EXHIBIT 99.4
EXHIBIT D
INCENTIVE STOCK OPTION AGREEMENT
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THIS AGREEMENT dated as of the 16th day of June,1999, between Anworth
Mortgage Asset Corporation, a Maryland corporation (the "Corporation"), and
Xxxxxxx X. Xxxxxx (the "Employee").
W I T N E S S E T H:
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WHEREAS, pursuant to the Anworth Mortgage Asset Corporation 1997 Stock
Option and Awards Plan, as amended (the "Plan"), the Corporation has granted to
the employee, effective as of April 16, 1999 (the "Award Date"), an option to
purchase all or any part of 5,000 authorized but unissued or treasury shares of
Common Stock, $.01 par value, of the Corporation upon the terms and conditions
set forth herein and in the Plan.
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties agree as
follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
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defined herein shall have the meaning assigned to such terms in the Plan.
2. Grant of Option. This Agreement evidences the Corporation's grant
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to the Employee of the right and option to purchase, on the terms and conditions
set forth herein and in the Plan, all or any part of an aggregate of 5,000
shares of the Common Stock at the price of $4.60 per share (the "Option"),
exercisable from time to time, subject to the provisions of this Agreement and
the Plan, prior to the close of business on the day before the tenth anniversary
of the Award Date (the "Expiration Date"). Such price slightly exceeds the Fair
Market Value of the Corporation's Common Stock as of the Award Date. It is the
intent of the Corporation that this Option constitute an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended ("Code").
[3. Dividend Equivalent Rights.
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(a) Pursuant to Section 5(k) of the Plan, the Administrator
hereby grants to the Employee Accrued DERs, which shall be accrued with
respect to one-quarter of the number of shares set forth in Section 2 that
have not been purchased by the Employee pursuant to the Option as of the
date dividends are declared on the Corporation's Common Stock. Accrued
DERs shall also be accrued with respect to Accrued DERs which, at the date
dividends are declared on the Corporation's Common Stock, had previously
accrued with respect to such Common Stock pursuant to this Agreement.
(b) Accrued DERs as described in subsection (a) above shall be
accrued in accordance with the following formula:
(A x B) / C
under which "A" equals one-quarter of the number of shares subject to
the Option (including Accrued DERs which had previously accrued), "B"
equals the cash dividend per share or the value per share of the
Common Stock or other property being distributed, as the case may be
and "C" equals the Fair Market Value per share of Common Stock on the
dividend payment date.
(c) The Accrued DERs shall represent shares of Common Stock which
shall be issuable to the Employee proportionately as the Employee exercises
the Option.
(d) Notwithstanding anything to the contrary herein, Accrued DERs
granted with respect to the Option shall be accrued only to the extent of
the number of shares of Common Stock then reserved and available for
issuance under the Plan in excess of the number of shares subject to
issuance pursuant to outstanding Stock Option, Accrued DER, Stock
Appreciation Right, Limited Stock Appreciation Right, Deferred Stock or
Performance Share awards.
(e) Accrued DERs accruing hereunder shall expire on the
expiration of the Option pursuant to the terms of this Agreement.
(f) Any Common Stock issued to the Employee which is attributable
to accrued DERs shall not constitute an Incentive Stock Option within the
meaning of Section 422 of the Code. The tax consequences to the Employee
of any such Common Stock attributable to accrued DERs which is issued to
the Employee shall be determined under the rules provided in Section 83 of
the Code.]
4. Exercisability of Option. Except as earlier permitted by or
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pursuant to the Plan or by resolution of the Committee adopted after the date
hereof, no shares may be purchased by exercise of the Option until the
expiration of thirty-six months after the Award Date. The Option may be
exercised as to 100% of the aggregate number of shares set forth in Section 2
hereof [subject to adjustment in the number of shares for Accrued DERs pursuant
to Section 3 hereof and pursuant to Section 3(c) of the Plan] on and after the
third anniversary of the Award Date.
To the extent the Employee does not in any year purchase all or any
part of the shares to which the Employee is entitled, the Employee has the right
cumulatively thereafter to purchase any shares not so purchased and such right
shall continue until the Option terminates or expires. Fractional share
interests shall be disregarded, but may be cumulated. No fewer than 1,000
shares may be purchased at any one time, unless the number purchased is the
total number at the time available for purchase under the Option.
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5. Limitation on Exercise of Option. In the event the Employee is
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granted incentive stock options (whether under this Agreement or any other
incentive stock option agreement) and the aggregate fair market value
(determined as of the respective dates of grant of such options) of the Common
Stock with respect to which such options are first exercisable in any calendar
year exceeds $100,000, the most recently granted options shall be treated as
nonqualified stock options to the extent of the excess. In addition, in the
case of simultaneously granted options, the Corporation may, in the manner and
to the extent permitted by law, designate which shares are to be treated as
stock acquired pursuant to the exercise of an incentive stock option.
6. Method of Exercise of Option.
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(a) The Option shall be exercisable by the delivery to the
Corporation of a written notice stating the number of shares to be
purchased pursuant to the Option and accompanied by payment made in
accordance with and in a form permitted in Section 5(c)(iv) of the Plan for
the full purchase price of the shares to be purchased, subject to such
further limitations and rules or procedures as the Administrator may from
time to time establish as to any non-cash payment. Shares delivered in
payment of the exercise price must have been owned by Employee for at least
six months prior to the exercise. In addition, the Employee shall furnish
any written statements required pursuant to Section 11(a) of the Plan.
(b) The Corporation may require that the Employee enter into an
arrangement providing for the payment by the Employee to the Corporation of
any tax withholding obligation of the Corporation arising by reason of (1)
the exercise of the Option; (2) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise; or (3)
the disposition of shares acquired upon such exercise.
7. Conditions to Exercise. Notwithstanding anything to the contrary
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contained herein, the Option may not be exercised unless the shares issuable
upon exercise of the Option are then registered under the Securities Act of
1933, as amended (the "Securities Act") or, if such shares are not then so
registered, the Corporation has determined that such exercise and issuance would
be exempt from the registration requirements of the Securities Act. If the
Corporation, in its sole discretion, shall determine that it is necesary to
comply with applicable securities laws, the certificate or certificates
representing the shares issuable upon exercise of the Option shall bear an
appropriate legend in form and substance, as determined by the Corporation,
giving notice of applicable restrictions on transfer under or in respect of such
laws.
8. Effect of Termination of Employment or Death: Change in Subsidiary
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Status. The Option and all other rights hereunder, to the extent not exercised,
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shall terminate and become null and void at such time as the Employee ceases to
be employed by either the Corporation or any Subsidiary, except that:
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(a) if the Employee voluntarily terminates or resigns, the
Employee may at any time within a period of three months after such
termination exercise the Option to the extent the Option was exercisable at
the date of such termination;
(b) if the Employee terminates by reason of becoming permanently
and totally disabled (within the meaning of Code Section 22(e)(3)), then
the Option shall, to the extent not theretofore exercised, fully vest and
may be exercised within a period of one year after the Employee's
termination from employment;
(c) if the Employee dies prior to a termination of employment, or
within three months after a termination of employment under subsection (a)
or (b) above, then the Option shall, to the extent not theretofore
exercised, fully vest and may be exercised within a period of one year
after the Employee's termination from employment pursuant to the provisions
of Section 5(g) of the Plan;
provided, however, that in no event may the Option be exercised by anyone under
this Section 8 or otherwise after the Expiration Date. If Employee is employed
by an entity which ceases to be a Subsidiary, such event shall be deemed for
purposes of this Section 8 to be a termination of employment described in
subsection (a) in respect of Employee. Absence from work caused by military
service or authorized sick leave shall not be considered as a termination of
employment for purposes of this Section 8 if the period of such absence does not
exceed 90 (ninety) days, or if longer, so long as the Employee's right to
reemployment with the Corporation or a Subsidiary is guaranteed either by
statute or by contract. Where the period of such absence exceeds 90 days and
where the individual's right to reemployment is not guaranteed either by statute
or by contract, the Employee's employment shall be deemed to have terminated
pursuant to subsection (a) of this Section 8 on the 91st day of such absence.
9. Investment Representation. You hereby covenant and agree with the
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Corporation that if, at the time of exercise of the Option, there does not exist
a Registration Statement on an appropriate form under the Securities Act, which
Registration Statement shall have become effective and shall include a
prospectus which is current with respect to the shares subject to the Option,
(i) that you are purchasing the shares for your own account and not with a view
to the resale or distribution thereof, (ii) that any subsequent offer for sale
or sale of any such shares shall be made either pursuant to (x) a Registration
Statement on an appropriate form under the Act, which Registration Statement
shall have become effective and shall be current with respect to the shares
being offered and sold, or (y) a specific exemption from the registration
requirements of the Act, but in claiming such exemption, you shall, prior to any
offer for sale of sale of such shares, obtain a favorable written opinion from
counsel for or approved by the Corporation as to the applicability of such
exemption and (iii) that you agree that the certificates evidencing such shares
shall bear a legend to the effect of the foregoing.
10. Non-Transferability of Option. The Option and any other rights of
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the Employee under this Agreement or the Plan are nontransferable except as
provided in Section 5(f) of the Plan.
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11. Notices. Any notice to be given under the terms of this Agreement
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shall be in writing and addressed to the Corporation at its principal office
located at 0000 Xxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx 00000, to the attention
of the Chief Financial Officer and to the Employee at the address given beneath
the Employee's signature hereto, or at such other address as either party may
hereafter designate in writing to the other.
12. Plan. The Option and all rights of Employee thereunder are
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subject to, and the Employee agrees to be bound by, all of the terms and
conditions of the provisions of the Plan, incorporated herein by this reference,
to the extent such provisions are applicable to options granted to Eligible
Employees. The Employee acknowledges receipt of a copy of the Plan, which is
made a part hereof by this reference, and agrees to be bound by the terms
thereof. Unless otherwise expressly provided in other Sections of this
Agreement, provisions of the Plan that confer discretionary authority on the
Administrator do not (and shall not be deemed to) create any rights in the
Employee unless such rights are expressly set forth herein or are otherwise in
the sole discretion of the Administrator so conferred by appropriate action of
the Administrator under the Plan after the date hereof.
13. Notice of Disposition. The Employee agrees to notify the
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Corporation of any sale or other disposition of any shares of Common Stock
received upon exercise of the Option, if such sale or disposition occurs within
two years after the Award Date or within one year after the date of such
exercise.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Employee has
hereunto set his or her hand.
ANWORTH MORTGAGE ASSET CORPORATION,
a Maryland corporation
By /s/ Xxxxxx Xxxxx XxXxxxx
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Name: Xxxxxx Xxxxx XxXxxxx
Title: President
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxx
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(Signature)
Xxxxxxx X. Xxxxxx
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(Print Name)
0000 Xxxxxxxx Xxxx
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(Address)
Xxxxxxx Xxxxxxxxx, XX 00000
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(City, State, Zip Code)
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CONSENT OF SPOUSE
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In consideration of the execution of the foregoing Incentive Stock
Option Agreement by Anworth Mortgage Asset Corporation, I, Xxxxx XxXxxxx, the
spouse of the Employee herein named, do hereby join with my spouse in executing
the foregoing Incentive Stock Option Agreement and do hereby agree to be bound
by all of the terms and provisions thereof and of the Plan.
DATED: June 16, 1999 /s/ Xxxxx XxXxxxx
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Signature of Spouse
