CROSS-CONTINENT AUTO RETAILERS, INC.
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION.
The purpose of the Amended and Restated 1996 Stock Option Plan (the
"Plan") of Cross-Continent Auto Retailers, Inc., a Delaware corporation (the
"Company"), is to attract and retain employees (including officers),
directors and independent contractors of the Company, or any Subsidiary or
Affiliate which now exists or hereafter is organized or acquired, and to
furnish additional incentives to such persons by encouraging them to acquire
a proprietary interest in the Company. Pursuant to Section 6 of the Plan,
there may be granted Options, including "incentive stock options" and
"nonqualified stock options". The Plan is intended to satisfy the
requirements of Rule 16b-3 promulgated under Section 16 of the Exchange Act
and shall be interpreted in a manner consistent with the requirements thereof.
2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Administrator" means the Board or, if and so long as a Committee
has been established and is in existence, the Committee.
(b) "Affiliate" means any entity if, at the time of granting of an
Option, (i) the Company, directly, owns at least 20% of the combined voting
power of all classes of stock of such entity or at least 20% of the ownership
interests in such entity or (ii) such entity, directly or indirectly, owns at
least 20% of the combined voting power of all classes of stock of the Company.
(c) "Beneficiary" means the person, persons, trust or trusts which
have been designated by an Optionee in his or her most recent written
beneficiary designation filed with the Company to receive the benefits specified
under the Plan upon his or her death, or, if there is no designated Beneficiary
or surviving designated Beneficiary, then the person, persons, trust or trusts
entitled by will or the applicable laws of descent and distribution to receive
such benefits.
(d) "Board" means the Board of Directors of the Company.
(e) "Change in Control" means a change in control of the Company
which will be deemed to have occurred if:
(i) any "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than an
Exempt Person), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding voting
securities; PROVIDED that no Change of Control shall be deemed to
have occurred as the result of an acquisition by the Company of
any of its then outstanding voting securities which, by reducing
the number of shares outstanding, increases the proportionate
number of shares of voting securities beneficially owned by any
person to 50% or more of the combined voting power of the
Company's then outstanding voting securities; PROVIDED FURTHER,
that if a person shall become the beneficial owner of 50% or more
of the combined voting power of the Company's then outstanding
voting securities by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the
beneficial
owner of any additional voting securities of the Company, then a
Change of Control shall be deemed to have occurred; and PROVIDED
FURTHER, that, notwithstanding anything to the contrary contained
in the Plan, if the Board of Directors of the Company determines
in good faith that a person who would otherwise be a beneficial
owner as defined pursuant to the foregoing provisions of this
paragraph has become such inadvertently, in a manner that
otherwise would cause a Change of Control, and such person
divests as promptly as practicable a sufficient number of voting
securities so that such person would no longer be a beneficial
owner, then a Change of Control shall be deemed to not have
occurred for any purposes of this Plan;
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii), or (iv) of
this Section 2(e)) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of
at least a majority of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving or parent entity) 50% or more of the
combined voting power of the voting securities of the Company or
such surviving or parent entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinbefore
defined), other than an Exempt Person, acquired 50% or more of
the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve of a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all of the Company's assets (or any transaction having a similar
effect).
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Committee" means the committee, consisting exclusively of two or
more Non-Employee Directors (as defined in Rule 16b-3), if and as the same may
be established by the Board to administer the Plan; PROVIDED, HOWEVER, that to
the extent required for the Plan to comply with the applicable provisions of
Section 162(m) of the Code, "Committee" means either such committee or a
subcommittee of that committee, as the case may be, which shall be constituted
to comply with the applicable requirements of Section 162(m) of the Code and the
regulations promulgated thereunder.
(h) "Company" means Cross-Continent Auto Retailers, Inc., a
corporation organized under the laws of the State of Delaware, or any successor
corporation.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and
2
cases.
(j) "Exempt Person" means (1) the Company, (2) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, (3)
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of Stock, or
(4) any person or group of persons who, immediately prior to the adoption of
this Plan, owned more than 50% of the combined voting power of the Company's
then outstanding voting securities.
(k) "Fair Market Value" means, with respect to Stock or other
property, the fair market value of such Stock or other property determined by
such methods or procedures as shall be established from time to time by the
Administrator. Notwithstanding the foregoing, the per share Fair Market Value
of Stock as of a particular date shall mean (i) if the shares of Stock are then
listed on a national securities exchange, the closing sales price per share of
Stock on the national securities exchange on which the stock is principally
traded, for the last preceding date on which there was a sale of such Stock on
such exchange, or (ii) if the shares of Stock are then traded on the National
Market System of the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the reported per share closing price of the Stock
on the day prior to such date or, if there was no such price reported for such
date, on the next preceding date for which such a price was reported, or (iii)
if the shares of Stock are then traded in an over-the-counter market other than
on the NASDAQ National Market System, the average of the closing bid and asked
prices for the shares of Stock in such over-the-counter market for the last
preceding date on which there was a sale of such Stock in such market, or (iv)
if the shares of Stock are not then listed on a national securities exchange or
traded in an over-the-counter market, such value as the Administrator, in its
sole discretion, shall determine in good faith.
(l) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code provided
that the Plan has been approved by the stockholders of the Company no later than
twelve months after the date of adoption of the Plan by the Board.
(m) "NQSO" means any Option not designated as an ISO.
(n) "Option" means a right, granted to an Optionee under Section 6(b)
of the Plan, to purchase shares of Stock. An Option may be either an ISO or an
NQSO, provided that ISOs may be granted only to employees of the Company or a
Subsidiary.
(o) "Optionee" means a person who, as an employee, director or
independent contractor of the Company, a Subsidiary or an Affiliate, has been
granted an Option.
(p) "Plan" means this Cross-Continent Auto Retailers, Inc. 1996 Stock
Option Plan, as amended from time to time.
(q) "Rule 16b-3" means Rule 16b-3, as from time to time in effect,
promulgated by the Securities and Exchange Commission under Section 16 of the
Exchange Act, including any successor to such Rule.
(r) "Stock" means the common stock, par value $.01 per share, of the
Company.
(s) "Stock Option Agreement" means any written agreement, contract,
or other instrument or document evidencing an Option.
(t) "Subsidiary" means any corporation in which the Company, directly
or
3
indirectly, owns stock possessing 50% or more of the total combined voting
power of all classes of stock of such corporation.
3. ADMINISTRATION.
The Plan shall be administered by the Administrator. The Administrator
shall have the authority in its discretion, subject to and not inconsistent with
the express provisions of the Plan, to administer the Plan and to exercise all
the powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Options; to determine the persons to whom and
the time or times at which Options shall be granted; to determine the type and
number of Options to be granted, the number of shares of Stock to which Options
may relate and the terms, conditions, restrictions and performance criteria
relating to any Options; to determine whether, to what extent, and under what
circumstances Options may be settled, canceled, forfeited, exchanged, or
surrendered; to make adjustments in the terms and conditions of, and the
criteria and performance objectives included in, Options in recognition of
unusual or non-recurring events affecting the Company or any Subsidiary or
Affiliate or the financial statements of the Company or any Subsidiary or
Affiliate, or in response to changes in applicable laws, regulations, or
accounting principles; to designate Affiliates; to construe and interpret the
Plan and any Options; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the Stock Option
Agreements (which need not be identical for each Optionee); and to make all
other determinations deemed necessary or advisable for the administration of the
Plan.
The Administrator may appoint a chairperson and a secretary and may make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Administrator shall be made by a majority of its members either present in
person or participating by conference telephone at a meeting or by written
consent. The Administrator may delegate to one or more of its members or to one
or more agents such administrative duties as it may deem advisable, and the
Administrator or any person to whom it has delegated duties as aforesaid may
employ one or more persons to render advice with respect to any responsibility
the Administrator or such person may have under the Plan. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all persons, including the Company, and any Subsidiary, Affiliate or
Optionee (or any person claiming any rights under the Plan from or through any
Optionee) and any stockholder.
No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
4. ELIGIBILITY.
Options may be granted to employees (including officers), directors and
independent contractors of the Company and its present or future Subsidiaries
and Affiliates, in the discretion of the Administrator. In determining the
person to whom Options shall be granted and the type of Options granted
(including the number of shares to be covered by such Options), the
Administrator shall take into account such factors as the Administrator shall
deem relevant in connection with accomplishing the purposes of the Plan.
5. STOCK SUBJECT TO THE PLAN.
The maximum number of shares of Stock reserved for the grant of Options
under the Plan shall be 1,380,000 shares of Stock, subject to adjustment as
provided herein. Such shares may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by the
Company in the open market, in private transactions or otherwise. The number of
shares of Stock
4
available for issuance under the Plan shall be reduced by the number of
shares of Stock subject to outstanding Options. If any shares subject to an
Option are forfeited, canceled, exchanged or surrendered or if an Option
otherwise terminates or expires without a distribution of shares to the
Optionee, the shares of Stock with respect to such Option shall, to the
extent of any such forfeiture, cancellation, exchange, surrender, termination
or expiration, again be available for Options under the Plan.
In the event that the Administrator shall determine that any dividend or
other distribution (whether in the form of cash, Stock, or other property),
recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of an Optionee under the Plan, then the Administrator shall make such
equitable changes or adjustments as it deems necessary or appropriate to any or
all of (i) the number and kind of shares of Stock which may thereafter be issued
in connection with Options, (ii) the number and kind of shares of Stock issued
or issuable in respect of outstanding Options, and (iii) the exercise price,
grant price, or purchase price relating to any Option; PROVIDED THAT, with
respect to ISOs, such adjustment shall be made in accordance with Section 424(h)
of the Code.
6. SPECIFIC TERMS OF OPTIONS.
(a) GENERAL. The term of each Option shall be for such period as may
be determined by the Administrator. The Administrator may make rules relating
to Options, and may impose on any Option or the exercise thereof, at the date of
grant or thereafter, such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Administrator shall determine.
(b) OPTIONS. The Administrator is authorized to grant Options to
Optionees on the following terms and conditions:
(i) TYPE OF OPTION. The Stock Option Agreement
evidencing the grant of an Option under the Plan shall designate
the Option as an ISO (in the event its terms, and the individual
to whom it is granted, satisfy the requirements for ISOs under
the Code), or an NQSO.
(ii) EXERCISE PRICE. The exercise price per share
of Stock purchasable under an Option shall be determined by the
Administrator; provided that, except as may otherwise be required
by the Code, in the case of an ISO, such exercise price shall be
not less than the Fair Market Value of a share of Stock on the
date of grant of such Option and, in the case of an ISO granted
to the holder of more than 10% of the Stock outstanding at the
date of grant of such Option, such exercise price shall be not
less than 110% of the Fair Market Value on such date of grant.
In no event shall the exercise price for the purchase of shares
of Stock be less than par value. The exercise price for Stock
subject to an Option may be paid in cash or by an exchange of
Stock previously owned by the Optionee, or a combination of both,
in an amount having a combined value equal to such exercise
price. Any shares of Stock exchanged upon the exercise of any
Option shall be valued at the Fair Market Value on the date on
which such shares are exchanged. An Optionee also may elect to
pay all or a portion of the aggregate exercise price by having
shares of Stock with a Fair Market Value on the date of exercise
equal to the aggregate exercise price withheld by the Company or
sold by a broker-dealer in accordance with applicable law.
(iii) TERM AND EXERCISABILITY OF OPTIONS. The
date on which the Administrator adopts a resolution expressly
granting an Option shall be considered the
5
day on which such Option is granted. Options shall be
exercisable over the exercise period (which shall not exceed ten
years from the date of grant or five years from the date of grant
in the case of an ISO granted to a holder of more than 10% of
Stock outstanding as of such date), at such times and upon such
conditions as the Administrator may determine, as reflected in
the Stock Option Agreement. An Option may be exercised to the
extent of any or all full shares of Stock as to which the Option
has become exercisable, by giving written notice of such exercise
to the Company's Secretary and paying the exercise price as
described in Section 6(b)(ii).
(iv) TERMINATION OF EMPLOYMENT, ETC. An Option
may not be exercised unless the Optionee is then in the employ
of, is then a director of, or then maintains an independent
contractor relationship with, the Company or any Subsidiary or
Affiliate (or a company or a parent or subsidiary company of such
company issuing or assuming the Option in a transaction to which
Section 424(a) of the Code applies), and unless the Optionee has
continuously maintained any of such relationships, since the date
of grant of the Option; PROVIDED THAT, the Stock Option Agreement
may contain provisions extending the exercisability of Options,
in the event of specified terminations, to a date not later than
the expiration date of such Option. The Administrator may
establish a period during which the Beneficiaries of an Optionee
who died while an employee, director or independent contractor of
the Company or any Subsidiary or Affiliate or during any extended
period referred to in the immediately preceding proviso may
exercise those Options which were exercisable on the date of the
Optionee's death; provided that no Option shall be exercisable
after its expiration date.
(v) NONTRANSFERABILITY. Options shall not be
transferable by an Optionee except by will or the laws of descent
and distribution and shall be exercisable during the lifetime of
an Optionee only by such Optionee or his guardian or legal
representative.
(vi) OTHER PROVISIONS. Options may be subject to
such other conditions as the Administrator may prescribe in its
discretion.
7. CHANGE IN CONTROL PROVISIONS.
In the event of a Change in Control, any and all Options then outstanding
shall become fully exercisable and vested, whether or not theretofore vested and
exercisable.
8. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND EXCHANGE REQUIREMENTS. The Plan, the
granting and exercising of Options thereunder, and the other obligations of the
Company under the Plan and any Stock Option Agreement, shall be subject to all
applicable federal and state laws, rules and regulations, and to such approvals
by any regulatory or governmental agency as may be required. The Company, in
its discretion, may postpone the issuance or delivery of Stock under any Option
until completion of such stock exchange listing or registration or qualification
of such Stock or other required action under any state, federal or foreign law,
rule or regulation as the Company may consider appropriate, and may require any
Optionee to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of Stock in
compliance with applicable laws, rules and regulations.
(b) NO RIGHT TO CONTINUED EMPLOYMENT, ETC. Nothing in the Plan or in
any Option granted or Stock Option Agreement entered into pursuant to the Plan
shall confer upon any Optionee
6
the right to continue in the employ of, or to continue as a director of or an
independent contractor to, the Company, any Subsidiary or any Affiliate, as
the case may be, or to be entitled to any remuneration or benefits not set
forth in the Plan or such Stock Option Agreement or to interfere with or
limit in any way the right of the Company or any such Subsidiary or Affiliate
to terminate such Optionee's employment, directorship or independent
contractor relationship.
(c) TAXES. The Company or any Subsidiary or Affiliate is authorized
to withhold from any Option granted, any payment relating to an Option under the
Plan (including from a distribution of Stock), or any other payment to an
Optionee, amounts of withholding and other taxes due in connection with any
transaction involving an Option, and to take such other action as the
Administrator may deem advisable to enable the Company and an Optionee to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Option. This authority shall include authority to
withhold or receive Stock or other property and to make cash payments in respect
thereof in satisfaction of an Optionee's tax obligations.
(d) AMENDMENT AND TERMINATION OF THE PLAN. The Board may at any time
and from time to time alter, amend, suspend, or terminate the Plan in whole or
in part. Notwithstanding the foregoing, no amendment shall affect adversely any
of the rights of any Optionee, without such Optionee's consent, under any Option
theretofore granted under the Plan.
(e) NO RIGHTS TO OPTIONS; NO STOCKHOLDER RIGHTS. No Optionee shall
have any claim to be granted any Option under the Plan, and there is no
obligation for uniformity of treatment of Optionees. Except as provided
specifically herein, an Optionee or a transferee of an Option shall have no
rights as a stockholder with respect to any shares covered by the Option until
the date of the issuance of a stock certificate to such Optionee for such
shares.
(f) UNFUNDED STATUS OF OPTIONS. The Plan is intended to constitute
an "unfunded" plan for incentive and deferred compensation. Nothing contained
in the Plan or any Option shall give any such Optionee any rights that are
greater than those of a general creditor of the Company.
(g) NO FRACTIONAL SHARES. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Option. The Administrator shall
determine whether cash, other Options, or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
(h) GOVERNING LAW. The Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of Delaware
without giving effect to the conflict of laws principles thereof.
(i) EFFECTIVE DATE. The Plan shall take effect upon its adoption by
the Board.
(j) PLAN TERMINATION. The Board may terminate the Plan at any time
with respect to any shares of Stock that are not subject to Options. Unless
terminated earlier by the Board, the Plan shall terminate ten years after the
effective date and no Options shall be granted under the Plan after such date.
Termination of the Plan under this Section 8(j) will not affect the rights and
obligations of any Optionee with respect to options granted prior to
termination.
7