Exhibit 10.(iii)(A)(11)
THE SOUTHLAND CORPORATION
1995 Stock Incentive Plan
1998 Award Agreement
GRANT OF NONQUALIFIED STOCK OPTION (NQSO)
The Southland Corporation (the "Company") hereby grants to ------------,
SSN ------------- (the "Participant") on October 14, 1998 (the "Date of
Grant"), pursuant to the 1995 Stock Incentive Plan (the "Plan"), a stock
option subject to the Plan and upon the terms and conditions set forth
below. Capitalized terms used and not otherwise defined herein have the
meanings given to them in the Plan.
1. GRANT OF OPTION
Subject to the terms and conditions hereinafter set forth, the
Company, with the approval and direction of the Committee and the Board of
Directors, grants to the Participant, as of the Date of Grant, an option to
purchase up to ------------ shares of Common Stock at a price of $1.90625
per share, the Fair Market Value of the Common Stock on the Date of Grant.
Such option is hereinafter referred to as the "Option" and the shares of
stock purchasable upon exercise of the Option are hereinafter referred to
as the "Option Shares." This Option is a Nonqualified Stock Option, and as
such is not intended by the parties hereto to be an Incentive Stock Option
(as such term is defined under the Code).
2. EXERCISABILITY OF OPTIONS
Subject to such further limitations as are provided herein, the Option
shall become exercisable in five (5) installments, the Participant having
the right hereunder to purchase from the Company the following number of
Option Shares upon exercise of the Option, on and after the following
dates, in cumulative fashion:
(a) on and after the first anniversary of the Date of Xxxxx, up to
one-fifth (ignoring fractional shares) of the total number of Option
Shares;
(b) on and after the second anniversary of the Date of Xxxxx, up to an
additional one-fifth (ignoring fractional shares) of the total number of
Option Shares;
(c) on and after the third anniversary of the Date of Xxxxx, up to an
additional one-fifth (ignoring fractional shares) of the total number of
Option Shares;
(d) on and after the fourth anniversary of the Date of Xxxxx, up to an
additional one-fifth (ignoring fractional shares) of the total number of
Option Shares; and
(e) on and after the fifth anniversary of the Date of Xxxxx, the remaining
Option Shares.
Tab 3
3. PERFORMANCE ACCELERATED VESTING
After the first anniversary of the Date of Xxxxx, an additional one-
fifth (ignoring fractional shares) of the total number of Option Shares
shall become exercisable on and after each of the following events:
(a) on and after the twentieth consecutive trading day that the
Closing Price is equal to or greater than $4.00;
(b) on and after the twentieth consecutive trading day that the
Closing Price is equal to or greater than $5.00;
(c) on and after the twentieth consecutive trading day that the
Closing Price is equal to or greater than $6.50; and
(d) on and after the twentieth consecutive trading day that the
Closing Price is equal to or greater than $8.00.
4. TERMINATION OF OPTION
(a) The Option and all rights hereunder with respect thereto, to the
extent such rights shall not have been exercised, shall terminate and
become null and void after the expiration of ten (10) years from the Date
of Grant (the "Option Term") unless sooner terminated pursuant to
paragraphs (b) through (h) below.
(b) If the Participant has an exercisable Option (in whole or in part)
as of the date of the Participant's termination of employment with the
Company, whether voluntary or involuntary, and such termination is for any
reason other than those described in the following paragraphs (c) through
(h) of this Section 4, then the exercisable portion of such Option shall
remain exercisable for a period equal to the lesser of (1) the remainder of
the Option Term or (2) the date which is 60 days after the date of
Participant's termination of employment.
(c) Upon termination of the Participant's employment with the Company
by reason of Normal Retirement, the Option shall become immediately one
hundred percent (100%) vested, and the Participant shall have until the
expiration of the Option Term to exercise the Option.
(d) Upon termination of the Participant's employment with the Company
by reason of Early Retirement or Disability, any portion of the Option that
is not yet vested shall continue to vest and to be exercisable in
accordance with the provisions of Sections 2 and 3 of this Award Agreement
and, once vested, the Option shall remain exercisable until the expiration
of the Option Term unless, prior thereto, the Participant reaches age 65,
at which time all remaining Options shall vest.
(e) Upon termination of the Participant's employment with the Company
by reason of Divestiture, any portion of the Option that as of the date of
termination is not yet exercisable shall become null and void as of the
date of termination and the portion, if any, of the Option that is
exercisable as of the date of termination shall remain exercisable for a
period equal to the lesser of (1) the remainder of the Option Term or (2)
the date which is one year after the date of termination.
(f) In the event of death of the Participant, regardless whether the
Participant had previously retired (either Early Retirement or Normal
Retirement) or was Disabled at the time of death, the Option shall become
immediately one hundred percent (100%) vested and the Participant's
Designated Beneficiary shall have twelve (12) months following the
Participant's death during which to exercise the Option.
(g) A transfer of the Participant's employment between the Company and
any Subsidiary of the Company, shall not be deemed to be a termination of
the Participant's employment.
(h) Notwithstanding any other provisions set forth herein or in the
Plan, if the Participant shall (i) commit any act of malfeasance or
wrongdoing affecting the Company or any Subsidiary of the Company, (ii)
breach any covenant not to compete, or employment contract with the Company
or any Subsidiary of the Company, or (iii) engage in conduct that would
warrant the Participant's discharge for cause (excluding general
dissatisfaction with the performance of the Participant's duties, but
including any act of disloyalty or any conduct clearly discrediting the
Company or any Subsidiary or Affiliate of the Company), any unexercised
portion of the Option shall immediately terminate and be void.
5. EXERCISE OF OPTIONS
(a) The Participant may exercise the Option from time to time with
respect to all or any part of the number of Option Shares then exercisable
hereunder by giving the Company's Manager of Compensation and Benefits
written notice of the intent to exercise. The notice of exercise shall
specify the number of Option Shares as to which the Option is to be
exercised, the Award Number (as indicated on the first page of the
applicable Award Agreement), and the date of the exercise thereof (the
"Exercise Date"), which date shall be within five days after the giving of
such notice.
(b) On or before the Exercise Date, the Participant shall pay the full
amount of the purchase price for the Option Shares in cash (U.S. dollars)
or through the surrender of previously acquired shares of Stock valued at
their Fair Market Value on the Exercise Date. In addition, to the extent
permitted by applicable law, the Participant may arrange with a brokerage
firm for that brokerage firm, on behalf of the Participant, to pay the
Company the Exercise Price of the Option being exercised (either as a loan
to the Participant or from the proceeds of the sale of Stock issued
pursuant to that exercise of the Option), and the Company shall promptly
cause the exercised shares to be delivered to the brokerage firm. Such
transactions shall be effected in accordance with such further procedures
as the Committee may establish from time to time.
On the Exercise Date or as soon thereafter as is practicable, the
Company shall cause to be delivered to the Participant, a certificate or
certificates for the Option Shares then being purchased (out of theretofore
unissued Stock or reacquired Stock, as the Company may elect) upon full
payment for such Option Shares. The obligation of the Company to deliver
Option Shares shall, however, be subject to the condition that if at any
time the Committee shall determine in its discretion that the listing,
registration or qualification of the Option or the Option Shares upon any
securities exchange or such other securities trading system or market or
under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of,
or in connection with, the Option or the issuance or purchase of the Option
Shares thereunder, the Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.
(c) If the Participant fails to pay for any of the Option Shares
specified in such notice or to pay any applicable withholding tax relating
thereto or fails to accept delivery of the Option Shares, the Participant's
right to purchase such Option Shares may be terminated by the Committee.
6. FAIR MARKET VALUE
As used herein, the "fair market value" of a share of Stock shall be
the Closing Price per share of Stock on The Nasdaq Stock Market, or such
other securities trading system or exchange which is the primary market on
which the Stock may then be listed or traded on the date in question, or if
the Stock has not been traded on such date, the Closing Price on the first
day prior thereto on which the Stock was so traded.
7. NO RIGHTS OF SHAREHOLDERS
Neither the Participant nor any personal representative shall be, or
shall have any of the rights and privileges of, a shareholder of the
Company with respect to any shares of Stock purchasable or issuable upon
the exercise of the Option, in whole or in part, prior to the date of
exercise of the Option.
8. NON-TRANSFERABILITY OF OPTION
During the Participant's lifetime, the Option shall be exercisable
only by the Participant or any guardian or legal representative of the
Participant, and the Option shall not be transferable except, in case of
the death of the Participant, by will or the laws of descent and
distribution, nor shall the Option be subject to attachment, execution or
other similar process. In the event of (a) any attempt by the Participant
to alienate, assign, pledge, hypothecate or otherwise dispose of the
Option, except as provided for herein, or (b) the levy of any attachment,
execution or similar process upon the rights or interest hereby conferred,
the Company may terminate the Option by notice to the Participant and it
shall thereupon become null and void. Notwithstanding the above, in the
discretion of the Committee, Options may be transferable pursuant to a
QDRO.
9. RESTRICTIONS ON TRANSFER FOLLOWING EXERCISE
(a) Thirty percent (30%) of the Option Shares (the "Restricted Option
Shares") acquired upon exercise of the Option shall be delivered to
Participant via a stock certificate bearing a legend restricting the
transfer or sale of such Option Shares for a period of 24 months
following the Exercise Date. Seventy percent (70%) of the Option Shares
acquired upon exercise of the Option shall not be subject to any
restriction against the transfer or sale of such Option Shares by the
Participant.
(b) If the Participant's employment with the Company is voluntarily
terminated within the 24-month period following the Exercise Date (other
than due to Early Retirement or Normal Retirement) or is terminated due to
cause, the Company may repurchase the Restricted Option Shares at the
Exercise Price paid by the Participant. If the Company elects not to
purchase such Restricted Option Shares, the Participant shall continue to
hold such Shares subject to the restrictions thereon.
(c) Upon a termination of employment as a result of death, Disability,
Divestiture, Early Retirement or Normal Retirement, any Restricted Option
Shares then held by a Participant or a Participant's Designated Beneficiary
shall be released from, and no Option Shares acquired after the date of
termination shall be subject to, the restrictions on transfer or sale set
forth in paragraph 9(a) above. Promptly after the date of any such
termination, upon receipt of certificates representing any Restricted
Option Shares, the Company shall exchange any such certificates for
certificates representing such Shares free of any restrictive legend
relating to the lapsed restrictions.
10. WITHHOLDING TAX REQUIREMENTS
Following receipt of each notice of exercise of the Option, the Company
shall deliver to Participant a notice specifying the amount that
Participant is required to pay to satisfy applicable tax withholding
requirements. Participant hereby agrees to either (i) deliver to the
Company by the due date specified in such notice from the Company a check
payable to the Company and equal to the amount set forth in such notice or
(ii) make other appropriate arrangements acceptable to the Company to
satisfy such tax withholding requirements.
11. NO RIGHT TO EMPLOYMENT
Neither the granting of the Option nor its exercise shall be construed
as granting to the Participant any right with respect to continued
employment with the Company.
12. CHANGE IN CONTROL
The Committee shall, in its sole discretion, have the right to
accelerate the vesting of any Option and to release any restrictions on the
Restricted Option Shares, in the event of a Change in Control.
13. ADJUSTMENT OF AWARDS
The terms of this Option and the number of Option Shares purchasable
hereunder shall be subject to adjustment pursuant to Sections 5(c) through
(h) of the Plan.
14. AMENDMENT OF OPTION
The Option may be amended by the Committee at any time (i) if the
Committee determines, in its sole discretion, that amendment is necessary
or advisable in the light of any additions to or changes in the Code or in
the regulations issued thereunder, or any federal or state securities law
or other law or regulation, which change occurs after the Date of Grant and
by its terms applies to the Option; or (ii) other than in the circumstances
described in clause (i), with the consent of the Participant.
15. NOTICE
Any notice to the Company provided for in this Award Agreement shall
be in writing and addressed to the Company in care of the Manager of the
Company's Compensation and Benefits Department, and any notice to the
Participant shall be in writing and addressed to the Participant at the
Participant's current address shown on the records of the Company or such
other address as the Participant may submit to the Company in writing. Any
notice shall be deemed to be duly given if and when properly addressed with
postage prepaid, or if personally delivered to the addressee or, in the
case of notice to the Company, if sent via telecopy to the Compensation and
Benefits Department's facsimile machine at such telephone number as may be
published in the Company's published telephone directory.
16. INCORPORATION OF PLAN BY REFERENCE
The Option is granted pursuant to the terms of the Plan, which terms
are incorporated herein by reference, and the Option shall in all respects
be interpreted in accordance with the Plan. The Committee shall interpret
and construe the Plan and this Award Agreement, and its interpretations and
determinations shall be conclusive and binding on the parties hereto and
any other person claiming an interest hereunder, with respect to any issue
arising hereunder or thereunder. In the event of a conflict between the
terms of this Award Agreement and the Plan, the terms of the Plan shall
control.
17. GOVERNING LAW
The validity, construction, interpretation and effect of this Award
Agreement shall exclusively be governed by and determined in accordance
with the law of the State of Texas, except to the extent preempted by
federal law, which shall to that extent govern.
IN WITNESS WHEREOF, The Southland Corporation has caused its duly
authorized officer to execute this Grant of Nonqualified Stock Option, and
the Participant has placed his or her signature hereon, effective as of the
Date of Xxxxx.
THE SOUTHLAND CORPORATION
By:
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President and Chief Executive Officer
ACCEPTED AND AGREED TO:
By:
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Participant
Participant's Social Security Number:
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