AutoZone, Inc. STOCK OPTION GRANT NOTICE AND STOCK OPTION AGREEMENT
Exhibit
10.26
AutoZone,
Inc.
2006
Stock Option Plan
STOCK
OPTION GRANT NOTICE AND
AutoZone,
Inc., a Nevada corporation (the “Company”),
pursuant to its 2006 Stock Option Plan (the “Plan”),
hereby grants to the holder listed below (“Participant”)
an
option (the “Option”)
to
purchase that number of shares of the Company’s common stock, par value $.01
(“Stock”)
set
forth below. This Option is subject to all of the terms and conditions set
forth
herein, in the Stock Option Agreement attached hereto as Exhibit A
(the
“Stock
Option Agreement”)
and
the Plan, which are incorporated herein by reference. All capitalized terms
used
in this Grant Agreement, but not defined, shall have the meanings provided
in
the Plan.
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Participant:
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[____]
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Grant
Date:
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[____]
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Exercise
Price per Share:
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$
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[____]
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Total
Number of Shares
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[____] | |||
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Subject
to the Option:
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[____]
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Expiration
Date:
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[____]
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Type
of Option:o
Incentive Stock
Option
o
Non-Qualified Stock Option
Vesting
Schedule: The
Option granted under this Agreement shall vest and become exercisable in four
(4) cumulative installments as follows:
(i) The
first
installment shall consist of one-fourth of the shares covered by the Option
and
shall become exercisable on the first anniversary of the Grant
Date.
(ii) The
second installment shall consist of one-fourth of the shares covered by the
Option and shall become exercisable on the second anniversary of the Grant
Date.
(iii) The
third
installment shall consist of one-fourth of the shares covered by the Option
and
shall become exercisable on the third anniversary of the Grant
Date.
(iv) The
fourth installment shall consist of one-fourth of the shares covered by the
Option and shall become exercisable on the fourth anniversary of the Grant
Date.]
By
his or
her signature, Participant agrees to be bound by the terms and conditions of
the
Plan, the Stock Option Agreement and this Grant Notice. Participant has reviewed
the Stock Option Agreement, the Plan and this Grant Notice in their entirety,
has had an opportunity to obtain the advice of counsel prior to executing this
Grant Notice and fully understands all provisions of this Grant Notice, the
Stock Option Agreement and the Plan. Participant hereby agrees to accept as
binding, conclusive and final all discussions or interpretations of the
Committee upon any questions arising under the Plan or relating to the
Option.
| AUTOZONE, INC. | PARTICIPANT | ||
| By: | By: | ||
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Print Name:
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Print Name:
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Title:
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Title:
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EXHIBIT
A
TO STOCK OPTION GRANT NOTICE
Pursuant
to the Stock Option Grant Notice (the
“Grant
Notice”)
to
which
this Stock Option Agreement (this “Agreement”)
is
attached,
AutoZone, Inc., a Nevada corporation (the “Company”),
has
granted to Participant an option under the Company’s 2006 Stock Option Plan (the
“Plan”)
to
purchase the number of shares of Stock indicated in the Grant
Notice.
ARTICLE
I.
GENERAL
1.1 Defined
Terms.
Wherever the following terms are used in this Agreement they shall have the
meanings specified below, unless the context clearly indicates otherwise.
Capitalized terms not specifically defined herein shall have the meanings
specified in the Plan and the Grant Notice.
(a) “Administrator”
shall mean the Board or the Committee responsible for conducting the general
administration of the Plan in accordance with Article 8 of the
Plan.
(b) “Cause”
shall mean the willful engagement by Participant in conduct which is
demonstrably or materially injurious to the Company, monetarily or otherwise.
For this purpose, no act or failure to act by the Participant shall be
considered “willful” unless done, or omitted to be done, by the Participant not
in good faith and without reasonable belief that his action or omission was
in
the best interest of the Company.
(c) “Termination
of Employment” shall mean the time when the employee-employer relationship
between Participant and the Company or any Subsidiary is terminated for any
reason, with or without cause, including, but not by way of limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding terminations where there is a simultaneous reemployment or continuing
employment of Participant by the Company or any Subsidiary. The Administrator,
in its absolute discretion, shall determine the effect of all matters and
questions relating to Termination of Employment, including, but not by way
of
limitation, the question of whether a particular leave of absence constitutes
a
Termination of Employment; provided,
however,
that,
if this Option is an Incentive Stock Option, unless otherwise determined by
the
Administrator in its sole discretion, a leave of absence, change in status
from
an employee to an independent contractor or other change in the
employee-employer relationship shall constitute a Termination of Employment
if,
and to the extent that, such leave of absence, change in status or other change
interrupts employment for purposes of Section 422(a)(2) of the Code and the
then
applicable regulations and revenue rulings under said Section.
1.2 Incorporation
of Terms of Plan.
The
Option is subject to the terms and conditions of the Plan which are incorporated
herein by reference. In the event of any inconsistency between the Plan and
this
Agreement, the terms of the Plan shall control.
ARTICLE
II.
GRANT
OF OPTION
2.1 Grant
of Option.
In
consideration
of Participant’s past and/or continued employment with the Company or a
Subsidiary and for other good and valuable consideration,
effective as of the Grant Date set forth in the Grant Notice (the “Grant
Date”),
the
Company irrevocably grants to Participant the Option to purchase any part or
all
of an aggregate of the number of shares of Stock set forth in the Grant Notice,
upon the terms and conditions set forth in the Plan, the Grant Notice and this
Agreement. The Option shall be a Non-Qualified Stock Option or an Incentive
Stock Option, as designated in the Grant Notice and, in the case of an Incentive
Stock Option, as permitted by law.
2.2 Exercise
Price.
The
exercise price of the shares of Stock subject to the Option shall be as set
forth in the Grant Notice, provided, however, that the price per share of the
shares of Stock subject to the Option shall not be less than 100% of the Fair
Market Value of a share of Stock on the Grant Date. Notwithstanding the
foregoing, if this Option is designated as an Incentive Stock Option and
Participant owns (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company
or
any “subsidiary corporation” of the Company or any “parent corporation” of the
Company (each within the meaning of Section 424 of the Code), the price per
share of the shares of Stock subject to the Option shall not be less than 110%
of the Fair Market Value of a share of Stock on the Grant Date.
2.3 Consideration
to the Company.
In
consideration of the grant of the Option by the Company, Participant
agrees
to
render faithful and efficient services to the Company and its Subsidiaries,
as
applicable. Nothing in the Plan, the Grant Notice or this Agreement shall confer
upon Participant any right to continue in the employ or service of the Company
or any Subsidiary or shall interfere with or restrict in any way the rights
of
the Company and its Subsidiaries, which rights are hereby expressly reserved,
to
discharge or terminate the services of Participant at any time for any reason
whatsoever, with or without Cause, except to the extent expressly provided
otherwise in a written agreement between the Company or a Subsidiary and
Participant.
ARTICLE
III.
PERIOD
OF EXERCISABILITY
3.1 Commencement
of Exercisability.
(a) Subject
to any limitations contained in this Stock Option Agreement, the Option shall
become vested and be exercisable in such amounts and at such times as are set
forth in the Grant Notice. Notwithstanding the exercise dates set forth in
the
Grant Notice, the Option shall become immediately exercisable on the date of
Participant’s death.
(b) No
portion of the Option which has not become vested and exercisable as of
Participant’s Termination of Employment shall thereafter become vested and
exercisable.
3.2 Duration
of Exercisability.
The
installments provided for in the vesting schedule set forth in the Grant Notice
are cumulative. Each such installment which becomes vested and exercisable
pursuant to the vesting schedule set forth in the Grant Notice shall remain
vested and exercisable until it becomes unexercisable pursuant to Section 3.3
below; provided, however, that no Option which has not vested and become
exercisable as of the date of a Participant’s Termination of Employment shall
thereafter vest and become exercisable.
3.3 Expiration
of Option.
The
Option shall be forfeited and cancelled and may not be exercised to any extent
by anyone after the first to occur of the following events:
(a) If
this
Option is designated as a Non-Qualified Stock Option, the expiration of ten
(10)
years and one (1) day from the Grant Date;
(b) If
this
Option is designated as an Incentive Stock Option, the tenth anniversary of
the
Grant Date;
(c) If
this
Option is designated as an Incentive Stock Option and, at the time the Option
was granted, Participant owned (within the meaning of Section 424(d) of the
Code) more than 10% of the total combined voting power of all classes of stock
of the Company or any “subsidiary corporation” of the Company or any “parent
corporation” of the Company (each within the meaning of Section 424 of the
Code), the fifth anniversary of the Grant Date;
(d) The
expiration of thirty days from the date of Participant’s Termination of
Employment unless such Termination of Employment occurs by reason of (i)
Participant’s death, (ii) Participant’s retirement at normal retirement age, as
determined under the AutoZone, Inc. Associate’s Pension Plan, as it may be
amended from time to time (or, if such plan ceases to exist or be applicable,
as
determined in the sole discretion of the Administrator) (in either case,
“Retirement”), or (iii) termination by the Company for Cause;
(e) The
expiration of one year from the date of Participant’s Termination of Employment
by reason of Participant’s death;
(f) The
commencement of business on the date of Participant’s Termination of Employment
by the Company for Cause; and
(g) The
expiration of the term stated in the Grant Notice following Participant’s
Termination of Employment due to Retirement.
3.4 Special
Tax Consequences. Participant acknowledges that, to the extent that the
aggregate Fair Market Value (determined as of the time the Option is granted)
of
all shares of Stock with respect to which Incentive Stock Options, including
the
Option, are exercisable for the first time by Participant in any calendar year
exceeds $100,000, the Option and such other options shall instead constitute
Non-Qualified Stock Options to the extent necessary to comply with the
limitations imposed by Section 422(d) of the Code. Participant further
acknowledges that the rule set forth in the preceding sentence shall be applied
by taking the Option and other Incentive Stock Options into account in the
order
in which they were granted, as determined under Section 422(d) of the Code
and
the Treasury Regulations there under.
ARTICLE
IV.
EXERCISE
OF OPTION
4.1 Person
Eligible to Exercise.
Except
as provided in Section 5.2(b) below, during the lifetime of Participant, only
Participant may exercise the Option or any portion thereof. After the death
of
Participant, any exercisable portion of the Option may, prior to the time when
the Option becomes unexercisable under Section 3.3 above, be exercised by
Participant’s personal representative or by any person empowered to do so under
the deceased Participant’s will or under then-applicable laws of descent and
distribution.
4.2 Partial
Exercise.
Any
exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the
time
when the Option or portion thereof becomes unexercisable under Section 3.3
above.
4.3 Manner
of Exercise.
The
Option, or any exercisable portion thereof, may be exercised solely by delivery
to the Secretary of the Company (or any third party administrator or other
person or entity designated by the Administrator) of each of the following
prior
to the time when the Option or such portion thereof becomes unexercisable under
Section 3.3 above:
(a) An
exercise notice in a form specified by the Administrator, stating that the
Option or portion thereof is thereby exercised, such notice complying with
all
applicable rules established by the Administrator;
(b) The
receipt by the Company of full payment for the shares of Stock with respect
to
which the Option or portion thereof is exercised, including payment of any
applicable withholding taxes, which may be in one or more of the forms of
consideration permitted under Section 4.4 below;
(c) Any
other
written representations as may be required in the Administrator’s sole
discretion to evidence compliance with any applicable law, rule or regulation;
and
(d) If
the
Option or portion thereof is exercised pursuant to Section 4.1 above by any
person or persons other than Participant, appropriate proof of the right of
such
person or persons to exercise the Option, as determined in the sole discretion
of the Administrator.
Notwithstanding
any of the foregoing, the Company shall have the right to specify all conditions
of the manner of exercise, which conditions may vary and which may be subject
to
change from time to time in the sole discretion of the
Administrator.
4.4 Method
of Payment. The
Administrator shall determine the method(s) by which the exercise price of
the
Option may be paid including, without limitation: (a) cash, (b) shares of Stock
having a Fair Market Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof, including shares
of
Stock that would otherwise be issuable or transferable upon exercise of the
Option, and/or (c) other property acceptable to the Administrator (including
through the delivery of a notice that the Participant has placed a market sell
order with a broker with respect to shares of Stock then issuable upon exercise
of the Option, and that the broker has been directed to pay a sufficient portion
of the net proceeds of the sale to the Company in satisfaction of the Option
exercise price; provided that payment of such proceeds is then made to the
Company, at such time as may be required by the Company, but not later than
the
settlement of such sale), and the methods by which shares of Stock shall be
delivered or deemed to be delivered to Participants.
4.5 Conditions
to Issuance of Shares of Stock.
The
shares of Stock deliverable upon the exercise of the Option, or any portion
thereof, may be either previously authorized but unissued shares of Stock or
issued shares of Stock which have then been reacquired by the Company. The
Company shall not be required to issue or deliver any shares of Stock
purchased
upon the exercise of the Option or portion thereof prior to fulfillment of
all
of the following conditions:
(a) The
admission of such shares of Stock to listing on all stock exchanges on which
such Stock is then listed;
(b) The
completion of any registration or other qualification of such shares of Stock
under any state or federal law or under rulings or regulations of the Securities
and Exchange Commission or of any other governmental regulatory body, which
the
Administrator shall, in its sole discretion, deem necessary or
advisable;
(c) The
obtaining of any approval or other clearance from any state or federal
governmental agency which the Administrator shall, in its sole discretion,
determine to be necessary or advisable;
(d) The
receipt by the Company of full payment for such shares of Stock, including
payment of any applicable withholding tax, which may be in one or more of the
forms of consideration permitted under Section 4.4 above; and
(e) The
lapse
of such reasonable period of time following the exercise of the Option as the
Administrator may from time to time establish for reasons of administrative
convenience.
4.6 Rights
as Stockholder.
The
holder of the Option shall not be, nor have any of the rights or privileges
of,
a stockholder of the Company in respect of any shares of Stock purchasable
upon
the exercise of any part of the Option unless and until such shares of Stock
shall have been issued by the Company to such holder (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment will be made for a dividend or other right
for which the record date is prior to the date the
shares of Stock are issued, except as provided in Section 7.1 of the Plan.
ARTICLE
V.
OTHER
PROVISIONS
5.1 Administration.
The
Administrator shall have the power to interpret the Plan, the Grant Notice
and
this Option Agreement and to adopt such rules for the administration,
interpretation and application of the Plan, the Grant Notice and this Option
Agreement as are consistent therewith and to interpret, amend or revoke any
such
rules. All actions taken and all interpretations and determinations made by
the
Administrator in good faith shall be final and binding upon Participant, the
Company and all other interested persons. No member of the Committee or the
Board or any delegate thereof shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
the
Grant Notice or this Option Agreement.
5.2 Option
Not Transferable.
(a) Subject
to Section 5.2(b), no right or interest of Participant in the Option may be
pledged, encumbered, or hypothecated to or in favor of any party other than
the
Company or a Subsidiary, or shall be subject to any lien, obligation, or
liability of Participant to any other party other than the Company or a
Subsidiary. Except as otherwise provided by the Administrator, the Option shall
not be assigned, transferred, or otherwise disposed of by Participant other
than
by will or the laws of descent and distribution.
(b) After
the
death of Participant, any exercisable portion of the Option may, prior to the
time when the Option becomes unexercisable under Section 3.3 above, be exercised
by Participant’s personal representative or by any person empowered to do so
under the deceased Participant’s will or under then-applicable laws of descent
and distribution.
5.3 Adjustments.
Participant acknowledges that the Option is subject to modification and
termination upon the occurrence of certain events as provided in this Agreement
and in Article 7 of the Plan.
5.4 Notices.
Any
notice to be given in connection with the this Agreement to the Company shall
be
addressed to the Company in care of the Secretary of the Company at the address
given beneath the signature of the Company’s authorized officer on the Grant
Notice, and any notice to be given to Participant shall be addressed to
Participant at the most current address on file with the Company’s Human
Resources department. By a notice given pursuant to this Section 5.4, either
party may hereafter designate a different address for notices to be given to
that party. Any notice which is required to be given to Participant shall,
if
Participant is then deceased, be given to the person entitled to exercise his
or
her Option pursuant to Section 4.1 above. Any notice shall be deemed duly given
on the date hand-delivered, on the day following deposit with a reputable
overnight carrier, or two days after such notice is sent by certified mail
(return receipt requested), in any case, to the addresses specified
herein.
5.5 Captions.
Captions are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
5.6 Governing
Law; Severability.
The
laws of the State of Nevada shall govern the interpretation, validity,
administration, enforcement and performance of the terms of this Agreement
without reference to the conflicts of laws principles thereof.
5.7 Conformity
to Securities Laws.
Participant acknowledges that the Plan and the Option are intended to conform
to
the extent necessary with all applicable federal, state, local and foreign
securities laws and any and all official interpretations, regulations and rules
promulgated there under. Notwithstanding anything herein to the contrary, the
Plan shall be administered, and the Option is granted and may be exercised,
only
in such a manner as conforms to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan and the Option shall be deemed amended
to
the extent necessary to conform to such laws, rules and
regulations.
5.8 Amendments,
Suspension and Termination.
Participant acknowledges that the Plan and the Option are subject to amendment,
suspension and/or termination as provided in Article 10 of the
Plan.
5.9 Successors
and Assigns.
The
Company may assign any of its rights under this Agreement to single or multiple
assignees, and this Agreement shall inure to the benefit of the successors
and
assigns of the Company. Subject to the restrictions on transfer herein set
forth
in Section 5.2 above, this Agreement shall be binding upon Participant and
his
or her heirs, executors, administrators, successors and assigns.
5.10 Notification
of Disposition.
If this
Option is designated as an Incentive Stock Option, Participant shall give prompt
notice to the Company of any disposition or other transfer of any shares of
Stock acquired under this Agreement if such disposition or transfer is made
(a)
within two years after the applicable Grant Date, or (b) within one year after
Participant exercises the Option. Such notice shall specify the date of such
disposition or other transfer and the amount realized, in cash, other property,
assumption of indebtedness or other consideration, by Participant in such
disposition or other transfer.
5.11 Limitations
Applicable to Section 16 Persons.
Notwithstanding any other provision of the Plan, the Grant Notice or this
Agreement, if Participant is subject to Section 16 of the Exchange Act, then
the
Plan, the Grant notice and this Agreement shall be subject to any additional
limitations set forth in any applicable exemptive rule under Section 16 of
the
Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that
are requirements for the application of such exemptive rule. To the extent
permitted by applicable law, this Agreement shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.
5.12 Not
a
Contract of Employment.
Nothing
in this Agreement or in the Plan shall confer upon Participant any right to
continue to serve as an employee or other service provider of the Company or
any
of its Subsidiaries.
5.13 Entire
Agreement.
The
Plan, the Grant Notice and this Agreement (including all Exhibits thereto)
constitute the entire agreement of the parties and supersede in their entirety
all prior undertakings and agreements of the Company and Participant with
respect to the subject matter hereof.
5.14 Section
409A.
Without
limiting the generality of Section 1.2 above, Section 11.14 of the Plan
regarding Code Section 409A is hereby expressly incorporated by reference by
reference into this Agreement.