EXHIBIT 99.3
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of the 1st day of March, 1998, by and between
XXXXXX REALTY TRUST, INC., a Missouri corporation (hereinafter called the
"Company"), and XXXXXXX X. XXXXXX (hereinafter called "Optionee"),
WITNESSETH THAT:
WHEREAS, Optionee is serving as Chief Executive Officer of the Company and,
in connection therewith, the Board of Directors of the Company ("Board of
Directors") desires to grant Optionee a stock option;
NOW, THEREFORE, in consideration of the premises, and of the mutual
agreements hereinafter set forth, it is covenanted and agreed as follows:
1. Grant and Terms of Option. Pursuant to action of the Special Committee
for Employment Agreements of the Board of Directors, which action was taken on
February 27, 1998, effective March 1, 1998 ("Date of Grant"), the Company grants
to Optionee the option to purchase all or any part of fifty thousand (50,000)
shares of the Common Stock of the Company, of the par value of $1.00 per share
("Common Stock") at the purchase price of $10.00 per share. The right to
exercise such option shall be, and is hereby, restricted so that no shares may
be purchased during the first year of the term hereof; that at any time during
the term of this option after the end of the first year from the Date of Grant,
Optionee may purchase up to 20% of the total number of shares to which this
option relates; that at any time during the term of this option after the end of
the second year from the Date of Grant, Optionee may purchase up to an
additional 20% of the total number of shares to which this option relates; and
that at any time after the end of the third year from the Date of Grant,
Optionee may purchase up to an additional 20% of the total number of shares to
which this option relates; that at any time during the term of this option after
the end of the fourth year from the Date of Grant, Optionee may purchase up to
an additional 20% of the total number of shares to which this option relates;
and that at any time after the end of the fifth year from the Date of Grant,
Optionee may purchase up to an additional 20% of the total number of shares to
which this option relates; so that upon the expiration of the fifth year from
the Date of Grant and thereafter during the term hereof, Optionee will have
become entitled to purchase the entire number of shares to which this option
relates. Notwithstanding the foregoing, in the event Optionee's employment is
terminated for any reason other than one described in Paragraph 5, or in the
event the Company shall sell all or substantially all of its assets or is
otherwise liquidated, Optionee may purchase 100% of the total number of shares
to which this option relates so long as such sale or liquidation or termination
occurs prior to the time the option by its own terms would have expired.
Optionee may exercise each portion of the option for a period of five (5) years
after each such portion becomes exercisable as hereinabove set forth. The
purchase price of the shares subject to the option may be paid for (i) in cash,
(ii) in the discretion of the Board of Directors, by tender of shares of Common
Stock already owned by Optionee, or (iii) in the discretion of the Board of
Directors, by a combination of methods of payment specified in clauses (i) and
(ii).
2. Anti-Dilution Provisions. In the event that, during the term of this
Agreement, there is any change in the number of shares of outstanding Common
Stock of the Company by reason of stock dividends, recapitalizations, mergers,
consolidations, split-ups, combinations or exchanges of shares and the like, the
number of shares covered by this option agreement and the price thereof shall be
adjusted, to the same proportionate number of shares and price as in this
original agreement.
3. Registration of Shares. The Company agrees to register under the
Securities Act of 1933, as amended, and any state securities law the issuance of
shares pursuant to any exercise of the option so that, upon such exercise,
Optionee will receive shares which shall not be "restricted securities" as such
term is defined in Rule 144 of the Securities and Exchange Commission.
4. Non-Transferability. Neither the option hereby granted nor any rights
thereunder or under this Agreement may be assigned, transferred or in any manner
encumbered except by will or the laws of descent and distribution, and any
attempted assignment, transfer, mortgage, pledge or encumbrance except as herein
authorized, shall be void and of no effect. The option may be exercised during
Optionee's lifetime only by him.
5. Termination of Employment. In the event Optionee's employment is
terminated on account of death or illness or other physical or mental
incapacity, the option hereby granted may be exercised by Optionee (or
Optionee's successor in interest, if Optionee has died), to the extent Optionee
was entitled to exercise it at the time of such death or termination of
employment at any time within six (6) months after such death or termination,
but not after five (5) years from the date the relevant portion of the option
first becomes exercisable pursuant to Paragraph 1. Any unexercised portion of
the option shall expire at the end of such six (6) month period. In the event
Optionee's employment is terminated for "Cause" (as hereinafter defined) the
option hereby granted shall immediately expire. For purposes of this agreement
the term "Cause" shall mean any of the following:
(a) optionee shall have been adjudged civilly liable for any material
breach of his duties under his employment agreement or of his fiduciary
duties to the Company;
(b) Optionee shall have been convicted of a felony against a person or
property;
(c) Optionee shall have willfully failed to perform his duties under
his employment agreement or be in material breach thereof and such failure
or breach shall have continued for 30 days after written notice thereof
shall have been given to Optionee by the Company; or
(d) The "Adjusted Funds From Operations" of the Company, as defined in
Exhibit A hereto, for the fiscal year ended December 31, 2000, as
determined in good faith by the Company's certified public accountants, is
less than $1,998,710. Nothing herein shall confer on Optionee any right to
continue in the employ of the Company or any subsidiary or interfere in any
way with the right of the Company or any subsidiary thereof to terminate
his employment at any time.
6. Shares Issued on Exercise of Option. It is the intention of the Company
that on any exercise of this option it will transfer to Optionee shares of its
authorized but unissued stock or transfer Treasury shares, or utilize any
combination of Treasury shares and authorized but unissued shares, to satisfy
its obligations to deliver shares on any exercise hereof.
7. Board of Directors Administration. This option has been granted pursuant
to a determination made by the Board of Directors, and the Board of Directors,
subject to the express terms of this option, shall have plenary authority to
interpret any provision of this option and to make any determinations necessary
or advisable for the administration of this option and the exercise of the
rights herein granted, and may waive or amend any provisions hereof in any
manner not adversely affecting the rights granted to Optionee by the express
terms hereof.
8. Option Not an Incentive Stock Option. This option shall not be treated
as an incentive stock option under Section 422 of the Internal Revenue Code of
1986, as amended.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its President, pursuant to due authorization, and Optionee has
signed this Agreement to evidence his acceptance of the option herein granted
and of the terms hereof, all as of the date hereof.
XXXXXX REALTY TRUST, INC.
By /s/ Xxxxxxxx X. Xxxxxx
--------------------------------
President
/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX
EXHIBIT A
"Adjusted Funds From Operations" shall be defined as Funds From Operation "FFO"
as set forth below and as interpreted in the 1991 NAREIT White Paper, adjusted
by adding back to FFO:
1. Expenses incurred for the year ended December 31, 2000 for legal fees
in connection with pending and threatened litigation and related
accruals for estimated litigation losses,
2. Direct out-of-pocket expenses for the year ended December 31, 2000
related to contested shareholder meetings including attorneys',
accountants', other consultants' fees and supplies and postage for
mailings to shareholders, and
3. Deferred compensation expense for the year ended December 31, 2000
recognized in accordance with Section 2(a) of this Agreement and
Section 2(a) of the Xxxxxxx employment agreement also dated March 1,
1998.
Furthermore, net income, as set forth in the definition of FFO below for the
year ending December 31, 2000 will be recognized on the basis of accounting
principles and estimates consistently applied with those utilized for the year
ended December 31, 1997.
Funds From Operations means net income (computed in accordance with generally
accepted accounting principles), excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect funds from operations on the same basis.
