1
EXHIBIT 10.11
GROUP 1 AUTOMOTIVE, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The GROUP 1 AUTOMOTIVE, INC. 1998 EMPLOYEE STOCK
PURCHASE PLAN (the "Plan") is intended to provide an incentive for employees of
GROUP 1 AUTOMOTIVE, INC. (the "Company") and certain of its subsidiaries to
acquire or increase a proprietary interest in the Company through the purchase
of shares of the Company's common stock. The Plan is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"). The provisions of the Plan shall be
construed in a manner consistent with the requirements of that section of the
Code.
2. DEFINITIONS. Where the following words and phrases are used
in the Plan, they shall have the respective meanings set forth below, unless
the context clearly indicates to the contrary:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means a committee appointed from time to
time by the Board to administer the Plan as provided in paragraph 3.
(d) "Company" means Group 1 Automotive, Inc., a Delaware
corporation.
(e) "Date of Exercise" means the last day of each Option
Period.
(f) "Date of Grant" means January 1, 1998, and,
thereafter, the first day of each successive April, July, October, and
January.
(g) "Eligible Compensation" means regular straight-time
earnings or base salary, except that such term shall not include
payments for overtime, incentive compensation, bonuses and other
special payments.
(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(i) "Option Period" means the three month period
beginning on each Date of Grant.
(j) "Option Price" shall have the meaning assigned to
such term in paragraph 8(b).
(k) "Participating Company" means any present or future
parent or subsidiary corporation of the Company that participates in
the Plan pursuant to paragraph 4.
2
(l) "Plan" means this Group 1 Automotive, Inc. 1998
Employee Stock Purchase Plan, as amended from time to time.
(m) "Restriction Period" means the period of time during
which shares of Stock acquired by a participant in the Plan may not be
sold, assigned, pledged, exchanged, hypothecated or otherwise
transferred, encumbered or disposed of by such participant as provided
in paragraph 8(d).
(n) "Stock" means the shares of the Company's common
stock, par value $.01 per share.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Committee, the members of which shall be appointed from time to time by the
Board. Each member of the Committee shall serve for a term commencing on a
date specified by the Board and continuing until he dies, resigns, or is
removed from office by the Board. Subject to the provisions of the Plan, the
Committee shall interpret the Plan and all options granted under the Plan, make
such rules as it deems necessary for the proper administration of the Plan, and
make all other determinations necessary or advisable for the administration of
the Plan. In addition, the Committee shall correct any defect or supply any
omission or reconcile any inconsistency in the Plan, or in any option granted
under the Plan, in the manner and to the extent that the Committee deems
desirable to carry the Plan or any option into effect. The Committee shall, in
its sole discretion, make such decisions or determinations and take such
actions, and all such decisions, determinations and actions taken or made by
the Committee pursuant to this and the other paragraphs of the Plan shall be
conclusive on all parties. The Committee shall not be liable for any decision,
determination or action taken in good faith in connection with the
administration of the Plan. The Committee shall have the authority to delegate
routine day-to-day administration of the Plan to such officers and employees of
the Company as the Committee deems appropriate.
4. PARTICIPATING COMPANIES. The Committee may designate any
present or future parent or subsidiary corporation of the Company that is
eligible by law to participate in the Plan as a Participating Company by
written instrument delivered to the designated Participating Company. Such
written instrument shall specify the effective date of such designation and
shall become, as to such designated Participating Company and persons in its
employment, a part of the Plan. The terms of the Plan may be modified as
applied to the Participating Company only to the extent permitted under Section
423 of the Code. Transfer of employment among the Company and Participating
Companies (and among any other parent or subsidiary corporation of the Company)
shall not be considered a termination of employment hereunder. Any
Participating Company may, by appropriate action of its Board of Directors,
terminate its participation in the Plan. Moreover, the Committee may, in its
discretion, terminate a Participating Company's Plan participation at any time.
5. ELIGIBILITY. Subject to the provisions hereof, all employees
of the Company and the Participating Companies who are employed by the Company
or any Participating Company as of a Date of Grant shall be eligible to
participate in the Plan; provided, however, that no option shall be granted to
an employee if such employee, immediately after the option is granted, owns
stock possessing five percent or more of the total combined voting power or
value of all classes of stock
-2-
3
of the Company or of its parent or subsidiary corporations (within the meaning
of Sections 423(b)(3) and 424(d) of the Code).
6. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
paragraph 13, the aggregate number of shares which may be sold pursuant to
options granted under the Plan shall not exceed 200,000 shares of the
authorized Stock, which shares may be unissued shares or reacquired shares,
including shares bought on the market or otherwise for purposes of the Plan.
Should any option granted under the Plan expire or terminate prior to its
exercise in full, the shares theretofore subject to such option may again be
subject to an option granted under the Plan. Any shares that are not subject
to outstanding options upon the termination of the Plan shall cease to be
subject to the Plan.
7. GRANT OF OPTIONS.
(a) IN GENERAL. Following the effective date of the Plan
and continuing while the Plan remains in force, the Company shall offer options
under the Plan to purchase shares of Stock to all eligible employees who elect
to participate in the Plan. Except as otherwise determined by the Committee,
these options shall be granted on each Date of Grant. Except as provided in
paragraph 13, the term of each option shall be for three months, which shall
begin on a Date of Grant and end on the last day of such three-month period.
Subject to subparagraph 7(d), the number of shares of Stock subject to an
option for a participant shall be equal to the quotient of (i) the aggregate
payroll deductions withheld on behalf of such participant during the Option
Period in accordance with subparagraph 7(b), divided by (ii) the Option Price
of the Stock applicable to the Option Period, including fractions; provided,
however, that the maximum number of shares of Stock that may be subject to any
option for a participant may not exceed 3,000 (subject to adjustment as
provided in paragraph 13).
(b) ELECTION TO PARTICIPATE; PAYROLL DEDUCTION
AUTHORIZATION. An eligible employee may participate in the Plan only by means
of payroll deduction. Except as provided in subparagraph 7(f), each eligible
employee who elects to participate in the Plan shall deliver to the Company,
within the time period prescribed by the Committee, a written payroll deduction
authorization in a form prepared by the Company whereby he gives notice of his
election to participate in the Plan as of the next following Date of Grant, and
whereby he designates an integral percentage of his Eligible Compensation to be
deducted from his compensation for each pay period and paid into the Plan for
his account. The designated percentage may not be less than 1% nor exceed 10%.
(c) CHANGES IN PAYROLL AUTHORIZATION. The payroll
deduction authorization referred to in subparagraph 7(b) may not be changed
during the Option Period. However, a participant may withdraw from the Plan as
provided in paragraph 9.
(d) $25,000 LIMITATION. No employee shall be granted an
option under the Plan which permits his rights to purchase Stock under the Plan
and under all other employee stock purchase plans of the Company and its parent
and subsidiary corporations to accrue at a rate which exceeds $25,000 of fair
market value of Stock (determined at the time such option is granted) for each
calendar year in which such option is outstanding at any time (within the
meaning of Section
-3-
4
423(b)(8) of the Code). Any payroll deductions in excess of the amount
specified in the foregoing sentence shall be returned to the participant as
soon as administratively feasible after the next following Date of Exercise.
(e) LEAVES OF ABSENCE. During a paid leave of absence
approved by the Company and meeting the requirements of Treasury Regulation
Section 1.421-7(h)(2), a participant's elected payroll deductions shall
continue. A participant may not contribute to the Plan during an unpaid leave
of absence. If a participant takes an unpaid leave of absence that is approved
by the Company and meets the requirements of Treasury Regulation Section
1.421-7(h)(2), then such participant's payroll deductions for such Option
Period that were made prior to such leave may remain in the Plan and be used to
purchase Stock under the Plan on the Date of Exercise relating to such Option
Period. If a participant takes a leave of absence that is not described in the
first or third sentence of this subparagraph 7(e), then he shall be considered
to have withdrawn from the Plan pursuant to the provisions of paragraph 9
hereof. Further, notwithstanding the preceding provisions of this subparagraph
7(e), if a participant takes a leave of absence that is described in the first
or third sentence of this subparagraph 7(e) and such leave of absence exceeds
90 days, then he shall be considered to have withdrawn from the Plan pursuant
to the provisions of paragraph 9 hereof on the 91st day of such leave of
absence.
(f) CONTINUING ELECTION. Subject to the limitation set
forth in subparagraph 7(d), a participant (i) who has elected to participate in
the Plan pursuant to subparagraph 7(b) as of a Date of Grant and (ii) who takes
no action to change or revoke such election as of the next following Date of
Grant and/or as of any subsequent Date of Grant prior to any such respective
Date of Grant shall be deemed to have made the same election, including the
same attendant payroll deduction authorization, for such next following and/or
subsequent Date(s) of Grant as was in effect immediately prior to such
respective Date of Grant. Payroll deductions that are limited by subparagraph
7(d) shall recommence at the rate provided in such participant's payroll
deduction authorization at the beginning of the first Option Period that is
scheduled to end in the following calendar year, unless the participant changes
the amount of his payroll deduction authorization pursuant to paragraph 7,
withdraws from the Plan as provided in paragraph 9, or is terminated from
participation in the Plan as provided in paragraph 10.
8. EXERCISE OF OPTIONS.
(a) GENERAL STATEMENT. Subject to the limitation set
forth in subparagraph 7(d), each participant in the Plan automatically and
without any act on his part shall be deemed to have exercised his option on
each Date of Exercise to the extent of his unused payroll deductions under the
Plan and to the extent the issuance of Stock to such participant upon such
exercise is lawful.
(b) "OPTION PRICE" DEFINED. The term "Option Price"
shall mean the per share price of Stock to be paid by each participant on each
exercise of his option, which price shall be equal to 85% of the fair market
value of the Stock on the Date of Exercise or on the Date of Grant, whichever
amount is less. For all purposes under the Plan, the fair market value of a
share of Stock on a particular date shall be equal to the closing price of the
Stock on the New York Stock Exchange,
-4-
5
Inc. on that date (or, if no shares of Stock have been traded on that date, on
the next regular business date on which shares of the Stock are so traded).
(c) DELIVERY OF SHARE CERTIFICATES. As soon as
practicable after each Date of Exercise, the Company shall deliver to a
custodian selected by the Committee one or more certificates representing (or
shall otherwise cause to be credited to the account of such custodian) the
total number of whole shares of Stock respecting options exercised on such Date
of Exercise in the aggregate (for both whole and fractional shares) of all of
the participating employees hereunder. Any remaining amount representing a
fractional share shall not be certificated (or otherwise so credited) and such
remaining amount shall be paid in cash to the custodian. Such custodian shall
keep accurate records of the beneficial interests of each participating
employee in such shares by means of participant accounts under the Plan, and
shall provide each eligible employee with quarterly or such other periodic
statements with respect thereto as may be directed by the Committee. If the
Company is required to obtain from any U.S. commission or agency authority to
issue any such shares, the Company shall seek to obtain such authority.
Inability of the Company to obtain from any commission or agency (whether U.S.
or foreign) authority which counsel for the Company deems necessary for the
lawful issuance of any such shares shall relieve the Company from liability to
any participant in the Plan except to return to him the amount of his payroll
deductions under the Plan which would have otherwise been used upon exercise of
the relevant option.
(d) RESTRICTIONS ON TRANSFER. The Committee may from time to time
specify with respect to a particular grant of options the Restriction Period
that shall apply to the shares of Stock acquired pursuant to such options.
Unless otherwise specified by the Committee, the Restriction Period applicable
to shares of Stock acquired under the Plan shall be a period of six months
after the Date of Exercise of the options pursuant to which such shares were
acquired. Except as hereinafter provided, during the Restriction Period
applicable to shares of Stock acquired under the Plan, such shares may not be
sold, assigned, pledged, exchanged, hypothecated or otherwise transferred,
encumbered or disposed of by the participant who has purchased such shares;
provided, however, that such restriction shall not apply to the transfer,
exchange or conversion of such shares of Stock pursuant to a merger,
consolidation or other plan of reorganization of the Company, but the stock,
securities or other property (other than cash) received upon any such transfer,
exchange or conversion shall also become subject to the same transfer
restrictions applicable to the original shares of Stock, and shall be held by
the custodian, pursuant to the provisions hereof. Upon the expiration of such
Restriction Period, the transfer restrictions set forth in this subparagraph
8(d) shall cease to apply and the optionee may, pursuant to procedures
established by the Committee and the custodian, direct the sale or distribution
of some or all of the whole shares of Stock in his Company stock account that
are not then subject to transfer restrictions and, in the event of a sale,
request payment of the net proceeds from such sale. Further, upon the
termination of the participant's employment with the Company and its parent or
subsidiary corporations for any reason whatsoever, the transfer restrictions
set forth in this subparagraph 8(d) shall cease to apply and the custodian
shall, upon the request of such participant, deliver to such participant a
certificate issued in his name representing (or otherwise credit to an account
of such participant) the aggregate whole number of shares of Stock in his
Company stock account under the Plan. At the time of distribution of such
shares, any fractional share in such Company stock account shall be converted
to cash based on the fair market value of the Stock on the date of distribution
and such cash shall be paid to the
-5-
6
participant. The Committee may cause the Stock issued in connection with the
exercise of options under the Plan to bear such legends or other appropriate
restrictions, and the Committee may take such other actions, as it deems
appropriate in order to reflect the transfer restrictions set forth in this
subparagraph 8(d) and to assure compliance with applicable laws.
9. WITHDRAWAL FROM THE PLAN.
(a) GENERAL STATEMENT. Any participant may withdraw in
whole from the Plan at any time prior to the Date of Exercise relating to a
particular Option Period. Partial withdrawals shall not be permitted. A
participant who wishes to withdraw from the Plan must timely deliver to the
Company a notice of withdrawal in a form prepared by the Company. The Company,
promptly following the time when the notice of withdrawal is delivered, shall
refund to the participant the amount of his payroll deductions under the Plan
which have not yet been otherwise returned to him or used upon exercise of
options; and thereupon, automatically and without any further act on his part,
his payroll deduction authorization and his interest in unexercised options
under the Plan shall terminate.
(b) ELIGIBILITY FOLLOWING WITHDRAWAL. A participant who
withdraws from the Plan shall be eligible to participate again in the Plan upon
expiration of the Option Period during which he withdrew (provided that he is
otherwise eligible to participate in the Plan at such time).
10. TERMINATION OF EMPLOYMENT.
(a) GENERAL STATEMENT. Except as provided in
subparagraph 10(b), if the employment of a participant terminates for any
reason whatsoever, then his participation in the Plan automatically and without
any act on his part shall terminate as of the date of the termination of his
employment. The Company shall promptly refund to him the amount of his payroll
deductions under the Plan which have not yet been otherwise returned to him or
used upon exercise of options, and thereupon his interest in unexercised
options under the Plan shall terminate.
(b) TERMINATION BY RETIREMENT, DEATH OR DISABILITY. If
the employment of a participant terminates after such participant has attained
age 65 or due to such participant's death or permanent and total disability
(within the meaning of Section 22(e)(3) of the Code), then such participant, or
such participant's personal representative, as applicable, shall have the right
to elect either to:
(1) withdraw all of such participant's
accumulated unused payroll deductions under the Plan; or
(2) exercise such participant's option for the
purchase of Stock on the last day of the Option Period during which
termination of employment occurs for the purchase of the number of
full shares of Stock which the accumulated payroll deductions at the
date of such participant's termination of employment will purchase at
the applicable Option Price (subject to subparagraph 7(d)), with any
excess payroll deduction amounts to be returned to such participant or
such personal representative.
-6-
7
The participant or, if applicable, such personal representative, must make such
election by giving written notice to the Committee at such time and in such
manner as the Committee prescribes. In the event that no such written notice
of election is timely received by the Committee, the participant or personal
representative will automatically be deemed to have elected as set forth in
clause (2) above, and promptly after the exercise so described in clause (2)
above, all shares of Stock in such participant's account under the Plan shall
be distributed to the participant or such personal representative.
11. RESTRICTION UPON ASSIGNMENT OF OPTION. An option granted
under the Plan shall not be transferable otherwise than by will or the laws of
descent and distribution. Each option shall be exercisable, during his
lifetime, only by the employee to whom granted. The Company shall not
recognize and shall be under no duty to recognize any assignment or purported
assignment by an employee of his option or of any rights under his option or
under the Plan.
12. NO RIGHTS OF STOCKHOLDER UNTIL EXERCISE OF OPTION. With
respect to shares of Stock subject to an option, an optionee shall not be
deemed to be a stockholder, and he shall not have any of the rights or
privileges of a stockholder, until such option has been exercised. With
respect to an individual's Stock held by the custodian pursuant to subparagraph
8(d), the custodian shall, as soon as practicable, pay the individual any cash
dividends attributable thereto and shall, in accordance with procedures adopted
by the custodian, facilitate the individual's voting rights attributable
thereto.
13. CHANGES IN STOCK; ADJUSTMENTS. Whenever any change is made in
the Stock, by reason of a stock dividend or by reason of subdivision, stock
split, reverse stock split, recapitalization, reorganization, combination,
reclassification of shares or other similar change, appropriate action will be
taken by the Committee to adjust accordingly the number of shares subject to
the Plan, the maximum number of shares that may be subject to any option, and
the number and Option Price of shares subject to options outstanding under the
Plan.
If the Company shall not be the surviving corporation in any merger or
consolidation (or survives only as a subsidiary of another entity), or if the
Company is to be dissolved or liquidated, then, unless a surviving corporation
assumes or substitutes new options (within the meaning of Section 424(a) of the
Code) for all options then outstanding, (i) the Date of Exercise for all
options then outstanding shall be accelerated to a date fixed by the Committee
prior to the effective date of such merger or consolidation or such dissolution
or liquidation and (ii) upon such effective date any unexercised options shall
expire and the Company promptly shall refund to each participant the amount of
such participant's payroll deductions under the Plan which have not yet been
otherwise returned to him or used upon exercise of options.
14. USE OF FUNDS; NO INTEREST PAID. All funds received or held by
the Company under the Plan shall be included in the general funds of the
Company free of any trust or other restriction, and may be used for any
corporate purpose. No interest shall be paid to any participant.
15. TERM OF THE PLAN. The Plan shall be effective upon the date
of its adoption by the Board, provided the Plan is approved by the stockholders
of the Company within 12 months thereafter. Notwithstanding any provision in
the Plan, no option granted under the Plan shall be
-7-
8
exercisable prior to such stockholder approval, and, if the stockholders of the
Company do not approve the Plan by the Date of Exercise of the first option
granted hereunder, then the Plan shall automatically terminate, no options may
be exercised hereunder, and the Company promptly shall refund to each
participant the amount of such participant's payroll deductions under the Plan;
and thereupon, automatically and without any further act on his part, his
payroll deduction authorization and his interest in unexercised options under
the Plan shall terminate. Except with respect to options then outstanding, if
not sooner terminated under the provisions of paragraph 16, the Plan shall
terminate upon and no further payroll deductions shall be made and no further
options shall be granted after June 30, 2007.
16. AMENDMENT OR TERMINATION OF THE PLAN. The Board in its
discretion may terminate the Plan at any time with respect to any Stock for
which options have not theretofore been granted. The Board and the Committee
shall each have the right to alter or amend the Plan or any part thereof from
time to time; provided, however, that no change in any option theretofore
granted may be made that would impair the rights of the optionee without the
consent of such optionee.
17. SECURITIES LAWS. The Company shall not be obligated to issue
any Stock pursuant to any option granted under the Plan at any time when the
offer, issuance or sale of shares covered by such option has not been
registered under the Securities Act of 1933, as amended, or does not comply
with such other state, federal or foreign laws, rules or regulations, or the
requirements of any stock exchange upon which the Stock may then be listed, as
the Company or the Committee deems applicable and, in the opinion of legal
counsel for the Company, there is no exemption from the requirements of such
laws, rules, regulations or requirements available for the offer, issuance and
sale of such shares. Further, all Stock acquired pursuant to the Plan shall be
subject to the Company's policies concerning compliance with securities laws
and regulations, as such policies may be amended from time to time. The terms
and conditions of options granted hereunder to, and the purchase of shares by,
persons subject to Section 16 of the Exchange Act shall comply with any
applicable provisions of Rule 16b-3. As to such persons, the Plan shall be
deemed to contain, and such options shall contain, and the shares issued upon
exercise thereof shall be subject to, such additional conditions and
restrictions as may be required from time to time by Rule 16b-3 to qualify for
the maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
18. NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the
Plan shall be construed to prevent the Company or any subsidiary from taking
any corporate action that is deemed by the Company or such subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any option granted under the Plan. No employee,
beneficiary or other person shall have any claim against the Company or any
subsidiary as a result of any such action.
19. MISCELLANEOUS PROVISIONS.
(a) PARENT AND SUBSIDIARY CORPORATIONS. For all purposes
of the Plan, a corporation shall be considered to be a parent or subsidiary
corporation of the Company only if such corporation is a parent or subsidiary
corporation of the Company within the meaning of Sections 424(e) and (f) of the
Code.
-8-
9
(b) NUMBER AND GENDER. Wherever appropriate herein,
words used in the singular shall be considered to include the plural and words
used in the plural shall be considered to include the singular. The masculine
gender, where appearing in the Plan, shall be deemed to include the feminine
gender.
(c) HEADINGS. The headings and subheadings in the Plan
are included solely for convenience, and if there is any conflict between such
headings or subheadings and the text of the Plan, the text shall control.
(d) NOT A CONTRACT OF EMPLOYMENT. The adoption and
maintenance of the Plan shall not be deemed to be a contract between the
Company or any Participating Company and any person or to be consideration for
the employment of any person. Participation in the Plan at any given time
shall not be deemed to create the right to participate in the Plan, or any
other arrangement permitting an employee of the Company or any Participating
Company to purchase Stock at a discount, in the future. The rights and
obligations under any participant's terms of employment with the Company or any
Participating Company shall not be affected by participation in the Plan.
Nothing herein contained shall be deemed to give any person the right to be
retained in the employ of the Company or any Participating Company or to
restrict the right of the Company or any Participating Company to discharge any
person at any time, nor shall the Plan be deemed to give the Company or any
Participating Company the right to require any person to remain in the employ
of the Company or such Participating Company or to restrict any person's right
to terminate his employment at any time. The Plan shall not afford any
participant any additional right to compensation as a result of the termination
of such participant's employment for any reason whatsoever.
(e) COMPLIANCE WITH APPLICABLE LAWS. The Company's
obligation to offer, issue, sell or deliver Stock under the Plan is at all
times subject to all approvals of and compliance with any governmental
authorities (whether domestic or foreign) required in connection with the
authorization, offer, issuance, sale or delivery of Stock as well as all
federal, state, local and foreign laws. Without limiting the scope of the
preceding sentence, and notwithstanding any other provision in the Plan, the
Company shall not be obligated to grant options or to offer, issue, sell or
deliver Stock under the Plan to any employee who is a citizen or resident of a
jurisdiction the laws of which, for reasons of its public policy, prohibit the
Company from taking any such action with respect to such employee.
(f) SEVERABILITY. If any provision of the Plan shall be
held illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining provisions hereof; instead, each provision shall be fully
severable and the Plan shall be construed and enforced as if said illegal or
invalid provision had never been included herein.
(g) GOVERNING LAW. All provisions of the Plan shall be
construed in accordance with the laws of Texas except to the extent preempted
by federal law.
-9-