........................................10
6.10 Governing Law. ...............................................10
6.11 Other Actions. ...............................................11
ii
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SPEEDWAY MOTORSPORTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
AMENDED AND RESTATED
AS OF
MAY 3, 2000
ARTICLE I. PURPOSE; DEFINITIONS; CONSTRUCTION
1.1 Purpose of Plan. The purpose of the Plan, which shall be known as
---------------
the Speedway Motorsports, Inc. Employee Stock Purchase Plan (the "Plan"), is to
provide employees of Speedway Motorsports, Inc. (the "Company") and its
participating subsidiaries (which hereinafter shall be referred to collectively
with the Company as the "Employer") an opportunity to acquire a proprietary
interest in the Company through the purchase of the common stock, $.01 par value
per share, of the Company. This Plan is intended to qualify as an "employee
stock purchase plan" within the meaning of Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code").
1.2 Definitions. Throughout this Plan, the following terms shall have
-----------
the meaningsindicated:
(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.
1
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(g) "Committee" shall mean the Compensation Committee of the
Board of Directors, or in the event that there is no Compensation Committee or
to the extent the authority of the Compensation Committee is limited, the Board
of Directors.
(h) "Company" shall mean Speedway Motorsports, Inc., a company
organized and existing under the laws of the State of Delaware.
(i) "Company Stock" shall mean the common stock, $.0l par value
per share, 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) "Effective Date" shall mean July 1, 1996 or as soon as
administratively practicable thereafter. The Plan's original effective date was
April 1, 1996.
(1) "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.
(m) "Employer" shall mean the Company and any of its present or
future subsidiaries (within the meaning of Sections 424(f) and (g) of the Code)
which the Committee may designate from time to time as participating Employers
under this Plan for purposes of a Grant Date.
(n) "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.
(o) "Grant Date" shall mean January 1 of each year during the
term of the Plan, plus any other interim dates during the year designated by the
Board of Directors or the Committee.
(p) "Option" shall mean an option to purchase shares of Company
Stock granted to a Participant pursuant to this Plan.
(q) "Participant" shall mean an Employee participating in this
Plan in accordance with Article III.
(r) "Plan" shall mean this Speedway Motorsports, Inc. Employee
Stock Purchase Plan, as amended and restated as of May 3, 2000, and as
subsequently 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
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"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.
ARTICLE II. ADMINISTRATION
2.1 Appointment and Procedure of Committee. The Plan shall be
--------------------------------------
administered by the Board of Directors or the Compensation Committee appointed
by the Board of Directors. The Committee shall be appointed from time to time by
the Board of Directors and shall consist of not fewer than two of its members.
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 interests 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, effective January 1, 2001, an Employee shall be eligible to
participate in this Plan on a Grant Date if, as of such Grant Date, the Employee
has been in the continuous service of the Employer for at least six consecutive
months and remains employed with the Employer. Prior to January 1, 2001, an
Employee shall be eligible to participate in this Plan on a Grant Date if, as of
such Grant Date, the Employee has been in the continuous service of the Employer
for at least one year and remains employed with the Employer. For this purpose,
years of employment prior to the Effective Date will be considered. If the Board
of Directors or the Committee designates an interim Grant Date after January 1,
2000 and before January 1, 2001, an Employee shall be eligible to participate in
this Plan on such Grant Date if the Employee had been in the continuous service
of the Employer for at least six consecutive months as of January 1, 2000 and
remains employed with the Employer; provided, however, that an Employee who
already had been eligible to participate in the Plan on January 1, 2000 shall
not be eligible to participate on such interim Grant Date.
3
<PAGE>
For purposes of eligibility to participate in this Plan, the following
service also shall be recognized: (a) service with an entity prior to the
acquisition by the Company, or one of its subsidiaries, of a controlling
interest in or substantially all of the assets of such entity, and (b) service
with Sonic Automotive, Inc. and its subsidiaries.
3.2 Restrictions on Participation. Notwithstanding the foregoing
-----------------------------
Section 3.1, 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 of its subsidiaries (as determined in accordance with the rules
of Code Section 424(d) relating to attribution of stock ownership).
3.3 Leave of Absence. Termination by the Company of an Employee's
----------------
bona fide leave on 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. Notwithstanding the
foregoing, for purposes of participation in the Plan, an Employee on a leave of
absence shall be deemed to continue 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 (or
unless the Employee's reemployment is guaranteed by law or contract).
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 may develop in its discretion 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 may prescribe in its discretion, 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 following 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, in lieu of payroll deductions
pursuant to Section 4.1, a Participant may
4
<PAGE>
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 toward the purchase of Company Stock on such
Exercise Date.
4.3 Leave of Absence. If a Participant goes on a bona fide 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) subject to Section 3.3, remain a Participant in the Plan
during such leave of absence, authorizing deductions to be made from payments by
the Company 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 then
credited to his Account 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, payroll deductions from his Base Pay shall cease.
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 to exercise
any unexpired Option he holds as of his termination of employment for any reason
unrelated to Cause may continue, if he so elects, until the next Exercise Date
following such termination of employment pursuant to Section 5.5(c)(ii) or
(iii), or he may withdraw the Contributions then credited to his Account in
accordance with Section 4.5.
ARTICLE V. OPTIONS
5.1 Company Stock Available for Options. There shall be available for
-----------------------------------
Options under the Plan an aggregate maximum of 400,000 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
<PAGE>
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 Board of
Directors or the Committee). On each Grant Date, all Employees eligible to
receive an Option on such Grant Date shall be granted an Option to purchase
shares of Company Stock. Prior to each Grant Date, the Committee shall determine
the number of shares of Company Stock available for purchase under each Option
to be granted on such Grant Date; provided that, the same number of shares will
be available under each Option granted on 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. Furthermore, no Participant may be granted Options
in any calendar year which permits the Participant to purchase more than 500
shares of Company Stock, subject to any adjustments which are made pursuant to
Section 6.1 (or such higher or lower number as the Committee may establish with
respect to all subsequently granted Options for all Participants in the Plan,
subject to the limitations of Code Section 423).
5.3 Option Price. The purchase price per share of Company Stock
------------
acquired pursuant to the exercise of all or any portion of an Option granted
under this Plan shall be ninety percent of the lesser of (i) the fair market
value per share of Company Stock on the applicable Grant Date, and (ii) the fair
market value per share of 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 fair
market value shall be determined by the Committee in accordance with the
regulations promulgated under Code Section 2031, 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. In no event will the duration of an Option period exceed
twenty-seven months (or such other applicable period permitted under Code
Section 423(b)(7)) from the date on which such Option is granted.
5.5 Exercise of Options.
-------------------
6
<PAGE>
(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.
(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.
(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 then credited
to the Participant's Account under the Plan, or
(B) To allow any unexercised Options held by the
Participant as of the date of his death for the purchase of Company Stock to be
exercised 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 Options
were 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.
7
<PAGE>
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
Options he holds as of his termination of employment to be exercised
automatically in accordance with Section 5.5(a) on the Exercise Date next
following his termination of employment, but only to the extent such Options
were 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.
(d) Leave of Absence. A Participant on a bona fide leave of
----------------
absence shall, subject to the election made by such Participant pursuant to
Section 4.3 and subject to this Section 5.5(d), continue to be a Participant in
the Plan so long as such Participant is on such bona fide leave of absence. A
Participant who has been on a bona fide leave of absence for more than ninety
days and who therefore is not an Employee for purposes of the Plan (unless the
right to reemployment is guaranteed by statute or contract) shall not be
entitled to participate in any offering commencing on any Grant Date following
the ninetieth day of such leave of absence. Notwithstanding any other provisions
of the Plan, unless a Participant on a bona fide leave of absence returns to
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, 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 its assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or
8
<PAGE>
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 Company
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 Company. The Company may require that any
person for whom an Option is being exercised 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 . 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 or
shares of the Company, the Committee may make such adjustments to the extent and
in the manner it deems appropriate in the number and/or kind of shares of
Company Stock available for issuance under the Plan, the number and/or kind of
shares of Company Stock subject to outstanding Options under the Plan, and in
the Option exercise price per share. In addition, the Committee may make such
other adjustments as it determines to be equitable. Any adjustments made
pursuant to this Section 6.1 remain subject to the limitations of Code Section
423 (including its $25,000 annual limitations).
6.2 Approval of Stockholders. Within twelve months before or after
------------------------
the Plan is originally adopted, this Plan must be approved 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.
6.3 Amendment, Suspension and Termination. The Board of Directors may
-------------------------------------
at any time amend, suspend or terminate this Plan; provided, however, that no
amendment, suspension or termination may, without the consent of a Participant,
adversely affect the rights of the Participant under any Option he then holds;
and provided further, that approval by the stockholders of the Company shall be
required for an amendment, suspension or termination to the extent necessary to
comply with any applicable law or regulation or the rules of any self-regulatory
organization that are applicable to the Company or this Plan. Any required
stockholder approval shall be deemed to
9
<PAGE>
have been given upon approval by a majority of the votes cast on such amendment,
suspension or termination 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. 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.
6.4 Intent to Comply With Code Section 423. It is intended that this
--------------------------------------
Plan qualify as an "employee stock purchase plan" under Code Section 423. The
provisions of this Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that Section of
the Code. In the event of an inconsistency between the Plan and Code Section
423, the Plan shall be interpreted in a manner which complies with the
requirements of Code Section 423 and the regulations thereunder, without further
act or amendment by the Company or the Board of Directors unless otherwise
required pursuant to Section 6.3 of this Plan.
6.5 Equal Rights and Privileges. All Participants granted Options
---------------------------
under this Plan shall have equal rights and privileges within the meaning of
Code Section 423(b)(5) and the regulations thereunder. The provisions applying
to one Option granted on a Grant Date must apply in the same manner to all other
Options granted on such Grant Date.
6.6 Use of Funds. All Contributions received and held by the Employer
------------
under this Plan may be used by the Employer for any corporate purpose and the
Employer shall not be obligated to segregate such Contributions.
6.7 Withholding. It shall be a condition to the obligation of the
-----------
Company to issue shares of Company Stock upon exercise of an Option that the
Participant (or his estate pursuant to Section 5.5(c)(ii)), through payroll
withholding, cash payment or otherwise, make adequate provision acceptable to
the Company to satisfy any tax withholding obligations arising in connection
with Options granted hereunder or Common Stock acquired upon the exercise
thereof, including taxes owed by the Participant due to the disposition of
Company Stock by the Participant prior to the expiration of the holding periods
described in Code Section 423 (a).
6.8 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.
6.9 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.
6.10 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 (excluding the principles of conflict of laws thereof), except to
the extent such laws are preempted by the laws of the United States.
10
<PAGE>
6.11 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
