Exhibit 10.7
NONQUALIFIED STOCK OPTION AGREEMENT
AMERICAN HOMESTAR CORPORATION
2001 MANAGEMENT INCENTIVE PROGRAM
THIS STOCK OPTION AGREEMENT (the "Agreement") is made between AMERICAN
HOMESTAR CORPORATION, a Texas corporation (the "Company"), and Xxxxxx Xxxxxxx
(the "Optionee"). The Board of Directors of the Company has adopted the American
Homestar Corporation 2001 Management Incentive Program (the "Plan"), which is
incorporated by reference herein. The Company considers that its interests will
be served by granting the Optionee an option to purchase shares of Series M
Common Stock of the Company as an inducement for the continued and effective
performance of services for the Company and as additional consideration for
Optionee's agreement not to compete against the Company. Any capitalized term
used in this Agreement that is not specifically defined herein shall have its
meaning specified in the Plan.
A G R E E M E N T:
SECTION 1. GRANT OF OPTION. Subject to the terms of the Plan and this
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Agreement, on October 3, 2001 (the "Date of Grant"), the Company hereby grants
to the Optionee a nonqualified stock option (the "Option") to purchase Sixty
Five Thousand (65,000) shares of the Series M Common Stock of the Company, $0.01
par value per share, at a price of $1.35 per share (the "Option Price"), subject
to adjustment as provided in the Plan.
SECTION 2. VESTING SCHEDULE. Except as specified below or in the Plan, the
Option is exercisable in accordance with the following schedule:
(a) the Option will vest and will be exercisable as to 15% of the
shares granted subject to the Option at the end of each fiscal year of the
Company after the date hereof in which the performance targets established by
the Board of Directors or the Committee, if any, as applicable to Optionee are
met. The option to acquire shares which are not vested in a given year shall
carry over to future years and shall vest in future years on such reasonable
cumulative performance targets as are reasonably adopted by the Board of
Directors from time-to-time;
(b) the Option will vest and will be exercisable as to an additional 5%
of the shares granted subject to the Option at the end of each fiscal year of
the Company after the date hereof in which such performance targets are exceeded
by target amounts established by the Board of Directors or the Committee, if
any, from time to time. The option to acquire shares which are not vested in a
given year shall carry over to future years and shall vest in future years on
such reasonable cumulative performance targets as are reasonably adopted by the
Board of Directors from time-to-time;
(c) to the extent not exercised, vested installments shall be
cumulative and may be exercised in whole or in part at any time; and
(d) to the extent not previously vested or exercised, the Option will
be exercisable as to 100% of the shares subject to the Option at the end of the
seventh year after the date hereof.
SECTION 3. EARLY TERMINATION OF OPTION. If the employment relationship
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between the Optionee and the Company is terminated, for any reason, prior to
full vesting hereunder, then, subject to the terms of Section 2(c) above, all
unvested shares subject to such Options shall terminate upon such termination of
employment, and the following rules shall apply to vested, unexercised shares
subject to the Option:
(a) Early Termination of Option Due to Termination of Employment. The
Option shall terminate on the earlier of the date of the expiration of the
general term of the Option or three months after the date of the termination of
the employment relationship between the Optionee and the Company by the Company
on account of a Change of Control (as such term is defined in the Plan).
(b) Early Termination of Option Due to Death. In the event of the
death of the Optionee while in the employ of the Company and before the date of
the expiration of the general term of the Option, the Option shall terminate on
the earlier of the date of expiration of the general term of the Option or nine
months after the date of the Optionee's termination of employment with the
Company due to death. This Option shall not vest further in the nine-month
period following Optionee's termination of employment with the Company due to
death.
(c) Early Termination of Option Due to Disability. In the event of the
disability of the Optionee, as determined by the Board in its discretion, the
Option shall terminate on the earlier of the expiration of the general term of
the Option or six months after the date of the Optionee's termination of
employment with the Company due to disability. Further, if the Optionee's
employment with the Company is terminated due to disability and within the
six-month period following the termination of employment the Optionee dies, the
Option shall terminate on the earlier of (1) the expiration of the general term
of the Option, or (2) six months after the date of the Optionee's death. This
Option shall not vest further in the six-month period following Optionee's
termination of employment with the Company due to disability or any time
thereafter.
(d) No Other Early Termination. Except as set forth in Section 3(a),
(b) or (c) or Section 12 of this Agreement or Section 11 of the Plan, the Option
shall not terminate prior to the expiration of the general term of the Option.
SECTION 4. ASSIGNMENT OF OPTION. The Option granted to the Optionee under
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this Agreement shall not be transferable or assignable by the Optionee other
than by will or the laws of descent and distribution, and shall be exercisable
during the Optionee's lifetime only by the Optionee; provided, however, the
Option may be assigned to a family partnership, limited liability company or
other- similar entity 100% owned and controlled by the Optionee and members of
his family and such entity may exercise the Option on the same terms, but
subject to the same limitations, as are set forth herein; provided further that,
in the event of such assignment, the term "Optionee" used hereunder shall
continue to refer to the individual who assigned the Option with respect to
provisions relating to the employment of the Optionee with the Company.
SECTION 5. GENERAL TERM OF OPTION. Unless earlier terminated pursuant to
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the terms of this Agreement or the Plan, the Option shall terminate and become
null and void on the last day of the nine-year period commencing on the Date of
Grant.
SECTION 6. EXERCISE OF OPTION. To exercise the Option, the Optionee must
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notify the Company in writing that the Optionee wishes to exercise the Option,
the number of shares with respect to
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which the Option is to be exercised, and the address to which any stock
certificates should be mailed. The written notice should be accompanied by the
Optionee's payment of the Option Price of the shares in the form of (a) a
cashier's check payable to the order of the Company, (b) shares of common stock
of the Company, provided that it in order to comply with Section 16 of the
Securities Exchange Act of 1934 as amended (to the extent it is applicable), the
Optionee must tender shares that have been owned by Optionee free of
restrictions, other than securities law restrictions, for at least six months,
or (c) any other form of payment that is acceptable to the Board.
SECTION 7. TAX WITHHOLDING. With respect to federal, state, or local tax
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law, the Company may either deduct from other compensation payable to the
Optionee an amount required to be withheld with respect to the exercise of the
Option, or require, as a condition to the exercise of the Option, that the
Optionee pay in cash or by check (or other form of payment acceptable to the
Company) the required amount directly to the Company on the date of exercise.
SECTION 8. DEATH OF OPTIONEE. Within nine months after the death of the
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Optionee, the executors or administrators of the Optionee or any person or
persons to whom the Option may be transferred by beneficiary designation, by
will or by the laws of descent and distribution, shall have the right, at any
time prior to the expiration of the Option to exercise the Option with respect
to the number of shares that the Optionee would have been entitled to exercise
prior to the Optionee's death.
SECTION 9. AMENDMENT AND TERMINATION. This Agreement may not be amended or
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terminated orally but only by an agreement in writing signed by the party
against whom enforcement of any such change or termination is sought.
SECTION 10. NO REQUIREMENT OF CONTINUED EMPLOYMENT. The Company shall not be
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deemed by the grant of the Option (as distinguished from a separate employment
agreement or service contract, if any) to be required to retain the services of
the Optionee for any period.
SECTION 11. NO RIGHTS AS STOCKHOLDER. The Optionee shall not have any rights
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as a stockholder with respect to any shares covered by the Option until the date
of the issuance of the stock certificate or certificates for such shares
following the exercise of the Option pursuant to its terms and conditions and
payment for the shares. Except as expressly provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record date is prior
to, the date such certificate or certificates are issued.
SECTION 12. FORFEITURE FOR CAUSE AND DISGORGEMENT OF PROFITS. If the
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Optionee, before or after severance of employment with the Company (a) committed
a fraud, embezzlement, theft, felony or an act of dishonesty in the course of
the Optionee's employment by the Company which conduct damaged the Company or
(b) disclosed trade secrets of the Company, then, to the extent outstanding, the
Option will be forfeited. If the Option would be forfeited pursuant to this
Section 12 but for the fact that the Option has been exercised, then the
Optionee must, upon demand by the Company, which demand must be made within 90
days of the Company's discovery of the violation and within 24 months of the
Optionee's severance of employment with the Company (i) sell to the Company, for
the per share exercise price applicable under the Option, the shares of Stock
purchased under the Option that have not yet been sold to another party and (ii)
deliver to the Company cash in an amount equal to the proceeds the Optionee
realized upon the sale of any of the Stock purchased under the Option, reduced
by the exercise price paid by the Optionee.
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SECTION 13. NOTICES. All offers, notices, demands, requests, acceptances or
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other communications hereunder shall be in writing and shall be deemed to have
been duly made or given if mailed by registered or certified mail, return
receipt requested. Any such notice mailed to the Company shall be addressed to
its principal office, and any notice mailed to the Optionee shall be addressed
to the Optionee's residence address as it appears on the books and records of
the Company or to such other address as either party may hereafter designate in
writing to the other.
SECTION 14. INUREMENT. This Agreement shall, except as herein stated to the
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contrary, inure to the benefit of and bind the legal representatives, successors
and assigns of the parties hereto.
SECTION 15. TYPE OF OPTION. This Option is a nonqualified stock option which
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is not intended to be governed by section 422 of the Internal Revenue Code of
1986, as amended, but is intended to be a nonqualified stock option subject to
the provisions of Section 83 of the Code.
SECTION 16. AGREEMENT TO PLAN TERMS. In accepting this Option, the Optionee
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accepts and agrees to be bound by all the terms and conditions of the Plan that
pertain to Options granted under the Plan.
SECTION 17. GOVERNING LAW AND SEVERABILITY. The validity, construction and
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performance of this Agreement shall be governed by the internal laws (and not
the principles relating to conflicts of law) of the State of Texas, except as
superseded by applicable federal law. Any invalidity of any provision of this
Agreement shall not affect the validity of any other provision.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to be
effective as of the day and year first above written.
AMERICAN HOMESTAR CORPORATION
Signature: /s/
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Name: Xxxxx X. Xxxxxxxx
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Title: Executive Vice President, CFO
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Date: October 3, 2001
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OPTIONEE:
Signature: /s/
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Name: Xxxxxx Xxxxxxx
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Title: VP of Finance, Manufacturing Operations
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