XXXXXXX SAV-O STORES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of this day of , 199_ (the
"Grant Date"), by and between XXXXXXX SAV-O STORES, INC., a Wisconsin
corporation (the "Company"), and (the "Optionee").
W I T N E S S E T H :
WHEREAS, the terms of the Xxxxxxx Sav-O Stores, Inc. 1995 Equity
Incentive Plan (the "Plan"), to the extent not stated herein, are specifically
incorporated by reference in this Agreement and defined terms used herein which
are not otherwise defined shall have the meaning set forth in the Plan;
WHEREAS, the purpose of the Plan is to permit the grant of various
equity-based incentive awards, including options to purchase shares of the
Company's Common Stock, $.05 par value ("Common Stock"), to be granted to
certain key employees of the Company;
WHEREAS, the Optionee is now employed by the Company in a key
capacity and has exhibited judgment, initiative and efforts which have
contributed materially to the successful performance of the Company; and
WHEREAS, the Company desires the Optionee to remain in the Company's
employ and wishes to provide the Optionee with the opportunity to secure or
increase his stock ownership in the Company in order to develop even a stronger
incentive to put forth maximum effort for the continued success and growth of
the Company.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements herein set forth, the parties hereby mutually covenant and agree
as follows:
1. Grant of Options. Subject to the terms and conditions of the Plan
and this Agreement, and shareholder approval of the Plan at the Company's 1995
annual meeting of shareholders, the Company grants to the Optionee this option
(the "Option") to purchase from the Company all or any part of the aggregate
number of ______ shares of Common Stock (the "Optioned Shares"), subject to
adjustment as provided in Paragraph 7. This Option is intended to constitute a
nonqualified stock option and shall not be treated as an incentive stock option
within the meaning of Section 422A of the Internal Revenue Code of 1986, as
amended.
2. Option Price. The option price to be paid for the Optioned Shares
shall be $______ per share, subject to adjustment as provided in Paragraph 7.
The per share option price has been determined by the Compensation and Stock
Option Committee (the "Committee") of the Board of Directors of the Company (the
"Board") to be not less than 100% of the fair market value of the Common Stock
on the Grant Date.
3. Exercise of Option.
(a) Subject to the terms and conditions of the Plan and except as
otherwise provided in this Agreement, this Option may be exercised by the
Optionee while in the employ of the Company, in whole or in part, from time to
time or at any time, beginning on the Grant Date and ending on the seventh
anniversary of the Grant Date (the "Termination Date") in accordance with the
following schedule:
Cumulative Percentage
Elapsed Number of of Optioned Shares
Years After Grant Date Which May be Purchased
Less Than One Year 0%
One Year 33-1/3%
Two Years 66-2/3%
Three Years and After 100%
(b) If the Optionee is discharged or leaves the employ of the Company
for any reason (other than termination by the Company for "cause," the death or
disability of the Optionee or the retirement of the Optionee after reaching the
age of 65), prior to the Termination Date, this Option, to the extent not
theretofore exercised but then permitted to be exercised under the percentage
limitations of Paragraph 3(a), may be exercised by the Optionee or by his legal
representative at any time within three months after the date of termination of
employment upon the tender to the Company in cash or its equivalent of the full
purchase price (and not by the tender of previously acquired Common Stock), but
in no event later than the Termination Date.
(c) If the Optionee dies while he is in the employ of the Company, or
if his employment is terminated by reason of his retirement after reaching the
age of 65 or his disability prior to the Termination Date, this Option, to the
extent not theretofore exercised (regardless of the percentage limitations of
Paragraph 3(a)), may be exercised in whole or in part as follows: (i) by the
legal representative of the Optionee at any time within six months after the
date of the Optionee's death or (ii) by the Optionee or his legal representative
at any time within three months after the termination of the Optionee's
employment by reason of retirement after reaching the age of 65 or disability,
but in no event later than the Termination Date in either case.
(d) If the Optionee's employment is terminated by the Company "for
cause," this Option to the extent not theretofore exercised shall terminate
immediately and shall not be exercisable following such termination of
employment. For purposes of this Paragraph 3, termination by the Company "for
cause" shall mean any termination of the Optionee by reason of any action or
omission on the part of the Optionee which is deemed contrary to the interests
of the Company or not in the interests of the Company, as determined by the
Board in its sole discretion.
2
(e) This Option may be exercised during the life of the Optionee only
by the Optionee (or his legal representative as provided in this Paragraph 3).
4. Manner of Exercise and Payment. This Option may be exercised only
by written notice to the Company by the Optionee (or his legal representative as
provided in Paragraph 3) of the Optionee's (or such legal representative's)
intent to exercise all or part of this Option, served upon the Secretary of the
Company at its office at Sheboygan, Wisconsin, specifying the number of Optioned
Shares in respect to which this Option is being exercised, accompanied by
payment of the aggregate option price for such Optioned Shares, at the
Optionee's (or such legal representative's) election (except as limited in
Paragraph 3): (a) in cash or by certified check or bank draft to the order of
the Company; (b) by delivering previously acquired shares of Common Stock, duly
endorsed in blank or accompanied by stock powers duly endorsed in blank, valued
at their fair market value at the time of exercise as determined by the
Committee; or (c) by any combination of (a) and (b). For purposes of (b) and (c)
above, the term "previously acquired shares of Common Stock" shall only include
Common Stock owned by the Optionee prior to the exercise of this Option and
shall not include shares of Common Stock which are being acquired pursuant to
the exercise of this Option. Upon receipt of the payment of the aggregate option
price for all of the Optioned Shares so purchased, certificates for such
Optioned Shares shall be issued by or on behalf of the Company to the Optionee.
The Optioned Shares so acquired, upon payment in full of the aggregate option
price, shall be fully paid and nonassessable, except as provided by Section
180.0622(2) (b) of the Wisconsin Statutes.
5. Transferability; Limitations. Subject to the limitations of this
Section 5, this Option shall be transferable, in whole or in part, upon the
surrender of this Option by the Optionee to the Company for one or more new
Options of like tenor representing, in the aggregate, the right to purchase the
number of shares of Common Stock purchasable hereunder, each of such new Options
to represent the right to purchase such number of shares of Common Stock as
shall be designated by the Optionee at the time of such surrender, subject to
the terms and conditions of the Plan and this Option. This Option may only be
transferred by will or by the laws of descent or distribution, or to any member
of the Optionee's "immediate family," as such term is defined in Rule 16a-1(e)
under the Securities Exchange Act of 1934 (the "Exchange Act") or to trusts,
partnerships or other entities established solely for the benefit of members of
the Optionee's immediate family; provided, however, that (x) there may be no
consideration for any such transfer, (y) subsequent transfers of any portion of
this Option must also be in compliance with this Section 5 and (z) promptly
after making any such transfer, the Optionee shall provide to the Company the
Notice of Transfer of Option attached as Exhibit 1 hereto. In the event of such
a permitted transfer of this Option, the transferee shall have all of the rights
of the Optionee under the Plan and this Option, as if the Optionee had retained
this Option. The terms of this Option shall be binding upon the permitted
transferees, executors, administrators, heirs and successors of the Optionee.
3
6. Tax Withholding.
(a) The Company may require as a condition precedent to the issuance or
transfer of any shares of Common Stock upon exercise of this Option that the
Optionee pay to the Company, upon its demand, or otherwise make arrangements
satisfactory to the Company for payment of, such amount as may be requested by
the Company for the purpose of satisfying the Company's tax withholding
requirement. If the amount so requested is not so paid or if such arrangements
are not made, the Company may refuse to issue or transfer any Optioned Shares
upon exercise of this Option.
(b) The Optionee shall be permitted to satisfy the Company's tax
withholding requirements by delivering shares of previously owned Common Stock
having a fair market value (as determined by the Committee) on the date income
is recognized by the Optionee (the "Tax Date") pursuant to the exercise of this
Option equal to the minimum amount required to be withheld. If the number of
shares of Common Stock determined pursuant to the preceding sentence shall
include a fractional share, the number of shares delivered shall be reduced to
the next lower whole number and the Optionee shall deliver to the Company cash
in lieu of such fractional share, in an amount equal to the Common Stock's then
fair market value as determined by the Committee, or otherwise make arrangements
satisfactory to the Company for payment of such amount
7. Adjustment to Optioned Shares and Option Price. In the event of a
capital adjustment resulting from a stock dividend (other than a stock dividend
in lieu of an ordinary cash dividend), stock split, reorganization, spin-off,
split-up or distribution of assets to shareholders, recapitalization, merger,
consolidation, combination or exchange of shares or the like, the Optioned
Shares and the per share option price (but not the aggregate option price for
all Optioned Shares, as adjusted) shall be adjusted in a manner consistent with
such capital adjustment and in accordance with the Plan; provided, however, that
no such adjustment shall require the Company to issue any fractional shares and
the adjustment shall be limited accordingly as determined by the Committee. The
determination of the Committee as to any adjustment shall be final.
8. Transfer Restrictions. The Optioned Shares to be acquired upon
exercise of this Option may not be sold or offered for sale except pursuant to
an effective registration statement under the Securities Act of 1933, as amended
("Act"), or in a transaction which, in the opinion of legal counsel for the
Company, is exempt from the registration provisions of the Act.
9. Status of Optionee. The Optionee shall not be deemed for any
purposes to be a shareholder of the Company with respect to any of the Optioned
Shares except to the extent that this Option shall have been exercised, the
aggregate option price for the Optioned Shares purchased shall have been fully
paid and a stock certificate shall have been issued by or on behalf of the
Company therefor.
10. Employment. It is fully understood that nothing contained in this
Agreement or the Plan shall be deemed to confer upon the Optionee any right to
continue in the employ of
4
the Company, nor to interfere in any way with the right of the Company to
terminate the employment of the Optionee at any time.
11. Interpretation by Committee. As a condition of the granting of
this Option, the Optionee agrees, for himself and his legal representatives,
that the Plan and this Agreement shall be subject to discretionary
interpretation by the Committee and that any interpretation by the Committee of
the terms of the Plan and this Agreement shall be final, binding and conclusive
on the Optionee and his legal representatives in all respects and shall not
subject to challenge or dispute by the Optionee or his legal representatives.
12. Change in Control.
(a) Notwithstanding any other provision of this Agreement (including,
without limitation, Paragraph 3) upon the occurrence of a Change in Control (as
hereinafter defined) this Option, to the extent then outstanding and
unexercised, shall become immediately exercisable in full for the remainder of
its term, but prior to the Termination Date, and the Optionee shall have the
right for a period of 30 days following the Change in Control to require the
Company to purchase this Option for cash at the aggregate Acceleration Price (as
hereinafter defined) for all Optioned Shares then subject to issuance upon
exercise of this Option; provided, however, that, if then required by the rules
under Section 16 of the Securities Exchange Act of 1934, as amended ("Section 16
Rules"), the Optionee shall have the right to exercise this Option or require
the Company to purchase this Option only if at least six months has elapsed
between the Grant Date and the Change in Control date.
(b) The "Acceleration Price" shall be the excess of the highest of the
following over the option price per share set forth in Paragraph 2 (as the same
may be adjusted from time to time pursuant to Paragraph 7) on the Change in
Control date:
(i) the highest reported ask price of the Common Stock, as
reported on NASDAQ or the principal securities exchange or market upon which the
Common Stock is then listed or traded, on or within the 60 days prior to and
including the Change in Control date;
(ii) the highest purchase or sale price of the Common Stock
reported in a Schedule 13D or an amendment thereto as paid or received on or
within the 60 days prior to and including the Change in Control date;
(iii) the highest tender offer price paid or offered for the
Common Stock on or within the 60 days prior to and including the Change in
Control date; and
(iv) the highest cash merger or similar price paid or offered for
the Common Stock on or within the 60 days prior to and including the Change of
Control date.
(c) A "Change in Control" (and the Change in Control date) shall be the
occurrence of any one of the following events (certain defined terms used in
this Paragraph 12(c) are defined in Paragraph 12(d)):
5
(i) the first day of receipt by the Company of a Schedule 13D, any
amendment thereto or notice of a public announcement confirming that any Person
(other than any employee benefit plan of the Company or of any subsidiary of the
Company or any Person organized, appointed or established pursuant to the terms
of any such benefit plan or any Person who is a key employee of the Company),
together with his Affiliates or Associates, is or becomes the Beneficial Owner
of securities representing at least 20% of the combined voting power of the
Company;
(ii) the first day on which two or more of the members of the
Board are not Continuing Directors;
(iii) the day on which the shareholders of the Company approve (A)
any business combination, consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the Common
Stock immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, or (B)
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company; or
(iv) the day on which the shareholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company.
d. For purposes of this Paragraph 12:
(i) a "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity.
(ii) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Securities Exchange Act
of 1934, as amended.
(iii) a Person shall be a "Beneficial Owner" of securities (A)
which such Person beneficially owns, directly or indirectly, or (B) which such
Person has the right to acquire (whether such right is exercisable immediately
or only with the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants, options or otherwise, other than if
such Person acquires or has the right to acquire such securities as an
underwriter, broker, dealer or selling group member in connection with the
public or private distribution of such securities pursuant to an underwriting or
similar agreement with the Company.
(iv) "Continuing Directors" means any member of the Board who was
a member of the Board on December 20, 1994, and any successor of a Continuing
Director who is recommended or elected to succeed the Continuing Director by a
majority of the remaining Continuing Directors.
6
13. Modification. At any time and from time to time the Committee may
direct execution of an instrument providing for the modification, extension or
renewal of this Option; provided, however, that no such modification, extension
or renewal shall (a) confer on the Optionee any right or benefit which could not
be conferred on him by the grant of a new option under the Plan at such time or
(b) alter, impair or adversely affect this Option or Agreement without the
written consent of the Optionee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Optionee has hereunto affixed
his signature as of the day and year first above written.
XXXXXXX SAV-O STORES, INC.
By: ___________________________
Title:__________________________
-------------------------------
___________________, Optionee
7
Exhibit 1
XXXXXXX SAV-O STORES, INC.
NOTICE OF TRANSFER OF STOCK OPTION
This Notice is intended to (i) inform Xxxxxxx Sav-O Stores, Inc. (the
"Company"), that ________________ ( the "Optionee") has transferred and assigned
to the transferee named below (the "Transferee"), a member of the Optionee's
"immediate family," as such term is defined in Rule 16a-1(e) of the Securities
Exchange Act of 1934, or a trust, partnership or other entity established solely
for the benefit of members of the Optionee's immediate family, all of the
Optionee's right, title and interest in and to a nonqualified stock option (or
portion thereof described below) to purchase ___________ shares of common stock
of the Company at a price of $_____ per share, originally granted to the
Optionee pursuant to the Nonqualified Stock Option Agreement, dated
_____________, 19__, issued by the Company to the undersigned (the "Option") and
(ii) request the Company to issue a new Option in the name of the Transferee. No
consideration has been or will be received by the Optionee in connection with
this transfer.
The Option has been validly transferred and assigned by the Optionee
to the following:
------------------- -------------------------------------
Name of Xxxxxxxxxx Xxxxxx Xxxxxxx, Xxxx, Xxxxx, Zip Code
-------------------------------------------------
If entire Option has not been transferred, number
of shares underlying the portion transferred
--------------------------------- ------------------
Signature of Optionee Date of Transfer
----------------------- -----------------
Signature of Transferee Name
By executing this Notice, the Transferee hereby agrees to comply with
and be subject to the terms and conditions of the Option.
Receipt of this Notice is hereby acknowledged this ___ day of
_________, 19__.
XXXXXXX SAV-O STORES, INC.
By
Name:
Title:
