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EXHIBIT 4.6
NO. ___________
REAL TRUST ASSET CORPORATION
1998 STOCK OPTION PLAN
STOCK OPTION AND RIGHTS AGREEMENT
This Agreement confirms the terms of your stock options, dividend
equivalent rights, stock appreciation rights, restricted stock, deferred stock
and/or performance shares, granted to you by Real Trust Asset Corporation, a
Maryland corporation (the "Company") under its 1998 Stock Option and Plan (the
"Plan").
1. Grant of Rights. You have been granted one or more of the following:
(a) stock options (either incentive stock options ("ISOs") or
non-statutory stock options ("NOS")) (the "Option" or "Options");
(b) dividend equivalent rights ("DERs");
(c) stock appreciation rights ("SARs"); or,
(d) restricted stock, deferred stock or performance shares awards
(collectively, AShare Awards@).
(Options, DERs, SARs and Share Awards are referred to collectively as the
"Rights"), in any combination, as reflected in the attached schedule ("Annex
A"). The Company will amend Annex A from time to time to reflect changes to the
amounts, the vesting dates, the exercise prices and the expiration dates of the
Rights. The most recent amendment of Annex A will replace any prior schedules.
2. Stock Options.
(a) An "Option" is the right to purchase a specified number of shares
(the "Underlying Shares") of the Company's Common Stock during a defined period
of time at a specified price. The Option will be characterized as either an ISO
or an NSO for tax purposes as follows:
(I ISO.
A. An "ISO" is an option granted to an individual for any
reason connected with his or her employment by a corporation, as more fully
described in Section 422(b) of the Code. The principal benefit of an ISO is that
the recipient is not taxed on the receipt or exercise of the ISO; any tax is
imposed as capital gain when the employee sells the stock received on the
exercise of a qualifying ISO. Only actual Employees of the Company may receive
ISOs (officers are generally deemed employees for this purpose.)
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B. If you do not exercise an ISO for at least two years
from the date of the grant, you will not be taxed upon the exercise of the ISO,
but will be taxed only on the sale of the Stock. If you exercise the ISO within
two years from the date of the grant, the gain between the exercise price and
the fair market value of the Stock on the date of exercise will be taxed as
ordinary income.
C. The sale of the Stock for an amount greater than the
exercise price of the ISO will be taxable to you as either ordinary income or
long term capital gain, depending on the amount of time that has passed since
the date the Option was exercised. If you sell your Stock less than 12 months
from the date of exercise of the Option, any gain on the sale will be taxed at
ordinary income tax rates of up to 39.6% (plus any applicable state income
taxes). If you sell your stock more than 12 months, but fewer than 18 months
from the date of exercise of the Option, any gain on the sale over your basis
will be taxed as long term capital gain at a maximum rate of 28% (plus any
applicable state income taxes). If you sell your stock more than 18 months from
the date of exercise of the Option, any gain on the sale over your basis will be
taxed as long term capital gain at a maximum rate of 20% (plus any applicable
state income taxes).
D. The excess, if any, of the fair market value of the
shares of the Stock on the date of exercise over the Exercise Price will be
treated as a tax preference item for federal income tax purposes and, depending
upon your own personal income tax situation, you may be subject to the
alternative minimum tax in the year of exercise.
E. You must notify the Company of the early exercise of
the Option or disposition of the Underlying Shares acquired within thirty (30)
days.
(ii) NSO.
A. An "NSO" is any option other than an ISO, including an
Option initially granted as an ISO but with respect to which not all of the
statutory requirements have been met. If the Option is an NSO, you may be
subject to regular federal and state income tax liability upon the exercise of
the Option. You will be treated as having received compensation income (taxable
at ordinary income tax rates) equal to the excess, if any, of (A) the fair
market value of the Stock at the close of trading on the business day before the
date of exercise over (B) the Exercise Price.
B. If you sell the Underlying Shares on the same day that
you exercise them, fair market value will be the actual price per share at which
you sell the Underlying Shares. In all other cases, the fair market value will
be the price per share at the close of trading on the business day before the
date of exercise.
C. If you are an Employee of the Company, the Company may
be required to withhold from your compensation or collect from you and pay to
the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise. If you sell your Stock less than 12
months from the date of exercise of the Option, any
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gain on the sale will be taxed at ordinary income tax rates of up to 39.6% (plus
any applicable state income taxes). If you sell your stock more than 12 months,
but fewer than 18 months from the date of exercise of the Option, any gain on
the sale will be taxed as long term capital gain at a maximum rate of 28% (plus
any applicable state income taxes). If you sell your stock more than 18 months
from the date of exercise of the Option, any gain on the sale will be taxed as
long term capital gain at a maximum rate of 20% (plus any applicable state
income taxes).
D. Upon the sale of the Stock, any appreciation in the
value of the Stock from date the Option was exercised is taxable to you as
either ordinary income or long term capital gain, depending on the amount of
time that has passed since the date the Option was exercised.
(b) This is only is a brief summary of some of the federal and state
income tax consequences relating to the exercise of a stock option and the
disposition of the Underlying Shares. THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. YOU SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE UNDERLYING SHARES SO THAT YOU WILL FULLY UNDERSTAND THE TAX
CONSEQUENCES BASED ON YOUR PARTICULAR SITUATION.
(c) If you decide to exercise your Options to purchase the Underlying
Shares, the exercise price will be the price per share shown on Annex A.
(d) You may exercise your Options as they vest. For each annual period
over a five-year period that the Company delivers a total return (stock price
appreciation, warrant value appreciation and dividends) to investors in the
Company=s initial public offering equal to or exceeding 20%, one-third of the
Options will vest until all granted Options shall have vested. Alternatively, if
at any time prior to the end of the five-year period the total return to
investors equals or exceeds 100%, all of the Options shall vest. Such automatic
grants of Options vest 25% on the anniversary date in the year following the
date of the grant and 25% on each anniversary date thereafter. The minimum
exercise amount is at least one hundred (100) shares at a time. You may exercise
your Options by giving the Company written notice of the number of Shares that
you wish to exercise. Payment of the Purchase Price may be made in any manner
permitted under the Plan (including payment to the Company out of the settlement
from the sale of the Shares or, at the Company's discretion, by a loan or
extension of credit from the Company to you evidenced by a full recourse
promissory note). The Shares will be issued only upon the Company's receipt of
the full exercise price.
(e) Your Option will terminate if not exercised within ten (10) years
from the date of the grant. In addition, you may not exercise your Option if:
(i) three (3) months has passed since the date of your Termination of Employment
by reason of Retirement or termination by the Company; or (ii) one (1) year has
passed since the date of your Termination of Employment by reason of death or
Disability.
(f) You will not have any rights as a shareholder with respect to any of
the Underlying Shares of the Options until after both of the following: (i) you
have exercised your Options as described above and (ii) the Company has issued
and delivered to you a certificate representing the
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Underlying Shares. You will not be entitled to receive dividends or other rights
for which the record date is prior to the date such stock certificates are
issued.
(g) You may sell the Underlying Shares you receive upon exercise of your
Options immediately, unless legal counsel to the Company determines that the
sale would violate federal or state securities laws.
(h) For purposes of this Agreement, fair market value will be the price
per Share at the close of business on the Business Day preceding the exercise of
the Right, unless the Shares are not currently traded on an exchange, in which
case fair market value will be determined as provided in the Plan.
3. Description of other Rights.
The following is a summary description of the other various Rights that
you may have been granted:
(a) DERs. A "DER" is a right to receive either (i) cash or (ii) accrued
rights, in an amount equal to the dividend distributions paid on a share of
common stock. There are no tax consequences to you on the receipt of the DER.
Any cash paid to you will be taxable as compensation income. You must make your
election to receive cash or accrued rights prior to the first DER distribution
and may change it at anytime prospectively by giving notice to the Company. You
will begin to receive cash payments equal to the dividends paid on a Share or to
accrue accrued rights on your DER as of the next dividend distribution following
the date of issuance of the DER.
(b) SARs. An "SAR" is an unfunded deferred obligation of the Company to
pay the recipient of the SAR upon exercise an amount of cash equal to the
excess, if any, of (i) the fair market value of a share at the time of exercise
of the SAR over (ii) the fair market value at the time that the SAR was issued
(or such other stated value as set forth on Annex A). There are no tax
consequences to you upon the grant of an SAR. When you exercise your SAR and
receive cash, you will have ordinary compensation income. If you are an
Employee, your employer may be required to withhold from your compensation or
collect from you and pay to the applicable taxing authorities an amount equal to
a percentage of this compensation income.
(c) Share Awards. The Company may grant Share Awards in the form of
Restricted Stock, Deferred Stock and/or Performance Shares. All such Share
Awards are subject to certain ownership restrictions during specified time
periods (the ARestricted Period@). With respect to the Restricted Stock and
Performance Share Awards, you will generally have all the voting rights of a
stockholder of the Company, including the right to receive dividends, during the
Restricted Period. With respect to the Deferred Stock Awards, you will generally
not have the voting rights of a stockholder of the Company during the Restricted
Period, but will be entitled to dividends during such period.
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(d) The Rights described in this Section vest immediately with the
exception of Related Stock Appreciation Rights (as defined in the Plan) which
vest after six months, unless otherwise stated in Annex A (DERs granted with the
issuance of convertible preferred stock are generally not effective until and
unless the preferred stock is converted into common stock.)
(e) The Rights will terminate if either (i) three (3) months has passed
since the date of your Termination of Employment by reason of Retirement or by
the Company; or (ii) One (1) year has passed since the date of your Termination
of Employment by reason of death or Disability. In the case of Share Awards, any
Termination of Employment during the Restricted Period will result in the
forfeiture of your shares in exchange for the amount, if any, paid to the
Company for such shares plus simple interest on such amount at the rate of 8%
per year.
4. Transferability.
Unless the Company otherwise consents in writing, the Rights (i) shall
be non-assignable and non-transferable, either voluntarily or by operation of
law, except pursuant to a qualified domestic relations order or by will or by
operation of the laws of descent and distribution, (ii) shall not be pledged or
hypothecated in any way, and (iii) shall be exercisable during your lifetime
only by you. Except as otherwise provided in this Agreement, any attempted sale,
transfer, pledge or assignment of any type, whether voluntary or involuntary,
with respect to all or any part of the Rights, shall be null and void and, at
the Company's option, shall cause all of your Rights to terminate. Any transfer,
other than those described in clauses (i), (ii), (iii) above, even if consented
to by the Company, may cause your Options not to be ISOs.
5. Effect of a Reorganization.
Any Rights awarded to you under this Agreement shall be proportionately
adjusted in the event of a stock split or recapitalization. Upon the occurrence
of a Change in Control (as defined in the Plan), dissolution, or liquidation of
the Company, all outstanding Rights shall automatically become fully vested and
exercisable and you will have fifteen days in which to exercise your Rights
before they terminate (unless, with respect to a change in control, the Rights
are being assumed by the successor company).
4. Notices.
You should address any notice to the Company in care of Xx. Xxxxxx X.
Xxxxxx, Chief Financial Officer. The Company will address any notice to you at
the address then currently on file with the Company. Notice shall be deemed
given when mailed in a correctly stamped and addressed envelope.
5. Miscellaneous.
(a) The Company has provided you with a copy of the Plan. The Company
assumes that
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you have read and understood the Plan prior to entering into this Agreement. The
terms and definitions of the Plan are incorporated into this Agreement. The
terms of the Plan will control if there is any conflict between the terms of
this Agreement and the Plan.
(b) The Company's Stock Option Committee has the power to interpret the
Plan and this Agreement and all actions taken and all interpretations and
determinations made by the Committee are final and binding.
(c) This Agreement and the Plan constitute the entire agreement between
the Company and you, and supersedes any prior agreements, relating to the
Options.
(d) This agreement may be exercised in two or more counterparts,
including electronically transmitted counterparts, all of which shall constitute
one and the same agreement.
(e) This Agreement shall be governed by and construed under the laws of
the State of Maryland.
6. Signatures
By signing on the line indicated below, you indicate your willingness to
abide by and be bound by the terms of this Agreement and the Plan.
REAL TRUST ASSET CORPORATION.,
A Maryland corporation
Date: By:
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Xxxx Xxx, President
RECIPIENT OF GRANT
Date: Name:
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Address:
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Tax ID No.:
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Signature:
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