EXHIBIT 10.4
X. X. XXXXXX, INC.
Form of Incentive Stock Option Agreement
(Term Vesting)
WHEREAS, _____________________________ (hereinafter called the
"Participant") has become an employee of X.X. Xxxxxx, Inc., a Delaware
corporation (hereinafter called the "Company"), or one of its Subsidiaries (as
defined herein) as a result of the merger of Xxxxxxx Homes, Inc. ("Xxxxxxx")
with and into the Company, with the Company as the surviving corporation,
pursuant to the Agreement and Plan of Merger, dated as of October 22, 2001, as
amended (the "Merger Agreement"), between the Company and Xxxxxxx;
WHEREAS, pursuant to Section 2.1.6 of the Merger Agreement and the
terms of the Amended and Restated 1992 Stock Option Plan and the Amended and
Restated 2000 Stock Incentive Plan of Xxxxxxx (the "Xxxxxxx Stock Option
Plans"), each outstanding stock option held by the Participant to purchase
shares of common stock of Xxxxxxx has been terminated and is being replaced with
a comparable option to purchase Common Stock of the Company;
WHEREAS, the grant of Option Rights to the Participant effective
February 21, 2002 (the "Date of Grant") and the execution of a Stock Option
Agreement in the form hereof has been duly authorized by a resolution of the
Committee duly adopted on February 21, 2002 and incorporated herein by
reference;
WHEREAS, the option granted hereby is intended to be an "incentive
stock option" within the meaning of that term under Section 422A of the Code and
it is intended that such grant shall not constitute a "modification" as defined
in Section 424 of the Code, because it will constitute the issuance or
substitution of a new option for an old option in a corporate merger
under Section 424(a) of the Code, pursuant to an exception from the modification
rules in Section 424(h)(3)(A) of the Code; and
WHEREAS, pursuant to Section 424(a) of the Code, the excess of the
aggregate fair market value of the shares subject to the Company option
immediately after the substitution over the aggregate option price of such
shares is not more than the excess of the aggregate fair market value of all
shares subject to the Xxxxxxx option immediately before such substitution over
the option price of such shares; and the new Company option does not give the
Participant additional benefits which he didn't have under the old Xxxxxxx
option;
NOW, THEREFORE, effective as of the Date of Grant the Company hereby
grants to the Participant an incentive stock option pursuant to the Company's
1991 Stock Incentive Plan (the "Plan") to purchase (INSERT NUMBER OF REPLACED
XXXXXXX OPTIONS TIMES STOCK EXCHANGE RATIO (0.598)) shares of Common Stock at
the price of (INSERT EXERCISE PRICE OF REPLACED XXXXXXX OPTIONS DIVIDED BY STOCK
EXCHANGE RATIO (0.598)) Dollars ($_________ ) per share, and agrees to cause
certificates for any shares purchased hereunder to be delivered to the
Participant upon payment of the aggregate Option Price in full, all subject,
however, to the terms and conditions hereinafter set forth and in the Plan,
which is incorporated herein by reference and, in the event of any conflict
between the Plan and this Agreement, the terms of the Plan shall prevail.
Capitalized terms used in this Agreement that are not otherwise defined in this
Agreement are used as defined in the Plan.
Stock Option Agreement-
Incentive Stock Option
(Replacement of Xxxxxxx Stock Options)
2
1. (A) This option (until terminated as hereinafter provided) shall
become exercisable as follows:
Time Period After Number of Shares for Which
Date of Grant Option is Exercisable
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(INSERT VESTING SCHEDULE REMAINING FROM REPLACED XXXXXXX OPTION)
Except as otherwise provided in paragraph 3, this option shall
be exercisable only if the Participant shall have been in the continuous employ
of the Company or any Subsidiary from the date hereof until this option is
exercised. For the purposes of this paragraph, leaves of absence approved by the
Board for illness, disability, military or governmental service, or other cause,
shall be considered as employment. The Participant shall be deemed to be in the
employ of the Company or any Subsidiary for so long as such Participant
continues to render periodic services to the Company or any Subsidiary as an
employee. The Participant shall be deemed to be an employee and to continue in
the Company's employ for so long as the Participant continues in the employ of
the Company or one or more of its Subsidiaries, subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance. To the extent exercisable, this option may be
exercised in whole or in part from time to time.
(B) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this option shall be exercisable to the extent of 100% of the
shares hereinabove specified upon the occurrence of any Change in Control (as
hereinafter defined) of the Company. For purposes of this Agreement, a "Change
in Control" means the occurrence of any of the following events:
(i) A merger, consolidation or reorganization of the
Company into or with another corporation or other legal person
if the stockholders of the Company, immediately before such
merger, consolidation or reorganization, do not,
Stock Option Agreement-
Incentive Stock Option
(Replacement of Xxxxxxx Stock Options)
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immediately following such merger, consolidation or
reorganization, then own directly or indirectly, more than 50%
of the combined voting power of the then-outstanding voting
securities of the corporation or other legal person resulting
from such merger, consolidation or reorganization in
substantially the same proportion as their ownership of Voting
Securities (as hereinafter defined) immediately prior to such
merger, consolidation or reorganization;
(ii) The Company sells all or substantially all of
its assets to another corporation or other legal person, or
there is a complete liquidation or dissolution of the Company;
(iii) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report)
each as promulgated pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), disclosing that any
person (as the term "person" is used in Section 13(d)(3) or
Section 14(d) (2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing
20% or more of the combined voting power of the
then-outstanding voting securities of the Company ("Voting
Securities") (computed in accordance with the standards for
the computation of total percentage ownership for the purposes
of Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report)); or
(iv) The Company files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or Schedule
14A (or any successor schedule, form or report or item
therein) that a change in control of the Company has occurred
or will occur in the future pursuant to any then-existing
contract or transaction.
Notwithstanding the provisions set forth in (iii) or (iv) above, a "Change in
Control" shall not be deemed to have occurred for purposes of this Agreement
solely because (i) the Company, (ii) any Subsidiary, or (iii) any employee stock
ownership plan or any other employee benefit plan of the Company or any
Subsidiary either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report or item therein) under
the Exchange Act disclosing beneficial ownership by it of Voting Securities,
whether in excess of 20% or otherwise, or because the Company reports that a
change in control of the Company has occurred or will occur in the
Stock Option Agreement-
Incentive Stock Option
(Replacement of Xxxxxxx Stock Options)
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future by reason of such beneficial ownership. For purposes of calculating
beneficial ownership pursuant to this subparagraph (B), any Voting Securities
held by Xxxxxx X. Xxxxxx as of the date hereof or received by Xxxxxx X. Xxxxxx
in connection with any merger involving the Company and any affiliate of the
Company shall not be included in the calculation of beneficial ownership.
(C) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this option shall be exercisable to the extent of 100% of the
shares hereinabove specified at the time the Participant ceases to be an
employee of the Company or any Subsidiary upon the occurrence of the events
described in subparagraph (B) or (D) of paragraph 3.
(D) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this option shall be exercisable to the extent of 100% of the
shares hereinabove specified if the Participant is involuntarily terminated as
an employee of the Company and its Subsidiaries without Cause for Termination
(and not on account of death or disability) within six months from the Date of
Grant. For purposes of this subparagraph (D) of this paragraph 1, "Cause for
Termination" shall mean any reason related to the violation of policies, rules
or directions of any employer or its management, misconduct or negligence in
performing assigned responsibilities, failure to meet performance goals or
objectives or to fulfill customary duties, conduct damaging to property or other
interests, fraud, misappropriation, dishonesty or abuse of alcohol or any
controlled substance, or similar basis related to performance or character.
2. The Option Price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock which have been owned by the Participant for more than six months prior to
the date of exercise and which have an aggregate Market Value per Share on the
date of exercise equal to the aggregate Option Price, (c) by a combination of
the methods of payment set forth in clauses (a) or (b) above, or
Stock Option Agreement-
Incentive Stock Option
(Replacement of Xxxxxxx Stock Options)
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(d) through a broker-dealer sale and remittance procedure, pursuant to which the
Participant shall provide irrevocable written instructions (i) to the designated
broker-dealer to effect the immediate sale of the purchased shares and remit to
the Company, out of the sale proceeds an amount equal to the aggregate option
price payable for the purchased shares plus all applicable Federal and State
income and employment taxes required to be withheld by the Company by reason of
such purchase and (ii) to the Company to deliver the certificates for the
purchased shares directly to such broker-dealer.
3. The nonvested portion of this option shall terminate immediately
upon termination of employment. The vested portion of this option shall
terminate on the earliest of the following dates:
(A) Three months after delivery to the Participant by the
Company or a Subsidiary of notice of termination of the Participant's
employment with the Company or a Subsidiary other than for any matter
that constitutes a violation of the standard of employee conduct set
forth in the Company's Employee Manual as in effect on the date of such
termination or delivery to the Company by the Participant of notice of
the voluntary termination by the Participant of the Participant's
employment with the Company or a Subsidiary;
(B) Three months after the Participant ceases to be an
employee of the Company or a Subsidiary by reason of retirement under a
retirement plan of the Company or a Subsidiary, which retirement is at
or after normal retirement age provided for in such retirement plan;
(C) Immediately upon the delivery to the Participant by the
Company or a Subsidiary of notice of termination of the Participant's
employment with the Company or
Stock Option Agreement-
Incentive Stock Option
(Replacement of Xxxxxxx Stock Options)
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a Subsidiary for any matter that constitutes a violation of the
standard of employee conduct set forth in the Company's Employee Manual
as in effect on the date of such termination;
(D) One year after the death or permanent disability of the
Participant if the Participant dies or becomes permanently disabled
while an employee of the Company or a Subsidiary; and
(E) (INSERT EXPIRATION DATE FROM REPLACED XXXXXXX OPTION).
Nothing contained in this option shall limit whatever right the Company or a
Subsidiary might otherwise have to terminate the employment of the Participant.
Except as otherwise provided in subparagraph (C) of paragraph 1, after the
termination of the Participant's employment this option shall be exercisable for
the same number of shares for which it was exercisable prior to such
termination. In the event that the Participant's employment terminates on the
same date that a Change in Control of the Company occurs, the Change in Control
will be deemed to have occurred prior to the termination of the Participant's
employment.
4. This option is not transferable or exercisable except as provided in
Paragraph 9 of the Plan.
5. Notwithstanding the provisions of Paragraph 10 of the Plan, no
adjustment shall be made to this option without the prior written consent of the
Participant if any such adjustment would constitute a "modification" of this
option within the meaning of Section 424(h) of the Code.
Stock Option Agreement-
Incentive Stock Option
(Replacement of Xxxxxxx Stock Options)
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6. If the Company shall be required to withhold any federal, state,
local or foreign tax in connection with the exercise of this option, it shall be
a condition to such exercise that the Participant pay or make provision
satisfactory to the Company for payment of all such taxes.
7. Upon each exercise of this option, the Company as promptly as
practicable shall mail or deliver to the Participant a stock certificate or
certificates representing the shares then purchased, and shall pay all stamp
taxes payable in connection therewith. The issuance of such shares and delivery
of the certificate or certificates therefor shall, however, be subject to any
delay necessary to complete (a) the listing of such shares on any stock exchange
upon which shares of the same class are then listed, (b) such registration or
qualification of such shares under any state or federal law, rule or regulation
as the Company may determine to be necessary or advisable, and (c) the making of
provision for the payment or withholding of any taxes required to be withheld
pursuant to any applicable law, in respect of the exercise of this option or the
receipt of such shares.
8. The term "Subsidiary" as used in this Agreement means any
corporation, trust, joint venture, partnership or other unincorporated entity in
which, at the time, the Company owns or controls, directly or indirectly, (i) in
the case of a corporation, not less than 50% of the total combined voting power
represented by all classes of stock issued by such corporation, or (ii) in the
case of a trust, joint venture, partnership or other unincorporated entity, not
less than 50% of the beneficial interest of such entity. A corporation shall be
considered to be a Subsidiary of the Company if it is a member of an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
fifty percent or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain. For purposes of this Agreement,
the continuous employ
Stock Option Agreement-
Incentive Stock Option
(Replacement of Xxxxxxx Stock Options)
8
of the Participant with the Company or a Subsidiary shall not be deemed
interrupted, and the Participant shall not be deemed to have ceased to be an
employee of the Company or any Subsidiary, by reason of the transfer of his
employment among the Company and any of its Subsidiaries.
EXECUTED at Arlington, Texas as of this 21st day of February, 2002.
X. X. XXXXXX, INC.
By
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The undersigned Participant hereby acknowledges receipt of an executed
original of this
Incentive Stock Option Agreement and accepts the stock option
granted thereunder.
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Participant
Stock Option Agreement-
Incentive Stock Option
(Replacement of Xxxxxxx Stock Options)
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