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Exhibit 10.5
STOCK OPTION AGREEMENT
(Incentive Stock Option)
THIS AGREEMENT is made to be effective as of July 1, 1997 (the "GRANT
DATE"), by and between Dominion Homes, Inc., an Ohio corporation (the
"COMPANY'), and Xxxxxx X. Xxxxx, Xx. (the "OPTIONEE").
WITNESSETH:
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WHEREAS, the Board of Directors of the COMPANY adopted its Incentive
Stock Plan (the "PLAN") on February 28, 1994; and
WHEREAS, the shareholders of the COMPANY, upon the recommendation of
the COMPANY's Board of Directors, approved the PLAN on March 3, 1994; and
WHEREAS, pursuant to the provisions of the PLAN, the Board of Directors
of the COMPANY has appointed a committee (the "COMMITTEE") to administer the
PLAN, and the COMMITTEE has determined that an option to acquire common shares,
without par value, of the COMPANY (the "SHARES") should be granted to the
OPTIONEE upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises, the parties hereto
make the following agreement, intending to be legally bound thereby:
1. PLAN as Controlling. All terms and conditions of the PLAN, as it may
be amended from time to time, applicable to options granted thereunder shall be
deemed incorporated herein by reference. A copy of the PLAN as in effect on the
date of this Agreement is attached hereto as Annex A. In the event of any
provision in this Agreement conflicts with any term in the PLAN, the term in the
PLAN shall be deemed controlling.
2. GRANT OF OPTION. The COMPANY hereby grants to the OPTIONEE an option
(the "OPTION") to purchase seven thousand five hundred (7,500) SHARES. The
OPTION is intended to qualify as an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended (the "CODE").
3. TERMS AND CONDITIONS OF THE OPTION.
(A) EXERCISE PRICE. The purchase price (the "EXERCISE PRICE") to be
paid by the OPTIONEE to the COMPANY upon the exercise of the OPTION shall be
$4.75 per SHARE, being 100% of the Fair Market Value (as that term is defined in
the PLAN) of the SHARES on the GRANT DATE.
(B) Exercise of the OPTION. The OPTIONEE may exercise the OPTION, from
time to time and at any time, after the SHARES subject thereto have vested.
Subject to the provisions of the PLAN and the other provisions of this
Agreement, the OPTION shall remain exercisable as to the SHARES subject thereto
which have vested until the date of expiration of the OPTION term. In accordance
with the vesting schedule set forth below, twenty percent (20%) of the SHARES
subject to the OPTION shall vest for the first time on July 1, 1998, and each
July 1 of the subsequent four years:
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Vesting Schedule
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July 1, 1998 July 1, 1999 July 1, 2000 July 1, 2001 July 1, 2002
20% Vested 40% Vested 60% Vested 80% Vested 100% Vested
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Total Total Total Total Total
Number of Number of Number of Number of Number of
SHARES Vested SHARES Vested SHARES Vested SHARES Vested SHARES Vested
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1,500 1,500 1,500 1,500 1,500
The grant of this OPTION shall not confer upon the OPTIONEE any right
to continue in the employment of the COMPANY or any subsidiary nor limit in any
way the right of the COMPANY or a subsidiary to terminate the employment of the
OPTIONEE at any time.
(C) FULL VESTING UPON CHANGE IN CONTROL. Notwithstanding the foregoing,
the OPTION shall fully vest with respect to all SHARES subject thereto upon the
occurrence of a "Change in Control." For purposes of this Agreement, the term
"Change in Control" shall mean the occurrence of any event which results in
either: (a) Xxxxxx Realty Company's failing to own at least thirty percent (30%)
of the combined voting power of the then outstanding voting securities of the
COMPANY entitled to vote generally in the election of directors; or (b) both
Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx ceasing to be directors and officers of the
COMPANY.
(D) OPTION TERM. The OPTION shall in no event be exercisable after the
expiration of ten (10) years from the GRANT DATE.
(E) METHOD OF EXERCISE. The OPTION may be exercised by giving written
notice of exercise to the COMMITTEE in care of the Treasurer of the COMPANY
stating the number of SHARES subject to the OPTION in respect of which it is
being exercised. The OPTIONEE shall be required, as a condition precedent to the
OPTIONEE'S right to exercise the OPTION and at the OPTIONEE'S expense, to supply
the COMMITTEE with such evidence, representations and agreements as the
COMMITTEE may deem necessary or desirable to establish the OPTIONEE'S right to
exercise the OPTION and the propriety of the sale of the SHARES by reason of
such exercise under the Securities Act of 1933, as amended from time to time
(the "Securities Act"), and any other laws or requirements of any governmental
authority. Without limiting the generality of the foregoing, the OPTION shall
not be exercisable unless the sale of the SHARES by reason of such exercise has
been registered under the Securities Act and all other applicable securities
laws of any jurisdiction or unless such sale is exempt from such registration
requirements.
Payment of the EXERCISE PRICE for all such SHARES shall be made to the
COMPANY at the time of the OPTION is exercised in such form as authorized by
Section 6(d) of the PLAN. After payment in full for the SHARES purchased under
the OPTION has been made, the COMPANY shall take all such action as is necessary
to deliver appropriate stock certificates evidencing the SHARES purchased upon
the exercise of the OPTION as promptly thereafter as is reasonably practicable.
(F) SATISFACTION OF TAXES AND TAX WITHHOLDING REQUIREMENTS. The COMPANY
or a subsidiary shall be entitled and is authorized, if the COMMITTEE deems it
necessary or desirable, to withhold (or secure payment from the OPTIONEE in lieu
of withholding) as provided in Section 10(e) of the PLAN. The COMPANY may defer
delivery of any SHARES pursuant to the exercise of the OPTION unless indemnified
to its satisfaction in this regard.
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4. ADJUSTMENTS AND CHANGES IN THE SHARES SUBJECT TO THE OPTION.
(A) In the event that any dividend or other distribution (whether in
the form of SHARES, other securities or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of SHARES or other securities of
the COMPANY, issuance of warrants or other rights to purchase SHARES or other
securities of the COMPANY, or other similar corporate transaction or event
affects the SHARES such that an adjustment is necessary in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the PLAN to the OPTIONEE, then the COMMITTEE shall
proportionately adjust either or both (as necessary) of: (i) the number of
SHARES or other securities of the COMPANY (or number and kind of other
securities or property) subject to the OPTION; and (ii) the EXERCISE PRICE with
respect to the OPTION;
(B) Notwithstanding the foregoing, any and all adjustments in
connection with the OPTION shall comply in all respects with Sections 442 and
424 of the CODE, or any successor provision as in effect from time to time, and
the rules and regulations promulgated thereunder as in effect from time to time.
5. NON-ASSIGNABILITY OF THE OPTION.
(A) During the lifetime of the OPTIONEE, the OPTION shall not be
assignable or transferable and may be exercised only by the OPTIONEE, or, if
permissible under applicable law, by the OPTIONEE's guardian or legal
representative or a transferee receiving the OPTION pursuant to a qualified
domestic relations order ("QDRO"), as determined by the COMMITTEE.
(B) The OPTION may not be assigned, alienated, pledged, attached, sold
or otherwise transferred or encumbered by the OPTIONEE otherwise than by will or
the laws of descent and distribution or pursuant to a QDRO, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the COMPANY or any
subsidiary.
6. EXERCISE AFTER TERMINATION OF EMPLOYMENT
(A) Except as otherwise provided in this Agreement or in the PLAN, the
OPTION: (i) is exercisable only by the OPTIONEE; (ii) is exercisable only while
the OPTIONEE is in the employment of the COMPANY or a subsidiary of the COMPANY
and then only if the OPTION has become exercisable by its terms; and (iii) if
not exercisable by its terms at the time the OPTIONEE ceases to be in the
employment of the Company and its subsidiaries, shall immediately expire on the
date of termination of employment.
(B) Except as otherwise provided in this Section 6, if the OPTION is
exercisable by its terms at the time the OPTIONEE ceases to be in the employment
of the COMPANY, by reason of retirement or otherwise, it must be exercised on or
before the earlier of three months after the date of termination of employment
or the fixed expiration date of the OPTION, after which period the OPTION shall
expire.
(C) In the event of the death of the OPTIONEE while in the employment
of the COMPANY, the unexercised portion of the OPTION (to the extent then
exercisable by its terms) shall be exercisable by his estate for a period ending
on the earlier of the fixed expiration date of the OPTION or twelve months after
the date of death, after which period the OPTION shall expire. For purposes
hereof, the estate of the OPTIONEE shall be defined to include the legal
representative thereof or any person who has acquired the right to exercise the
OPTION by reason of the death of the OPTIONEE.
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(D) In the event of the termination of employment by reason of the
"disability" of the OPTIONEE, the unexercised portion of the OPTION (to the
extent then exercisable by its terms) shall be exercisable by the OPTIONEE for a
period ending on the earlier of twelve months after the termination of
employment or other fixed expiration date of the OPTION. For purposes hereof,
"disability" shall have the same meaning as that set forth for that term in
Section 22(e)(3) of the CODE, or any successor provision as in effect from time
to time.
7. RESTRICTIONS ON TRANSFERS OF SHARES. Anything contained in this
Agreement or elsewhere to the contrary notwithstanding, the OPTION may not be
exercised if the COMMITTEE determines that the sale of SHARES upon exercise of
the OPTION may violate the Securities Act or any other law or requirement of any
governmental authority. An appropriate restrictive legend shall be placed on
certificates representing SHARES acquired upon the exercise of the OPTION,
unless the COMMITTEE determines, upon the advise of counsel to the COMPANY, that
such legend is not required because of the existence of an effective
registration statement registering the SHARES under the Securities Act or
because all applicable federal and state legal requirements have been satisfied.
8. NO RIGHTS OF THE OPTIONEE AS A SHAREHOLDER. The OPTIONEE shall have
no rights as a shareholder of the COMPANY with respect to any SHARES covered by
the OPTION until the date of issuance of a certificate to the OPTIONEE
evidencing such SHARES.
9. GOVERNING LAW. The rights and obligations of the OPTIONEE and the
COMPANY under this Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio (without giving effect to the conflict of
laws principles thereof) in all respects, including, without limitation, matters
relating to the validity, construction, interpretation, administration, effect,
enforcement, and remedies provisions of the PLAN and its rules and regulations,
except to the extent preempted by applicable federal law.
10. RIGHTS AND REMEDIES CUMULATIVE. All rights and remedies of the
COMPANY and of the OPTIONEE enumerated in this Agreement shall be cumulative
and, except as expressly provided otherwise in this Agreement, none shall
exclude any other rights or remedies allowed by law or in equity, and each of
said rights or remedies may be exercised and enforced concurrently.
11. CAPTIONS. The captions contained in this Agreement are included
only for convenience of reference and do not define, limit, explain or modify
this Agreement or its interpretation, construction or meaning and are in no way
to be construed as a part of this Agreement.
12. SEVERABILITY. If any provision of this Agreement or the application
of any provision hereof to any person or any circumstance shall be determined to
be invalid or unenforceable, then such determination shall not affect any other
provision of this Agreement or the application of said provision to any other
person or circumstance, all of which other provisions shall remain in full force
and effect, and it is the intention of each party to this Agreement that if any
provision of this Agreement is susceptible of two or more constructions, one of
which would render the provision enforceable and the other or others of which
would render the provision unenforceable, then the provision shall have the
meaning which renders it enforceable.
13. NUMBER AND GENDER. When used in this Agreement, the number and
gender of each pronoun shall be construed to be such number and gender as the
context, circumstances or its antecedent may require.
14. AMENDMENT, ETC. OF OPTION. The COMMITTEE may waive any conditions
or rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, the OPTION, prospectively or retroactively; provided that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would impair the rights of the OPTIONEE or any holder or
beneficiary of the OPTION shall not to that extent be effective without the
consent of the OPTIONEE, holder or beneficiary.
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15. ENTIRE AGREEMENT. This Agreement, including the PLAN as amended
from time to time incorporated by reference herein, constitutes the entire
agreement between the COMPANY and the OPTIONEE in respect of the subject matter
of this Agreement, and this Agreement supersedes all prior and contemporaneous
agreements between the parties hereto in connection with the subject matter of
this Agreement. No change, termination or attempted waiver of any of the
provisions of this Agreement shall be binding upon any party hereto unless
contained in a writing signed by the party to be charged.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed to be effective as of the date first above written.
COMPANY:
DOMINION HOMES, INC.
By:/s/Xxxx X. Xxxxxxx
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Its: President
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OPTIONEE:
/s/ Xxxxxx X. Xxxxx, Xx.
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Xxxxxx X. Xxxxx, Xx.
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