EXHIBIT 10.(iii)(A)(7)
Award Number
THE SOUTHLAND CORPORATION
1995 Stock Incentive Plan
1996 Award Agreement
GRANT OF NONQUALIFIED STOCK OPTION (NQSO)
The Southland Corporation (the "Company") hereby grants to
_______________ ) (Social Security Number _____________)
(the "Participant") on October 1, 1996 (the "Date of
Grant"), subject to the approval by Company shareholders of
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, grants to the Participant, as of the Date of
Grant, an option to purchase up to ____________ shares of
Common Stock at a price of $ 3.00 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
▇▇▇▇▇, 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
▇▇▇▇▇, 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
▇▇▇▇▇, 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
▇▇▇▇▇, 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
▇▇▇▇▇, the remaining Option Shares.
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3. PERFORMANCE ACCELERATED VESTING
After the first anniversary of the Date of ▇▇▇▇▇, 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").
(b) If the Participant has an exercisable Option (in
whole or in part) as of the date of the Participant's
voluntary termination of employment with the Company, 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 voluntary 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.
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(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
Manager of the Company's Compensation and Benefits
Department 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 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
theCommittee.
6. FAIR MARKET VALUE
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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
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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
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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
▇▇▇▇▇.
THE SOUTHLAND CORPORATION
By:____________________________________________
President and Chief Executive Officer
ACCEPTED AND AGREED TO:
By:____________________________________________
Participant
Participant's Social Security Number:_____________
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