EXHIBIT 10.6
SANTA XXXXX OPERATING COMPANY
STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement") is dated as of the 18th day of August,
1996, by and between Santa Xxxxx Operating Company, a Delaware corporation (the
"Company") and Xxxxxxx X. Xxxxx (the "Optionee").
W I T N E S S E T H:
WHEREAS, on March 29, 1996, the Board of Directors of Santa Xxxxx Realty
Enterprises, Inc. ("Realty") granted to the Optionee, effective as of April 1,
1996, a nonstatutory stock option (the "Prior Option") to purchase all or any
part of an aggregate of 200,000 shares of common stock (the "Prior Grant"),
$0.10 par value, of Realty; and
WHEREAS, on April 1, 1996 Optionee and Realty entered into a
Nonstatutory Stock Option Agreement (the "Prior Stock Option Agreement"),
governing the terms and conditions of the Prior Grant; and
WHEREAS, effective August 16, 1996, Optionee resigned as the Chief
Executive Officer of Realty and became the Chief Executive Officer of the
Company; and
WHEREAS, on August 18, 1996, pursuant to the Company's 1995 Share Award
Plan (the "Plan") the Company's Board of Directors has granted to the Optionee,
effective as of August 18, 1996, (the "Award Date") a nonstatutory option (the
"Option") to purchase all or any part of an aggregate of 200,000 shares of
common stock (the "Aggregate Grant"), $0.10 par value, of the Company (the
"Operating Common Stock"), upon the terms and conditions set forth herein; and
WHEREAS, Optionee has agreed to surrender the Prior Options and to
terminate the Prior Stock Option Agreement in consideration for entering into
this Stock Option Agreement with the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties hereto
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. The Company has granted to the Optionee as a
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matter of separate inducement and agreement in connection with his or her
employment, and not in lieu of any salary or other compensation for his or her
services, the right
and option to purchase, on the terms and conditions hereinafter set forth, all
or any part of the Aggregate Grant at a price of $1.21 per share, exercisable
from time to time subject to the provisions of this Agreement prior to the close
of business on a date not later than March 31, 2006 (the "Expiration Date").
Such price equals the value established by the Committee for purposes of
granting options under the Plan and is at least 100% of the Fair Market Value of
the Operating Common Stock on the Award Date. It is the intent of the Company
that, to the maximum extent permitted by law, this Option constitute an
incentive stock option within the meaning of Section 422 of the Code.
3. Exercisability of Option.
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(a) The Option may be exercised for 100% of the Aggregate Grant (1) on
or after the 60th consecutive business day after the Award Date that the Fair
Market Value of a Paired Share is $27.50 or more, provided such 60th day occurs
before April 1, 2001; (2) immediately prior to a reorganization that is
consummated before April 1, 2001 in which the Company is not the surviving
entity and the shareholders of the Company are to receive consideration worth
$27.50 or more per Paired Share; or (3) immediately prior to a sale by the
shareholders that occurs before April 1, 2001 of substantially all of the Paired
Shares at a price of $27.50 or more per share of Paired Share. Unless one of
these three events occurs by April 1, 2001, the Option shall expire on April 1,
2001.
(b) To the extent the Optionee does not in any year purchase all or
any part of the shares to which the Employee is entitled, the Optionee 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 10 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. Notwithstanding
anything to the contrary contained in this Agreement, if the Option becomes
exercisable, in all events the Optionee or the Optionee's Beneficiary shall be
entitled to a period of no less than 90 days to exercise the Option.
(c) If there shall occur any extraordinary dividend or other
extraordinary distribution in respect of the Paired Share (whether in the form
of cash, common stock of Realty (the "Realty Common Stock"), Operating Common
Stock, other securities, or other property), or any reclassification,
recapitalization, stock split (including a stock split in the form of a stock
dividend), reverse stock split, reorganization, merger, combination,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Realty Common Stock, Operating Common Stock or other securities of the
corporation, or there shall occur any similar extraordinary corporate
transaction, then the
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Committee shall, in such manner and to such extent (if any) as it deems
appropriate and equitable, proportionately adjust the performance standard of
this Section 3.
4. Concurrent Grant and Exercise of Options. The grant and exercise
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of any Option under the Plan is subject to the following:
(a) Concurrently with the granting of the Option to purchase Operating
Common Stock pursuant to the Plan, an option to purchase 200,000 shares, $.10
par value, of Realty Common Stock has been granted to the Optionee pursuant to
an agreement between the Optionee and the Company.
(b) The Option shall not be exercisable unless the Optionee submits
evidence satisfactory to the Company that a number of shares of Realty Common
Stock equal to the number of shares of Operating Common Stock to be received
upon exercise of all or a portion of the Option will, and are able to, be
purchased by or are available to the Optionee, such that upon exercise the
Optionee will receive or hold an equal number of shares of Realty Common Stock
and Operating Common Stock. The Optionee shall be required to pair such
unpaired shares of Realty Common Stock with the Optionee's shares of Operating
Common Stock.
5. Limitation on Exercise of Option. In the event the Optionee is
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granted incentive stock options (whether under this Award 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 Operating
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 Company 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. Pursuant
to two separate Incentive Stock Option Agreements executed concurrently
herewith, the Company has granted Optionee an option to purchase 135,756 shares
of Operating Common Stock and an option to purchase 14,244 shares of Operating
Common Stock (the "Parallel Options"). The Company has designated the shares of
Operating Common Stock acquired pursuant to the Parallel Options as stock
acquired pursuant to the exercise of an incentive stock option. Accordingly, to
the extent that the aggregate fair market value of the Operating Common Stock
with respect to which the Option and the Parallel Options are first exercisable
in any calendar year does not exceed $100,000, the shares of Operating Common
Stock acquired pursuant to the Option will be treated as stock acquired pursuant
to an incentive stock option. To the extent that the aggregate fair market
value described in the preceding sentence exceeds
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$100,000, the shares of Operating Common Stock acquired pursuant to the Option
will be treated as stock acquired pursuant to a nonstatutory stock option.
6. Method of Exercise of Option and Payment of Purchase Price.
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Subject to such further limitations and rules or procedures as the Committee may
from time to time establish, the exercise of all or any portion of the Option
shall be by means of written notice of exercise delivered to the Company,
specifying the number of whole shares with respect to which the Option is being
exercised, together with any written statements required by Section 6.4 of the
Plan (regarding compliance with applicable law) and payment of the purchase
price according to the following terms:
(a) in cash, electronic funds transfer or by check payable to the
order of the Company;
(b) by notice and third party payment in such manner as may be
authorized by the Committee;
(c) subject to the Committee's ability in its absolute discretion
to deny such request and upon receipt of all necessary regulatory approvals, the
Optionee may request that the Optionee deliver in payment of a portion or all of
the purchase price, other already-owned shares of Operating Common Stock
(whether obtained through the exercise of Options or otherwise), which shares of
Operating Common Stock shall be valued at the then Fair Market Value. The
Committee's consent is required prior to the Optionee's use, pursuant to this
clause, of Operating Common Stock which he has held less than six months. If the
Committee permits delivery of Operating Common Stock to pay the purchase price,
the Operating Common Stock held six months or more may be used without consent
of the Committee; or
(d) subject to the Committee's ability in its absolute discretion
to deny such request, the Optionee may request that shares of Operating Common
Stock that would otherwise be deliverable with a Fair Market Value equal to the
purchase price of the Operating Common Stock being purchased be withheld in
payment of the purchase price.
(e) The Optionee shall in all cases be required to exercise an
option to obtain the same number of unpaired shares of Realty Common Stock as
the number of shares of Operating Common Stock obtained through exercise of the
Option, and shall be required to pair the shares of Realty Common Stock with the
shares or Operating Common Stock.
7. Continuance of Employment. Nothing contained in this Agreement
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shall confer upon the Optionee any right to continue in the employ of the
Company or interfere in any way with the rights of the Company, which are hereby
expressly
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reserved, to reduce the Optionee's compensation from the rate in existence at
any time or to terminate the Optionee's employment for any reason. The
preceding sentence is subject, however, to the terms of any employment agreement
between Optionee and the Company.
8. Effect of Termination of Relationship.
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(a) The Option is exercisable by Optionee (or, in the event of
Optionee's death, his Beneficiary) for a period ending on the later of March 31,
2001 or 90 days after the end of the period described in Section 3(a)(1). On or
after the expiration of the period described in the preceding sentence, the
Option shall only be exercisable if Optionee is then employed by the Company.
In no event may the Option be exercised by anyone, however, unless the vesting
condition in Section 3(a) is satisfied and exercise occurs before the Expiration
Date.
(b) If Optionee 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 Optionee.
(c) 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.
(d) Notwithstanding the preceding, in the event that all or a portion
of the Option is exercised after the periods permitted by or pursuant to Section
422 of the Code regarding incentive stock options, the portion of the Option
which is then exercised shall be treated as a nonqualified stock option.
9. Non-Assignability of Option. Subject to the provisions of Section
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8 above, the Option and the rights and privileges conferred hereby are not
transferable or assignable and may not be offered, sold, pledged, hypothecated
or otherwise disposed of in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment, garnishment, levy or similar
process. The Option may be exercised only by (i) the Optionee, during the
Optionee's lifetime, or (ii) to the extent provided by Section 8, by his
transferees by will or under the laws of descent and distribution, or (iii) by a
person designated pursuant to a QDRO. In the event that the spouse of the
Optionee shall have acquired a community property interest in the Option, the
Optionee or such transferees may exercise it on behalf of the spouse of the
Optionee or such spouse's successor in interest.
10. Termination of Option Under Certain Circumstances. Section 6.2(c)
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of the Plan is incorporated by reference. As permitted by Section 6.2(c) of the
Plan, the Option shall
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terminate upon the occurrence of certain corporate reorganizations in which the
Company is not the survivor.
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 Secretary of the Company at its
principal office, and any notice to be given to the Optionee shall be addressed
to him or her at the address given beneath the Optionee's signature hereto or at
such other address as either party may hereafter designate in writing to the
other party. Any such notice shall be deemed to have been duly given when
enclosed in a properly sealed envelope addressed as aforesaid, registered or
certified, and deposited (postage and registry or certification fee prepaid) in
a post office or branch post office regularly maintained by the United States
Government.
12. 1995 Share Award Plan. The Option and all rights of Optionee
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thereunder are subject to, and the Optionee 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 Optionee 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
Committee do not (and shall not be deemed to) create any rights in the Optionee
unless such rights are expressly set forth herein or are otherwise in the sole
discretion of the Committee so conferred by appropriate action of the Committee
under the Plan after the date hereof.
13. Notice of Disposition. In addition to giving the notification
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required by Section 11, the Optionee agrees to notify the Company of any sale or
other disposition of any shares of Operating 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 exercise of the Option.
14. Surrender of Prior Option. By executing this Agreement, Optionee
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surrenders the Prior Option and terminates the Prior Stock Option Agreement.
Optionee acknowledges and agrees that neither Realty nor the Company has any
remaining obligations to Optionee under, and that Optionee has no remaining
rights, past or future, under, the Prior Stock Option Agreement.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by a duly authorized officer and the Optionee has hereunto set his
or her hand as of the day and year first above written.
SANTA XXXXX OPERATING COMPANY
By: /s/ Xxxxxxx X. XxXxxxx
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Xxxxxxx X. XxXxxxx
General Counsel
OPTIONEE
___________________________________
(Signature)
___________________________________
(Print Name)
___________________________________
(Address)
___________________________________
(City, State, Zip Code)
___________________________________
(Social Security Number)
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CONSENT OF SPOUSE
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In consideration of the execution of the foregoing Stock Option
Agreement by Santa Xxxxx Operating Company, I, _________________ the spouse of
the Optionee herein named, do hereby join with my spouse in executing the
foregoing Stock Option Agreement and do hereby agree to be bound by all of the
terms and provisions thereof.
Date: _________________ ________________________________
Signature of Spouse
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