<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Discount Auto Parts, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
---------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
(Discount Auto Parts Logo)
August 16, 1999
Dear Stockholder:
On behalf of the Board of Directors and all the team members of Discount
Auto Parts, Inc., I am pleased to invite you to the Annual Meeting of
Stockholders of Discount Auto Parts, Inc., which will be held at the Lakeland
Center, 700 West Lemon Street, Lakeland, Florida at 10:30 A.M., local time, on
Tuesday, October 5, 1999. I hope you will be able to join us to review the year
and the progress of your company.
The items of business to be acted on during the meeting are listed in the
Notice of Annual Meeting of Stockholders and are described more fully in the
Proxy Statement. In addition, the formal business of the meeting will include a
report on operations followed by a question and discussion period.
TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED, I URGE YOU TO VOTE, DATE,
SIGN AND MAIL THE ENCLOSED PROXY CARD IN THE ENVELOPE WHICH IS PROVIDED, WHETHER
OR NOT YOU EXPECT TO BE PRESENT. YOU MAY, OF COURSE, ATTEND THE ANNUAL MEETING
AND VOTE IN PERSON EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
I look forward to seeing you at the meeting, and on behalf of the Board of
Directors and team members of Discount Auto Parts, Inc., I want to thank you for
your continued support and confidence in us.
Sincerely,
/s/Peter I. Fontaine
PETER J. FONTAINE
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
(Discount Auto Parts Logo)
DISCOUNT AUTO PARTS, INC.
4900 FRONTAGE ROAD SOUTH
LAKELAND, FLORIDA 33815
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 5, 1999
To The Stockholders Of
Discount Auto Parts, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Discount
Auto Parts, Inc. will be held on Tuesday, the 5th day of October, 1999, at 10:30
A.M., local time, at the Lakeland Center, 700 West Lemon Street, Lakeland,
Florida for the following purposes:
1. To elect two Class I directors to serve for three-year terms;
2. To ratify the 1999 Amendment of the Amended and Restated 1995 Stock
Option Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The close of business on August 9, 1999 has been fixed by the Board of
Directors as the record date for the determination of the stockholders entitled
to notice of and to vote at the meeting or any adjournments thereof.
Stockholders are requested to vote, date, sign and mail the enclosed proxy
promptly in the enclosed addressed envelope. If you should be present at the
meeting and desire to vote in person, you may withdraw your proxy.
By Order of the Board of Directors,
/s/ C. Michael Moore
C. MICHAEL MOORE
Secretary
August 16, 1999
<PAGE> 4
(Discount Auto Parts Logo)
DISCOUNT AUTO PARTS, INC.
4900 FRONTAGE ROAD SOUTH
LAKELAND, FLORIDA 33815
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of August 16, 1999
Discount Auto Parts, Inc.:
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Discount Auto Parts, Inc. (the "Company"),
from the holders of the Company's common stock, par value $.01 per share (the
"Common Stock"), to be used at the Annual Meeting of Stockholders and at any
adjournments thereof. This meeting will be held at 10:30 A.M., local time, on
Tuesday, October 5, 1999, at the Lakeland Center, 700 West Lemon Street,
Lakeland, Florida.
Any proxy given pursuant to this solicitation may be revoked by notice in
writing to the Secretary prior to the voting, by delivering a proxy bearing a
later date or by attending the Annual Meeting and voting the shares in person.
No such notice of revocation or later-dated proxy, however, will be effective
until received by the Company at or prior to the Annual Meeting. Unless the
proxy is revoked, the shares represented thereby will be voted at the Annual
Meeting or any adjournment thereof. The giving of the proxy does not affect the
right to vote in person should the stockholder attend the meeting.
The entire cost of preparing and mailing the proxy material will be borne
by the Company. Solicitation of proxies will be made by mail, personally, or by
telephone or telegraph, by officers, directors and regular employees of the
Company. The Company will request brokerage houses and other custodians,
nominees and fiduciaries to forward soliciting material to the stockholders and
the Company will reimburse such institutions for their out-of-pocket expenses
incurred thereby.
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, whether you plan to attend or not, you are urged, regardless
of the number of shares of stock owned, to vote, date, sign and return the
enclosed proxy promptly.
The approximate date on which this proxy is to be mailed to stockholders is
August 27, 1999.
Shares of Common Stock are the only outstanding voting securities of the
Company.
The Board of Directors, in accordance with the bylaws, has fixed the close
of business on August 9, 1999 as the record date for determining the
stockholders entitled to notice of and to vote at the Annual Meeting of
Stockholders and adjournments thereof. At the close of business on such date,
the outstanding number of voting securities of the Company was 16,690,555 shares
of Common Stock, each of which is entitled to one vote. All votes will be
tabulated by employees of ChaseMellon Shareholder Services, the Company's
transfer agent for the Common Stock. An employee of ChaseMellon Shareholder
Services and an employee of the Company are expected to serve as the inspectors
of election. Abstentions and broker non-votes are each included in the
determination of the number of shares present but are not counted on any matters
brought before the meeting.
<PAGE> 5
1. ELECTION OF DIRECTORS -- ITEM ONE ON YOUR PROXY CARD
The current terms of the three classes of directors expire in 1999 (Class I
directors), 2000 (Class II directors) and 2001 (Class III directors). Directors
are generally elected for three-year terms.
Two directors (the Class I directors) are to be elected at the 1999 Annual
Meeting. The Board of Directors has nominated the following named persons to
stand for election at the 1999 Annual Meeting for the two Class I director seats
(terms expiring in 2002):
Charles W. Webster, Jr.
David P. Walling
It is the intention of the persons named in the enclosed form of proxy,
unless otherwise directed, to vote such proxy "FOR" the election of Charles W.
Webster, Jr. and David P. Walling as the Class I directors of the Company, to
serve for the term described above. The nominees that receive a plurality of the
votes cast by the shares entitled to vote at the Annual Meeting shall be elected
as the Class I directors.
The proposed nominees for election as directors are willing to be elected
as such. If, as a result of circumstances not now known or foreseen, a nominee
shall be unavailable or unwilling to serve as a director, proxies may be voted
for the election of such other person as the Board of Directors may select. The
Board of Directors has no reason to believe that any nominee will be unable or
unwilling to serve.
The following sets forth information as to each nominee for election at
this meeting and each Director continuing in office, including his or her age,
present principal occupation, other business experience during the last five
years, directorships in other publicly held companies and period of service as a
Director of Discount Auto Parts.
Nominees for election at this meeting to terms expiring in 2002:
Charles W. Webster, Jr., 53. Since March 1995, Mr. Webster has been
President of Strategic Advantage, Inc., a business consulting firm. Strategic
Advantage, Inc. provides advice to chief executive officers and other senior
executives, primarily through The Executive Committee, an international
organization of chief executive officers. Prior to founding Strategic Advantage,
Inc., Mr. Webster was an independent management consultant for seven years. Mr.
Webster, directly from 1988 until March 1995 and through Strategic Advantage,
Inc. from March 1995 and thereafter, has provided limited consulting services to
the Company on behalf of and through an affiliation with The Executive
Committee.
David P. Walling, 68. Since 1990, David P. Walling has provided consulting
services to the Company on a part-time basis. Prior to 1990, Mr. Walling was
employed by Kmart for over 32 years in various managerial and executive
capacities. Mr. Walling served as Vice President, General Controller of Kmart
Corporation from 1976 until 1980. From 1980 until 1988, Mr. Walling served as
Vice President -- Corporate Accounting and Reporting and from 1988 until his
retirement in 1989 he served as Vice President -- Accounting/ Administration.
Director since 1996.
Directors whose present terms continue until 2000:
Warren Shatzer, 52. Mr. Shatzer was Executive Vice President --
Merchandising for the Company from 1992 until his resignation in July 1998. Mr.
Shatzer joined the Company in June 1980 and served in various executive
capacities until he was elected Executive Vice President -- Merchandising in
1992. Since December 1998, he has been a director and 50% owner of B&V
Restaurant, Inc., a privately held restaurant company.
Director since 1983.
2
<PAGE> 6
E.E. Wardlow, 77. Mr. Wardlow was President and Chief Operating Officer of
Kmart Corporation from 1972 until his retirement in 1981 after 44 years of
service with Kmart Corporation. Over the past eleven years, Mr. Wardlow has
provided consulting services to the Company on a part-time basis.
Director since 1992.
Directors whose present terms continue until 2001:
Peter J. Fontaine, 45, Chairman and Chief Executive Officer of the Company.
Mr. Fontaine has been with the Company since March 1975, serving since 1978 in
various managerial and executive capacities. Mr. Fontaine was elected Secretary
and Treasurer in 1979, Executive Vice President -- Operations in 1992, Chief
Operating Officer in 1993 and President, Chief Executive Officer and Chairman of
the Board in July 1994. Effective February 1, 1997, Mr. Fontaine stepped down
from his position as President of the Company but continued in his positions of
Chief Executive Officer and Chairman of the Board of the Company. Mr. Fontaine
is also currently a director of Vision Twenty-One, Inc.
Director since 1978.
William C. Perkins, 42, President and Chief Operating Officer of the
Company. Mr. Perkins has been with the Company since June 1983, serving in
various managerial capacities and executive capacities since 1989. He currently
holds the positions of President and Chief Operating Officer, offices to which
he was elected effective February 1, 1997. Mr. Perkins had previously served as
Controller and Chief Accounting Officer from 1989 to 1992, Chief Financial
Officer from 1992 until 1996 and Executive Vice President -- Operations and
Secretary from 1994 until 1997. Mr. Perkins has more than 17 years of experience
in retailing.
Director since 1994.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES.
The Board of Directors held four meetings during fiscal 1999. Each of the
incumbent Directors attended at least 75% of all meetings of the Board and each
committee of which he was a member.
The Board of Directors has a standing Audit Committee and a Compensation
and Benefits Committee (the "Compensation Committee"); it does not have a
Nominating Committee. The Board of Directors functions as a Nominating
Committee, and the Board will consider written recommendations from stockholders
for positions on the Board of Directors in accordance with the procedures set
forth in the Amended and Restated Articles of Incorporation of the Company.
See -- "Stockholder Proposals For Presentation At The 2000 Annual Meeting" for
further information.
The members of the Audit Committee are E. E. Wardlow, A Gordon Tunstall and
David P. Walling. It is anticipated that Charles W. Webster, Jr. will be
appointed to the Audit Committee in place of A Gordon Tunstall if he is elected
as a Director. The Audit Committee held three meetings during fiscal 1999. The
Audit Committee recommends the appointment, subject to approval by the Board of
Directors, of the Company's independent auditors. The Committee also reviews the
accounting principles and the financial reporting practices adopted by
management, the non-audit services performed by the independent auditors, the
scope of the audits performed by the independent auditors, and the findings and
recommendations of the independent auditors and approves the fees paid to the
independent auditors.
The members of the Compensation Committee are E. E. Wardlow, A Gordon
Tunstall and David P. Walling. It is anticipated that Charles W. Webster, Jr.
will be appointed to the Compensation Committee in place of A Gordon Tunstall if
he is elected as a Director. The Compensation Committee held three meetings
during fiscal 1999. The Compensation Committee reviews and recommends to the
Board of Directors the compensation of officers of the Company, examines
periodically the compensation structure of the Company and administers the
Company's 1992 Stock Option Plan, the Company's 1992 Team Members Stock Purchase
Plan, the Company's Amended and Restated 1995 Stock Option Plan and certain
aspects of the Company's Supplemental Executive Profit Sharing Plan along with
other employee compensation and benefit programs.
3
<PAGE> 7
COMPENSATION OF OUTSIDE DIRECTORS
Directors who are not employees received a fee of $2,500 for each regularly
scheduled meeting attended plus reimbursement for reasonable out-of-pocket
expenses to attend meetings of the Board of Directors and its committees. Such
directors are also paid a $2,500 fee for certain special meetings, depending on
the duration of such meetings. In addition, non-employee directors are entitled
to receive 1,000 stock options on an annual basis under the Discount Auto Parts,
Inc. Non-Employee Directors' Stock Option Plan. In fiscal 1999, each
non-employee director was granted options to purchase 1,000 shares of the
Company's Common Stock at an exercise price equal to the fair market value of
the Common Stock on the date of grant. The options become exercisable in 25%
percent increments on each subsequent anniversary of the date of grant.
No director who is an employee of the Company will receive separate
compensation for services rendered as a director.
2. PROPOSAL TO RATIFY THE 1999 AMENDMENT OF THE AMENDED AND RESTATED 1995 STOCK
OPTION PLAN -- ITEM TWO ON YOUR PROXY CARD
In 1995, the Board of Directors and stockholders of the Company adopted the
Discount Auto Parts, Inc. 1995 Stock Option Plan. In 1997, the Board of
Directors amended and restated the 1995 Stock Option Plan. The purpose of the
Amended and Restated 1995 Stock Option Plan is to enable the Company to be in a
position to continue to effectively attract and retain executive officers and
other key employees.
The 1999 Amendment
The 1995 Stock Option Plan as originally adopted covered a maximum of
300,000 shares of Common Stock. A 1997 amendment increased the number of shares
of Common Stock that may be issued under the plan by 600,000, to a maximum of
900,000. The Board of Directors has determined that the number of shares
remaining under the plan is insufficient to continue to meet the Company's needs
of attracting and retaining executive officers and other key employees. As a
result, the Board of Directors has approved, subject to stockholder ratification
at the 1999 Annual Meeting of Stockholders, an amendment to the Amended and
Restated 1995 Stock Option Plan increasing the number of shares of Common Stock
that may be issued upon exercise of options by 800,000 to a maximum of
1,700,000.
The Board recommends that you vote "FOR" ratification of the amendment of
the Amended and Restated 1995 Stock Option Plan (the "1999 Amendment"). The 1999
Amendment will be ratified if the votes cast "FOR" ratification of the 1999
Amendment by holders entitled to vote exceed the votes cast opposing the
ratification of the 1999 Amendment.
Summary of the Plan
An aggregate of 1,700,000 shares of Common Stock have been reserved for
issuance under the Amended and Restated 1995 Stock Option Plan, as amended by
the 1999 Amendment (the "Plan"). Under the Plan, incentive stock options,
nonqualified stock options or any combination thereof are granted to eligible
individuals. The Plan is administered by the Compensation and Benefits
Committee, whose members currently are E. E. Wardlow, David P. Walling, and A
Gordon Tunstall, none of whom are eligible to participate in the Plan.
All officers of the Company and other team members who have executive or
supervisory responsibility are eligible to receive options under the Plan,
except with respect to incentive stock options for any team members ineligible
by reason of the provisions of Section 422 of the Internal Revenue Code (e.g., a
team member owning or who would own upon the exercise of the option more than
10% of the outstanding common stock of the Company, unless the option price is
at least 110% of the fair market value of the Common Stock subject to the option
and the option is not exercisable after five years from the date of grant). No
consideration will be received by the Company for the granting of the options
under the Plan other than the services rendered to the Company by the team
member in such capacity.
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<PAGE> 8
The aggregate number of shares covered by the Plan, as well as the number
of shares covered by outstanding options (and the per share purchase price
thereof) are subject to automatic adjustment, without further action of the
Board of Directors or the stockholders, in the event of a stock dividend, a
stock split or certain other recapitalizations with respect to the Company's
stock.
The Board of Directors may amend the Plan (or suspend or discontinue it)
without further stockholder approval, except with respect to certain major
changes such as changing the number of shares subject to the Plan, the minimum
option price or the class of team members eligible to receive options, removing
the administration of the Plan from the committee or amending the Plan in any
other way so that incentive stock options granted thereunder would fail to
qualify under Section 422 of the Internal Revenue Code. No amendment may
adversely affect any then outstanding option.
The Plan will continue for 10 years from the date of its original adoption
(i.e., through 2005), unless the Plan terminates earlier upon the granting of
options covering 1,700,000 shares (options that are forfeited may be reissued by
the committee).
Incentive Stock Options. The per share exercise price of each incentive
stock option may not be less than the fair market value of the stock on the date
of grant or, in the case of a team member owning more than 10% of the
outstanding Common Stock of the Company, not less than 110% of such fair market
value. Also, the aggregate fair market value of the stock with respect to which
options are exercisable for the first time by a team member in any calendar year
may not exceed $100,000.
Nonqualified Stock Options. The per share exercise price of each
nonqualified stock option may not be less than the fair market value of the
stock on the date of grant.
If exercised, an option must be exercised within the exercise period by
payment of the option price in cash, by check or by other means prescribed by
the committee.
No option is exercisable within three years from the date of grant or more
than 10 years after the date of grant, or, in the case of an individual who owns
more than 10% of the outstanding common stock of the Company, more than five
years after the date of grant. Each option is exercisable in stock of the
Company. Options are exercisable based on vesting schedules established by the
committee administering the Plan. As a general matter, options may not be
exercisable any more rapidly than in cumulative installments of one quarter of
the number of shares covered by the option every year beginning on the third
anniversary from the date of grant and continuing annually for a period of four
years thereafter. If the individual's affiliation with the Company as a team
member is terminated during the term of the option, the end of the option period
will be accelerated. Notwithstanding the foregoing general rules, the committee
may issue options for shorter periods of time and may permit the earlier
exercise of outstanding options.
An individual may not transfer any option granted under the Plan, although
in some circumstances after the individual's death, the individual's personal
representative may exercise the option and, in certain other circumstances,
options can be exchanged for new options.
On August 9, 1999, the reported last sale price of the Company's Common
Stock on the New York Stock Exchange was $22.5625.
Federal Income Tax Consequences
The recipient of an incentive stock option should not recognize any taxable
income or loss for federal income tax purposes at the time the incentive stock
option is granted or exercised; however, upon exercise, the difference between
the stock purchase price set forth in the option and the fair market value of
the shares received may be subject to the alternative minimum tax. If the Common
Stock purchased upon the exercise of an incentive stock option is held for at
least two years after the granting of the option and at least one year after
exercise, the recipient should receive a long term capital gain or loss upon the
sale or disposition of the Common Stock based on the difference between the fair
market value of the Common Stock on the date of sale or other disposition and
the purchase price of the Common Stock under the option. The Company will not
5
<PAGE> 9
be entitled to any deductions with respect to the granting or exercise of the
incentive stock option in such cases.
If the recipient of an incentive stock option does not hold the shares for
two years after the grant of the option and one year after exercise, the
recipient will generally recognize as ordinary income in the year of disposition
the difference between (1) the purchase price of Common Stock covered by the
option and (2) the lesser of the sales price or the fair market value of the
shares on the date of exercise; and the Company will be entitled to a
corresponding deduction for such amount in that year. Any remaining gain would
be taxable to the recipient as capital gain. However, if the sales price is less
than the purchase price under the option, no income will be recognized; the
recipient would generally realize a capital loss equal to the difference between
the purchase price and the disposition price; and the Company will not receive
any deduction.
The general rules described in the preceding paragraph apply only when the
sale is made to an unrelated party. If the recipient makes a sale or other
disposition to certain related persons or entities before the end of the
applicable holding periods, then the recipient will be treated as having
received ordinary income (with a corresponding deduction to the Company) in the
year of disposition in an amount equal to the difference between the sales price
and the fair market value of the shares on the date of exercise (even if the
fair market value of the shares is less on the date of sale or other
disposition).
Because the Company does not anticipate that any nonqualified stock option
will have a readily ascertainable fair market value when issued, the recipient
of such an option should not recognize any taxable income or loss for federal
income tax purposes at the time the option is granted. The exercise of the
nonqualified stock option, however, will result in the immediate recognition of
taxable income by its holder at ordinary income rates based on the difference
between the purchase price for shares covered by the option and the fair market
value of the shares received at the time of exercise. The Company will receive a
corresponding deduction at the same time. Additional gain or loss, determined
under general rules of taxation, may be realized upon the sale of the shares.
The specific application and impact of the tax rules will vary depending on
the specific personal situation of individual option recipients.
6
<PAGE> 10
PLAN BENEFITS TABLE -- AMENDED AND RESTATED 1995 STOCK OPTION PLAN
The following table provides information regarding the number and value of
the securities to be granted or purchased under the Amended and Restated 1995
Stock Option Plan, as amended by the 1999 Amendment.
<TABLE>
<CAPTION>
AMENDED AND RESTATED
1995
STOCK OPTION PLAN
------------------------
NUMBER
NAME AND POSITION DOLLAR VALUE OF UNITS
- ----------------- ------------ ---------
<S> <C> <C>
Peter J. Fontaine........................................... (1) (1)
Chairman of the Board and Chief Executive Officer
William C. Perkins.......................................... (1) (1)
President and Chief Operating Officer
C. Michael Moore............................................ (1) (1)
Chief Financial Officer and Secretary
Steven C. Bair.............................................. (1) (1)
Vice President -- Operations
David C. Viele.............................................. (1) (1)
Vice President -- Purchasing
Executive Group(2).......................................... (1) (1)
Non-Executive Director Group................................ * *
Non-Executive Officer Employee Group........................ (1) (1)
</TABLE>
- ---------------
* Not eligible for participation
(1) The grant of options under the Amended and Restated 1995 Stock Option Plan
is entirely within the discretion of the Compensation and Benefits
Committee. The Company cannot determine the nature or amount of awards that
will be made in the future. For information regarding grants of options in
fiscal 1999 to Messrs. Moore, Bair, and Viele, see the Summary Compensation
Table and the Option/SAR Grants Table. During fiscal 1999, 55,000 stock
options and 277,750 stock options were granted under this plan to the
Executive Group and Non-Executive Officer Employee Group, respectively. The
dollar value of such stock options cannot be determined.
(2) Consists of 10 executive officers including the 5 executive officers listed
above.
INFORMATION CONCERNING INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Representatives of Ernst & Young LLP, the Company's independent auditors,
are expected to be present at the Annual Meeting with the opportunity to make a
statement if they desire to do so and to respond to appropriate questions posed
by stockholders. Matters pertaining to the auditing of the Company's financial
condition and results of operations are referred to the Company's Board of
Directors and its Audit Committee.
It is expected that the Company's independent certified public accountants
for fiscal 2000 will be confirmed by the Board of Directors during the fiscal
year.
OTHER BUSINESS
It is not expected that any other matters are likely to be brought before
the meeting. However, if any other matters are presented, it is the intention of
the persons named in the proxy to vote the proxy in accordance with their best
judgment.
7
<PAGE> 11
COMPENSATION COMMITTEE REPORT
To: The Board of Directors
As members of the Compensation and Benefits Committee (the "Compensation
Committee"), it is our duty to administer the Company's various incentive plans,
including its stock option plans, its stock purchase plan and its annual bonus
plans. In addition, we review compensation levels of the executive officers,
evaluate the performance of the executive officers, make recommendations to the
Board of Directors with respect to the Company's executive compensation
policies, and deal with related matters. In evaluating the performance of
executive officers, we consult with the Chief Executive Officer and the
President, except when evaluating their respective performance, in which case we
meet independently. The Compensation Committee will review with the Board of
Directors in detail all aspects of compensation for the executive officers. The
Compensation Committee is composed of three outside directors.
The Compensation Committee has access to independent compensation data and
may, from time to time in the future, consult with an outside compensation
consultant.
The Company's compensation policy for executive officers, which is endorsed
by the Compensation Committee, is designed to support the overall objective of
enhancing value for stockholders by attracting, developing, rewarding and
retaining highly qualified and productive individuals; relating compensation to
both Company and individual performance; and insuring compensation levels that
are, in general, externally competitive and internally equitable.
The key elements of the Company's executive officers' compensation in
fiscal 1999 consisted principally of (1) base salary, (2) potential bonuses
based on overall Company performance for the Chief Executive Officer, the
President, the Chief Financial Officer, and certain of the other vice presidents
and based in part on overall Company performance and in part on specific
performance criteria keyed to areas of responsibility for each of the other
executive officers and (3) the award of stock options under the 1992 Stock
Option Plan and/or the Amended and Restated 1995 Stock Option Plan which is
designed to give certain of the officers and other team members the opportunity
to be awarded long-term, stock-based incentives.
The Compensation Committee's policies with respect to each of these
elements are discussed below, including the basis for the compensation awarded
in fiscal 1999 to Peter J. Fontaine, the Company's Chief Executive Officer and
to William C. Perkins, the Company's President. In addition, although the
elements of compensation described below are considered separately, the
Compensation Committee takes into account the full compensation package afforded
by the Company to the individual.
Base Salary
Each officer's base salary is reviewed annually. The specific base salaries
are based upon the subjective determination by the Chief Executive Officer and
the President of appropriate salary levels, taking into consideration the scope
of responsibility, experience, Company and individual performance, as well as
pay practices of other companies relating to executives with similar
responsibility. The Chief Executive Officer and the President then make
recommendations to the Compensation Committee, which is responsible for
approving or disapproving those recommendations.
With respect to the base salary of Peter J. Fontaine in fiscal 1999,
consideration was given to a comparison of base salaries of persons with
comparable positions and responsibilities in peer companies and an assessment of
the individual performances of Mr. Fontaine. Mr. Fontaine was granted a base
salary of $192,400 for fiscal 1999, which was unchanged from his base salary for
fiscal 1998. The level nature of the base salary was reflective of the desire to
reward improved overall performance of the Company and the perceived
contribution of Peter J. Fontaine to this improved performance through the
annual bonus rather than by increasing base salary.
With respect to the base salary of William C. Perkins in fiscal 1999,
consideration was given to a comparison of base salaries of persons with
comparable positions and responsibilities in peer companies and an assessment of
the individual performance of Mr. Perkins. Mr. Perkins was granted a base salary
of $192,400
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<PAGE> 12
for fiscal 1999 which was unchanged from his base salary for fiscal 1998. The
level nature of the base salary was reflective of the desire to reward improved
overall performance of the Company and the perceived contribution of William C.
Perkins to this improved performance through the annual bonus rather than by
increasing base salary.
Annual Bonus Program
Under the Company's annual bonus plans, incentive compensation is somewhat
discretionary but through objective overall performance criteria established
under the plans, is expected to be paid based on current year's performance. The
fiscal year 1999 annual bonus plans for the Chief Executive Officer, the
President, the Chief Financial Officer and certain of the vice presidents were
directly tied to pre-tax net income and were earned based in part on the ability
of the Company to achieve a preestablished goal for comparable store sales
growth, in part on the ability of the Company to achieve a preestablished goal
for operating earnings growth and, with respect to the Chief Financial Officer
and certain of the vice presidents, in part on the ability of the Company to
meet certain other performance goals such as gross profit margin and team member
retention. Under the bonus program in fiscal 1999 for the particular executive
officers who held these positions during fiscal 1999, determinations as to
payment of bonuses were made quarterly. The base bonus for each of the Chief
Executive Officer and the President was 1% of the Company's pre-tax earnings,
and for the Chief Financial Officer was .25% of the Company's pre-tax earnings.
Under the bonus program for these three executive officers, the amount of the
base bonus is adjusted downward if and to the extent the goals are not achieved
and is increased if and to the extent the goals are exceeded. In fiscal 1999,
the goal for comparable store sales increase was 10% and the goal for operating
earnings growth was 25%.
The fiscal year 1999 annual bonus plan for the other executive officers was
based in part on pre-tax net income and comparable store sales growth and in
part on (1) the ability of the Company to meet certain other overall performance
goals such as gross profit margin, team member retention and controllable
expense percentages and (2) such executive officer meeting other personal
performance goals. The applicable percentage of pre-tax earnings target for the
other executive officers and the performance criteria for the executive officers
who had other performance goals were developed by the President in coordination
with the Chief Executive Officer of the Company, with input from the respective
senior officer to whom they report and subject to approval by the Compensation
Committee.
In order to provide some flexibility, management is given the authority to
amend or terminate these various bonus plans at any time.
Long-Term Compensation
The Compensation Committee awards stock options under the 1992 Stock Option
Plan and/or the Amended and Restated 1995 Stock Option Plan to executive
officers, other members of management and key individual contributors.
Generally, the President together with the Chief Executive Officer will
recommend the number of options to be granted and will present this number along
with appropriate supporting data to the Compensation Committee for its review
and approval. Options are granted at fair market value on the date of grant and
therefore any value which ultimately accrues to key team members under such
options is based entirely on the Company's performance, as perceived by
investors who establish the price for the Company's stock. These options
generally vest beginning after three years and then over a four-year period and
have a 10-year duration.
Stock option grants are designed to retain key team members, including
executive officers, and to provide an incentive for key team members to improve
the return to stockholders. In fiscal 1999, the Compensation Committee awarded
stock options to Mr. Moore, Mr. Bair, Mr. Bottino, Mr. Viele, Mr. Joiner, Mr.
Harrah and Mr. Wiley. The grants were based on their respective
responsibilities, their relative positions in the Company and their respective
contributions to the Company's financial performance. Although stock options
were issued to other key team members as well, no stock options were awarded to
Mr. Fontaine or Mr. Perkins during fiscal 1999.
9
<PAGE> 13
Other
The Committee believes that linking executive compensation to corporate
performance through a more significant emphasis on performance bonuses results
in a better alignment of compensation with corporate goals and stockholder
interest. As performance goals are met or exceeded, resulting in increased value
to stockholders, executives are rewarded commensurately. The Committee believes
that compensation levels during fiscal 1999 adequately reflect the Company's
compensation goals and policies.
No member of the Compensation Committee is a former or current officer of
the Company.
COMPENSATION COMMITTEE:
E. E. Wardlow
A Gordon Tunstall
David P. Walling
10
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock with the cumulative total return of the companies in the Standard &
Poor's 500 Index and an Automotive Peer Group.(1) Cumulative total return for
each of the periods shown in the Performance Graph is measured assuming an
initial investment of $100 on May 31, 1994, and the reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
DISCOUNT AUTO PARTS,
INC. S&P 500 INDEX OLD PEER GROUP NEW PEER GROUP
-------------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
May 31, 1994 100.00 100.00 100.00 100.00
May 30, 1995 116.85 117.56 99.32 98.96
May 28, 1996 112.50 151.16 128.85 128.77
June 3, 1997 80.44 195.77 119.53 119.20
June 2, 1998 107.34 256.89 134.87 134.72
June 1, 1999 104.35 366.86 131.07 132.37
</TABLE>
- ---------------
(1) The peer group comprises publicly traded Automotive Parts Retailers which
are engaged principally or in significant part in the retail sale of
automotive replacement parts, maintenance items and accessories to the
Do-It-Yourself consumer and which often are viewed as being in competition
with the Company. The returns of each company have been weighted according
to each company's respective stock market capitalization for purposes of
arriving at a peer group average. The members of the old peer group are:
Auto Zone, Inc.; Genuine Parts Co.; O'Reilly Automotive, Inc.; The Pep
Boys -- Manny, Moe & Jack; and Trak Auto Corporation (which was merged into
a privately held company). The members of the new peer group are: Auto Zone,
Inc.; CSK Automotive Corporation (which was chosen to replace Trak Auto
Corporation); Genuine Parts Co.; O'Reilly Automotive, Inc.; and The Pep
Boys -- Manny, Moe & Jack.
11
<PAGE> 15
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
executive officers:
<TABLE>
<CAPTION>
YEARS WITH
NAME POSITIONS THE COMPANY
- ---- --------- -----------
<S> <C> <C>
Peter J. Fontaine................. Chairman of the Board, Chief Executive Officer and 24
Director
William C. Perkins................ President, Chief Operating Officer and Director 16
C. Michael Moore.................. Chief Financial Officer and Secretary 3
David C. Viele.................... Vice President -- Purchasing 23
Steven C. Bair.................... Vice President -- Operations 20
Clement A. Bottino................ Vice President -- Human Resources 20
Steven K. Joiner.................. Vice President -- Marketing 15
Michael D. Harrah................. Vice President -- Information Systems 6
Clifford J. Wiley................. Vice President -- Real Estate 15
Don L. Casey...................... Vice President -- Purchasing and Inventory Systems 1
</TABLE>
NON-DIRECTOR EXECUTIVE OFFICERS
C. Michael Moore, 39, joined the Company in July 1996 as Chief Financial
Officer and was elected as Secretary in February 1997. Prior to joining the
Company, Mr. Moore was employed by Ernst & Young LLP from December 1981 until
June 1996, most recently as Senior Manager.
David C. Viele, 41, has been with the Company since March 1976, serving in
various distribution and purchasing capacities. Mr. Viele served as Purchasing
Manager from 1988 until April 1994, at which time he was elected to his current
position as Vice President -- Purchasing.
Steven C. Bair, 39, has been with the Company since September 1978, serving
in various managerial capacities. Mr. Bair served as a Division Manager from
1985 until April 1994, at which time he was elected to his current position as
Vice President -- Operations.
Clement A. Bottino, 47, has been with the Company since July 1979, serving
in various managerial capacities. Mr. Bottino served as a Division Manager from
1985 until April 1994, at which time he was elected to serve as a Vice
President -- Operations. He was appointed to his current position as Vice
President -- Human Resources in March 1996.
Steven K. Joiner, 38, has been with the Company since October 1983, serving
in various managerial capacities. Since 1995, Mr. Joiner has served in the
position of Vice President -- Marketing.
Michael D. Harrah, 49, was appointed Vice President -- Information Systems
in 1995. Prior thereto, Mr. Harrah was the Company's Director of Information
Systems since October 1992. Before joining the Company, Mr. Harrah worked for
Lykes Bros., Inc., for over 13 years, where he last served as Director of Data
Processing.
Clifford Wiley, 42, has been with the Company since August 1984, serving in
various real estate-related capacities. Mr. Wiley served as a Real Estate
Manager from August 1984 to July 1996, at which time he was elected to his
current position as Vice President -- Real Estate.
Don L. Casey, 48, was appointed Vice President -- Purchasing and Inventory
Systems in May 1999. Mr. Casey had been employed in various executive capacities
since 1987 by The Pep Boys -- Manny, Moe and Jack, most recently as Vice
President of Merchandising Systems.
12
<PAGE> 16
None of the executive officers or directors are related to one another.
Executive officers are elected by and serve at the discretion of the Board of
Directors.
In recent years, the Company has also benefitted from the advice of four
seasoned retailers who, prior to retirement, were executives with Kmart
Corporation. E.E. Wardlow has provided advice and consultation on all phases of
mass merchandising and discount retailing; David P. Walling has provided advice
and consultation on accounting and financial matters; and Ken Dunkel, with
experience in distribution and Kenneth Dowden, with experience in distribution
and information systems, have also been providing guidance to the Company for
the past several years and continue to serve as advisors to the Company.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information concerning the annual compensation
of each of the named executive officers of the Company, as defined under
applicable Securities and Exchange Commission Rules, for services rendered to
the Company in each of the Company's last three fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(2)
-------------
ANNUAL COMPENSATION(1) SECURITIES
----------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS(3)($) OPTIONS(#)(4) COMPENSATION($)(5)
- --------------------------- ---- --------- ----------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
Peter J. Fontaine.................... 1999 192,400 190,616 (6) 2,697
Chief Executive Officer and 1998 192,400 333,423 (6) 2,710
Chairman of the Board 1997 192,400 203,786 (6) 1,586
William C. Perkins................... 1999 192,400 190,616 (6) 16,270
President and 1998 192,400 333,423 50,000 13,918
Chief Operating Officer 1997 141,996 170,142 (6) 12,676
C. Michael Moore..................... 1999 155,000 93,926 10,000 16,076
Chief Financial Officer 1998 143,942 81,795 1,000 11,849
1997 120,000 19,575 5,500 0
Steven C. Bair....................... 1999 104,567 73,379 10,000 15,968
Vice President -- Operations 1998 97,500 80,198 1,000 12,352
1997 94,400 42,629 500 11,092
David C. Viele....................... 1999 104,661 74,899 10,000 13,037
Vice President -- Purchasing 1998 97,500 74,343 1,000 12,180
1997 92,000 38,834 500 39,715
</TABLE>
- ---------------
(1) Other Annual Compensation, other than salary and bonuses, was not paid or
did not exceed the minimum amounts required to be reported pursuant to
Securities and Exchange Commission Rules.
(2) The Company does not offer any Restricted Stock Awards, SAR or other LTIP
programs.
(3) Amounts in this column include bonuses earned under the annual management
incentive plan which is keyed to the Company's performance. Amounts earned
with respect to a particular fiscal year are accrued as expenses in such
fiscal year.
(4) This category reflects stock options pursuant to the Company's 1992 Stock
Option Plan and Amended and Restated 1995 Stock Option Plan.
(5) For fiscal 1999, includes (1) contributions by the Company to the Team
Member's Section 401(k) Plan for each of Messrs. Fontaine, Perkins, Moore,
Bair, and Viele, (2) accruals to the Company's Supplemental Employee Profit
Sharing Plan for Messrs. Perkins, Moore, Bair, and Viele, and (3) amounts
paid for earned but unused vacation for Messrs. Perkins, Moore, and Bair.
(6) Not applicable. No compensation of this type received.
13
<PAGE> 17
OPTION/SAR GRANTS TABLE
The following table shows information concerning stock options granted
during fiscal 1999 for the individuals shown in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
---------------------------- ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION -----------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ---------- --------------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Peter J. Fontaine.............. -0- -- -- -- -- --
William C. Perkins............. -0- -- -- -- -- --
C. Michael Moore............... 10,000 * 27.188 07/06/08 170,984 433,307
Steven C. Bair................. 10,000 * 27.188 07/06/08 170,984 433,307
David C. Viele................. 10,000 * 27.188 07/06/08 170,984 433,307
</TABLE>
- ---------------
* Less than one percent
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table shows information concerning stock option values as of
the end of fiscal 1999.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- ----------------------------- ----------------------------
<S> <C> <C>
Peter J. Fontaine............................ -0-/-0- -0-/-0-
William C. Perkins........................... 56,449/85,113 302,916/481,250
C. Michael Moore............................. -0-/16,500 -0-/5,875
Steven C. Bair............................... 31,031/15,825 117,086/84,625
David C. Viele............................... 31,031/15,825 117,086/84,625
</TABLE>
- ---------------
(1) This represents the amount by which the fair market value of the Company's
Common Stock of $24.00 per share as of June 1, 1999 exceeds the exercise
price of those options held by the named executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation and Benefits Committee (the
"Committee"), are E. E. Wardlow, A Gordon Tunstall and David P. Walling. Neither
Mr. Wardlow, Mr. Tunstall nor Mr. Walling has at any time been an officer of the
Company. Neither Mr. Wardlow, Mr. Tunstall nor Mr. Walling were employees of the
Company during fiscal 1999. It is anticipated that Charles W. Webster, Jr. will
be appointed to the Committee if he is elected as a Director. Mr. Webster has
not at any time been an officer or employee of the Company.
No director, executive officer or member of the Committee had any
interlocking relationship with any other company which would require disclosure
in this proxy statement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of October 10, 1992, the Company and Herman and Marie Fontaine ("Mr. and
Mrs. Fontaine"), entered into a Wage Agreement (the "Agreement") that provides
that from October 10, 1992 and continuing
14
<PAGE> 18
as long as Mr. and Mrs. Fontaine are both living and are continuing to provide
the services required under the Agreement, the Company will pay to Mr. and Mrs.
Fontaine, collectively, $140,000.00 per year. Upon the death of either Herman or
Marie Fontaine, the Company is required to continue to pay the survivor
$140,000.00 per year provided the survivor continues to provide the services
required under the Agreement. Under the Agreement, Mr. and Mrs. Fontaine must
continue to provide services to the Company in the capacities as consultant and
sales auditor, respectively, or to provide consulting services to the Company.
Herman Fontaine is one of the founders of the Company and is currently Chairman
Emeritus of the Company. Mr. and Mrs. Fontaine are the parents of Denis L.
Fontaine and Peter J. Fontaine. In fiscal 1999, the Company paid Mr. and Mrs.
Fontaine a total of $147,280 of which $140,000 was paid in accordance with the
Agreement and $7,280 was paid as additional compensation to Mrs. Fontaine.
The Company leases two of its store locations under separate one year
leases from a Florida partnership which was established by Denis L. Fontaine and
Peter J. Fontaine and the current partners of which are Peter J. Fontaine and
the Glenda A. Fontaine Marital Trust, which was formed after Denis L. Fontaine's
death in June 1994 (the "Marital Trust"). The leases provide for fixed monthly
rental, pass through of all expenses to the Company, including taxes, repairs
and insurance and one year renewal terms. In the past, the leases have been
renewed from year to year and it is anticipated that such renewals will
continue. Lease payments under the two leases aggregated $127,200 in fiscal
1999. The leases are believed to be at or below fair market value.
During fiscal 1999, the Company chartered on a regular basis an airplane
from PF Flyers, Inc., a Florida corporation that owns and operates an airplane
charter service and all of the common stock of which is beneficially owned by
Peter J. Fontaine. The payments made during fiscal 1999 by the Company to PF
Flyers, Inc., aggregated approximately $88,294. The rates charged to the Company
by PF Flyers, Inc., for the chartering services are believed to be at or below
fair market value.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
To the Company's knowledge, based solely on a review of the forms, reports
and certificates filed with the Company by the Company's directors and officers
and the holders of more than 10% of the Company's Common Stock, all Section
16(a) filing requirements were complied with by such persons in fiscal 1999,
except that for each of Fontaine Enterprises Limited Partnership, Peter J.
Fontaine, and the Glenda A. Fontaine Marital Trust one Form 4 was filed late to
report a sale of stock by Fontaine Enterprises Limited Partnership.
15
<PAGE> 19
SECURITY OWNERSHIP
The following table sets forth, as of August 9, 1999, the number of shares
of the Company's Common Stock beneficially owned by (i) each person known to the
Company as having beneficial ownership of more than 5% of the Company's Common
Stock together with such person's address, (ii) each of the Company's directors
and nominees to become a director, (iii) each named executive officer as defined
under applicable Securities and Exchange Commission rules and (iv) all directors
and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OR NUMBER IN GROUP OWNERSHIP(1) OF CLASS
- ------------------------------------------- ------------- --------
<S> <C> <C>
Fontaine Industries Limited Partnership..................... 4,041,289(2) 24.21%
3305 W. Spring Mountain Road #60
Las Vegas, Nevada 89012
Fontaine Enterprises Limited Partnership.................... 3,342,864(3) 20.03%
3305 W. Spring Mountain Road #60
Las Vegas, Nevada 89012
Peter J. Fontaine........................................... 7,386,153(4) 44.25%
c/o Discount Auto Parts, Inc.
4900 Frontage Road South
Lakeland, Florida 33815
Glenda A. Fontaine Marital Trust under...................... 3,342,864(5) 20.03%
Agreement dated July 8, 1993
c/o Discount Auto Parts, Inc.
4900 Frontage Road South
Lakeland, Florida 33815
William C. Perkins.......................................... 59,033(6) *
C. Michael Moore............................................ 2,975(7) *
Steven C. Bair.............................................. 31,931(8) *
David C. Viele.............................................. 31,631(9) *
Warren Shatzer.............................................. 5,000(10) *
E. E. Wardlow............................................... 9,250(11) *
A Gordon Tunstall........................................... 5,250(12) *
David P. Walling............................................ 6,790(13) *
Charles W. Webster, Jr...................................... 117(14) *
FMR Corp.................................................... 2,031,500(15) 12.17%
82 Devonshire Street
Boston, Massachusetts 02109
Fidelity Management & Research Company...................... 1,703,800(15) 10.21%
82 Devonshire Street
Boston, Massachusetts 02109
Edward C. Johnson 3d........................................ 2,031,500(15) 12.17%
82 Devonshire Street
Boston, Massachusetts 02109
Abigail P. Johnson.......................................... 2,031,500(15) 12.17%
82 Devonshire Street
Boston, Massachusetts 02109
T. Rowe Price Associates, Inc............................... 1,281,600(16) 7.68%
100 E. Pratt Street
Baltimore, Maryland 21202
</TABLE>
16
<PAGE> 20
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OR NUMBER IN GROUP OWNERSHIP(1) OF CLASS
- ------------------------------------------- ------------- --------
<S> <C> <C>
T. Rowe Price New Horizons Fund, Inc........................ 1,100,000(16) 6.59%
100 E. Pratt Street
Baltimore, Maryland 21202
All Directors and........................................... 7,591,873 45.13%
Executive Officers as a Group (14 persons)
</TABLE>
- ---------------
* Less than one percent
(1) Beneficial ownership of shares, as determined in accordance with applicable
Securities and Exchange Commission rules, includes shares as to which a
person has or shares voting power and/or investment power. Except as
otherwise indicated, all shares are held of record with sole voting and
investment power.
(2) Fontaine Industries Limited Partnership ("Industries L.P.") is a Nevada
Limited Partnership. A revocable trust established by Peter J. Fontaine and
under which Mr. Fontaine is the trustee, is the sole general partner and is
one of two limited partners of Industries L.P., owning an aggregate of 99%
of the partnership interests. Peter J. Fontaine is a limited partner and
owns the remaining 1% of the partnership interests. Although not reflected
in the table, Industries L.P. may be considered, for beneficial ownership
purposes, part of a group which also includes Fontaine Enterprises Limited
Partnership, Peter J. Fontaine Revocable Trust, Glenda A. Fontaine Marital
Trust, certain trusts established for the benefit of the children of Denis
L. Fontaine, Peter J. Fontaine and Merritt A. Gardner as Trustee;
therefore, Industries L.P. may be considered as beneficially owning the
same aggregate number of shares shown in the table as being beneficially
owned by Peter J. Fontaine.
(3) Fontaine Enterprises Limited Partnership ("Enterprises L.P.") is a Nevada
Limited Partnership. The Glenda A. Fontaine Marital Trust (the "Glenda
Fontaine Trust"), of which Peter J. Fontaine and Merritt A. Gardner are the
trustees, is the sole general partner and a limited partner of Enterprises
L.P., owning an aggregate of 81.5% of the partnership interests. Certain
trusts established for the benefit of the children of Denis L. Fontaine
(the "Children's Trusts"), of which Peter J. Fontaine and Merritt A.
Gardner are also the trustees, are limited partners of Enterprises L.P. and
in such capacity own the remaining 18.5% of the partnership interests.
Although not reflected in the table, Enterprises L.P. may be considered,
for beneficial ownership purposes, part of a group which also includes
Fontaine Industries Limited Partnership, Peter J. Fontaine Revocable Trust,
Glenda A. Fontaine Marital Trust, certain trusts established for the
benefit of the children of Denis L. Fontaine, Peter J. Fontaine and Merritt
A. Gardner as Trustee; therefore, Enterprises L.P. may be considered as
beneficially owning the same aggregate number of shares shown in the table
as being beneficially owned by Peter J. Fontaine.
(4) Peter J. Fontaine does not directly own any shares. Beneficial ownership by
Mr. Fontaine reflects (i) 4,041,289 shares owned by Industries L.P., (ii)
3,342,864 shares owned by Enterprises L.P., (iii) 1,000 shares owned by
Debra Fontaine, Mr. Fontaine's wife and (iv) 1,000 shares owned by Mr.
Fontaine's daughter. See Notes (2) and (3) above.
(5) The Glenda Fontaine Trust does not directly own any shares. Beneficial
ownership by the Glenda Fontaine Trust reflects shares owned by Enterprises
L.P. See Note (3) above.
(6) The number of shares shown includes 56,561 shares deemed to be beneficially
owned by Mr. Perkins by virtue of certain stock options that are currently
exercisable or become exercisable within 60 days. Also includes 272 shares
owned by Gina Perkins, his wife, and 200 additional shares (100 owned by
each of his two sons).
(7) The number of shares shown includes 1,375 shares deemed to be beneficially
owned by Mr. Moore by virtue of certain stock options that are currently
exercisable or become exercisable within 60 days.
(8) The number of shares shown includes 31,231 shares deemed to be beneficially
owned by Mr. Bair by virtue of certain stock options that are currently
exercisable or become exercisable within 60 days.
(9) The number of shares shown includes 31,231 shares deemed to be beneficially
owned by Mr. Viele by virtue of certain stock options that are currently
exercisable or become exercisable within 60 days.
17
<PAGE> 21
(10) The number of shares shown for Warren Shatzer includes all of the shares
held by Shatzer Enterprises Limited Partnership, a Nevada limited
partnership. A revocable trust established by Mr. Shatzer, and under which
Mr. Shatzer is the trustee, is the sole general partner and is one of two
limited partners of Shatzer Enterprises Limited Partnership, owning an
aggregate of 99% of the partnership interests, with Warren Shatzer being a
limited partner and owning the remaining 1% of the partnership interests.
(11) The number of shares shown includes 4,250 shares deemed to be beneficially
owned by Mr. Wardlow by virtue of certain stock options that are currently
exercisable or become exercisable within 60 days. Also includes 5,000
shares that are held in a revocable trust established by Mr. Wardlow and
under which Mr. Wardlow is the Trustee.
(12) The number of shares shown includes 4,250 shares deemed to be beneficially
owned by Mr. Tunstall by virtue of certain stock options that are currently
exercisable or become exercisable within 60 days.
(13) The number of shares shown includes 1,500 shares deemed to be beneficially
owned by Mr. Walling by virtue of certain stock options that are currently
exercisable or become exercisable within 60 days. Also includes 245 shares
owned by Elizabeth Walling, his wife.
(14) The number of shares shown includes 5 shares held by Mr. Webster as
custodian for one of his two sons, and 12 shares held by Mr. Webster as
custodian for his other son.
(15) This information is derived from a Schedule 13G dated February 1, 1999,
filed by FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson. FMR Corp.,
Edward C. Johnson 3d and Abigail P. Johnson are each shown to have sole
dispositive power with respect to all 2,031,500 shares. Fidelity Management
& Research Company is a wholly owned subsidiary of FMR Corp. and is deemed
the beneficial owner with respect to 1,703,800 shares as a result of acting
as investment adviser to several investment companies registered under
Section 8 of the Investment Company Act of 1940. Neither FMR Corp., Edward
C. Johnson, 3d, or Abigail P. Johnson has the sole power to vote or direct
the voting of any of the 2,031,500 shares shown. This power resides with
the Board of Trustees of the various institutions for which FMR Corp.'s
wholly owned subsidiaries act as investment advisers.
(16) The number of shares shown are owned by various individual and
institutional investors including the T. Rowe Price Horizons Fund, Inc.
(which owns 1,100,000 shares, representing 6.59 % of the shares
outstanding), for which T. Rowe Price Associates, Inc. ("Price Associates")
serves as investment adviser with power to direct investments and/or sole
power to vote the securities. For purposes of the reporting requirements of
the Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
This information is derived from a Schedule 13G dated February 12, 1999
filed by Price Associates and T. Rowe Price Horizons Fund, Inc.
STOCKHOLDERS PROPOSALS FOR PRESENTATIONS AT THE 2000 ANNUAL MEETING
Pursuant to the General Rules under the Securities Exchange Act of 1934,
proposals of stockholders intended to be presented at the 2000 Annual Meeting of
Stockholders must be received by management of the Company at its principal
executive offices by April 25, 2000.
The Company's Amended and Restated Articles of Incorporation also contain
requirements concerning advance notice to the Company of any stockholder
proposal and of any nominations by stockholders of persons to stand for election
as directors at a stockholders' meeting. Notice of stockholder proposals and of
director nominations must be timely given in writing to the Secretary of the
Company prior to the meeting at which the directors are to be elected. To be
timely, notice must be received at the principal executive offices of the
Company not less than 60 days prior to the meeting of stockholders; provided,
however, that in the event that less than 70 days' notice prior to public
disclosure of the date of the meeting is given or made to the stockholders,
notice by the stockholder, in order to be timely, must be so delivered or
received not later than the close of business on the tenth day following the day
on which such notice of the date of the annual meeting was mailed or public
disclosure of the date of the annual meeting was made, whichever first occurs.
A stockholder's notice with respect to a proposal to be brought before the
annual meeting must set forth (a) a brief description of the proposal and the
reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Company's books, of the stockholder proposing
such business
18
<PAGE> 22
and any other stockholders known by such stockholder to be supporting such
proposal, (c) the class and number of shares of the Company which are
beneficially owned by such stockholder on the date of such stockholder notice
and by any other stockholders known by such stockholder to be supporting such
proposal on the date of such stockholder notice, and (d) any financial interest
of the stockholder in such proposal.
A stockholder's notice with respect to a director nomination must set forth
(a) as to each nominee (1) the name, age, business address and residence address
of the person, (2) the principal occupation or employment of the person, (3) the
class and number of shares of the Company which are beneficially owned by such
person, (4) all information that would be required to be included in a proxy
statement soliciting proxies for the election of the nominee director (including
such person's written consent to serve as a director if so elected) and (b) as
to the stockholder providing such notice (i) the name and address, as they
appear on the Company's books, of the stockholder and (ii) the class and number
of shares of the Company which are beneficially owned by such stockholder on the
date of such stockholder notice.
The complete Amended and Restated Articles of Incorporation provisions
governing these requirements are available to any stockholder without charge
upon request from the Secretary of the Company.
By Order of the Board of Directors,
/s/ C. Michael Moore
C. MICHAEL MOORE,
Secretary
Dated: August 16, 1999
19
<PAGE> 23
APPENDIX A
DISCOUNT AUTO PARTS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 5, 1999
The undersigned, a stockholder of DISCOUNT AUTO PARTS, INC. (the "Company"),
hereby appoints Peter J. Fontaine and William C. Perkins, and each of them,
attorney and proxy of the undersigned, each with full powers of substitution,
for and on behalf of the undersigned, to represent the undersigned at the Annual
Meeting of Stockholders of the Company to be held at the Lakeland Center, 700
West Lemon Street, Lakeland, Florida at 10:30 a.m., local time, on October 5,
1999 and any adjournments or postponements thereof (the "Annual Meeting"), and
to vote at the Annual Meeting all the shares of Common Stock of the Company that
the undersigned is entitled to vote at the Annual Meeting, with the same effect
as if the undersigned were personally present at the Annual Meeting, all as
described in the Company's Proxy Statement dated August 16, 1999 relating to the
Annual Meeting, and the undersigned hereby authorizes and instructs the above
named proxies to vote as specified on the reverse side.
The shares represented by this Proxy will be voted in the manner directed
herein only if this Proxy is properly executed and timely returned. IF THE
UNDERSIGNED DOES NOT SPECIFY A CHOICE, THE SHARES WILL BE VOTED FOR THE NOMINEES
FOR DIRECTOR LISTED HEREON, FOR THE PROPOSAL TO RATIFY THE 1999 AMENDMENT OF THE
AMENDED AND RESTATED 1995 STOCK OPTION PLAN, AND IN THE DISCRETION OF THE
PROXIES FOR OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE> 24
(CONTINUED FROM OTHER SIDE)
The Board of Directors recommends voting FOR the following proposals:
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS. NOMINEES FOR CLASS I DIRECTORS: CHARLES W. WEBSTER, JR. AND DAVID P. WALLING
<S> <C>
[ ] FOR the nominees listed above [ ] AUTHORITY WITHHELD to vote for the nominees
(except as marked to the contrary). listed above.
(Instruction: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in
the list above).
2. PROPOSAL TO RATIFY THE 1999 AMENDMENT OF THE AMENDED AND RESTATED 1995 STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. OTHER MATTERS. Unless a line is stricken through this sentence, the proxies herein named may in their discretion
vote the shares represented by this Proxy upon such other matters as may properly come before the Annual Meeting.
</TABLE>
The undersigned acknowledges receipt of (1) the Company's 1999 Annual Report
to Stockholders and (2) the Company's Notice of Annual Meeting and Proxy
Statement dated August 16, 1999 relating to the Annual Meeting. The undersigned
does hereby revoke any proxy previously given with respect to the shares
represented by this Proxy.
<TABLE>
<CAPTION>
<S> <C>
Dated: _____________________________________, 1999
-------------------------------------------------------
Signature
-------------------------------------------------------
Signature if held jointly
NOTE: Your signature should appear as your name appears
hereon. As to shares held in joint names, each joint
owner should sign. If the signer is a corporation,
please sign full corporate name by a duly authorized
officer. If a partnership, please sign in partnership
name by an authorized person. If signing as attorney,
executor, administrator, trustee, guardian, or in other
representative capacity, please give full title as such.
</TABLE>
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT USING
THE ENCLOSED ENVELOPE.
<PAGE> 25
APPENDIX B
DISCOUNT AUTO PARTS, INC.
AMENDED AND RESTATED
1995 STOCK OPTION PLAN
ARTICLE 1
GENERAL
1.1 PURPOSE. This incentive stock option and nonqualified stock option
plan (the "Plan") is established to promote the interests of Discount Auto
Parts, Inc. (the "Company") and its stockholders by enabling the Company,
through the granting of stock options, to attract and retain executive and other
key team members of the Company and its subsidiaries, and to provide additional
incentive to such team members to increase their stock ownership in the Company.
It is intended that those Options issued pursuant to the provisions of the Plan
relating to incentive stock options shall constitute incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, or any statute or
regulation of similar import.
1.2 DEFINITIONS. The following words and terms as used herein shall
have that meaning set forth therefor in this Section 1.2 unless a different
meaning is clearly required by the context. Whenever appropriate, words used in
the singular shall be deemed to include the plural and vice versa, and the
masculine gender shall be deemed to include the feminine gender.
(a) "Board" or "Board of Directors" shall mean the Board of
Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean the Compensation and Benefits
Committee of the Board or such other committee as may be appointed by the Board
as the Committee in accordance with Section 1.3(a).
(d) "Common Stock" shall mean the common stock, $.01 par
value, of the Company.
(e) "Company" shall mean Discount Auto Parts, Inc., a Florida
corporation, and any successor.
(f) "Eligible Employee" shall mean any individual employed by
the Company or any Subsidiary who meets the eligibility requirements of Section
1.4. The Committee shall have the sole power to determine who is and who is not
an Eligible Employee.
(g) "Fair market value" of the shares of Common Stock shall
mean the closing price, on the date in question (or, if no shares are traded on
such day, on the next preceding day on which shares were traded), of the Common
Stock as reported on the Composite Tape, or if not reported thereon, then such
price as reported in the trading reports of the principal securities exchange in
the United States on which such stock is listed, or if such stock is not listed
on a securities exchange in the United States, the mean between the dealer
closing "bid" and "ask" prices on the over-the-counter market as reported by the
National Association of Security Dealers Automated Quotation System (NASDAQ), or
NASDAQ's
<PAGE> 26
successor, or if not reported on NASDAQ, the fair market value of such stock as
determined by the Committee in good faith and based on all relevant factors.
(h) "ISO" shall mean an incentive stock option granted in
accordance with the provisions of Article 2 of this Plan.
(i) "NSO" shall mean a nonqualified stock option granted in
accordance with the provisions of Article 3 of this Plan.
(j) "Option" shall mean an ISO or a NSO.
(k) "Optionee" shall mean an Eligible Employee to whom an
Option is granted under the Plan.
(l) "Plan" shall mean the Discount Auto Parts, Inc. 1995 Stock
Option Plan, as set forth herein and as amended from time to time.
(m) "Subsidiary" shall mean any corporation that at the time
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" contained in Section 424(f) of the Code.
(n) "10% Stockholder" is defined in Section 2.2.
1.3 ADMINISTRATION.
(a) The incentive stock option and nonqualified stock option
provisions of the Plan shall be administered by a committee appointed by the
Board of Directors (the "Committee"). The Committee shall consist of not less
than two (2) nor more than five (5) persons, each of whom shall be a member of
the Company's Board of Directors and none of whom shall be eligible to
participate under the Plan. The Board of Directors may from time to time remove
members from, or add members to, the Committee. Vacancies on the Committee,
howsoever caused, shall be filled by the Board of Directors.
(b) The Committee shall select one of its members as chairman,
and shall hold meetings at such time and places as it may determine. The acts of
a majority of the Committee at which a quorum is present, or acts reduced to or
approved in writing by a majority of the members of the Committee, shall be
valid acts of the Committee.
(c) Subject to the provisions of the Plan, the Committee shall
have full authority, in its discretion: (1) to determine the employees of the
Company and its Subsidiaries to whom Options shall be granted; (2) to determine
the time or times at which Options shall be granted; (3) to determine whether an
Eligible Employee shall be granted an incentive stock option, a nonqualified
stock option or any combination thereof; (4) to determine the option price of
the shares subject to each Option; (5) to determine the time or times when each
Option becomes exercisable and the duration of any Option period; and (6) to
interpret the Plan and the Options granted hereunder, and to prescribe, amend
and rescind rules and regulations with respect thereto. The interpretation and
construction by the Committee of any provision of the Plan over which it has
discretionary authority or of any Option granted hereunder shall be final and
conclusive.
2.
<PAGE> 27
(d) No member of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Option
granted hereunder.
1.4 ELIGIBLE EMPLOYEES. An Option may be granted to any executive or
other key employee of the Company or of any Subsidiary (who may or may not be an
officer or member of the Board), with the exceptions only of (a) with respect to
the incentive stock options granted under the Plan, employees who cannot qualify
for the benefits of incentive stock options under Section 422 of the Code, and
(b) with respect to all provisions of the Plan, members of the Committee and any
other members of the Board who are not otherwise employees of the Company.
1.5 STOCK SUBJECT TO THE PLAN.
(a) The stock subject to the Options under the Plan shall be
authorized and unissued shares of Common Stock. The aggregate number of shares
that may be issued upon the exercise of Options granted under the Plan shall not
exceed 900,000 shares of Common Stock, which limitation shall be subject to
adjustment as provided in Section 4.1.
(b) If an Option is surrendered or for any other reason ceases
to be exercisable in whole or in part, the shares of Common Stock that are
subject to such Option, but as to which the Option has not been exercised, shall
again become available for offering under the Plan.
(c) The maximum number of shares of Common Stock for which
options may be granted under the Plan to any one person shall be 250,000.
ARTICLE 2
TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS
Any incentive stock option ("ISO") granted pursuant to the Plan shall
be authorized by the Committee and shall be evidenced by certificates or
agreements in such form as the Committee from time to time shall approve, which
certificates or agreements shall comply with and be subject to the terms and
conditions hereinafter specified.
2.1 NUMBER OF SHARES. Each ISO shall state the number of shares to
which it pertains.
2.2 OPTION PRICE. Each ISO shall state the option price, which price
shall be determined by the Committee in its discretion. In no event, however,
shall such price be less than 100% of the fair market value of the shares of
Common Stock on the date of the granting of the ISO; or, in the case of an
individual who owns (at the time the Option is granted) more than 10% of the
total combined voting power of all classes of stock of the Company or of a
parent or subsidiary corporation (a "10% Stockholder"), shall such price be less
than 110% of such fair market value.
2.3 METHOD OF PAYMENT. Each ISO shall state the method of payment of
the ISO price upon the exercise of the ISO. The method of payment stated in the
ISO shall include payment (a) in United States dollars in cash or by check, bank
draft or money order payable to the order of the Company, or (b)
3.
<PAGE> 28
in the discretion of and in the manner determined by the Committee, by the
delivery of shares of Common Stock already owned by the Optionee, or (c) by any
other legally permissible means acceptable to the Committee at the time of grant
of the ISO, or (d) in the discretion of the Committee, through a combination of
(a), (b) and (c) of this Section 2.3. If the option price is paid in whole or in
part through the delivery of shares of Common Stock, the decision of the
Committee with respect to the fair market value of such shares shall be final
and conclusive. To the extent permitted by applicable law and regulations, the
Board and/or the Committee may, in their respective discretions, approve an
arrangement with a brokerage firm under which such brokerage firm, on behalf of
the person electing to exercise the options, pays to the Company the full
purchase price of the shares being purchased together with an amount equal to
any taxes which the Company is required to withhold in connection with the
exercise of the option and the Company, pursuant to an irrevocable notice from
such person, delivers the shares being purchased to such brokerage firm.
2.4 TERM AND EXERCISE OF OPTIONS. No ISO shall be exercisable either in
whole or in part prior to twelve (12) months from the date it is granted. The
Committee, in its discretion exercised at the time that it grants an ISO, shall
establish such further restrictions on when an ISO shall become partially or
fully exercisable; provided, however, that such vesting provisions established
by the Committee at the time of grant shall not permit the ISO to be exercised
more rapidly than would be permitted by the following chart:
<TABLE>
<CAPTION>
Exercisable Percentage
Number of Years From the of Number of Shares
Date the ISO is Granted Originally Covered by Option
- ----------------------- --------------------------------
10% Stockholder Other Optionee
--------------- --------------
<S> <C> <C>
Less than three years 0% 0%
3 years but less than 4 years 50% 25%
4 years but less than 5 years 100% 50%
5 years but less than 6 years 100% 75%
6 years or more 100% 100%
</TABLE>
To the extent not exercised, exercisable installments of Options shall
be exercisable, in whole or in part, in any subsequent period, but not later
than the expiration date of the Option. No ISO shall be exercisable after the
expiration of ten (10) years from the date it is granted; or, in the case of a
10% Stockholder, no ISO shall be exercisable after the expiration of five (5)
years from the date it is granted. Not less than one hundred (100) shares may be
exercised at any one time unless the number exercised is the total number at the
time exercisable under the ISO.
Within the limits described above, the Committee may impose additional
requirements on the exercise of ISOs, including, but without limitation, the
expiration date of the Option. When it deems special circumstances to exist, the
Committee in its discretion also may accelerate the time at which an ISO may be
exercised if, under previously established exercise terms, such ISO was not
immediately exercisable in full, even if the acceleration would permit the ISO
to be exercised more rapidly than the minimum vesting period set forth above in
the chart would permit.
2.5 ADDITIONAL LIMITATIONS ON EXERCISE OF OPTIONS. An Optionee may hold
and exercise more than one ISO, but only on the terms and subject to the
restrictions hereafter set forth. The aggregate fair
4.
<PAGE> 29
market value (determined as of the time an ISO is granted) of the Common Stock
with respect to which ISOs are exercisable for the first time by any Eligible
Employee in any calendar year under this Plan and under all other incentive
stock option plans of the Company and any parent and subsidiary corporations of
the Company (as those terms are defined in Section 424 of the Code) shall not
exceed $100,000.
2.6 NOTICE OF GRANT OF OPTION. Upon the granting of any ISO to an
employee, the Committee shall promptly cause such employee to be notified of the
fact that such ISO has been granted. The date on which the Committee approves
the grant of an ISO shall be considered to be the date on which such ISO is
granted.
2.7 DEATH OR OTHER TERMINATION OF EMPLOYMENT.
(a) In the event that an Optionee (1) shall cease to be
employed by the Company or a Subsidiary because of his or her discharge for
dishonesty, or because he or she violated any material provision of any
employment or other agreement between him or her and the Company or a
Subsidiary, or (2) shall voluntarily resign or terminate his or her employment
with the Company or a Subsidiary under or followed by such circumstances as
would constitute a breach of any material provision of any employment or other
agreement between him or her and the Company or the Subsidiary, or (3) shall
have committed an act of dishonesty not discovered by the Company or a
Subsidiary prior to the cessation of his or her employment but that would have
resulted in his or her discharge if discovered prior to such date, or (4) shall,
either before or after cessation of his or her employment with the Company or a
Subsidiary, without the written consent of his or her employer or former
employer, use (except for the benefit of his or her employer or former employer)
or disclose to any other person any confidential information relating to the
continuation or proposed continuation of his or her employer's or former
employer's business or any trade secrets of the Company or a Subsidiary obtained
as a result of or in connection with such employment, or (5) shall, either
before or after the cessation of his or her employment with the Company or a
Subsidiary, without the written consent of his or her employer or former
employer, directly or indirectly, give advice to, or serve as an employee,
director, officer, partner or trustee of, or in any similar capacity with, or
otherwise directly or indirectly participate in the management, operation, or
control of, or have any direct or indirect financial interest in, any
corporation, partnership or other organization that directly or indirectly
competes in any respect with the Company or any Subsidiary, then forthwith from
the happening of any such event, any ISO then held by him or her shall terminate
and become void to the extent that it then remains unexercised. In the event
that an Optionee shall cease to be employed by the Company or a Subsidiary for
any reason other than his or her death or one or more of the reasons set forth
in the immediately preceding sentence, subject to the conditions that no Option
shall be exercisable after the expiration of ten (10) years from the date it is
granted, or, in the case of a 10% Stockholder, five (5) years from the date it
is granted, such Optionee shall have the right to exercise the ISO at any time
within three (3) months after such termination of employment to the extent his
or her right to exercise such ISO had accrued pursuant to this Article 2 at the
date of such termination and had not previously been exercised; such three-month
limit shall be increased to one (1) year for any Optionee who ceases to be
employed by the Company or a Subsidiary because he or she is disabled (within
the meaning of Section 22(e)(3) of the Code) or who dies during the three-month
period and the ISO may be exercised within such extended time limit by the
Optionee or, in the case of death, the personal representative of the Optionee
or by any person or persons who shall have acquired the ISO directly from the
Optionee by bequest or inheritance. Whether an authorized leave of absence or
absence for military or governmental service shall
5.
<PAGE> 30
constitute termination of employment for purposes of the Plan shall be
determined by the Committee, whose determination shall be final and conclusive.
(b) In the event that an Optionee shall die while in the
employ of the Company or a Subsidiary and shall not have fully exercised any
ISO, the ISO may be exercised, subject to the conditions that no ISO shall be
exercisable after the expiration of ten (10) years from the date it is granted,
or, in the case of a 10% Stockholder, five (5) years from the date it is
granted, to the extent that the Optionee's right to exercise such ISO had
accrued pursuant to this Article 2 at the time of his or her death and had not
previously been exercised, at any time within one (1) year after the Optionee's
death, by the personal representative of the Optionee or by any person or
persons who shall have acquired the ISO directly from the Optionee by bequest or
inheritance.
(c) No ISO shall be transferable by the Optionee otherwise
than by will or the laws of descent and distribution.
(d) During the lifetime of the Optionee, the ISO shall be
exercisable only by him or her and shall not be assignable or transferable and
no other person shall acquire any rights therein.
(e) Transfers of employment between the Company and any of its
Subsidiaries shall not be considered to be a termination of employment for the
purposes of this Plan.
2.8 RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a
stockholder with respect to any shares covered by his or her ISO until the date
on which he or she becomes a record owner of the shares purchased upon the
exercise of the ISO (the "record ownership date"). No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
record ownership date, except as provided in Article 4.
2.9 MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the
terms and conditions and within the limitations of the Plan, the Committee may
modify, extend or renew outstanding ISOs granted under the Plan, or accept the
surrender of outstanding ISOs (to the extent not theretofore exercised) and
authorize the granting of new Options in substitution therefor (to the extent
not theretofore exercised). The Committee shall not, however, modify any
outstanding ISO so as to specify a lower option price or accept the surrender of
outstanding ISOs and authorize the granting of new Options in substitution
therefor specifying a lower option price. Notwithstanding the foregoing,
however, no modification of an ISO shall, without the consent of the Optionee,
adversely alter or otherwise impair any of the right or obligations under any
ISO theretofore granted under the Plan.
2.10 LISTING AND REGISTRATION OF SHARES. Each ISO shall be subject to
the requirement that if at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of the shares
covered thereby upon any securities exchange or under any state or federal laws,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such ISO or
the issuance or purchase of shares thereunder, such ISO may not be exercised
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee. Notwithstanding anything in the Plan to the contrary, if the
provisions of this Section 2.10 become operative, and if, as a
6.
<PAGE> 31
result thereof, the exercise of an ISO is delayed, then and in that event, the
term of the ISO shall not be affected.
2.11 OTHER PROVISIONS. The ISO certificates or agreements authorized
under the Plan shall contain such other provisions, including, without
limitation, restrictions upon the exercise of the ISO, as the Committee shall
deem advisable. Any such certificate or agreement shall contain such limitations
and restrictions upon the exercise of the ISO as shall be necessary in order
that such ISO will be an incentive stock option as defined in Section 422 of the
Code, or to conform to any change in the law.
ARTICLE 3
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
Any nonqualified stock option ("NSO") granted pursuant to the Plan
shall be authorized by the Committee and shall be evidenced by certificates or
agreements in such form as the Committee from time to time shall approve, which
certificates or agreements shall comply with and be subject to the terms and
conditions hereinafter specified.
3.1 NUMBER OF SHARES. Each NSO shall state the number of shares to
which it pertains.
3.2 OPTION PRICE. Each NSO shall state the option price, which price
shall be determined by the Committee in its discretion. In no event, however,
shall such price be less than 100% of the fair market value of the shares of
Common Stock on the date of the granting of the NSO.
3.3 METHOD OF PAYMENT. Each NSO shall state the method of payment of
the NSO price upon the exercise of the NSO. The method of payment stated in the
NSO shall include payment (a) in United States dollars in cash or by check, bank
draft or money order payable to the order of the Company, or (b) in the
discretion of and in the manner determined by the Committee, by the delivery of
shares of Common Stock already owned by the Optionee, or (c) by any other
legally permissible means acceptable to the Committee at the time of the grant
of the NSO, or (d) in the discretion of the Committee, through a combination of
(a), (b) and (c) of this Section 3.3. If the option price is paid in whole or in
part through the delivery of shares of Common Stock, the decision of the
Committee with respect to the fair market value of such shares shall be final
and conclusive. To the extent permitted by applicable law and regulations, the
Board and/or the Committee may, in their respective discretions, approve an
arrangement with a brokerage firm under which such brokerage firm, on behalf of
the person electing to exercise the options, pays to the Company the full
purchase price of the shares being purchased together with an amount equal to
any taxes which the Company is required to withhold in connection with the
exercise of the option and the Company, pursuant to an irrevocable notice from
such person, delivers the shares being purchased to such brokerage firm.
3.4 TERM AND EXERCISE OF OPTIONS. No NSO shall be exercisable either in
whole or in part prior to twelve (12) months from the date it is granted. The
Committee, in its discretion exercised at the time that it grants a NSO, shall
establish such further restrictions on when a NSO shall become partially or
fully exercisable; provided, however, that such vesting provisions established
by the Committee at the
7.
<PAGE> 32
time of grant shall not permit the NSO to be exercised more rapidly than would
be permitted by the following chart:
Exercisable Percentage
Number of Years From the of Number of Shares
Date the NSO is Granted Originally Covered by Option
----------------------- ----------------------------
Less than three years 0%
3 years but less than 4 years 25%
4 years but less than 5 years 50%
5 years but less than 6 years 75%
6 years or more 100%
To the extent not exercised, exercisable installments of Options shall
be exercisable, in whole or in part, in any subsequent period, but not later
than the expiration date of the Option. No NSO shall be exercisable after the
expiration of ten (10) years from the date it is granted. Not less than one
hundred (100) shares may be exercised at any one time unless the number
exercised is the total number at the time exercisable under the NSO.
Within the limits described above, the Committee may impose additional
requirements on the exercise of NSOs, including, but without limitation, the
expiration date of the Option. When it deems special circumstances to exist, the
Committee in its discretion also may accelerate the time at which a NSO may be
exercised if, under previously established exercise terms, such NSO was not
immediately exercisable in full, even if the acceleration would permit the NSO
to be exercised more rapidly than the minimum vesting period set forth above in
the chart would permit.
3.5 NOTICE OF GRANT OF OPTION. Upon the granting of any NSO to an
employee, the Committee shall promptly cause such employee to be notified of the
fact that such NSO has been granted. The date on which the Committee approves
the grant of a NSO shall be considered to be the date on which such NSO is
granted.
3.6 DEATH OR OTHER TERMINATION OF EMPLOYMENT.
(a) In the event that an Optionee (1) shall cease to be
employed by the Company or a Subsidiary because of his or her discharge for
dishonesty, or because he or she violated any material provision of any
employment or other agreement between him or her and the Company or a
Subsidiary, or (2) shall voluntarily resign or terminate his or her employment
with the Company or a Subsidiary under or followed by such circumstances as
would constitute a breach of any material provision of any employment or other
agreement between him or her and the Company or the Subsidiary, or (3) shall
have committed an act of dishonesty not discovered by the Company or a
Subsidiary prior to the cessation of his or her employment but that would have
resulted in his or her discharge if discovered prior to such date, or (4) shall,
either before or after cessation of his or her employment with the Company or a
Subsidiary, without the written consent of his or her employer or former
employer, use (except for the benefit of his or her employer or former employer)
or disclose to any other person any confidential information relating to the
continuation or proposed continuation of his or her employer's or former
employer's business or any trade secrets of the Company or a Subsidiary obtained
as a result of or in connection with such
8.
<PAGE> 33
employment, or (5) shall, either before or after the cessation of his or her
employment with the Company or a Subsidiary, without the written consent of his
or her employer or former employer, directly or indirectly, give advice to, or
serve as an employee, director, officer, partner or trustee of, or in any
similar capacity with, or otherwise directly or indirectly participate in the
management, operation or control of, or have any direct or indirect financial
interest in, any corporation, partnership or other organization that directly or
indirectly competes in any respect with the Company or any Subsidiary, then
forthwith from the happening of any such event, any NSO then held by him or her
shall terminate and become void to the extent that it them remains unexercised.
In the event that an Optionee shall cease to be employed by the Company or a
Subsidiary for any reason other than his or her death or one or more of the
reasons set forth in the immediately preceding sentence, subject to the
condition that no Option shall be exercisable after the expiration of ten (10)
years from the date it is granted, such Optionee shall have the right to
exercise the NSO at any time within three (3) months after such termination of
employment to the extent his or her right to exercise such NSO had accrued
pursuant to this Article 3 at the date of such termination and had not
previously been exercised; such three-month limit shall be increased to one (1)
year for any Optionee who ceases to be employed by the Company or a Subsidiary
because he or she is disabled (within the meaning of Section 22(e)(3) of the
Code) or who dies during the three-month period and the NSO may be exercised
within such extended time limit by the Optionee or, in the case of death, the
personal representative of the Optionee or by any person or persons who shall
have acquired the NSO directly from the Optionee by bequest or inheritance.
Whether an authorized leave of absence or absence for military or governmental
service shall constitute termination of employment for purposes of the Plan
shall be determined by the Committee, whose determination shall be final and
conclusive.
(b) In the event that an Optionee shall die while in the
employ of the Company or a Subsidiary and shall not have fully exercised any
NSO, the NSO may be exercised, subject to the condition that no NSO shall be
exercisable after the expiration of ten (10) years from the date it is granted,
to the extent that the Optionee's right to exercise such NSO had accrued
pursuant to this Article 3 at the time of his or her death and had not
previously been exercised, at any time within one (1) year after the Optionee's
death, by the personal representative of the Optionee or by any person or
persons who shall have acquired the NSO directly from the Optionee by bequest or
inheritance.
(c) No NSO shall be transferable by the Optionee otherwise
than by will or the laws of descent and distribution.
(d) During the lifetime of the Optionee, the NSO shall be
exercisable only by him or her and shall not be assignable or transferable and
no other person shall acquire any rights therein.
(e) Transfers of employment between the Company and any of its
Subsidiaries shall not be considered to be a termination of employment for the
purposes of this Plan.
3.7 RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a
stockholder with respect to any shares covered by his or her NSO until the date
on which he or she becomes a record owner of the shares purchased upon the
exercise of the NSO (the "record ownership date"). No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the record ownership date, except as provided in Article 4.
9.
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3.8 MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the
terms and conditions and within the limitations of the Plan, the Committee may
modify, extend or renew outstanding NSOs granted under the Plan, or accept the
surrender of outstanding NSOs, whether issued under this Plan or under any other
stock option plan of the Company (to the extent not theretofore exercised) and
authorize the granting of new Options in substitution therefor (to the extent
not theretofore exercised), including previously granted Options having higher
option prices. Notwithstanding the foregoing, however, no modification of a NSO
shall, without the consent of the Optionee, adversely alter or otherwise impair
any of the rights or obligations under any NSO theretofore granted under the
Plan.
3.9 LISTING AND REGISTRATION OF SHARES. Each NSO shall be subject to
the requirement that if at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of the shares
covered thereby upon any securities exchange or under any state or federal laws,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such NSO or
the issuance or purchase of shares thereunder, such NSO may not be exercised
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee. Notwithstanding anything in the Plan to the contrary, if the
provisions of this Section 3.9 become operative, and if, as a result thereof,
the exercise of a NSO is delayed, then and in that event, the term of the NSO
shall not be affected.
3.10 OTHER PROVISIONS. The NSO certificates or agreements authorized
under the Plan shall contain such other provisions, including, without
limitation, restrictions upon the exercise of the NSO, as the Committee shall
deem advisable.
ARTICLE 4
MISCELLANEOUS
4.1 STOCK ADJUSTMENTS.
(a) In the event of any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split or other division or
consolidation of shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such shares
effected without any receipt of consideration by the Company, then, in any such
event, the number of shares of Common Stock that remain available under the
Plan, the number of shares of Common Stock covered by each outstanding Option,
the maximum number of shares as to which an Option or Options may be granted to
any one Optionee, and the purchase price per share of Common Stock covered by
each outstanding Option shall be proportionately and appropriately adjusted for
any such increase or decrease.
(b) Subject to any required action by the stockholders, if any
change occurs in the shares of Common Stock by reason of any recapitalization,
reorganization, merger, consolidation, split-up, combination or exchange of
shares, or of any similar change affecting the shares of Common Stock, then, in
any such event, the number and type of shares covered by each outstanding
Option, and the purchase price per share of Common Stock covered by each
outstanding Option, shall be proportionately and appropriately adjusted for any
such change. A dissolution or liquidation of the Company shall cause each
outstanding Option to terminate.
10.
<PAGE> 35
(c) In the event of a change in the Common Stock as presently
constituted that is limited to a change of all of its authorized shares with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any change shall be deemed to be shares of
Common Stock within the meaning of the Plan.
(d) To the extent that the foregoing adjustments relate to
stock or securities of the Company, such adjustments shall be made by, and in
the discretion of, the Committee, whose determination in that respect shall be
final, binding and conclusive; provided, however, that any ISO granted pursuant
to pursuant to this Plan shall not be adjusted in a manner that causes such ISO
to fail to continue to qualify as an incentive stock option within the meaning
of Section 422 of the Code.
(e) Except as hereinabove expressly provided in this Section
4.1, an Optionee shall have no rights by reason of any division or consolidation
of shares of stock of any class or the payment of any stock dividend or any
other increase or decrease the number of shares of stock of any class or by
reason of any dissolution, liquidation, merger or consolidation, or spin-off of
assets or stock of another corporation; and any issuance by the Company of
shares of stock of any class, securities convertible into shares of stock of any
class, or warrants or options for shares of stock of any class shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to the Option.
(f) The grant of any Option pursuant to the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate, or to dissolve, to liquidate, to sell,
or to transfer all or any part of its business or assets.
4.2 TERM OF THE PLAN. The ISOs and NSOs may be granted pursuant to the
provisions of the Plan from time to time within a period of ten (10) years from
the date the Plan is adopted by the Board, or the date the Plan is approved by
the stockholders of the Company, whichever is earlier.
4.3 AMENDMENT OF THE PLAN; TERMINATION. The Board may, insofar as
permitted by law, from time to time, with respect to any shares at the time not
subject to Options, suspend, discontinue or terminate the Plan or revise or
amend it in any respect whatsoever, except that, without approval of the
stockholders of the Company, no such revision or amendment shall change the
number of shares subject to the Plan, change the designation of the class of
employees eligible to receive Options, decrease the price at which Options may
be granted, otherwise materially increase the benefits accruing to Eligible
Employees under the Plan, or remove the administration of the Plan from the
Committee. No termination or amendment of the Plan shall adversely affect the
rights of an Optionee under any then issued and outstanding Option, except with
the consent of such Optionee. The foregoing prohibitions shall not be affected
by adjustments in shares and purchase price made in accordance with the
provisions of Section 4.1. Furthermore, the Plan may not, without the approval
of the stockholders of the Company, be amended in any manner that will cause
Options issued under it to fail to meet, when appropriate, the requirements of
incentive stock options as defined in Section 422 of the Code.
4.4 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to Options will be used for general corporate
purposes.
11.
<PAGE> 36
4.5 NO OBLIGATION TO EXERCISE. The granting of any Option under the
Plan shall impose no obligation upon any Optionee to exercise such Option.
4.6 NO IMPLIED RIGHTS TO EMPLOYEES. The existence of the Plan, and the
granting of Options under the Plan, shall in no way give any employee the right
to continued employment, give any employee the right to receive any Options or
any additional Options under the Plan, or otherwise provide any employee any
rights not specifically set forth in the Plan or in any Options granted under
the Plan.
4.7 WITHHOLDING. Whenever the Company proposes or is required to issue
or transfer shares of Common Stock under the Plan, the Company shall have the
right to require the Optionee to remit to the Company an amount sufficient to
satisfy any federal, state or local withholding tax liability prior to the
delivery of any certificate or certificates for such shares. Whenever under the
Plan payments are to be made in cash, such payments shall be made net of an
amount sufficient to satisfy any federal, state or local withholding tax
liability.
4.8 CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become
effective upon the date that the Plan is adopted by the Board of Directors,
subject to the approval of the Plan by the stockholders of the Company within 12
months after its adoption by the Board.
12.
<PAGE> 37
1999 AMENDMENT
TO THE
DISCOUNT AUTO PARTS, INC.
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
This 1999 Amendment to the Discount Auto Parts, Inc. Amended and
Restated 1995 Stock Option Plan, which increases the number of shares covered by
the Plan by 800,000 shares, is hereby adopted, effective the 6th day of July,
1999, as follows:
1. Section 1.5(a) of the Plan is hereby amended in its entirety to read
as follows:
a. The stock subject to the Options under the Plan
shall be authorized and unissued shares of Common Stock. The
aggregate number of shares that may be issued upon the
exercise of Options granted under the Plan shall not exceed
1,700,000 shares of Common Stock, which limitation shall be
subject to adjustment as provided in Section 4.1.
