<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 23, 1995
Registration No. 33-
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________
THE SOUTHLAND CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-1085131
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2711 NORTH HASKELL AVENUE
DALLAS, TEXAS 75204-2906
(Address of principal executive offices, including zip code)
____________________
THE SOUTHLAND CORPORATION 1995 STOCK INCENTIVE PLAN
(Full title of the plan)
CAROL S. HILBURN
ASSOCIATE GENERAL COUNSEL
THE SOUTHLAND CORPORATION
2711 NORTH HASKELL AVENUE
DALLAS, TEXAS 75204-2906
(214) 828-7011
(Name, address and telephone number of agent for service)
copy to:
DEREK R. MCCLAIN
VINSON & ELKINS L.L.P.
3700 TRAMMELL CROW CENTER
2001 ROSS AVENUE
DALLAS, TEXAS 75201-2975
(214) 220-7797
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------
Title of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered offering price aggregate registration fee
registered per share1 offering price1
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.0001 par
value per share 41,000,000 shares $3.25 $133,250,000 $45,948
- ----------------------------------------------------------------------------------------------------------
1 Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(h)
under the Securities Act of 1933, as amended, and based on the average of the high and low prices
of the Common Stock reported on The Nasdaq Stock Market on October 19, 1995.
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents have been filed with the Securities and Exchange
Commission (the "Commission") by The Southland Corporation, a Texas corporation
(the "Company"), and are incorporated herein by reference and made a part
hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994;
(b) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1995;
(c) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1995; and
(d) The description of the Company's Common Stock, $.0001 par value per
share, contained in Item 1 of the Company's Registration Statement
on Form 8-A filed with the Commission on December 12, 1990.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), subsequent to the effective date hereof and prior to the filing of a
post-effective amendment hereto that indicates that all securities offered
hereby have been sold or that deregisters all such securities then remaining
unsold, shall be deemed to be incorporated herein by reference and to be a part
hereof from the date of filing of such documents. Any statement contained
herein or in any document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed to constitute a
part of this Registration Statement, except as so modified or superseded.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the Company's Articles of Incorporation and Bylaws and the
Texas Business Corporation Act, the Company has agreed to indemnify certain
current and former officers and directors in connection with pending litigation
as well as with other actions they may have taken while serving as directors
or officers of the Company. Pursuant to Article 2.02-1 of the Texas Business
Corporation Act, the Company generally has the power to indemnify its present
and former directors and officers against expenses and liabilities incurred
by them in connection with any suit to which they are, or are threatened to be
made, a party by reason of their serving in those positions so long as they
acted in good faith and in a manner they reasonably believed to be in, or not
opposed to, the best interests of the Company, and with respect to any criminal
action, so long as they had no reasonable cause to believe their conduct was
unlawful. With respect to suits by or in the right of the Company, however,
indemnification is generally limited to attorneys' fees and other expenses and
2
<PAGE>
is not available if the person is adjudged to be liable to the Company, unless
the court determines that indemnification is appropriate. The statute
expressly provides that the power to indemnify authorized thereby is not
exclusive of any rights granted under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. The Company also has
the power to purchase and maintain insurance for its directors and officers.
The preceding discussion is not intended to be exhaustive and is qualified
in its entirety by the Articles of Incorporation and Article 2.02-1 of the
Texas Business Corporation Act.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Unless otherwise indicated below as being incorporated by reference to
another filing of the Company with the Commission, each of the following
exhibits is filed herewith:
4.1 - Specimen Certificate for Common Stock, $.0001 par value, incorporated
by reference to The Southland Corporation's Annual Report on Form 10-K
for the year ended December 31, 1990, Exhibit 4(i)(2).
4.2 - Form of Voting Agreement and Stock Transfer Restriction and Buy-Back
Agreement relating to shares of common stock, $.01 par value, issued
pursuant to Grant Stock Plan, incorporated by reference to Registration
Statement on Form S-8, Reg. No. 33-25327, Exhibits 4.5 and 4.4.
4.3 - Shareholders Agreement dated as of November 1, 1988, by and among The
Southland Corporation, Thompson Brothers, L.P., Thompson Capital
Partners, L.P., The Hayden Company, The Williamsburg Corporation,
Four J Investment, L.P., each Limited Partner of Thompson Capital
Partners, L.P., as of the date thereof, and The Philp Co., incorporated
by reference to File No. 0-676, Annual Report on Form 10-K for year
ended December 31, 1988, Exhibit 4(i)(7), Tab 2.
4.4 - Shareholders Agreement dated as of March 5, 1991, among The Southland
Corporation, Ito-Yokado Co., Ltd., IYG Holding Company, Thompson
Brothers, L.P., Thompson Capital Partners, L.P., The Hayden Company,
The Williamsburg Corporation, Four J Investment, L.P., The Philp Co.,
participants in the Company's Grant Stock Plan who are signatories
thereto and certain limited partners of Thompson Capital Partners,
L.P., who are signatories thereto, incorporated by reference to
Schedule 13D filed by Ito-Yokado Co., Ltd., Seven-Eleven Japan Co.,
Ltd. and IYG Holding Company, Exhibit A.
4.5 - First Amendment to Shareholders Agreement, dated December 30, 1992,
incorporated by reference to File Nos. 0-676 and 0-16626, Annual
Report on Form 10-K for year ended December 31, 1992, Exhibit 4(i)(5),
Tab 1.
4.6 - Warrant Agreement dated as of March 5, 1991, among certain Holders of
Common Shares of The Southland Corporation named therein, Wilmington
Trust Company, as Warrant Agent, The Southland Corporation and
Ito-Yokado Co., Ltd., incorporated by reference to Schedule 13D filed
by Ito-Yokado Co., Ltd., Seven-Eleven Japan Co., Ltd. and IYG Holding
Company, Exhibit B.
4.7 - Specimen Warrant Certificates to Purchase Common Shares of The Southland
Corporation pursuant to Warrant Agreement dated as of March 5, 1991,
between The Southland Corporation and Wilmington Trust Company as
Warrant Agent, incorporated by reference to The Southland Corporation's
Annual Report on Form 10-K for the year ended December 31, 1990, Exhibit
4(i)(7).
3
<PAGE>
4.8 - Indenture, including Debenture, between The Southland Corporation and
Ameritrust Company National Association, as trustee, providing for 5%
First Priority Senior Subordinated Debenture due December 15, 2003,
incorporated by reference to The Southland Corporation's Annual Report
on Form 10-K for the year ended December 31, 1990, Exhibit 4(ii)(2).
4.9 - Indenture, including Debentures, between The Southland Corporation and
The Riggs National Bank of Washington, D.C., as trustee providing for
4 1/2% Second Priority Senior Subordinated Debentures (Series A) due
June 15, 2004, 4% Second Priority Senior Subordinated Debentures
(Series B) due June 15, 2004, and 12% Second Priority Senior
Subordinated Debentures (Series C) due June 15, 2009, incorporated by
reference to The Southland Corporation's Annual Report on Form 10-K for
the year ended December 31, 1990, Exhibit 4(ii)(3).
4.10 - The Southland Corporation 1995 Stock Incentive Plan.
5.1 - Opinion of Vinson & Elkins L.L.P.
15.1 - Letter of Coopers & Lybrand, L.L.P., Re Unaudited Interim Financial
Information.
23.1 - Consent of Coopers & Lybrand L.L.P., Independent Auditors.
23.9 - Consent of Vinson & Elkins L.L.P. (included in its opinion filed as
Exhibit 5.1 hereto).
24.1 - Power of Attorney (see the signature pages hereto).
ITEM 9. UNDERTAKINGS.
The Company hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3)
of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant
to section 13 or section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
4
<PAGE>
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to
section 13(a) or section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dallas, State of Texas, on the 23rd day of
October, 1995.
THE SOUTHLAND CORPORATION
By: /s/ Clark J. Matthews, II
-----------------------------------------
Clark J. Matthews, II
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below authorizes Bryan F. Smith, Jr., Ezra Shashoua and Carol S. Hilburn, and
each of them, each of whom may act without joinder of the other, to execute in
the name of each such person who is then an officer or director of the Company
and to file any amendments to this Registration Statement necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration of
the securities which are the subject of this Registration Statement, which
amendments may make such changes in the Registration Statement as such attorney
may deem appropriate.
Signature Capacity Date
--------- -------- ----
/s/ Masatoshi Ito Chairman of the Board and October 23, 1995
- ----------------------- Director
Masatoshi Ito
/s/ Toshifumi Suzuki Vice Chairman of the Board October 23, 1995
- ----------------------- and Director
Toshifumi Suzuki
/s/ Clark J. Matthews, II President and Chief October 23, 1995
- --------------------------- Executive Officer and
Clark J. Matthews, II Director (Principal Executive
Officer) and Acting Chief
Financial Officer (Principal
Financial Officer)
/s/ Don Thomas Controller October 23, 1995
- --------------------------- (Principal Accounting Officer)
Don Thomas
October 23, 1995
/s/Yoshitami Arai Director
- ---------------------------
Yoshitami Arai
/s/ Timothy N. Ashida Director October 23, 1995
- ---------------------------
Timothy N. Ashida
/s/ Jay W. Chai Director October 23, 1995
- ---------------------------
Jay W. Chai
6
<PAGE>
/s/ Gary J. Fernandes Director October 23, 1995
- ---------------------------
Gary J. Fernandes
/s/ Masaaki Kamata Director October 23, 1995
- ---------------------------
Masaaki Kamata
/s/ Kazuo Otsuka Director October 23, 1995
- ---------------------------
Kazuo Otsuka
/s/ Asher O. Pacholder Director October 23, 1995
- ---------------------------
Asher O. Pacholder
/s/ Nobutake Sato Director October 23, 1995
- ---------------------------
Nobutake Sato
/s/ Tatsuhiro Sekine Director October 23, 1995
- ---------------------------
Tatsuhiro Sekine
/s/ Jere W. Thompson Co-Vice Chairman of the Board October 23, 1995
- --------------------------- and Director
Jere W. Thompson
/s/ John P. Thompson Co-Vice Chairman of the Board October 23, 1995
- --------------------------- and Director
John P. Thompson
7
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
------- ----------------------
4.1 - Specimen Certificate for Common Stock, $.0001 par value,
incorporated by reference to The Southland Corporation's
Annual Report on Form 10-K for the year ended December 31,
1990, Exhibit 4.(i)(2).
4.2 - Form of Voting Agreement and Stock Transfer Restriction and
Buy-Back Agreement relating to shares of common stock, $.01
par value, issued pursuant to Grant Stock Plan, incorporated
by reference to Registration Statement on Form S-8, Reg. No.
33-25327, Exhibits 4.5 and 4.4.
4.3 - Shareholders Agreement dated as of November 1, 1988, by and
among The Southland Corporation, Thompson Brothers, L.P.,
Thompson Capital Partners, L.P., The Hayden Company, The
Williamsburg Corporation, Four J Investment, L.P., each
Limited Partner of Thompson Capital Partners, L.P., as of the
date thereof, and The Philp Co., incorporated by reference to
File No. 0-676, Annual Report on Form 10-K for year ended
December 31, 1988, Exhibit 4(i)(7), Tab 2.
4.4 - Shareholders Agreement dated as of March 5, 1991, among The
Southland Corporation, Ito-Yokado Co., Ltd., IYG Holding
Company, Thompson Brothers, L.P., Thompson Capital Partners,
L.P., The Hayden Company, The Williamsburg Corporation, Four
J Investment, L.P., The Philp Co., participants in the
Company's Grant Stock Plan who are signatories thereto and
certain limited partners of Thompson Capital Partners, L.P.,
who are signatories thereto, incorporated by reference to
Schedule 13D filed by Ito-Yokado Co., Ltd., Seven-Eleven Japan
Co., Ltd. and IYG Holding Company, Exhibit A.
4.5 - First Amendment to Shareholders Agreement, dated December 30,
1992, incorporated by reference to File Nos. 0-676 and
0-16626, Annual Report on Form 10-K for year ended
December 31, 1992, Exhibit 4(i)(5), Tab 1.
4.6 - Warrant Agreement dated as of March 5, 1991, among certain
Holders of Common Shares of The Southland Corporation named
therein, Wilmington Trust Company, as Warrant Agent, The
Southland Corporation and Ito-Yokado Co., Ltd., incorporated
by reference to Schedule 13D filed by Ito-Yokado Co., Ltd.,
Seven-Eleven Japan Co., Ltd. and IYG Holding Company,
Exhibit B.
4.7 - Specimen Warrant Certificates to Purchase Common Shares of
The Southland Corporation pursuant to Warrant Agreement dated
as of March 5, 1991, between The Southland Corporation and
Wilmington Trust Company as Warrant Agent, incorporated by
reference to The Southland Corporation's Annual Report on Form
10-K for the year ended December 31, 1990, Exhibit 4(i)(7).
4.8 - Indenture, including Debenture, between The Southland
Corporation and Ameritrust Company National Association, as
trustee, providing for 5% First Priority Senior Subordinated
Debenture due December 15, 2003, incorporated by reference to
The Southland Corporation's Annual Report on Form 10-K for the
year ended December 31, 1990, Exhibit 4(ii)(2).
4.9 - Indenture, including Debentures, between The Southland
Corporation and The Riggs National Bank of Washington, D.C.,
as trustee providing for 4 1/2% Second Priority Senior
Subordinated Debentures (Series A) due June 15, 2004, 4%
Second Priority Senior Subordinated Debentures (Series B) due
June 15, 2004, and 12% Second Priority Senior Subordinated
Debentures (Series C) due June 15, 2009, incorporated by
reference to The Southland Corporation's Annual Report on Form
10-K for the year ended December 31, 1990, Exhibit 4(ii)(3).
8
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Exhibit Description of Exhibit
------- ----------------------
4.10 - The Southland Corporation 1995 Stock Incentive Plan.
5.1 - Opinion of Vinson & Elkins L.L.P.
15.1 - Letter of Coopers & Lybrand, L.L.P., Re Unaudited Interim
Financial Information
23.1 - Consent of Coopers & Lybrand L.L.P., Independent Auditors.
23.9 - Consent of Vinson & Elkins L.L.P. (included in its opinion
filed as Exhibit 5.1 hereto).
24.1 - Power of Attorney (see the signature pages hereto).
9
THE SOUTHLAND CORPORATION
1995 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
The purposes of The Southland Corporation 1995 Stock Incentive Plan (the "Plan")
are to promote the interests of the Company and its shareholders by (i)
attracting and retaining executive personnel and other key employees of
outstanding ability; (ii) motivating executive personnel and other key
employees, by means of performance-related incentives, to achieve longer-range
performance goals; and (iii) enabling such employees to participate in the
long-term growth and financial success of the Company. This Plan covers the
sale of Restricted Stock, the grant of Restricted Stock Units, the award of
Bonus Stock and the grant of Options (including options intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code of 1986,
as amended), the award of Performance Shares, Stock Appreciation Rights, and
any other Stock Unit Awards or stock-based forms of awards as the Committee
may determine in its sole and complete discretion at the time of grant.
SECTION 2. DEFINITIONS
"Affiliate" shall mean (a) any corporation or other entity which is not a
Subsidiary but as to which the Company possesses a direct or indirect ownership
interest of 10% or more; (b) any Person who is directly or indirectly the
beneficial owner of 10% or more of the voting power of the Company; or (c) any
Person controlling, controlled by or under common control with the Company.
"Award" shall mean a grant or award under Sections 7 through 12, inclusive, of
the Plan, whether granted individually, in combination, or in tandem, to a
Participant pursuant to the terms, conditions and limitations that the
Committee may establish in order to fulfill the objectives of the Plan.
"Award Agreement" shall mean the written agreement between the Company and a
Participant evidencing the terms, conditions and limitations of the Award
granted to that Participant.
"Board of Directors" shall mean the Board of Directors of the Company.
"Bonus Stock" shall mean an award granted pursuant to Section 11 of the Plan
expressed as a share of Common Stock which may or may not be subject to
restrictions.
"Change in Control" shall mean (a) the direct or indirect acquisition by any
Person (an "Acquiring Person") other than the Company, any subsidiary of the
Company, any employee benefit plan of the Company or a subsidiary of the
Company, of securities of the Company representing 50% or more of the
combined voting power of the Company, such that such Person becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of the
Company; or (b) a public announcement of a tender offer or exchange offer by
any Acquiring Person for securities representing 50% or more of the combined
voting power of the Company, which offer is not opposed by the Company's
Board of Directors; (c) the approval by the shareholders of the Company of a
merger or a consolidation of the Company with any other Person (or, if no such
approval is required, the consummation of such a merger or consolidation of the
Company), other than a merger or consolidation that would result in the stock
of the Company outstanding immediately before the consummation thereof
continuing to represent a majority of the combined voting power of the
surviving entity outstanding immediately after such merger or consolidation;
1
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or (d) the approval by the shareholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or distribution by the
Company of all or substantially all of the Company's assets (or, if no such
approval is required, the consummation of such a liquidation, sale or
disposition in one transaction or a series of related transactions), other than
a liquidation, sale or disposition of all or substantially all of the Company's
assets in one transaction or a series of related transactions to a corporation
owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of the stock of the
Company.
"Closing Price" shall mean the last traded price per share of Stock as reported
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.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" shall mean the Committee that administers this Plan and shall be
the Compensation and Benefits Committee of the Board of Directors unless any
member of such committee shall fail to qualify as a Person described in the
following three sentences, in which case, the Compensation and Benefits
Committee shall appoint an Incentive Compensation Committee, consisting solely
of persons who do so qualify, to serve as the Committee to administer this
Plan. The Committee shall consist of not less than two persons (all of whom
shall be members of the Board of Directors and shall qualify as Outside
Directors under Section 162(m)). A member of the Committee shall not be
eligible to receive Awards or equity securities under any plan of the Company
or its Affiliates while serving as a member of the Committee; shall not have
received Awards or equity securities under any plan of the Company or its
Affiliates within one year before appointment to the Committee; and shall not
be eligible to receive Awards or such equity securities under any plan of the
Company or its Affiliates for such period following service on the Committee
as may be required by Rule 16b-3 for that person to remain a Disinterested
Person (as provided in Rule 16b-3), in each case except for Awards or equity
securities granted as provided in paragraphs (c)(2)(i)(A), (B), (C) or (D) of
Rule 16b-3. A "Disinterested Person" cannot be a former officer of the Company
or a former employee receiving deferred compensation.
"Common Stock" or "Stock" shall mean the Common Stock of the Company, par
value $.0001 per share, or such other security or right or instrument into
which such Common Stock may later be changed or converted.
"Company" shall mean The Southland Corporation and any Subsidiary of the
Company that has Key Employees that satisfy the eligibility requirements for
participation in this Plan.
"Date of Grant" shall mean the date specified by the Committee as the
effective date or date of grant of an Award or, if the Committee does not so
specify, shall be the date the Committee adopts the resolution approving the
offer of an Award to an individual, including the specification of the number
(or method of determining the number) of shares of Stock and the amount (or
method of determining the amount) of cash to be subject to the Award, even
though certain terms of the Award Agreement may not be determined at that
time and even though the Award Agreement may not be executed until a later
time.
2
<PAGE>
"Department" shall mean the Company's Compensation and Benefits
Department.
"Designated Beneficiary" shall mean the beneficiary designated by the
Participant, pursuant to procedures established by the Department, to receive
amounts due the Participant in the event of the Participant's death. In the
absence of an effective designation by the Participant, Designated Beneficiary
shall mean the Participant's estate.
"Disability" shall mean the mental or physical disability, either occupational
or non-occupational in cause, defined as "Total Disability" in the Company's
Disability Plan as currently in effect and as amended from time to time, or
which, in the opinion of the Committee, on the basis of medical evidence
satisfactory to it, prevents the employee from engaging in any occupation or
employment for wage or profit, which has continued for at least 12 months and
is likely to be permanent.
"Divestiture" shall mean the sale of, or closing by, the Company of the
business operations in which the Participant was employed, or the elimination
of a particular position at the Company's discretion.
"Early Retirement" shall mean, in the case of any Participant, retirement from
employment with the Company after the age of 55, but before the age of 65,
provided that such Participant is eligible for retiree benefits under the
Company's group medical/dental plans.
"Exchange Act" shall mean the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder, or any successor law, as it may be
amended from time to time.
"Executive Officer" shall mean the Company's president, principal financial
officer, principal operating officer, principal accounting officer or any vice
president of the Company in charge of a principal business unit, division or
function (such as sales, administration or finance), any other officer who
performs a policy-making function, or any other person who performs similar
policy-making functions for the Company or any other person who is subject to
the provisions of Rule 16b-3.
"Fair Market Value" shall mean the Closing Price of the Stock 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.
"Fiscal Year" shall mean the fiscal year of the Company.
"Incentive Stock Option" shall mean a stock option granted under Section 7 of
the Plan which is intended to meet the requirements of Section 422 of the Code.
"Key Employee" shall mean any employee whom the Committee identifies as
having a direct and significant effect on the performance of the Company or
any of its Subsidiaries.
"Non-Stock Based Incentive Compensation" refers to incentive compensation the
value of which is not based in whole or in part on the value of the Stock.
"Nonqualified Stock Option" shall mean a stock option granted under Section 7
of the Plan which is not intended to be an Incentive Stock Option.
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<PAGE>
"Normal Retirement" shall mean, in the case of any Participant, retirement
from employment with the Company at or after the time when such Participant
reaches age 65 or some earlier age if approved by the Committee.
"Option" shall mean an Incentive Stock Option or a Nonqualified Stock Option.
"Option Shares" shall mean the shares of Stock purchased upon exercise of an
Option granted pursuant to this Plan.
"Outside Director" shall mean a person who satisfies the requirements of
Section 162(m) of the Code and is a "Disinterested Person" under Rule 16b-3.
"Participant" shall mean an employee who is selected by the Committee to
receive an Award under the Plan.
"Payment Value" shall mean the dollar amount assigned to a Performance Share
which shall be equal to the Fair Market Value of the Common Stock on the day
of the Committee's determination under Section 9 with respect to the applicable
Performance Cycle.
"Performance Based Awards" shall mean any Awards of Performance Shares,
Restricted Stock, Restricted Stock Units, Bonus Stock or other stock-based
compensation that is intended by the Committee to constitute performance-
based compensation under Section 162(m).
"Performance Cycle" or "Cycle" shall mean the period of years selected by the
Committee during which the performance is measured for the purpose of
determining the extent to which an award of Performance Shares has been
earned.
"Performance Goals" shall mean the objectives established by the Committee for
a Performance Cycle, for the purpose of determining the extent to which
Performance Shares which have been contingently awarded for such Cycle are
earned.
"Performance Share" shall mean an award granted pursuant to Section 9 of the
Plan expressed as a share of Common Stock.
"Person" shall mean any person or entity of any nature whatsoever, specifically
including (but not limited to) an individual, a firm, a company, a corporation,
a partnership, a trust or other entity.
"Plan" shall mean "The Southland Corporation 1995 Stock Incentive Plan."
"QDRO" shall mean a "Qualified Domestic Relations Order" as defined in the
Code or Title I of the Employee Retirement Income Security Act.
"Restricted Period" shall mean the period of years selected by the Committee
during which a grant of Restricted Stock or Restricted Stock Units may be
forfeited to the Company.
"Restricted Stock" shall mean shares of Common Stock, subject to restrictions,
contingently granted to a Participant under Section 10 of the Plan.
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"Restricted Stock Unit" shall mean a fixed or variable dollar denominated right
to acquire Stock, which may or may not be subject to restrictions,
contingently awarded under Section 10 of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of the Exchange Act as
adopted in Exchange Act Release No. 34-29131 (April 26, 1991), or any
successor rule, as it may be amended from time to time.
"Section 162(m)" shall mean Section 162(m) of the Code, or any successor
section under the Code, as it may be amended from time to time and as
interpreted by final or proposed regulations promulgated thereunder from time
to time.
"Securities Act" shall mean the Securities Act of 1933 and the rules and
regulations promulgated thereunder, or any successor law, as it may be
amended from time to time.
"Stock Appreciation Right" shall mean an award granted under Section 8 of the
Plan.
"Stock Unit Award" shall mean an award of Common Stock or units granted
under Section 12 of the Plan.
"Stockholder Approved Standard" means any pre-established objective
performance goal qualifying under Section 162(m) and approved by the
shareholders of the Company in accordance with Section 162(m), including (a)
total stockholder return (Stock price appreciation plus dividends), (b) net
income, (c) earnings per share, (d) return on sales, (e) return on equity,
(f) return on assets, (g) increase in the market price of Stock or other
securities of the Company, (h) the performance of the Company in any of the
items mentioned in clause (a) through (g) in comparison to the average
performance of the companies used in a self-constructed peer group established
before the beginning of the performance period.
"Subsidiary" shall mean any business entity in which the Company possesses
directly or indirectly fifty percent (50%) or more of the total combined
voting power.
"Unvested Stock" shall mean all the shares of Restricted Stock, Unit Stock,
Bonus Stock and Option Stock other than Vested Stock.
"Vested Stock" shall mean: (i) all shares of Restricted Stock, Unit Stock,
Bonus Stock and Option Stock which at the time in question have been freed
of the restrictions imposed pursuant to the Plan; and (ii) all shares of
Unit Stock, Bonus Stock and Option Stock which shall have been issued free
of restrictions pursuant to the Plan.
SECTION 3. ADMINISTRATION
The Plan shall be administered and interpreted by the Committee. The Committee
shall have full authority, in its discretion, to adopt, alter and repeal such
administrative rules, guidelines, and practices governing the operation of the
Plan as it shall from time to time deem advisable, and to interpret the terms
and provisions of the Plan. Subject to Section 4, the Committee shall have
full authority, in its discretion, to determine those Executive Officers and
Key Employees who shall participate in the Plan and the number of shares of
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Stock to be sold or awarded to each Participant and the number of shares of
Stock to be covered by either rights to acquire shares of Stock or Options
granted to each Participant (it being understood that more than one sale, award
or grant or any combination thereof may relate to the same Participant).
Recommendations for individual awards shall be made to the Committee by the
President of the Company. The Committee may delegate to the President of the
Company the power to make Awards to Participants who are not Executive Officers
of the Company provided the Committee shall fix the maximum amount of such
Awards for the group and a maximum for any one Participant. The Committee
shall determine the Awards to be made to the Executive Officers. The
Committee's decisions shall be binding upon all persons, including the Company,
its stockholders, employees, Participants, and Designated Beneficiaries.
The Committee may act by a meeting in person or take action by unanimous
written consent or by means of a meeting held by conference telephone call or
similar communications equipment pursuant to which all persons participating in
the meeting can hear each other. The Committee may request advice or
assistance or employ such persons as it deems necessary for proper
administration of the Plan. Any determination made by the Committee shall be
conclusive except to the extent that the sufficiency of the consideration
therefor or the terms of any such sale or award of shares of Stock or any grant
of rights or Options under the Plan are required by law or by the Articles of
Incorporation or Bylaws of the Company to be subject to ratification by the
Board of Directors or its Compensation and Benefits Committee prior to such
sale, award or grant.
SECTION 4. ELIGIBILITY
Key Employees, including officers, of the Company shall be eligible to
participate under the Plan. However: (i) no non-Employee director of the
Company shall be eligible to participate under the Plan; (ii) no member of the
Committee shall be eligible to participate under the Plan; and (iii) no person
shall be eligible to participate under the Plan if he owns, directly or
indirectly, more than 5% of the total combined voting power of all classes of
stock of the Company.
SECTION 5. SHARES SUBJECT TO PLAN/MAXIMUM AMOUNT AVAILABLE FOR AWARDS
(a) The maximum number of shares of Stock in respect of which Awards may
be made under the Plan shall be a total of 41,000,000 shares of Common Stock,
which may be in any combination of Options, Restricted Stock, Restricted Stock
Units, Performance Shares, Bonus Shares or any other right or option.
(b) Shares of Common Stock may be available from the authorized but
unissued shares of Common Stock of the Company or from shares of Common Stock
reacquired by the Company, including shares of Common Stock purchased in the
open market. In the event that (i) an Option or Stock Appreciation Right is
settled for cash or expires or is terminated unexercised as to any shares of
Common Stock covered thereby, or (ii) any Award in respect of shares of Common
Stock is cancelled or forfeited for any reason under the Plan without the
delivery by the Company of shares of Common Stock, such shares shall thereafter
be again available for award pursuant to the Plan. In the event that any
Option or other Award granted hereunder is exercised through the delivery of
shares of Common Stock, the number of shares of Common Stock available for
Awards under the Plan shall be increased by the number of shares so
surrendered, to the extent permissible under Rule 16b-3 as interpreted from
time to time by the Securities and Exchange Commission or its staff.
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(c) If at any time, or from time to time, the Company shall subdivide as a
whole (by reclassification, by a Stock split, by the issuance of a distribution
on Stock payable in Stock, or otherwise) the number of shares of Stock then
outstanding into a greater number of shares of Stock, or increase the number of
outstanding shares of Common Stock by virtue of any public or private stock
offering or the issuance by the Company of debt, equity or other instruments
that are convertible to Common Stock, such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under this Plan, then (i) the maximum number of shares of Stock
available for the Plan shall be increased proportionately, and the kind of
shares or other securities available for the Plan shall be appropriately
adjusted, (ii) the number of shares of Stock (or other kind of shares or
securities) that may be acquired under any award under the Plan shall be
increased proportionately, and (iii) the price (including Exercise Price) for
each share of Stock (or other kind of shares or securities) subject to then
outstanding awards shall be reduced proportionately, without changing the
aggregate purchase price or value as to which outstanding awards remain
exercisable or subject to restrictions.
(d) If at any time, or from time to time, the Company shall consolidate as
a whole (by reclassification, reverse Stock split, or otherwise) the number of
shares of Stock then outstanding into a lesser number of shares of Stock, (i)
the maximum number of shares of Stock available for the Plan shall be decreased
proportionately, and the kind of shares or other securities available for the
Plan shall be appropriately adjusted, (ii) the number of shares of Stock (or
other kind of shares or securities) that may be acquired under any award shall
be decreased proportionately, and (iii) the price (including Exercise Price)
for each share of Stock (or other kind of shares or securities) subject to then
outstanding awards shall be increased proportionately, without changing the
aggregate purchase price or value as to which outstanding awards remain
exercisable or subject to restrictions.
(e) In the event that any stock dividend, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase
Common Stock, or other similar corporate event, not contemplated in Section
5(c) or (d) above, affects the Common Stock such that an adjustment is deemed
appropriate in order to preserve the benefits or potential benefits intended to
be made available under this Plan, then the Committee may in its discretion
adjust any or all of (i) the number and kind of shares which thereafter may be
awarded or optioned and sold or made the subject of Stock Appreciation Rights
under the Plan, (ii) the number and kind of shares subject of Options and other
Awards, and (iii) the grant, exercise or conversion price with respect to any of
the foregoing and/or, if deemed appropriate, make provision for cash payment to
a Participant or a person who has an outstanding Option or other Award provided,
however, that the number of shares subject to any Option or other Award shall
always be a whole number.
(f) Whenever the number of shares of Stock subject to outstanding awards
under the Plan and the price for each share of Stock subject to outstanding
awards are required to be adjusted as provided in this Section, the Committee
shall authorize the Department to prepare a notice setting forth the event
requiring adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the change in price and the number of shares of
Stock, or securities, cash or property purchasable subject to each Award after
giving effect to the adjustments. The Committee shall authorize the Department
to give each Participant such a notice.
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(g) The maximum number of shares of Stock in respect of which Awards may
be made under the Plan to any individual Key Employee shall be 10,000,000
shares of Stock, which may be in any combination of Options, Restricted Stock,
Restricted Stock Units, Performance Units, Bonus Shares or any other right or
option. Such maximum number of shares shall be adjusted as provided in
Sections 5(c), (d), and (e) above; however, the events described in Section 5(b)
above shall count against and reduce the maximum number of shares of Stock
in respect of which Awards may be made under the Plan to any individual Key
Employee. This Section 5(g) is intended to comply with the requirement of the
performance-based compensation exception to Section 162(m) and shall be
interpreted accordingly.
(h) Adjustments under this Section shall be made, as required, and the
calculations by the Department shall be final, binding and conclusive. No
fractional interest shall be issued under the Plan as a result of any such
adjustments.
SECTION 6. PRICE
Subject to the provisions of this Plan and to the requirements of applicable
law, the Committee shall determine the price at which shares of Restricted
Stock, Restricted Stock Units or any other form of incentive Stock shall be
sold to Participants hereunder and the price at which any Options granted to
purchase shares of Option Stock hereunder shall become exercisable. All
shares purchased upon exercise of any Option shall be paid for in full at the
time of exercise and such payment may be made in whole or in part by delivery
of shares of Stock already owned by the participant with such shares being
valued for these purposes at 100% of the Fair Market Value thereof on the date
of the exercise.
SECTION 7. STOCK OPTIONS
(a) Grant.
Subject to the provisions of the Plan and applicable law, all Options granted
pursuant to the Plan shall have such terms and conditions as the Committee in
its sole discretion shall determine, all of which terms and conditions shall be
specified in the particular Award Agreement, including the period during which
such Option may be exercised in whole or in part, and the conditions under
which such Option may be terminated and such other provisions as may be
advisable to comply with law or the rules of any securities trading system or
stock exchange. The Committee shall have the authority to grant Incentive
Stock Options, or to grant Nonstatutory Stock Options, or to grant both types
of options. In the case of Incentive Stock Options, the terms and conditions
of such grants shall be subject to and comply with such rules as may be
prescribed by Section 422 of the Code, as from time to time amended, and any
implementing regulations.
(b) Option Price.
The Committee shall establish the option price at the time each Option is
granted, which price shall not be less than 100% of the Fair Market Value of
the Common Stock on the Date of Grant.
(c) Exercise.
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(1) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may, in its sole discretion, specify in
the applicable Award Agreement or thereafter, provided, however, that in no
event may any Option granted hereunder be exercisable prior to the expiration
of six months from the Date of Grant nor after the expiration of ten years from
the Date of Grant. The Committee may impose such conditions with respect to
the exercise of Options, including without limitation, any relating to the
application of federal or state securities laws, as it may deem necessary or
advisable, restrictions on transfer of shares of Stock received upon exercise,
or a portion thereof, after exercise, as the Committee may deem advisable,
including, without limitation, restrictions on, or acceleration of, the term or
vesting based on market appreciation of the Stock, increases in the revenues,
sales, net worth or net earnings of the Company or any Subsidiary, division or
other component thereof, or the attainment of any other business or financial
goal of the Company.
(2) No shares of Stock shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefore is received by the
Company. Such payment may be made in cash, or its equivalent, or by exchanging
shares of Common Stock owned by the optionee (which are not the subject of any
pledge or other security interest), or by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any such Common Stock so tendered to the Company, valued as of
the date of such tender, is at least equal to such option price. In addition,
at the request of the Participant and to the extent permitted by applicable
law, the Committee may (but shall not be required to) approve arrangements with
a brokerage firm under which that brokerage firm, on behalf of the Participant,
shall pay to 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 the procedures that the
Committee may establish from time to time.
(d) Each Option shall have the following additional conditions:
(1) The Options shall not be transferable other than by will or the laws
of descent and distribution and shall be exercisable during the Participant's
lifetime only by him, except as otherwise determined by the Committee.
(2) Participants shall have no right to receive any fractional shares of
Stock upon the exercise of Options granted under the Plan.
(3) No optionee shall be deemed to be a holder of any shares of Stock
until the issuance of certificates after the exercise of an Option. No
adjustment shall be made for any dividends or distributions or other rights
for which the record date is prior to the date such stock certificates are so
issued.
(4) The number of shares of Stock subject to an Option and the price per
share shall be appropriately adjusted pursuant to Section 5.
(5) All Option Shares (and all shares of Stock received thereon as the
result of any adjustment pursuant to Section 5) shall either be free of
any restrictions (other than those imposed by applicable law) or in the
discretion of the Committee may be subject to restrictions or features
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similar to those referred to in Section 10 and set forth in the related
Award Agreement.
SECTION 8. STOCK APPRECIATION RIGHTS
(a) The Committee may, with full authority and in its sole and complete
discretion, grant Stock Appreciation Rights in tandem with an Option, in
addition to an Option, or freestanding and unrelated to an Option. Stock
Appreciation Rights granted in tandem with or in addition to an Option may
be granted either at the same time as the Option or at a later time. Stock
Appreciation Rights shall not be exercisable earlier than six months after
grant and shall not be exercisable after the expiration of ten years from the
Date of Grant.
(b) The Committee shall establish the grant price of each Stock
Appreciation Right at the time each Stock Appreciation Right is granted,
and, unless such Stock Appreciation Right is not intended to comply with
the performance-based compensation exception to Section 162(m), such
grant price shall not be less than the Fair Market Value of the Common
Stock on the date of grant.
(c) A Stock Appreciation Right shall entitle the Participant to receive
from the Company an amount equal to the excess of the Fair Market Value of a
share of Common Stock on the exercise of the Stock Appreciation Right
over the grant price thereof, provided that the Committee may for
administrative convenience determine that, a Stock Appreciation Right
which is not related to an Incentive Stock Option can only be exercised
during limited periods of time in order to satisfy the conditions of certain
rules of the Securities and Exchange Commission, and the exercise of any
such Stock Appreciation Right for cash during such limited period shall be
deemed to occur for all purposes hereunder on the day during such limited
period on which the Fair Market Value of the Stock is the highest. Any
such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation
Rights granted prior to such determination as well as Stock Appreciation
Rights thereafter granted. The Committee shall determine upon the exercise
of a Stock Appreciation Right whether such Stock Appreciation Right shall be
settled in cash, shares of Common Stock, Stock Options, or a combination
thereof, provided, however, that if any payment in shares of Stock results in
a fractional share, payment for the fractional share shall be made in cash.
SECTION 9. PERFORMANCE SHARES
(a) The Committee may, with full authority and in its sole and complete
discretion, grant Performance Shares and determine the number of such
shares for each Performance Cycle, the duration of each Performance
Cycle and the value of each Performance Share. All the terms and
conditions of each Performance Share Grant shall be included in the
applicable Award Agreement. There may be more than one Performance
Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other.
(b) The Committee shall establish Performance Goals for each Cycle on
the basis of such criteria and to accomplish such objectives as the
Committee may from time to time select. During any Cycle, the Committee
may adjust the Performance Goals for such Cycle as it deems equitable in
recognition of unusual or non-recurring events affecting the Company,
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changes in applicable tax laws or accounting principles, or such other
factors as the Committee may determine.
(c)(1) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have
been earned on the basis of performance in relation to the established
Performance Goals.
(2) Payment Value of earned Performance Shares shall be distributed
to the Participant or, if the Participant has died, to the Participant's
Designated Beneficiary, as soon as practicable after the expiration of the
Performance Cycle and the Committee's determination under paragraph
(c)(1), above. The Committee shall determine whether Payment Values
are to be distributed in the form of cash or shares of Common Stock,
provided, however, that if any payment in shares of Stock results in a
fractional share, payment for the fractional share shall be made in cash.
SECTION 10. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
(a) The Committee may, with full authority and in its sole and complete
discretion, grant Restricted Stock and Restricted Stock Units and determine
the number of shares of Restricted Stock and the number of Restricted Stock
Units to be granted to each Participant, the duration of the Restricted Period
during which, the consideration to be paid, if any, therefor, and the
conditions under which, the Restricted Stock and Restricted Stock Units may be
forfeited to the Company, and the other terms and conditions of such Awards.
The Restricted Period may be shortened, lengthened or waived by the Committee
at any time in its discretion with respect to one or more Participants or
Awards outstanding.
(b) Shares of Restricted Stock and Restricted Stock Units may not be
sold, assigned, transferred, pledged, or otherwise encumbered, except as
herein provided, during the Restricted Period. Certificates issued in
respect of shares of Restricted Stock shall be registered in the name of
the Participant and deposited by such Participant, together with a stock
power endorsed in blank, with the Company or with the Company's stock
transfer agent. At the expiration of the Restricted Period, the Company or
its stock transfer agent shall deliver such certificates to the Participant or
the Participant's legal representative. If any payment is to be made to the
Company for Restricted Stock Units, it shall be made in cash/or shares of
Common Stock, as permitted in the Award Agreement, provided, however,
that if any payment in shares of Stock results in a fractional share,
payment for the fractional share shall be made in cash.
(c) Except as otherwise provided in the related Award Agreement, in the
event a Participant who has purchased shares hereunder ceases to be employed
by the Company as the result of death, Disability, Divestiture, Early
Retirement or Normal Retirement, then: (i) the Company may repurchase that
portion of the shares of Unvested Stock sold to such Participant, at such
price and on such terms and conditions, as the Committee shall determine at
such time in its sole discretion; or (ii) the other restrictions imposed and
still existing upon any or all of the shares of Unvested Stock sold to such
Participant shall lapse or shall be removed in accordance with a specified
formula, all as shall be determined at such time in the sole discretion of
the Committee.
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(d) The Committee may provide in the related Award Agreement that, in
the event of the failure of any condition to the vesting of shares of
Restricted Stock, all such shares of Unvested Stock that have been purchased
by the Participant may be repurchased by the Company on a date selected by
the Committee within 60 days after the occurrence of the failure of such
condition of vesting upon such terms and conditions as the Committee may
elect.
(e) The Committee may provide in the related Award Agreement for: (i)
any other restrictions or features relating to any shares of Restricted Stock
sold pursuant to this Plan as it may deem advisable, including, without
limitation, restrictions or acceleration of terms or vesting based on market
appreciation of the Stock, increases in the revenues, sales, net worth or
net earnings of the Company or any Subsidiary, division or other component
thereof, or the attainment of any other business or financial goal of the
Company; and (ii) such further restrictions as may be advisable to comply with
law, including the requirements of the Securities Act, any stock exchange or
securities trading system upon which such share or shares of the same class
are then listed and under any state securities or other laws applicable to
such shares.
(f) The Committee shall determine the exercise period within which a
right to acquire shares of Restricted Stock pursuant to this Plan must be
exercised and, subject to the other provisions of this Plan, the Participant
may not sell, assign, transfer or otherwise alienate or hypothecate such
right other than by will or the laws of descent and distribution, and such
right shall be exercisable during the Participant's lifetime only by him or
his guardian or legal representative.
SECTION 11. BONUS STOCK
The Committee may, with full authority and in its sole and complete
discretion, award shares of Bonus Stock to participants hereunder without
cash consideration and may determine in the related Award Agreement
whether shares of Bonus Stock awarded pursuant to the Plan (including
any shares received by the holders thereof as a result of any adjustment
pursuant to Section 5) shall be free of any restrictions (other than those
advisable to comply with law) or shall be subject to restrictions and
limitations similar to those referred to in Section 10. In the event that
any restrictions are imposed on shares of Bonus Stock awarded pursuant to
the Plan, then such shares shall be subject to at least the following
restrictions:
A. Shares of Unvested Stock may not be sold, assigned, transferred or
otherwise alienated or hypothecated.
B. In the event of the failure of any condition to the vesting of shares
of Bonus Stock, all such shares of Unvested Stock shall be delivered to
the Company (as designated by the Committee) within 60 days after the
occurrence of the failure of such condition as is established by the Committee
without any payment from the Company.
SECTION 12. OTHER STOCK BASED AWARDS
(a) In addition to granting Options, Stock Appreciation Rights,
Performance Shares, Bonus Stock, Restricted Stock, and Restricted Stock
Units, the Committee shall have authority to grant to Participants Stock
Unit Awards which can be in the form of Common Stock or units with the
precise terms and conditions of each Award to be as specified in the
Award Agreement, with the value of each such Award based, in whole or in
part, on the value of Common Stock. Subject to the provisions of the Plan,
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Stock Unit Awards shall be subject to such terms, restrictions, conditions,
vesting requirements, and payment rules (all of which are sometimes
hereinafter collectively referred to as "rules") as the Committee may
determine in its sole and complete discretion at the time of grant. The
rules need not be identical for each Stock Unit Award.
(b) In the sole and complete discretion of the Committee, a Stock Unit
Award may be granted subject to the following rules:
(1) Any shares of Common Stock which are part of a Stock Unit
Award may not be assigned, sold, transferred, pledged or otherwise
encumbered prior to the date on which the shares are issued or, if later,
the date provided by the Committee at the time of grant of the Stock Unit
Award.
(2) Stock Unit Awards may provide for the payment of cash
consideration by the person to whom such Award is granted or provide
that the Award, and any Common Stock to be issued in connection therewith,
if applicable, shall be delivered without the payment of cash consideration.
(3) Stock Unit Awards may relate in whole or in part to certain
performance criteria established by the Committee at the time of grant.
(4) Stock Unit Awards may provide for deferred payment schedules
and/or vesting over a specified period of employment.
(5) In such circumstances as the Committee may deem advisable,
the Committee may waive or otherwise remove, in whole or in part, any
restriction or limitation to which a Stock Unit Award was made subject at
the time of grant.
(c) In the sole and complete discretion of the Committee, an Award,
whether made as a Stock Unit Award under this Section 12 or as an Award
granted pursuant to Sections 7 through 11, may provide the Participant
with (i) dividends or dividend equivalents (payable on a current or deferred
basis) and (ii) cash payments in lieu of or in addition to an Award.
SECTION 13. CERTAIN PERFORMANCE SHARES, RESTRICTED STOCK,
RESTRICTED STOCK UNITS, BONUS STOCK AND OTHER STOCK BASED AWARDS
(a) Performance-Based Awards shall be subject to the requirements of
this Section 13 in addition to the requirements of Sections 9, 10, 11 and 12
above. To the extent that the requirements of this Section 13 conflict with
the requirements of Sections 9, 10, 11 and 12, the requirements of this
Section 13 shall govern.
(b) The Award Agreement with respect to each Performance-Based
Award shall condition the Participant's right to receive the underlying
compensation (whether payable in Stock or otherwise) on the achievement
of specific numeric targets under one or more Stockholder Approved
Standards; provided further that a Performance-Based Award may be
conditioned upon the achievement either cumulatively or in the alternative
of numeric targets under multiple Stockholder Approved Standards.
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(c) The Committee in its discretion will select a specific Stockholder
Approved Standard(s) and a specific numeric target(s) under such
Stockholder Approved Standard(s) on which a Participant's right to receive
a Performance-Based Award is conditioned.
(d) The Committee will select a specific period of time over which numeric
target(s) of Stockholder Approved Standard(s) must be achieved; provided,
however, that such period of time shall be equal to one year, two years, three
years, or such other period of time as the Committee may in its discretion
select, but in no event shall such period of time be less than six months.
(e) Before the earlier of the lapse of (i) 90 days after the commencement
of the period of service to which a Performance-Based Award relates or (ii)
25% of the period of service to which such Award relates, the Committee will
specify in writing the specific Stockholder Approved Standard(s), numeric
target(s) for such Stockholder Approved Standard(s), and the period of time
over which the numeric target(s) of such Stockholder Approved Standard(s) must
be achieved with respect to such Performance-Based Award.
(f) A Performance-Based Award shall be in an amount calculated as, and
specified in the Award Agreement as, the product of the number of shares
of Common Stock with respect to which such Performance-Based Award is
made multiplied by the Fair Market Value of the Common Stock, or some
multiple of the Fair Market Value of the Common Stock, on the date the
numeric target(s) are achieved under the applicable Stockholder Approved
Standard(s) and any other conditions to receipt of such Performance-
Based Award are satisfied.
(g) The Committee will certify in writing, prior to the lapse of the
restrictions and/or conditions on a Participant's receipt of compensation
under a Performance-Based Award, that the numeric target(s) under the
applicable Stockholder Approved Standard(s) have been achieved; provided,
however, that such certification will be required only if the Committee
concludes that there is a material possibility that such Participant will be
a "covered employee" within the meaning of Section 162(m). The written
certification requirement will be satisfied if approved written minutes are
kept of the meeting of the Committee at which such certification occurs.
(h) The preceding Sections 13(a)-(g) shall not apply to any Performance-
Based Awards the value of which, upon satisfaction of all restrictions
and/or conditions to receipt by the Participant, is dependent solely and
exclusively upon an increase in the Fair Market Value of the Common
Stock between the date of grant and the date that such restrictions and
conditions are satisfied.
SECTION 14. GENERAL PROVISIONS
(a) Withholding.
The Company shall have the right to deduct from all amounts paid to a
Participant in cash (whether under this Plan or otherwise) any taxes
required by law to be withheld in respect of Awards under this Plan. In the
case of payments of incentive Awards in the form of Common Stock, at the
Committee's discretion the Participant may be required to pay to the
Company the amount of any taxes required to be withheld with respect to
such Common Stock, or, in lieu thereof, the Company shall have the right
to retain (or the Participant may be offered the opportunity to elect to
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tender) the number of shares of Common Stock the Fair Market Value of
which equals the amount required to be withheld.
(b) Awards.
Each Award hereunder shall be evidenced in writing, delivered to the
Participant, and shall specify the terms and conditions thereof and any
rules applicable thereto, including but not limited to the effect on such
Award of the death, Disability, Divestiture, Early Retirement, Normal
Retirement or other termination of employment of the Participant and the
effect thereon, if any, of a Change in Control.
(c) Nontransferability.
No Award shall be assignable or transferable except by will or the laws of
descent and distribution, and no right or interest of any Participant shall
be subject to any lien, obligation, or liability of the Participant.
Notwithstanding the above, in the discretion of the Committee, Awards may be
transferable pursuant to a QDRO, as determined by the Committee.
(d) No Right to Employment.
No person shall have any claim or right to be granted an Award, and the grant
of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Company.
(e) Rights as Shareholder.
Subject to the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a shareholder with
respect to any shares of Common Stock to be distributed under the Plan
until he or she has become the holder thereof. Notwithstanding the
foregoing, in connection with each grant of Restricted Stock hereunder,
the applicable Award shall specify that upon the issuance of certificates
with respect to such shares, the Participant or Designated Beneficiary
shall be the owner of such shares as provided herein and in the related
Restricted Stock Agreement, Restricted Stock Unit Agreement, Bonus Stock
Agreement or Option Stock Agreement and, except as otherwise provided herein
or in any such related Agreement, shall be entitled to full voting, dividend
and distribution rights like any other holder of the Stock as long as such
Participant remains the owner thereof.
(f) Construction of the Plan.
The validity, construction, interpretation, administration and effect of the
Plan and of its rules and regulations, and rights relating to the Plan, shall
be determined solely in accordance with the laws of the state of Texas. If
any provision of the Plan should be found by any court of competent
jurisdiction to be invalid, illegal or unenforceable, in whole or in part,
such declaration shall not affect the validity, legality or enforceability of
any remaining provision or portion thereof, which remaining provision or
portion shall remain in full force and effect as if the Plan had been adopted
with the invalid, illegal or unenforceable provision or portion thereof
eliminated.
(g) Effective Date and Term of Plan.
15
<PAGE>
Subject to the approval of the shareholders of the Company, the Plan shall
be effective on October 23, 1995; provided, however, that no Stock,
rights or Options may be sold, awarded or granted under the Plan until a
Registration Statement under the Securities Act covering the shares of
Stock to be issued under the Plan has become effective. Any rights,
Options or Stock granted hereunder shall be granted subject to approval
of this Plan by the shareholders of the Company.
No Awards may be granted under the Plan after December 31, 2005;
however, all previous Awards made that have not expired under their
original terms at the time the Plan expires will remain outstanding.
(h) Amendment of Plan.
The Board of Directors or the Committee may amend, suspend, or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without shareholder approval if such approval
is necessary to comply with any tax or regulatory requirement, including for
these purposes any approval requirement which is a prerequisite for
exemptive relief under Section 16(b) of the Exchange Act or under the
performance-based compensation exception to Section 162(m). Notwithstanding
anything to the contrary contained herein, the Committee may amend the Plan
in such manner as may be necessary so as to have the Plan conform with local
rules and regulations.
(i) Amendment of Award.
Any Award 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 light of any additions to or changes in the Code or in the regulation
issued thereunder, or any federal or state securities law or other law or
regulations, which change occurs after the Date of Grant and by its terms
applies to the Award; or (ii) other than in the circumstances described in
clause (i), with the consent of the Participant.
(j) Exemption from Computation of Compensation for Other Purposes.
By acceptance of shares of Stock sold or awarded or rights or Options
granted under this Plan, each Participant shall be deemed to agree that it
is special incentive compensation and that it will not be taken into account
as "wages" or "salary" in pension, retirement, life insurance or other
employee benefit plans or arrangements of the Company, except as otherwise
determined by the Company. In addition, each Designated Beneficiary of a
deceased Participant shall be deemed to agree that such Award or grant will
not affect the amount of any life insurance coverage available under any life
insurance plan covering employees of the Company.
(k) Termination.
Unless earlier terminated by the Board of Directors or the Committee, the
Plan shall terminate at 11:59 p.m. on December 31, 2005. No shares of
Stock shall be sold or issued (except to the extent issued in connection
with rights or Options previously granted hereunder) or rights or Options
granted hereunder after such date. The termination of the Plan, however,
shall not affect any restrictions previously imposed on shares of Stock
issued pursuant to the Plan or alter the rights of Participants with respect
16
<PAGE>
to rights or Options granted or shares of Stock issued (including Unvested
Stock) pursuant to the Plan.
(l) Legend.
In order to enforce the restrictions imposed upon shares of Stock sold or
awarded hereunder, the Committee may cause a legend or legends to be placed
on any certificates representing such shares, which legend or legends shall
make appropriate reference to the restrictions imposed hereunder.
(m) Certain Participants.
All Award Agreements for Participants who are subject to Section 16(b) of
the Exchange Act shall be deemed to include such additional limitations,
terms, and provisions as Rule 16b-3 then requires unless the Committee
determines that any such Award should not comply with the requirements
of Rule 16b-3. All Performance-Based Awards shall be deemed to include
such additional limitations, terms and provisions as are necessary to
comply with the performance-based compensation exemption to Section
162(m). Unless the Committee determines that an Award to an Executive
Officer is not intended to qualify for the exemption for performance-based
compensation under Section 162(m) or unless (and then only to the
extent) the requirements of Section 162(m) change, (a) an Award of a
Stock Option shall have an exercise price (and Award of a Stock
Appreciation Right shall have a specified price fixed by the Committee)
equal to the Fair Market Value of a share of Stock on the Date of Grant of
the Award, (b) the period over which the performance objectives of the
Award must be satisfied shall not be shorter than six months, (c) the
performance objectives applicable to an Award for an Executive Officer
shall be based on one or more of the Stockholder Approved Standards;
and (d) the Award shall be subject to any additional requirement of Section
162(m).
(n) Restriction on Awards.
If a Participant has received a hardship distribution from a plan maintained
by the Company and qualified under Section 401(a) of the Code with a Section
401(k) cash or deferred arrangement that permits hardship withdrawals, then
such Participant must suspend all elective and employee contributions under
the Plan, to the extent required by regulations promulgated by the United
States Department of the Treasury pursuant to and in respect of provisions of
the Code or by the Internal Revenue Service's interpretation thereof, for 12
months following the hardship distribution.
(o) Change in Control.
The Committee shall, in its sole discretion, have the right to
accelerate the payment or vesting of any Award and to release
any restrictions on any Awards in the event of a Change in Control.
17
Letterhead of Vinson & Elkins L.L.P.
October 23, 1995
The Southland Corporation
2711 North Haskell Avenue
Dallas, Texas 75204-2906
Re: The Southland Corporation
Common Stock, par value $.0001 per share
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel for The Southland Corporation, a Texas
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of 41,000,000
shares (the "Shares") of its common stock, par value $.0001 per share (the
"Common Stock"), on the Company's Registration Statement on Form S-8 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission (the "Commission") on or about October 23, 1995. The Shares
will be issued pursuant to the terms of the Company's 1995 Stock Incentive
Plan.
We are rendering this opinion as of the time the Registration
Statement becomes effective in accordance with Section 8(a) of the Securities
Act.
In reaching the opinions set forth herein, we have reviewed those
agreements, certificates of public officials, officers of the Company and
other persons, records, documents, and matters of law that we deemed relevant,
including, but not limited to, (a) the Articles of Incorporation and By-Laws of
the Company and (b) resolutions previously adopted by the Board of Directors
of the Company.
Based on and subject to the foregoing and subject further to the
assumptions, exceptions and qualifications hereinafter stated, we are of the
opinion that the Shares, when issued in accordance with the provisions of the
Company's 1995 Stock Incentive Plan as described in the Registration
Statement, will be legally issued, fully paid and nonassessable.
The opinions expressed above are subject in all respects to the
following assumptions, exceptions and qualifications:
<PAGE>
The Southland Corporation
Page 2
October 23, 1995
a. We have assumed that (i) all signatures on all
documents reviewed by us are genuine, (ii) all documents submitted to
us as originals are true and complete, (iii) all documents submitted
to us as copies are true and complete copies of the originals thereof,
(iv) all information submitted to us in the preparation of the
Registration Statement is true and complete as of the date hereof, (v)
each natural person signing any document reviewed by us had the legal
capacity to do so, (vi) each person signing in a representative
capacity any document reviewed by us had authority to sign in that
capacity and (vii) the consideration to be received by the Company for
each Share was equal to or exceeded the par value thereof.
b. The opinions expressed above are limited to the laws
of the State of Texas and the federal laws of the United States of
America.
c. The opinions expressed above speak as of the date
hereof and are limited to the matters expressly set forth herein, and
no opinion is to be implied or inferred beyond such matters.
This opinion may be filed as an exhibit to the Registration Statement.
In giving this consent, we do not admit that we come into the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission promulgated thereunder.
This firm disclaims any duty to advise you regarding any changes in,
or otherwise communicate with you with respect to, the matters addressed
herein.
Respectfully submitted,
/s/ VINSON & ELKINS L.L.P.
Securities and Exchange Commission
450 Fifth Street, Northwest
Washington, D.C. 20549
Attention: Document Control
Re: The Southland Corporation Registration on Form S-8
We are aware that our reports dated April 24, 1995 and July 31, 1995 on our
reviews of interim financial information of The Southland Corporation and
Subsidiaries for the periods ended March 31, 1995 and June 30, 1995,
respectively, and included in the Company's quarterly reports on Form 10-Q
for the quarters then ended are incorporated by reference in this registration
statement on Form S-8. Pursuant to Rule 436(c) under the Securities Act of
1933, these reports should not be considered a part of the registration
statement prepared or certified by us within the meaning of Sections 7 and 11
of that Act.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
October 23, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-8 of our reports, which include an explanatory paragraph describing
the changes in methods of accounting for postemployment benefits and income
taxes in 1993, dated February 23, 1995, on our audits of the consolidated
financial statements and financial statement schedule of The Southland
Corporation and Subsidiaries.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
October 23, 1995
