Exhibit 10.17
XXXXXXXX DRUG STORES, INC.
Employee's Nonqualified Stock Option Agreement
RECITALS:
A. __________________ (the "Optionee") is an officer
or key employee of Xxxxxxxx Drug Stores, Inc. (the "Company").
B. The Optionee has been selected as a participant in the
Company's 1984 Employee Stock Option and Stock Appreciation
Rights Plan (the "Plan").
C. The Compensation Committee of the Board of Directors of the
Company (the "Committee") has authorized the execution of a stock option
agreement in the form hereof as of June 16, 1997 (the "Date of Grant").
D. The option granted hereby is intended to be a nonqualified
stock option and will not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986.
NOW, THEREFORE, pursuant to the Plan and subject to the terms
and conditions thereof and to the terms and conditions herein set forth, the
Company hereby grants to the Optionee a Nonqualified Option (the "Option") to
purchase___________ Common Shares (the "Option Shares") at an exercise price
equal to $19.38 per Option Share (the "Exercise Price").
I. Vesting of Option. (a) Unless terminated as hereinafter provided, the Option
will become fully exercisable upon the fifth anniversary of the Date of Grant,
provided that the Optionee remains in the continuous employ of the Company or an
Affiliate until such date. For the purposes of this Agreement, the continuous
employment of the Optionee with the Company or an Affiliate will not be deemed
to have been interrupted, and the Optionee will not be deemed to have ceased to
be an employee of the Company or an Affiliate, by reason of the transfer of his
or her employment among the Company and its Affiliates or a leave of absence
approved by the Board.
(b) Notwithstanding the provisions of Section
1(a) hereof, if the Optionee's employment with the Company and all Affiliates
terminates prior to the fifth anniversary of the
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Date of Grant by reason of his or her death, Disability or Retirement, the
Option will become fully exercisable.
(c) Notwithstanding the provisions of Sections
1(a) and 1(b) hereof, if a Change in Control occurs while the Optionee is
employed by the Company or an Affiliate and prior to the termination of the
Option as provided in Section 2 hereof, the Option will thereupon become fully
exercisable.
(d) To the extent that the Option becomes
exercisable in accordance with the terms of this Section 1, it may be exercised
in whole or in part from time to time thereafter.
1. Termination of Option. The Option will terminate
automatically and without further action on the earliest of the
following dates:
(a) the date of the voluntary termination by the
Optionee of his or her employment with the Company or an
Affiliate;
(b) the date of the termination by the Company
or an Affiliate of the Optionee's employment for Cause;
(c) six months after the termination of the
Optionee's employment with the Company and all Affiliates by
reason of his or her Disability;
(d) one year after the termination of the
Optionee's employment with the Company and all Affiliates by
reason of his or her death;
(e) two years after the termination of the
Optionee's employment with the Company and all Affiliates by
reason of his or her Retirement;
(f) 30 days after the termination by the Company
and all Affiliates of the Optionee's employment therewith for any
reason other than Cause or Disability; or
(g) ten years after the Date of Grant, if the
Optionee remains in the continuous employ of the Company or an Affiliate during
that ten-year period.
2. Payment of Exercise Price. The Exercise Price applicable to
an Option Share may be paid (a) in cash or check or other cash equivalent
acceptable to the Company, (b) by actual or constructive transfer to the Company
of nonforfeitable, nonrestricted Common Shares, or (c) by any combination of the
foregoing methods of payment. Nonforfeitable, nonrestricted Common Shares that
are transferred by the Optionee in payment of all or any part of the Exercise
Price applicable to an Option
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Share will be valued on the basis of their fair market value as determined by
the Committee from time to time. The requirement of payment in cash will be
deemed satisfied if the Optionee makes arrangements that are satisfactory to the
Company with a broker that is a member of the National Association of Securities
Dealers, Inc. to sell a sufficient number of the Option Shares that are being
purchased pursuant to the exercise so that the net proceeds of the sale
transaction will at least equal the amount of the aggregate Exercise Price and
pursuant to which the broker undertakes to deliver to the Company the amount of
the aggregate Exercise Price not later than the date on which the sale
transaction will settle in the ordinary course of business.
3. Compliance with Law. The Company will make reasonable
efforts to comply with all applicable securities laws; provided, however, that
notwithstanding any other provision of this agreement, the Option will not be
exercisable if the exercise thereof would result in a violation of any such law.
4. Right to Terminate Employment and Adjust Compensation. No
provision of this agreement will limit in any way whatsoever any right that the
Company or an Affiliate may otherwise have to terminate the employment or adjust
the compensation of the Optionee at any time.
5. Relation to Other Benefits. Any economic or other benefit
to the Optionee under this agreement or the Plan will not be taken into account
in determining any benefits to which the Optionee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by
the Company or an Affiliate and will not affect the amount of any life insurance
coverage available to any beneficiary under any life insurance plan covering
employees of the Company or an Affiliate.
6. The Plan. The Option evidenced hereby will be subject to
the provisions of the Plan, including without limitation the provisions thereof
relating to the transferability and exercisability of Option Rights (including
the Option), adjustments and withholding taxes, as the Plan may from time to
time be amended, provided, however, that, following a Change in Control, no such
amendment adversely affects the rights of the Optionee hereunder without the
Optionee's written consent thereto.
7. Severability. In the event that one or more of the
provisions of this Agreement may be invalidated for any reason by a court, any
provision so invalidated will be deemed to be separable from the other
provisions hereof, and the remaining provisions hereof will continue to be valid
and fully enforceable.
8. Governing Law. This Agreement is made under, and
will be construed in accordance with, the laws of the State of
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New York, without giving effect to the principle of conflict of laws of such
State.
9. Certain Definitions. (a) "Affiliate" means a corporation,
partnership, joint venture, unincorporated association or other entity that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, the Company.
(b) "Cause" means any act or omission by the
Optionee that is materially inimicable to the business or reputation of the
Company or any Affiliate, as determined in good faith by a majority of the Board
of Directors of the Company after giving the Optionee notice of its intent to
make such a determination and an opportunity to be heard.
(c) "Change in Control" means the occurrence
during the term of this Option of any of the following events:
(i) The Company is merged, consolidated or
reorganized into or with another corporation or other legal person, and
as a result of such merger, consolidation or reorganization less than a
majority of the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors
("Voting Stock") of such corporation or person immediately after such
transaction are held in the aggregate by the holders of Voting Stock of
the Company immediately prior to such transaction;
(ii) The Company sells or otherwise transfers
all or substantially all of its assets to another corporation or other
legal person, and as a result of such sale or transfer less than a
majority of the combined voting power of the then-outstanding Voting
Stock of such corporation or person immediately after such sale or
transfer is held in the aggregate by the holders of Voting Stock of the
Company immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D
or Schedule 14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), disclosing that any person (as the term "person"
is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act)
has become the beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing 20% or
more of the combined voting power of the then-outstanding Voting Stock
of the Company;
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(iv) The Company files a report or proxy
statement with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a change in
control of the Company has occurred or will occur in the future
pursuant to any then-existing contract or transaction; or
(v) If, during any period of two consecutive
years, individuals who at the beginning of any such period constitute
the Directors of the Company cease for any reason to constitute at
least a majority thereof; provided, however, that for purposes of this
clause (v) each Director who is first elected, or first nominated for
election by the Company's stockholders, by a vote of at least
two-thirds of the Directors of the Company (or a committee thereof)
then still in office who were Directors of the Company at the beginning
of any such period will be deemed to have been a Director of the
Company at the beginning of such period.
Notwithstanding the foregoing provisions of Section 10(c)(iii) or
10(c)(iv), unless otherwise determined in a specific case by majority
vote of the Board, a "Change in Control" shall not be deemed to have
occurred for purposes of Section 10(c)(iii) or 10(c)(iv) solely because
(A) the Company, (B) an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding Voting
Stock (a "Subsidiary"), or (C) any Company-sponsored employee stock
ownership plan or any other employee benefit plan of the Company or any
Subsidiary either files or becomes obligated to file a report or a
proxy statement under or in response to Schedule 13D, Schedule 14D-1,
Form 8-K or Schedule 14A (or any successor schedule, form or report or
item therein) under the Exchange Act disclosing beneficial ownership by
it of shares of Voting Stock, whether in excess of 20% or otherwise, or
because the Company reports that a change in control of the Company has
occurred or will occur in the future by reason of such beneficial
ownership.
(d) "Disability" means total and permanent
disability as determined for purposes of any long-term disability plan that is
maintained by the Company or an Affiliate and that is in effect for, or
applicable to, the Optionee.
(e) "Retirement" means termination of employment
with the Company and all Affiliates (i) after the attainment of at least age 55
and the completion of at least 15 calendar years of employment with the Company
and all Affiliates, or (ii) at such other age or under such other circumstances
as the Committee may determine in its sole and absolute discretion.
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This Agreement is executed by the Company on this 16th day of
June, 1997, effective as of the Date of Grant.
XXXXXXXX DRUG STORES, INC.
By
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Xxxxxxx Xxxxxxxx,
President
The undersigned Optionee hereby acknowledges receipt of an
executed original of this Agreement and accepts the Option granted hereunder,
subject to the terms and conditions of the Plan and the terms and conditions
hereinabove set forth.
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Optionee
Date:
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