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EXHIBIT (d)(2)
EMERITUS CORPORATION
AMENDED AND RESTATED 1995 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION LETTER AGREEMENT
To: Grant Date:
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We are pleased to inform you that you have been selected by Emeritus
Corporation (the "Company") to receive a stock option (the "Option") to purchase
shares (the "Option Shares") of the Company's Common Stock under the Company's
Amended and Restated 1995 Stock Incentive Plan (the "Plan").
The terms of the Option are as set forth in this Agreement and in the
Plan, a copy of which is attached. The Plan is incorporated by reference into
this Agreement, which means that this Agreement is limited by and subject to the
express terms and provisions of the Plan. Capitalized terms that are not defined
in this Agreement have the meanings given to them in the Plan.
The most important terms of the Option are summarized as follows:
GRANT DATE:
NUMBER OF SHARES:
EXERCISE PRICE:
EXPIRATION DATE:
VESTING BASE DATE:
TYPE OF OPTION:
VESTING AND EXERCISABILITY: The Option will vest and become exercisable
according to the following schedule:
PORTION OF TOTAL OPTION
DATE ON AND AFTER WHICH WHICH IS
OPTION IS VESTED AND EXERCISABLE VESTED AND EXERCISABLE
TERMINATION OF OPTION: The unvested portion of the Option will terminate
automatically and without further notice immediately upon termination (voluntary
or involuntary) of your employment or service relationship with the Company or a
Related Corporation. The vested portion of the Option will terminate
automatically and without further notice on the earliest of the following dates:
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(a) three months after termination of your employment or service
relationship with the Company or a Subsidiary for any reason other than
Retirement, Early Retirement at the Company's request, Disability or death;
(b) three years after termination of your employment or service
relationship with the Company or a Related Corporation by reason of Retirement,
Early Retirement at the Company's request, Disability or death; and
(c) the Expiration Date;
except, that if the Company or a Subsidiary terminates your services for Cause
you will forfeit the unexercised portion of the Option, including vested and
unvested shares, on the date you are notified of your termination. If you die
while the Option is exercisable, the Option may be exercised until three years
after the date of death or the Expiration Date, whichever is earlier. The Option
must be exercised within three months after termination of employment for
reasons other than death or Disability and one year after termination of
employment due to Disability to qualify for the beneficial tax treatment
afforded ISOs.
IT IS YOUR RESPONSIBILITY TO BE AWARE OF THE DATE YOUR OPTION
TERMINATES.
ISO QUALIFICATION: The Option is intended to qualify as an ISO under
federal income tax law, but the Company does not represent or guarantee that the
Option qualifies as such.
If the aggregate Grant Date fair market value of the shares with respect
to which the Option first becomes exercisable during any calendar year (under
the Option and all other ISOs you hold) exceeds $100,000, the excess portion
will be treated as a nonqualified stock option, unless the Internal Revenue
Service changes the rules and regulations governing the $100,000 limit for ISOs.
A portion of the Option may be treated as a nonqualified stock option if certain
events cause exercisability of the Option to accelerate.
NOTICE OF DISQUALIFYING DISPOSITION: To obtain certain tax benefits
afforded to ISOs you must hold the shares issued upon the exercise of the Option
for two years after the Grant Date and one year from the date of exercise. You
may be subject to the alternative minimum tax at the time of exercise. You
should obtain tax advice when exercising the Option and prior to the disposition
of the Option Shares. By accepting the Option, you agree to promptly notify the
Company if you dispose of any of the Option Shares within one year from the date
you exercise all or part of the Option or within two years from the Grant Date.
METHOD OF EXERCISE: You may exercise the Option by giving written notice
to the Company or it's agent, in form and substance satisfactory to the Company,
which will state the election to exercise the Option and the number of shares of
Common Stock for which you are exercising the Option. The written notice must be
accompanied by full payment of the exercise price for the number of shares of
Common Stock you are purchasing or notice of your intent to exercise and sell
your shares.
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FORM OF PAYMENT: You may pay the Option exercise price, in whole or in
part, in cash, by check or, unless the Plan Administrator determines otherwise,
by (a) tendering (either actually or by attestation) mature shares of Common
Stock (generally, shares you have held for a period of at least six months)
having a fair market value on the day prior to the date of exercise equal to the
exercise price (you should consult your tax advisor before exercising the Option
with stock you received upon the exercise of an incentive stock option); (b) if
and so long as the Common Stock is registered under the Securities Exchange Act
of 1934, as amended, delivery of a properly executed exercise notice together
with irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds necessary to pay the exercise price all in
accordance with the regulations of the Federal Reserve Board; or (c) such other
consideration as the Plan Administrator may permit.
WITHHOLDING TAXES: As a condition to the exercise of any portion of the
Option that is treated as a nonqualified stock option, you must make such
arrangements as the Company may require for the satisfaction of any federal,
state or local withholding tax obligations that may arise in connection with
such exercise. The Company has the right to retain without notice sufficient
shares of stock to satisfy the withholding obligation. Unless the Plan
Administrator determines otherwise, you may satisfy the withholding obligation
by electing to have the Company withhold from the shares to be issued upon
exercise that number of shares having a fair market value equal to the amount
required to be withheld (up to the minimum required federal tax withholding
rate).
LIMITED TRANSFERABILITY: During your lifetime only you can exercise the
Option. The Option is not transferable except by will or by the applicable laws
of descent and distribution. The Plan provides for exercise of the Option by a
designated beneficiary or the personal representative of your estate.
REGISTRATION: At the present time, the Company has an effective
registration statement with respect to the Option Shares. The Company intends to
maintain this registration but has no obligation to do so. In the event that
such registration ceases to be effective, you will not be able to exercise the
Option unless exemptions from registration under federal and state securities
laws are available; such exemptions from registration are very limited and might
be unavailable. By accepting the Option, you hereby acknowledge that you have
read and understand Section 18.3 of the Plan.
BINDING EFFECT: This Agreement will inure to the benefit of the
successors and assigns of the Company and be binding upon you and your heirs,
executors, administrators, successors and assigns.
LIMITATION ON RIGHTS; NO RIGHT TO FUTURE GRANTS; EXTRAORDINARY ITEM OF
COMPENSATION: By entering into this Agreement and accepting the grant of the
Option evidenced hereby, you acknowledge: (a) that the Plan is discretionary in
nature and may be suspended or terminated by the Company at any time; (b) that
the grant of the Option is a one-time benefit which does not create any
contractual or other right to receive future grants of options, or benefits in
lieu of options; (c) that all determinations with respect to any such future
grants, including, but not limited to, the times when options will be granted,
the number of shares subject to each option, the option price, and the time or
times when each option will be exercisable, will be at the sole discretion of
the Company; (d) that your participation in the Plan is voluntary; (e) that the
value of the Option is an extraordinary item of compensation which is outside
the scope of your employment contract, if any; (f) that the Option is not part
of normal or expected compensation for purposes of calculating any severance,
resignation, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement benefits or
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similar payments; (g) that the vesting of the Option ceases upon termination of
employment or service relationship with the Company for any reason except as may
otherwise be explicitly provided in the Plan or this Agreement or otherwise
permitted by the Plan Administrator; (h) that the future value of the underlying
Option Shares is unknown and cannot be predicted with certainty; and (i) that if
the underlying Option Shares do not increase in value, the Option will have no
value.
SECURITIES AND EXCHANGE ACT SECTION 16: If an individual subject to
Section 16 of the Exchange Act sells shares of Common Stock obtained upon the
exercise of an Option within six months after the date the Option was granted,
such sale may result in short-swing profit recovery under Section 16(b) of the
Exchange Act.
Very truly yours,
EMERITUS CORPORATION
By
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Xxx Xxxx
Chairman
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ACCEPTANCE AND ACKNOWLEDGMENT
I, a resident of the State of ______________, accept the Option
described in this Agreement and in the Plan, and acknowledge receipt of a copy
of this Agreement and the Plan Summary. I have read the Summary and understand
the Plan.
Signed: Dated:
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Address
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Social Security Number
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