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AWARD AGREEMENT
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THIS AWARD AGREEMENT (the "Agreement") is entered into as of the 1st
day of June 1998 (hereinafter referred to as the "Date of Grant"), by and
between XXXXX X. XXXXXXX (the "Optionee") and LINCOLN HERITAGE CORPORATION, a
Texas corporation (f/k/a National Prearranged Services of Texas, Inc., the
"Company").
WHEREAS, the Company has adopted the Lincoln Heritage Corporation 1998
Long-Term Incentive Plan (the "Plan"), which Plan is incorporated by
reference and made a part of this Agreement,
WHEREAS, the Plan provides for the grant of options to the Optionee as
an inducement to the Optionee to serve on the Board of Directors of the
Company (the "Board").
NOW, THEREFORE, in consideration of the mutual covenants of the parties
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Option. The Company hereby confirms the grant to
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the Optionee the right and option (the "Option") to purchase, on the terms
and conditions hereinafter set forth, 50,000 shares (the "Option Shares") of
common stock, $0.01 par value, of the Company (the "Common Stock"). The
purchase price of the Option Shares shall be $3.75 per share (the "Exercise
Price"), subject to adjustments as herein provided. This Option is intended
to be treated as a Non-Qualified Stock Option. Unless otherwise provided
herein, capitalized terms shall have the meanings ascribed to such terms in
the Plan.
2. Vesting. Subject to the provisions of Paragraph 4 hereof,
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the Option will vest and become exercisable as to one-quarter of the Shares
on the first anniversary of the Date of Grant, and thereafter as to the next
one-quarter of the Shares on the second anniversary of the Date of Grant, and
as to the next one-quarter of the Shares on the third anniversary of the Date
of Grant, and as to the remaining one-quarter of the total shares specified
in Paragraph 1 hereof on the fourth anniversary of the Date of Grant, which
amounts shall accumulate from year to year for the full term hereof to the
extent not previously exercised, so long as the Optionee is continuously
serving on the Board or on the Board of Directors of any of its subsidiaries,
as of such dates. Notwithstanding the foregoing, all Options granted
hereunder shall vest immediately upon a "Change in Control" of the Company.
3. Exercise of Option.
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(a) Subject to the provisions of Paragraph 4 hereof, the Option
will remain exercisable until the earlier of (i) 30 days following the
termination of the Optionee's serving on the Board or on the Board of
Directors of any of its subsidiaries (other than by reason of death in
which event the Option shall remain exercisable for 90 days following
the Optionee's death) or a Deemed Exercise (as defined in Section 4
hereof) or (ii) the tenth (10th) anniversary of the Date of Grant (the
"Expiration Date"); provided, however, in no event shall this Option be
exercisable after the tenth (10th) anniversary of the Date of Grant.
This Option may be exercised with respect to whole Option Shares only.
(b) To the extent then vested as set forth in Paragraph 2
above, this Option may be exercised by delivering to the Company at its
principal executive office written notice of intent to so exercise.
Such notice shall specify the number of Option Shares for which the
Option is being exercised and shall be accompanied by payment in full
of the Exercise Price and any applicable
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taxes or like requirements pursuant to Section 10 hereof. Such payment
shall be made in cash or by certified check, bank draft or postal or
express money order payable to the order of the Company, or, with the
consent of the Committee, in whole or in part in Common Stock, valued at
Fair Market Value (which Common Stock must have been owned by the
Optionee for at least 180 days).
(c) Notwithstanding any other provision of the Plan or this
Agreement to the contrary, this Option may not be exercised prior to
the completion of any registration or qualification of the shares of
Common Stock to be received upon exercise of the Option under
applicable state and Federal securities or other laws, or under any
ruling or regulation of any governmental body or national securities
exchange that the Committee shall with reasonable discretion determine
to be necessary or advisable.
(d) Upon the valid exercise of the Option as to any of the
shares of Common Stock subject thereto, the Secretary of the Company or
the Company's transfer agent shall issue a certificate in the
Optionee's name for such shares of Common Stock. However, the Company
shall not be liable to the Optionee for damages relating to any
reasonable delays in issuing such certificate to the Optionee, any loss
of the certificate or any mistakes or errors in the issuance of the
certificate itself.
4. Exercisability Upon Change in Control of the Company or
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Death, Retirement, Termination or Suspension of Employment. If the Optionee's
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service on the Board or on the Board of Directors of any of its subsidiaries
terminates for any reason, any unvested Option held by the Optionee shall be
immediately forfeited and any vested Option held by such Optionee shall
continue to be exercisable according to the provisions of Paragraph 3 hereof;
provided, however, that in the event of a Change in Control, any outstanding
Option held by the Optionee shall become immediately and fully exercisable or
payable according to the following terms:
(a) The Option shall become immediately and fully exercisable,
and shall remain exercisable until it would otherwise terminate in
accordance with its terms.
(b) During the six-month and seven-day period from and after a
Change in Control (the "Exercise Period"), the Optionee shall have the
right, in lieu of the payment of the Exercise Price per share of Common
Stock being purchased under the Option and by giving notice to the
Committee, to elect to receive cash, within the Exercise Period, in
lieu of exercise thereof (a "Deemed Exercise"), provided that if the
Optionee is a Reporting Person, either (i) the Option grant was
approved by the Board or the Committee or (ii) more than six (6) months
have elapsed from the grant thereof, to surrender all or part of the
Option to the Company and to receive in cash, within 30 days of such
notice, an amount equal to the amount by which the Change in Control
Price (as hereinafter defined) per share of Common Stock on the date of
such election shall exceed the Exercise Price per share of Common Stock
under the Option multiplied by the number of shares of Common Stock
granted under the Option as to which the right granted under this
subparagraph 4(b) shall have been exercised. Change in Control Price
shall mean the higher of (i) (A) for any period during which Common
Stock shall be listed for trading on a national securities exchange,
the highest closing price per share of Common Stock on such exchange as
of the close of such trading day, (B) for any period during which
Common Stock shall not be listed for trading on a national securities
exchange, but when Common Stock shall be authorized as a Nasdaq
National Market security, the highest price per share as quoted by the
Nasdaq, (C) for any period during which Common Stock shall not be
listed for trading on a national securities exchange or authorized as a
Nasdaq National Market security, but when Common Stock shall be
authorized as a Xxxxxx
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XxxxxXxx Xxxxxx security, the highest average of the high bid and low
asked prices as reported by the Nasdaq or (D) the highest market price
per share of Common Stock as determined by a nationally recognized
investment banking firm selected by the Committee in the event neither
(A), (B) nor (C) above shall be applicable, in each case during the
60-day period prior to and ending on the date of the Change in Control,
and (ii) if the Change in Control is the result of a transaction or
series of transactions described in clauses (i), (iii), (iv) or (v) of
the definition of "Change in Control" in the Plan, the highest price per
share of Common Stock paid in such transaction or series of transactions
(which in the case of paragraph (i) shall be the highest price per share
of Common Stock as reflected in a Schedule 13D by the person having made
the acquisition).
5. No Right to Continued Board Membership. This Option shall
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not confer on the Optionee any right to continue serving on the Board or on
the Board of Directors of any of its subsidiaries nor shall this Agreement
limit in any way the Company's or any subsidiary's right to terminate or
change the terms of the Optionee's service on the Board or on the Board of
Directors of any of its subsidiaries.
6. Transferability. Except as required by law or for
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transfers to a Permitted Transferee, this Option is not transferable or
assignable by an Optionee other than by will or the laws of descent and
distribution. Unless otherwise provided by the Board or the Committee,
during the Optionee's lifetime, the Option shall be exercisable only by the
Optionee or a Permitted Transferee, as the case may be.
7. Death of Optionee. Following the death of the Optionee,
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this Option shall be exercisable to the extent provided in Paragraph 4 by the
Optionee's executor or administrator, or a Permitted Transferee, as the case
may be, or the person or persons to whom the Optionee's rights under this
Agreement shall pass by will or by the laws of descent and distribution, as
the case may be. Any heir or legatee of the Optionee shall take rights
herein granted subject to the terms and conditions hereof. No such transfer
of this Option to heirs or legatees of the Optionee shall be effective to
bind the Company unless the Company shall have been furnished with written
notice thereof and a copy of such evidence as the Committee may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions hereof.
8. Adjustments Upon Changes in Capitalization, Etc. In the
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event of the payment of a stock dividend, a split-up or consolidation of
shares, or any like capital adjustment of the Company occurring after June 1,
1998, then to the extent the Option hereunder remains outstanding and
unexercised, there shall be a corresponding adjustment as to the number of
shares covered under this Option, and in the Exercise Price per share, to the
end that the Optionee shall retain a proportionate interest without change in
the total Exercise Price under this Option.
9. Forfeiture of Option. The Optionee shall forfeit all
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unexercised Options if he competes with the business of the Company or any
subsidiary of the Company, engages in any activity adverse to the best
interests of the Company or any subsidiary of the Company or uses any of the
trade secrets or confidential information of the Company or any subsidiary of
the Company. The non-competition restriction contained in this Paragraph 9
may be waived by the Company in writing as to delineated services rendered by
the Optionee to certain specified individuals and/or entities.
10. Withholding. The Optionee agrees to make appropriate
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arrangements with the Company for satisfaction of any applicable Federal,
state or local income tax, withholding requirements or like requirements,
including the payment to the Company at the time of exercise of the Option of
all such taxes and requirements.
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11. Securities Laws; Legend on Certificates. Upon the
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acquisition of any shares of Common Stock pursuant to the exercise of this
Option, the Optionee will enter into such written representations, warranties
and agreements as the Company may reasonably request in order to comply with
applicable securities laws or with this Agreement. The certificates
representing the shares of Common Stock purchased by exercise of this Option
may be stamped or otherwise imprinted with a legend in such form as the
Company or its counsel may require with respect to any applicable
restrictions on sale or transfer and the stock transfer records of the
Company may reflect stop-transfer instructions with respect to such shares of
Common Stock.
12. Notices. Any notice necessary under this Agreement shall
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be addressed (a) to the Company in care of its Secretary at the principal
executive office of the Company in Austin, Texas, (b) to the Optionee at the
address appearing in the personnel records of the Company for such Optionee
or (c) to either party at such other address as either party hereto may
hereafter designate in writing to the other. A notice shall be deemed to
have been given (i) as of the day when the notice is personally delivered,
(ii) three days after being deposited with the United States mail properly
addressed, (iii) the next day after being delivered during business hours to
said overnight delivery service for next day delivery, properly addressed and
prior to such delivery service's cutoff time for next day delivery, or (iv)
the day when receipt of the telecopy is confirmed, as the case may be.
13. Choice of Law. The interpretation, performance and the
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enforcement of this Agreement shall be governed by the laws of the State of
Texas.
14. Amendment of Agreement. No waiver, modification or
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amendment of any provision of this Agreement shall be effective unless
specifically made in writing and duly signed by the parties hereto.
15. Severability. If any provision of this Agreement is held
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by a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions shall nevertheless continue in full force and effect
to the greatest extent possible and without being impaired or invalidated in
any way.
16. Counterparts. This Agreement may be executed in one or
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more counterparts, and each of such counterparts shall, for all purposes, be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
the date and year first above written.
LINCOLN HERITAGE CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
OPTIONEE:
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
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