AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SONIC AUTOMOTIVE, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 56-2010790
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
5401 EAST INDEPENDENCE BOULEVARD
P.O. BOX 18747
CHARLOTTE, NORTH CAROLINA 28212
(Address of Principal Executive Offices) (Zip Code)
FIRSTAMERICA AUTOMOTIVE, INC. 1997 STOCK OPTION PLAN
AMENDED AND RESTATED AS OF DECEMBER 10, 1999
(Full Title of Plan)
---------------
MR. O. BRUTON SMITH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SONIC AUTOMOTIVE, INC.
5401 E. INDEPENDENCE BOULEVARD
P.O. BOX 18747
CHARLOTTE, NORTH CAROLINA 28212
(704) 532-3320
(Name, Address and Telephone Number, including Area Code, of Agent for Service)
COPIES TO:
GARY C. IVEY, ESQ.
PARKER, POE, ADAMS & BERNSTEIN L.L.P.
2500 CHARLOTTE PLAZA, CHARLOTTE, NORTH CAROLINA 28244
TELEPHONE (704) 372-9000
---------------
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
TITLE OF SECURITIES AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT
TO BE TO BE OFFERING PRICE AGGREGATE OF
REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Class A Common Stock, 546,977 $ 10.23(1) $5,595,575 $1,500
par value $0.01 per share 419,983 8.41 (2) 3,532,057 $1,000
------- ---------- ------
Total 966,960 $9,127,632 $2,500
</TABLE>
================================================================================
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h)(1) under the Securities Act of 1933 and based on
the exercise prices of options ($2.85 per share for 126,779 shares, $6.21
per share for 29,008 shares, $12.41 per share for 110,493 shares and
$13.12 per share for 280,697 shares) to purchase shares of the
Registrant's Class A common stock granted to date.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 and based upon
the average of the highest and lowest prices of the Registrant's Class A
common stock reported on the New York Stock Exchange -- Composite
Transactions Tape on January 27, 2000, which prices were $8.50 and $8.31,
respectively.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I of Form S-8
(plan information and registrant information) will be sent or given to
employees as specified by Securities and Exchange Commission Rule 428(b)(1).
Such documents need not be filed with the Securities and Exchange Commission
either as part of this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424. These documents, which include the statement
of availability required by Item 2 of Form S-8, and the documents incorporated
by reference in this Registration Statement pursuant to Item 3 of Form S-8
(Part II hereof), taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act of 1933, as amended (the
"Securities Act").
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by Sonic Automotive, Inc. ("Sonic" or
"Registrant") are incorporated herein by reference:
(i) Sonic's Annual Report on Form 10-K for its fiscal year ended
December 31, 1998 (File No. 1-13395);
(ii) Sonic's Quarterly Report on Form 10-Q for its fiscal quarter ended
March 31, 1999;
(iii) Sonic's Quarterly Report on Form 10-Q for its fiscal quarter
ended June 30, 1999;
(iv) Sonic's Quarterly Report on Form 10-Q for its fiscal quarter ended
September 30, 1999;
(v) Sonic's Current Report on Form 8-K dated November 19, 1999
(Manhattan and Freeland acquisitions);
(vi) Sonic's Current Report on Form 8-K dated November 19, 1999
(Press Release relating to stock repurchase);
(vii) Sonic's Current Report on Form 8-K dated December 22, 1999
(FirstAmerica acquisition); and
(viii) Sonic's Current Report on Form 8-K/A dated January 18, 2000
(Manhattan and Freeland acquisitions);
(ix) Sonic's Current Report on Form 8-K/A dated January 27, 2000
(FirstAmerica acquisition);
(x) The combined financial statements of Williams Automotive Group, the
financial statements of Economy Cars, Inc., the financial statements of Global
Imports, Inc., the combined financial statements of Newsome Automotive Group,
the combined financial statements of Lloyd Automotive Group and the financial
statements of Lute Riley Motors, Inc., included in Sonic's Registration
Statement on Form S-3 (Registration No. 333-71803);
(xi) The combined financial statements of Hatfield Automotive Group,
the financial statements of Casa Ford of Houston, Inc. and the combined
financial statements of Higginbotham Automotive Group, included in Sonic's
Registration Statement on Form S-4 (Registration Nos. 333-64397 and
333-64397-001 through 333-64397-044); and
(xii) The description of Sonic's Class A common stock contained in
Sonic's Registration Statement on Form 8-A, as amended, filed with the
Commission pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
All documents filed by Sonic pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, after the date hereof and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference into this Registration Statement and
to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document, all or a portion of which is
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superceded, to
constitute a part of this Registration Statement.
2
<PAGE>
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Sonic's Bylaws effectively provide that Sonic shall, to the full extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time ("Section 145"), indemnify all persons
whom it may indemnify pursuant thereto. In addition, Sonic's Certificate of
Incorporation eliminates personal liability of its directors to the full extent
permitted by Section 102(b)(7) of the General Corporation Law of the State of
Delaware, as amended from time to time ("Section 102(b)(7)").
Section 145 permits a corporation to indemnify its directors and officers
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlements actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by a third party if such directors or
officers acted in good faith and in a manner they reasonably believed to be in,
or not opposed to, the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, indemnification may be made only for expenses
actually and reasonably incurred by directors and officers in connection with
the defense or settlement of an action or suit and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent
that the court in which the action or suit was brought shall determine upon
application that the defendant officers or directors are reasonably entitled to
indemnity for such expenses despite such adjudication of liability.
Section 102(b)(7) provides that a corporation may eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for willful or
negligent conduct in paying dividends or repurchasing stock out of other than
lawfully available funds, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or
limit the liability of a director for any act or omission occurring prior to
the date when such provision becomes effective.
Sonic maintains insurance against liabilities under the Securities Act for
the benefit of its officers and directors.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------
<S> <C>
4.1 FirstAmerica Automotive, Inc. 1997 Stock Option Plan Amended and Restated as of December 10,
1999.
5.1 Opinion of Parker, Poe, Adams & Bernstein L.L.P. regarding the legality of securities registered.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of KPMG LLP.
23.3 Consent of Parker, Poe, Adams & Bernstein L.L.P. (included in Exhibit 5.1 to this Registration
Statement).
24.1 Power of Attorney (contained on the signature page to this Registration Statement).
</TABLE>
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
3
<PAGE>
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
[Signatures begin on next page]
4
<PAGE>
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on
January 31, 2000.
SONIC AUTOMOTIVE, INC.
By: /S/ O. BRUTON SMITH
------------------------------------
O. BRUTON SMITH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
We, the undersigned directors and officers of Sonic Automotive, Inc., do
hereby constitute and appoint Messrs. O. Bruton Smith, Bryan Scott Smith, and
Theodore M. Wright, each with full power of substitution, our true and lawful
attorney-in-fact and agent to do any and all acts and things in our names and
in our behalf in our capacities stated below, which acts and things any of them
may deem necessary or advisable to enable Sonic Automotive, Inc. to comply with
the Securities Act, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but not limited to, power and authority to
sign for any and all of us in our names, in the capacities stated below, any
and all amendments (including post-effective amendments) hereto and any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission; and we do hereby ratify and confirm all that they shall do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- ------------------------------------------ ----------------
<S> <C> <C>
/S/ O. BRUTON SMITH Chief Executive Officer (Principle January 31, 2000
---------------------------------- Executive Officer) and Chairman
O. BRUTON SMITH
/S/ THOMAS A. PRICE Vice Chairman and Director January 31, 2000
----------------------------------
THOMAS A. PRICE
/S/ B. SCOTT SMITH President, Chief Operating Officer and January 31, 2000
---------------------------------- Director
B. SCOTT SMITH
/S/ THEODORE M. WRIGHT Chief Financial Officer, Vice President- January 31, 2000
---------------------------------- Finance, Treasurer, Secretary
THEODORE M. WRIGHT (Principle Financial and Accounting
Officer) and Director
/S/ JEFFREY C. RACHOR Executive Vice President of Retail January 31, 2000
---------------------------------- Operations and Director
JEFFREY C. RACHOR
/S/ WILLIAM R. BROOKS Director January 31, 2000
----------------------------------
WILLIAM R. BROOKS
/S/ WILLIAM P. BENTON Director January 31, 2000
----------------------------------
WILLIAM P. BENTON
/S/ WILLIAM I. BELK Director January 31, 2000
----------------------------------
WILLIAM I. BELK
/S/ H. ROBERT HELLER Director January 31, 2000
----------------------------------
H. ROBERT HELLER
</TABLE>
5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------
<S> <C>
4.1 FirstAmerica Automotive, Inc. 1997 Stock Option Plan Amended and Restated as of December 10,
1999.
5.1 Opinion of Parker, Poe, Adams & Bernstein L.L.P. regarding the legality of securities registered.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of KPMG LLP.
23.3 Consent of Parker, Poe, Adams & Bernstein L.L.P. (included in Exhibit 5.1 to this Registration
Statement).
24.1 Power of Attorney (contained on the signature page to this Registration Statement).
</TABLE>
Exhibit 4.1
FIRSTAMERICA AUTOMOTIVE, INC.
1997 STOCK OPTION PLAN
AMENDED AND RESTATED AS OF DECEMBER 10, 1999
1. ESTABLISHMENT, PURPOSE , CONVERSION OF FAA OPTIONS AND TERM OF
PLAN.
1.1 ESTABLISHMENT. The FirstAmerica Automotive, Inc. 1997 Stock
Option Plan (the "PLAN") was originally established effective as of July 10,
1997 (the "EFFECTIVE DATE"). The Plan was subsequently amended by the Board of
Directors of FirstAmerica Automotive, Inc. ("FAA") on each of December 27, 1998,
March 17, 1999 and April 7, 1999. The Plan is now hereby amended and restated in
connection with the consummation of the transactions contemplated by the
Agreement and Plan of Merger and Reorganization, dated as of October 31, 1999,
among Sonic Automotive, Inc. (the "COMPANY"), FAA Acquisition Corp., FAA and
certain of the stockholders of FAA (the "REORGANIZATION AGREEMENT").
1.2 PURPOSE. The purpose of the Plan is to advance the interests of
the Company and its shareholders by providing an incentive to retain and reward
persons performing services for FAA on or before December 10, 1999 and by
motivating such persons to continue to contribute to the growth and
profitability of the Company and the Participating Company Group.
1.3 CONVERSION OF FAA OPTIONS. The Reorganization Agreement requires
that, effective upon the closing of the "Securities Purchase" (as defined and
described in the Reorganization Agreement), each unexpired and unexercised
option to purchase shares of FAA Class A Common Stock, par value $0.00001 per
share (the "FAA STOCK"), then outstanding under the Plan (an "FAA OPTION") shall
be deemed to be automatically converted into an option to purchase a number of
shares of the Company's Class A Common Stock, par value $0.01 per share (the
"STOCK"), equal to the number of shares of FAA Stock that could have been
purchased under the FAA Option multiplied by .32232, such number being the
"Conversion Number" as defined in and determined pursuant to the Reorganization
Agreement (with the resulting number of shares rounded down to the nearest whole
share), at a price per share of Stock equal to the option exercise price per
share under the FAA Option divided by the Conversion Number; provided, that
there shall be no accelerated exercisability of any FAA Option solely as a
result of the consummation of the Securities Purchase, and provided, further,
that the Optionee may not offer, sell, contract to sell, pledge, hypothecate,
grant any option to purchase or make any short sale of, or otherwise dispose of
any shares of Stock issuable upon exercise of such Options for a period of one
hundred eighty (180) days from the closing of the Securities Purchase.
1.4 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan
<PAGE>
and the agreements evidencing Options granted under the Plan have lapsed.
However, all Options shall be granted, if at all, within ten (10) years from the
Effective Date.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Whenever used herein, the following terms shall
have the respective meanings set forth below:
(1) "BOARD" means the Board of Directors of the Company. If
one or more Committees have been appointed by the Board to administer the Plan,
"BOARD" also means such Committee(s).
(2) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.
(3) "COMMITTEE" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.
(4) "COMPANY" means Sonic Automotive, Inc., a Delaware
corporation, and any successors thereto.
(5) "CONSULTANT" means any person, including an advisor,
engaged by a Participating Company to render services other than as an Employee
or a Director.
(6) "DIRECTOR" means a member of the Board or of the board of
directors of any Participating Company.
(7) "DISABILITY" means the inability of the Optionee, in the
opinion of a qualified physician acceptable to the Company, to perform the major
duties of the Optionee's position with the Participating Company Group because
of the sickness or injury of the Optionee.
(8) "EMPLOYEE" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in the
records of a Participating Company and, with respect to any Incentive Stock
Option granted to such person, who is an employee for purposes of Section 422 of
the Code; provided, however, that neither service as a Director nor payment of a
director's fee shall be sufficient to constitute employment for purposes of the
Plan.
<PAGE>
(9) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(10) "FAA" means FirstAmerica Automotive, Inc., a Delaware
corporation.
(11) "FAA OPTION" means each unexpired and unexercised option
to purchase shares of FAA Stock previously granted and outstanding under the
Plan as of December 10, 1999.
(12) "FAA STOCK" means the Class A Common Stock, par value
$0.00001 per share, of FAA.
(13) "FAIR MARKET VALUE" means, as of any date, the value of a
share of Stock or other property as determined by the Board, in its discretion,
or by the Company, in its discretion, if such determination is expressly
allocated to the Company herein, subject to the following:
(a) If, on such date, the Stock is listed on a national
or regional securities exchange or market system, the Fair Market Value of a
share of Stock shall be the closing price of a share of Stock (or the mean of
the closing high bid and low asked prices of a share of Stock if the Stock is so
quoted instead) as quoted on the Nasdaq National Market, the Nasdaq SmallCap
Market or such other national or regional securities exchange or market system
constituting the primary market for Stock as reported in the Wall Street Journal
or such other source as the Company deems reliable. If the relevant date does
not fall on a day on which the Stock has traded on such securities exchange or
market system, the date on which the Fair Market Value shall be established
shall be the last day on which the Stock was so traded prior to the relevant
date, or such other appropriate day as shall be determined by the Board, in its
discretion.
(b) If, on such date, there is no public market for the
Stock, the Fair Market Value of a share of Stock shall be as determined by the
Board in good faith without regard to any restriction other than a restriction
which, by its terms, will never lapse.
(14) "INCENTIVE STOCK OPTION" means an Option intended to be
(as set forth in the Option Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.
(15) "INSIDER" means an officer or a Director of the Company
or any other person whose transactions in Stock are subject to Section 16 of the
Exchange Act.
(16) "NONSTATUTORY STOCK OPTION" means an Option not intended
to be (as set forth in the Option Agreement) or which does not qualify as an
Incentive Stock Option.
<PAGE>
(17) "OPTION" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory
Stock Option. The term "OPTION" includes any FAA Option which has been converted
into an option to purchase Stock pursuant to the Reorganization Agreement.
(18) "OPTION AGREEMENT" means a written agreement between FAA,
or the Company as successor to FAA, and an Optionee setting forth the terms,
conditions and eestrictions of the Option granted to the Optionee and any shares
acquired upon the exercise thereof. The term "OPTION AGREEMENT" includes any
written option agreement evidencing an FAA Option which has been converted into
an Option pursuant to the Reorganization Agreement.
(19) "OPTIONEE" means a person who has been granted one or
more Options.
(20) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, within the meaning of Section 424(e) of the Code.
(21) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation.
(22) "PARTICIPATING COMPANY GROUP" means, at any point in
time, all corporations collectively which are then Participating Companies.
(23) "PLAN" means the FirstAmerica Automotive, Inc. 1997 Stock
Option Plan, as amended and restated as of December 10, 1999 and as subsequently
amended from time to time.
(24) "REORGANIZATION AGREEMENT" means the Agreement and Plan
of Merger and Reorganization, dated as of October 31, 1999, among the Company,
FAA Acquisition Corp., FAA and certain of the stockholders of FAA.
(25) "RULE 16B-3" means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor rule or regulation.
(26) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(27) "SERVICE" means an Optionee's employment or service with
the Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. The Optionee's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided that
there is no interruption or termination of the Optionee's Service. Furthermore,
an Optionee's Service with the Participating Company Group shall not be deemed
to have terminated if the Optionee takes any military leave, sick leave, or
other bona
<PAGE>
fide leave of absence approved by the Company; provided, however, that if any
such leave exceeds ninety (90) days, on the ninety-first (91st) day of such
leave the Optionee's Service shall be deemed to have terminated unless the
Optionee's right to return to Service with the Participating Company Group is
guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company or required by law, a leave of absence shall
not be treated as Service for purposes of determining vesting under the
Optionee's Option Agreement. The Optionee's Service shall be deemed to have
terminated either upon an actual termination of Service or upon the company for
which the Optionee performs Service ceasing to be a Participating Company.
Subject to the foregoing, the Company, in its discretion, shall determine
whether the Optionee's Service has terminated and the effective date of such
termination.
(28) "STOCK" means the Class A Common Stock, $0.01 par value
per share, of the Company, as adjusted from time to time in accordance with
Section 4.2.
(29) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, within the meaning of Section 424(f) of
the Code.
(30) "TEN PERCENT OWNER OPTIONEE" means an Optionee who, at
the time an Option is granted to the Optionee, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
a Participating Company within the meaning of Section 422(b)(6) of the Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by
the Board, unless the Board delegates administration to the Committee. All
questions of interpretation of the Plan or of any Option shall be determined by
the Board, and such determinations shall be final and binding upon all persons
having an interest in the Plan or such Option.
3.2 AUTHORITY OF OFFICERS. Any officer of the Company shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election which is the responsibility of or which is
allocated to the Company herein, provided the officer has apparent authority
with respect to such matter, right, obligation, determination or election.
<PAGE>
3.3 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.
3.4 POWERS OF THE BOARD. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its discretion:
(a) to determine the persons to whom, and the time or times at
which, Options shall be granted and the number of shares of Stock to be subject
to each Option;
(b) to designate Options as Incentive Stock Options or
Nonstatutory Stock Options;
(c) to determine the Fair Market Value of shares of Stock or
other property;
(d) to determine the terms, conditions and restrictions
applicable to each Option (which need not be identical) and any shares acquired
upon the exercise thereof, including, without limitation, (i) the exercise price
of the Option, (ii) the method of payment for shares purchased upon the exercise
of the Option, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with the Option or such shares, including by
the withholding or delivery of shares of stock, (iv) the timing, terms and
conditions of the exercisability of the Option or the vesting of any shares
acquired upon the exercise thereof, (v) the time of the expiration of the
Option, (vi) the effect of the Optionee's termination of Service with the
Participating Company Group on any of the foregoing, and (vii) all other terms,
conditions and restrictions applicable to the Option or such shares not
inconsistent with the terms of the Plan;
(e) to approve one or more forms of Option Agreement;
(f) to amend, modify, extend, cancel, renew, reprice or
otherwise adjust the exercise price of, or grant a new Option in substitution
for, any Option or to waive any restrictions or conditions applicable to any
Option or any shares acquired upon the exercise thereof;
(g) to construe and interpret the Plan and Options granted
under it, and to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions of,
the Plan, including, without limitation, as the Board deems necessary or
desirable to comply with the laws of, or to accommodate the tax policy or custom
of, foreign jurisdictions whose citizens may be granted Options; and
(h) to correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Option Agreement and to make all other
determinations and
<PAGE>
take such other actions with respect to the Plan or any Option as the Board may
deem advisable to the extent consistent with the Plan and applicable law.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be Nine Hundred Sixty-Six Thousand Nine
Hundred and Sixty (966,960) and shall consist of authorized but unissued or
reacquired shares of Stock or any combination thereof. If an outstanding Option
for any reason expires or is terminated or canceled or if shares of Stock are
acquired upon the exercise of an Option subject to a Company repurchase option
and are repurchased by the Company at the Optionee's exercise price, the shares
of Stock allocable to the unexercised portion of such Option or such repurchased
shares of Stock shall again be available for issuance under the Plan.
Notwithstanding the foregoing, at any such time as the offer and sale of
securities pursuant to the Plan is subject to compliance with Section 260.140.45
of Title 10 of the California Code of Regulations ("SECTION 260.140.45"), the
total number of shares of Stock issuable upon the exercise of all outstanding
Options (together with options outstanding under any other stock option plan of
the Company) and the total number of shares provided for under any stock bonus
or similar plan of the Company shall not exceed thirty percent (30%) (or such
other higher percentage limitation as may be approved by the shareholders of the
Company pursuant to Section 260.140.45) of the then outstanding shares of the
Company as calculated in accordance with the conditions and exclusions of
Section 260.140.45.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options and in the exercise price per
share of any outstanding Options. If a majority of the shares which are of the
same class as the shares that are subject to outstanding Options are exchanged
for, converted into, or otherwise become (whether or not pursuant to an
Ownership Change Event, as defined in Section 8.1) shares of another corporation
(the "NEW SHARES"), the Board may unilaterally amend the outstanding Options to
provide that such Options are exercisable for New Shares. In the event of any
such amendment, the number of shares subject to, and the exercise price per
share of, the outstanding Options shall be adjusted in a fair and equitable
manner as determined by the Board, in its discretion. Notwithstanding the
foregoing, any fractional share resulting from an adjustment pursuant to this
Section 4.2 shall be rounded down to the nearest whole number, and in no event
may the exercise price of any Option be decreased to an amount less than the par
value, if any, of the stock subject to the Option. The adjustments determined by
the Board pursuant to this Section 4.2 shall be final, binding and conclusive.
<PAGE>
5. ELIGIBILITY AND OPTION LIMITATIONS.
5.1 PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only to
Employees, Consultants, and Directors who performed services for FAA or a
Subsidiary Corporation of FAA on or before December 10, 1999. For purposes of
the foregoing sentence, "Employees," "Consultants" and "Directors" shall include
prospective Employees, prospective Consultants and prospective Directors to whom
Options are granted in connection with written offers of an employment or other
service relationship with the Participating Company Group. Eligible persons may
be granted more than one (1) Option.
5.2 OPTION GRANT RESTRICTIONS. Any person who is not an Employee on
the effective date of the grant of an Option to such person may be granted only
a Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee shall be deemed
granted effective on the date such person commences Service with a Participating
Company, with an exercise price determined as of such date in accordance with
Section 6.1.
5.3 FAIR MARKET VALUE LIMITATION. To the extent that options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portions
of such options which exceed such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5.3, options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of stock shall be determined as of the time the option
with respect to such stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Section 5.3, such different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such amendment to the Code.
If an Option is treated as an Incentive Stock Option in part and as a
Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section 5.3, the Optionee may designate which portion of such Option the
Optionee is exercising. In the absence of such designation, the Optionee shall
be deemed to have exercised the Incentive Stock Option portion of the Option
first. Separate certificates representing each such portion shall be issued upon
the exercise of the Option.
<PAGE>
6. TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by Option Agreements specifying the
number of shares of Stock covered thereby, in such form as the Board shall from
time to time establish. No Option or purported Option shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Option
Agreement. Option Agreements may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and
conditions:
6.1 EXERCISE PRICE. The exercise price for each Option shall be
established in the discretion of the Board; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option, (b) the exercise price per share for a Nonstatutory Stock Option shall
be not less than eighty-five percent (85%) of the Fair Market Value of a share
of Stock on the effective date of grant of the Option, and (c) no Option granted
to a Ten Percent Owner Optionee shall have an exercise price per share less than
one hundred ten percent (110%) of the Fair Market Value of a share of Stock on
the effective date of grant of the Option. Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Section 424(a) of
the Code.
6.2 EXERCISE PERIOD. Options shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board and
set forth in the Option Agreement evidencing such Option; provided, however,
that (a) no Option shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such Option, (b) no Incentive Stock Option
granted to a Ten Percent Owner Optionee shall be exercisable after the
expiration of five (5) years after the effective date of grant of such Option,
(c) no Option granted to a prospective Employee, prospective Consultant or
prospective Director may become exercisable prior to the date on which such
person commences Service with a Participating Company, and (d) with the
exception of an Option granted to an officer, Director or Consultant, no Option
shall become exercisable at a rate less than twenty percent (20%) per year over
a period of five (5) years from the effective date of grant of such Option,
subject to the Optionee's continued Service. Subject to the foregoing, unless
otherwise specified by the Board in the grant of an Option, any Option granted
hereunder shall have a term of ten (10) years from the effective date of grant
of the Option.
<PAGE>
6.3 PAYMENT OF EXERCISE PRICE.
(A) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check or
cash equivalent, (ii) by tender to the Company, or attestation to the ownership,
of shares of Stock owned by the Optionee having a Fair Market Value (as
determined by the Company without regard to any restrictions on transferability
applicable to such stock by reason of federal or state securities laws or
agreements with an underwriter for the Company) not less than the exercise
price, (iii) by the assignment of the proceeds of a sale or loan with respect to
some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a "CASHLESS EXERCISE"), (iv) by the
Optionee's promissory note in a form approved by the Company, (v) by such other
consideration as may be approved by the Board from time to time to the extent
permitted by applicable law, or (vi) by any combination thereof. The Board may
at any time or from time to time, by adoption of or by amendment to the standard
forms of Option Agreement described in Section 7, or by other means, grant
Options which do not permit all of the foregoing forms of consideration to be
used in payment of the exercise price or which otherwise restrict one or more
forms of consideration.
(B) LIMITATIONS ON FORMS OF CONSIDERATION.
(I) TENDER OF STOCK. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender or attestation would
constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Stock. Unless otherwise provided by the Board,
an Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock unless such shares either have been owned by the
Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.
(II) CASHLESS EXERCISE. The Company reserves, at any and
all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.
(III) PAYMENT BY PROMISSORY NOTE. No promissory note
shall be permitted if the exercise of an Option using a promissory note would be
a violation of any law. Any permitted promissory note shall be on such terms as
the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon
<PAGE>
the exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Board, if the Company at any time is subject to
the regulations promulgated by the Board of Governors of the Federal Reserve
System or any other governmental entity affecting the extension of credit in
connection with the Company's securities, any promissory note shall comply with
such applicable regulations, and the Optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.
6.4 TAX WITHHOLDING. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
Option or the shares acquired upon the exercise thereof. Alternatively or in
addition, in its discretion, the Company shall have the right to require the
Optionee, through payroll withholding, cash payment or otherwise, including by
means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof. The Company
shall have no obligation to deliver shares of Stock or to release shares of
Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.
6.5 REPURCHASE RIGHTS. Shares issued under the Plan may be subject
to a right of first refusal, one or more repurchase options, or other conditions
and restrictions as determined by the Board in its discretion at the time the
Option is granted. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to
one or more persons as may be selected by the Company. Upon request by the
Company, each Optionee shall execute any agreement evidencing such transfer
restrictions prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates representing shares of
Stock acquired hereunder for the placement on such certificates of appropriate
legends evidencing any such transfer restrictions.
6.6 EFFECT OF TERMINATION OF SERVICE.
(A) OPTION EXERCISABILITY. Subject to earlier termination of
the Option as otherwise provided herein, an Option shall be exercisable after an
Optionee's termination of Service as follows:
(I) DISABILITY. If the Optionee's Service with the
Participating Company Group is terminated because of the Disability of the
Optionee, the Option, to the extent unexercised and exercisable on the date on
which the Optionee's Service terminated, may be exercised by the Optionee (or
the Optionee's guardian or legal representative) at any time prior to the
expiration of six (6) months (or such longer period of
<PAGE>
time as determined by the Board, in its discretion) after the date on which the
Optionee's Service terminated, but in any event no later than the date of
expiration of the Option's term as set forth in the Option Agreement evidencing
such Option (the "OPTION EXPIRATION DATE").
(II) DEATH. If the Optionee's Service with the
Participating Company Group is terminated because of the death of the Optionee,
the Option, to the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee's legal
representative or other person who acquired the right to exercise the Option by
reason of the Optionee's death at any time prior to the expiration of six (6)
months (or such longer period of time as determined by the Board, in its
discretion) after the date on which the Optionee's Service terminated, but in
any event no later than the Option Expiration Date. The Optionee's Service shall
be deemed to have terminated on account of death if the Optionee dies within
thirty (30) days (or such longer period of time as determined by the Board, in
its discretion) after the Optionee's termination of Service.
(III) OTHER TERMINATION OF SERVICE. If the Optionee's
Service with the Participating Company Group terminates for any reason, except
Disability or death, the Option, to the extent unexercised and exercisable by
the Optionee on the date on which the Optionee's Service terminated, may be
exercised by the Optionee within thirty (30) days (or such longer period of time
as determined by the Board, in its discretion) after the date on which the
Optionee's Service terminated, but in any event no later than the Option
Expiration Date.
(B) EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding
the foregoing, if the exercise of an Option within the applicable time periods
set forth in Section 6.6(a) is prevented by the provisions of Section 11 below,
the Option shall remain exercisable until thirty (30) days (or such longer
period of time as determined by the Board, in its discretion) after the date the
Optionee is notified by the Company that the Option is exercisable, but in any
event no later than the Option Expiration Date.
(C) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(B).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 6.6(a) of shares acquired upon the exercise of the Option would
subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of Service, or (iii) the Option Expiration
Date.
7. STANDARD FORMS OF OPTION AGREEMENT.
7.1 INCENTIVE STOCK OPTIONS. Unless otherwise provided by the Board
at the time the Option is granted, an Option designated as an "Incentive Stock
Option" shall comply with and be subject to the terms and conditions set forth
in the form of Incentive
<PAGE>
Stock Option Agreement adopted concurrently with the adoption of the Plan and as
amended from time to time.
7.2 NONSTATUTORY STOCK OPTIONS. Unless otherwise provided by the
Board at the time the Option is granted, an Option designated as a "Nonstatutory
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of Nonstatutory Stock Option Agreement adopted concurrently
with the adoption of the Plan and as amended from time to time.
7.3 AUTHORITY TO VARY TERMS. The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement are not
inconsistent with the terms of the Plan.
8. CHANGE IN CONTROL.
8.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the shareholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.
(b) A "CHANGE IN CONTROL" shall mean an Ownership Change Event
or a series of related Ownership Change Events (collectively, a "TRANSACTION")
wherein the shareholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
<PAGE>
8.2 EFFECT OF CHANGE IN CONTROL ON OPTIONS. In the event of a Change
in Control, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "ACQUIRING CORPORATION"),
may either assume the Company's rights and obligations under outstanding Options
or substitute for outstanding Options substantially equivalent options for the
Acquiring Corporation's stock. For purposes of this Section 8.2, an Option shall
be deemed assumed if, following the Change in Control, the Option confers the
right to purchase in accordance with its terms and conditions, for each share of
Stock subject to the Option immediately prior to the Change in Control, the
consideration (whether stock, cash or other securities or property) to which a
holder of a share of Stock on the effective date of the Change in Control was
entitled. The Board may, in its discretion, provide in any Option Agreement
that, in the event of a Change in Control, the exercisability and vesting of any
outstanding Option shall accelerate upon such circumstances and to such extent
as specified in the Option Agreement. The exercise or vesting of any Option that
was permissible solely by reason of this Section 8.2 and the provisions of such
Option Agreement shall be conditioned upon the consummation of the Change in
Control. Any Options which are neither assumed or substituted for by the
Acquiring Corporation in connection with the Change in Control nor exercised as
of the date of the Change in Control shall terminate and cease to be outstanding
effective as of the date of the Change in Control. Notwithstanding the
foregoing, shares acquired upon exercise of an Option prior to the Change in
Control and any consideration received pursuant to the Change in Control with
respect to such shares shall continue to be subject to all applicable provisions
of the Option Agreement evidencing such Option except as otherwise provided in
such Option Agreement. Furthermore, notwithstanding the foregoing, if the
corporation the stock of which is subject to the outstanding Options immediately
prior to an Ownership Change Event described in Section 8.1(a)(i) constituting a
Change in Control is the surviving or continuing corporation and immediately
after such Ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another corporation or by
other corporations that are members of an affiliated group within the meaning of
Section 1504(a) of the Code without regard to the provisions of Section 1504(b)
of the Code, the outstanding Options shall not terminate unless the Board
otherwise provides in its discretion.
9. PROVISION OF INFORMATION.
To the extent required by applicable law, at least annually, copies
of the Company's balance sheet and income statement for the just completed
fiscal year shall be made available to each Optionee and purchaser of shares of
Stock upon the exercise of an Option. The Company shall not be required to
provide such information to key employees whose duties in connection with the
Company assure them access to equivalent information.
10. NONTRANSFERABILITY OF OPTIONS.
During the lifetime of the Optionee, an Option shall be exercisable
only by the Optionee or the Optionee's guardian or legal representative. No
Option shall be assignable or transferable by the Optionee, except by will or by
the laws of descent and distribution.
<PAGE>
11. COMPLIANCE WITH SECURITIES LAW.
The grant of Options and the issuance of shares of Stock upon exercise of
Options shall be subject to compliance with all applicable requirements of
federal, state and foreign law with respect to such securities. Options may not
be exercised if the issuance of shares of Stock upon exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any stock exchange or market system
upon which the Stock may then be listed. In addition, no Option may be exercised
unless (a) a registration statement under the Securities Act shall at the time
of exercise of the Option be in effect with respect to the shares issuable upon
exercise of the Option or (b) in the opinion of legal counsel to the Company,
the shares issuable upon exercise of the Option may be issued in accordance with
the terms of an applicable exemption from the registration requirements of the
Securities Act. The inability of the Company to obtain from any regulatory body
having jurisdiction the authority, if any, deemed by the Company's legal counsel
to be necessary to the lawful issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the failure to issue or sell
such shares as to which such requisite authority shall not have been obtained.
As a condition to the exercise of any Option, the Company may require the
Optionee to satisfy any qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the
Company.
12. INDEMNIFICATION.
In addition to such other rights of indemnification as they may have
as members of the Board or officers or employees of the Participating Company
Group, members of the Board and any officers or employees of the Participating
Company Group to whom authority to act for the Board or the Company is delegated
shall be indemnified by the Company against all reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties; provided, however,
that within sixty (60) days after the institution of such action, suit or
proceeding, such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.
<PAGE>
13. TERMINATION OR AMENDMENT OF PLAN.
The Board may terminate or amend the Plan at any time. However,
subject to changes in applicable law, regulations or rules that would permit
otherwise, without the approval of the Company's shareholders, there shall be
(a) no increase in the maximum aggregate number of shares of Stock that may be
issued under the Plan (except by operation of the provisions of Section 4.2),
(b) no change in the class of persons eligible to receive Incentive Stock
Options, and (c) no other amendment of the Plan that would require approval of
the Company's shareholders under any applicable law, regulation or rule. No
termination or amendment of the Plan shall affect any then outstanding Option
unless expressly provided by the Board. In any event, no termination or
amendment of the Plan may adversely affect any then outstanding Option without
the consent of the Optionee, unless such termination or amendment is required to
enable an Option designated as an Incentive Stock Option to qualify as an
Incentive Stock Option or is necessary to comply with any applicable law,
regulation or rule.
14. SHAREHOLDER APPROVAL.
Any increase in the maximum aggregate number of shares of Stock
issuable thereunder as provided in Section 4.1 (the "AUTHORIZED SHARES") shall
be approved by the shareholders of the Company within twelve (12) months of the
date of adoption thereof by the Board. Options granted in excess of the
Authorized Shares previously approved by the shareholders shall become
exercisable no earlier than the date of shareholder approval of such increase in
the Authorized Shares.
<PAGE>
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing sets forth the FirstAmerica Automotive, Inc. 1997 Stock
Option Plan as amended and restated as of December 10, 1999 and as approved by
the Board.
/s/ Theodore M. Wright
------------------------------------
Secretary
Exhibit 5.1
January 31, 2000
Board of Directors
Sonic Automotive, Inc.
5401 East Independence Blvd.
Charlotte, North Carolina 28212
Dear Sirs:
We are acting as counsel to Sonic Automotive, Inc., a Delaware corporation
(the "COMPANY"), in connection with the preparation, execution, filing and
processing with the Securities and Exchange Commission (the "COMMISSION"),
pursuant to the Securities Act of 1933, as amended (the "ACT"), of a
Registration Statement on Form S-8 (the "REGISTRATION STATEMENT") relating to
the issuance and sale of up to 966,960 shares (the "SHARES") of common stock,
par value $.01 per share (the "COMMON STOCK"), reserved for issuance under the
FirstAmerica Automotive, Inc. 1997 Stock Option Plan Amended and Restated as of
December 10, 1999 (the "PLAN"). This opinion is furnished to you for filing with
the Commission pursuant to Item 601(b)(5) of Regulation S-K promulgated under
the Act.
In our representation of the Company, we have examined the Registration
Statement, the Plan, and the Company's Amended and Restated Certificate of
Incorporation and Bylaws, each as amended to date, all pertinent actions of the
Company's Board of Directors recorded in the Company's minute book, the form of
certificate evidencing the Shares and such other documents as we have considered
necessary for purposes of rendering the opinions expressed below.
Based upon the foregoing, we are of the following opinion:
1. The Company is a corporation duly incorporated, validly existing and
(based solely upon our review of a good standing certificate from
the Secretary of State of the State of Delaware dated January 6,
2000) in good standing under the laws of the State of Delaware.
2. The Shares proposed to be offered and sold by the Company under the
Plan have been duly authorized for issuance and, subject to the
Registration Statement becoming effective under the Act and to
compliance with any applicable state securities laws and to the
issuance of such Shares in accordance with the provisions of the
Plan, the Shares will be, when so issued, legally issued, fully paid
and non-assessable shares of Common Stock of the Company.
<PAGE>
Sonic Automotive, Inc.
January 31, 2000
Page 2
The opinions expressed herein are limited to the General Corporation Law
of the State of Delaware and the Act.
We hereby consent to the use of this opinion letter as Exhibit 5.1 to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Parker, Poe, Adams & Bernstein L.L.P.
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and Stockholders of
Sonic Automotive, Inc.:
We consent to the incorporation by reference in this Registration Statement of
Sonic Automotive, Inc. on Form S-8 of:
o our report dated November 23, 1999 on the financial statement of Freeland
automotive, a business unit of South Gate Motors, Inc., as of and for the
year ended December 31, 1998 and our report dated August 13, 1999 on the
combined financial statements of Manhattan Automotive Group as of and for
the year ended December 31, 1998, both appearing in the Amendment No. 1 to
Sonic Automotive, Inc.'s Current Report on Form 8-K/A dated January 18,
2000,
o our report dated May 21, 1999 on the combined financial statements of
Certain Dealerships, Assets and Liabilities of Lucas Dealership Group, Inc.
as of December 31, 1997 and 1998 and for each of the three years in the
period ended December 31, 1998, appearing in the Amendment No. 1 to Sonic
Automotive, Inc.'s Current Report on Form 8-K/A dated January 27, 2000;
o our report dated February 16, 1999 on the consolidated financial statements
of Sonic Automotive, Inc. and Subsidiaries as of December 31, 1997 and 1998
and for each of the three years in the period ended December 31, 1998, our
report dated March 26, 1999 on the combined financial statements of
Williams Automotive Group as of and for the year ended December 31, 1998,
our report dated March 16, 1999 on the financial statements of Economy
Cars, Inc. as of and for the year ended December 31, 1998, our report dated
March 26, 1999 on the financial statements of Global Imports, Inc. as of
and for the year ended December 31, 1998, our report dated March 12, 1999
on the combined financial statements of Newsome Automotive Group as of and
for the year ended December 31, 1998, our report dated March 15, 1999 on
the combined financial statements of Lloyd Automotive Group as of and for
the year ended December 31, 1998, and our report dated March 24, 1999 on
the financial statements of Lute Riley Motors, Inc. as of and for the year
ended December 31, 1998, all appearing in the Prospectus dated April 29,
1999 that was included in Sonic Automotive, Inc.'s Registration Statement
on Form S-3 (Registration No. 333-71803); and
o our report dated May 22, 1998 on the combined financial statements of
Hatfield Automotive Group as of December 31, 1996 and 1997 and for each of
the three years in the period ended December 31, 1997, our report dated
June 4, 1998 on the financial statements of Casa Ford of Houston, Inc. as
of and for the year ended December 31, 1997, and our report dated August
21, 1998 on the combined financial statements of Higginbotham Automotive
Group as of and for the year ended December 31, 1997, all appearing in the
Prospectus dated November 5, 1998 that was included in Sonic Automotive,
Inc.'s Registration Statement on Form S-4 (Registration Nos. 333-64397 and
333-64397-001 through 333-64397-044).
/s/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
January 31, 2000
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
FirstAmerica Automotive, Inc.
We consent to the incorporation by reference in the registration statement on
Form S-8 of Sonic Automotive, Inc. dated January 31, 2000 of our report dated
March 19, 1999, with respect to the consolidated balance sheets of FirstAmerica
Automotive, Inc. and subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1998,
which report appears in the Form 8-K/A of Sonic Automotive dated January 27,
2000:
/s/ KPMG LLP
January 31, 2000
San Francisco, California
