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EXHIBIT 10.6
INCENTIVE STOCK OPTION AGREEMENT
BY THIS INCENTIVE STOCK OPTION AGREEMENT ("Agreement") effective this
18th day of August, 1995 (the "Grant Date"), CAVCO INDUSTRIES, INC., an Arizona
corporation, (the "Company") and XXX XXXXXX, a key employee of the Company (the
"Optionee") hereby state, confirm, represent, warrant and agree as follows:
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RECITALS
1.1 The Company, through its Board of Directors (the "Board"), has
determined that in order to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to key
employees of the Company and to promote the success of the Company's business,
it must offer a compensation package that provides such employees of the Company
a chance to participate financially in the success of the Company by developing
an equity interest in it.
1.2 As part of the compensation package, the Company has adopted a 1985
Incentive Stock Option Plan (the "Plan"), the provisions of which are expressly
incorporated herein and made a part hereof as though set forth herein.
1.3 By this Agreement, the Company and the Optionee desire to establish
the terms upon which the Company is willing to grant to the Optionee, and upon
which the Optionee is willing to accept from the Company an option to purchase
shares of the common stock of the Company ("Common Stock").
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AGREEMENTS
2.1 Grant of Incentive Stock Option. Subject to the terms and
conditions hereinafter set forth, the Company grants to the Optionee the right
and option (the "Option) to purchase from the Company all or any part of an
aggregate number of 50,000 shares of Common Stock, authorized but unissued or,
at the option of the Company, treasury stock if available (the "Optioned
Shares").
2.2 Exercise of Option. Subject to the terms and conditions of this
Agreement, the Option may be exercised only by completing and signing a written
notice in substantially the following form:
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I hereby exercise the Option granted to me by Cavco Industries, Inc.
and elect to purchase shares of no par value Common Stock of Cavco
Industries, Inc., for the purchase price to be determined under
Paragraph 2.3 of the Incentive Stock Option Agreement dated the 1st day
of September, 1985.
2.3 Purchase Price. The price to be paid for the Optioned Shares (the
"Purchase Price") shall be $10.00 per share which was not less than the fair
market value (as defined under Section 2(i) of the Plan) of the Optioned Shares
as determined by the Board on the Grant Date, or, in the case of an option
granted to an employee who, on the Grant Date, owns ten percent (10%) or more of
the Common Stock, as such amount is calculated under Section 422A(b)(6) of the
Internal Revenue Code, as amended ("Code"), not less than one hundred and ten
percent (110%) of the fair market value of the Optioned Stock.
2.4 Payment of Purchase Price. Payment of the Purchase Price may be
made as follows:
(a) In United States dollars in cash or by check, bank draft or money
order payable to the Company, or
(b) At the discretion of the Board, through the delivery of shares of
Common Stock with an aggregate fair market value at the date of such
delivery, equal to the Purchase Price, or
(c) By a combination of both (a) and (b) above, or
(d) In the manner provided in Section 2.5 below.
The Board shall determine acceptable methods for tendering Common Stock as
payment upon exercise of an Option and may impose such limitations and
conditions on the use of Common Stock to exercise an Option as it deems
appropriate.
2.5 Loans of Guarantees. The Board may, in its absolute discretion and
without any obligation to do so, assist Optionee in the exercise of this Option
by:
(a) Authorizing the extension of a loan to Optionee from the Company;
or
(b) Permitting Optionee to pay the exercise price for the Shares in
installments over a period of years; or
(c) Authorizing a guaranty by the Company of a third-party loan to
Optionee.
The terms of any loan, installment, method of payment or guaranty (including the
interest rate and terms of repayment) shall be established by the Board, in its
sole discretion.
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2.6 Reduction in Optioned Shares. The number of Optioned Shares to
which an Optionee is entitled shall be reduced by the number of Optioned Shares
purchased by Optionee.
2.7 Exercisability of Option. Subject to the provisions of Paragraph
2.9, and except as otherwise provided in Paragraphs 2.10 and 2.11, the Option
may be exercised by the Optionee only while in the employ of the Company which
shall include any parent ("Parent") or subsidiary ("Subsidiary") corporation of
the Company (as defined in Sections 425(e) and (f), respectively, of the Code)
in whole or in part from time to time during the period beginning August 18,
1995, but only in accordance with the following schedule:
Cumulative Percentage of
Elapsed Number of Years Shares Subject To An
After Grant Date Option Which May Be Exercised
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None None
One 10%
Two 20%
Three 30%
Four 40%
Five 50%
Six 60%
Seven 70%
Eight 80%
Nine 90%
Ten 100%
Provided, however, that as provided in Paragraph 2.8, no part of the Option
shall be exercised prior to the expiration by reason of lapse of time or
exercise in full or all incentive stock options granted to Optionee by Company
prior to the Grant Date.
2.8 Sequential Exercise. Not withstanding any other provision of the
Agreement, the Option may not be exercised while there is outstanding any
incentive stock option which was granted, before the Grant Date, to the Optionee
to purchase the Common Stock of the Company or any other corporation which, on
the Grant Date, was a Parent or Subsidiary of the Company or any predecessor of
such a Parent or Subsidiary. Any incentive stock option shall be considered
outstanding until exercised in full or until it expires by reason of lapse of
time. For the purposes of the Agreement, the term "incentive stock option" shall
mean an option which is intended to qualify as an incentive stock option within
the meaning of Section 422A of the Code.
2.9 Termination of Option. Except as otherwise provided herein, the
Option, to the extent not heretofore exercised, shall terminate upon the first
to occur of the following dates:
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(a) The date on which the Optionee's employment by the Company is
terminated except if such termination is voluntary with the consent of
the Board, or occurs due to retirement with the consent of the Board,
death or disability within the meaning of Section 105(d)(4) of the
Code;
(b) Thirty (30) days after voluntary termination with the consent of
the Board or termination due to retirement with the consent of the
Board;
(c) Ninety (90) days after termination due to disability within the
meaning of Section 105(d)(4) of the Code;
(d) One hundred eighty (180) days after the Optionee's death; or
(e) August 18, 2005 (being the expiration of ten (10) years from the
Grant Date).
2.10 Adjustments. In the event of any merger, consolidation, stock
dividend, split-up, combination or exchange of shares or recapitalization or
change in capitalization, the number and kind of Optioned Shares (including any
Option outstanding after termination of employment or death) and the Option
Price per share shall be proportionately and appropriately adjusted without any
change in the aggregate Option Price to be paid therefor upon exercise of the
Option. The determination by the Board as to the terms of any of the foregoing
adjustments shall be conclusive and binding.
2.11 Acquisition. If any person, corporation or other entity or group
thereof (the "Acquiror") directly or indirectly makes an acquisition (an
"Acquisition"), other than by merger or consolidation or purchase from Company,
of the beneficial ownership (as that term is used in Section 13(d)(1) of the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder) of shares of Common Stock which, when added to any other shares the
beneficial ownership of which is held by the Acquiror, shall have more than
twenty percent (20%) of the votes that are entitled to be cast at meetings of
stockholders, any portion of the Option which was not currently exercisable
pursuant to Paragraph 2.7 prior to the date of the Acquisition becomes
immediately exercisable and Optionee may elect, during the period commencing on
the date of the Acquisition and ending at the close of business on the thirtieth
(30th) day following the date of the Acquisition, to exercise the Option in
whole or in part. In the event the thirtieth (30th) day referred to in this
paragraph shall fall on a day that is not a business day, then the thirtieth
(30th) day shall be deemed to be the next following business day.
2.12 Notices. Any notice to be given under the terms of the Agreement
("Notice") shall be addressed to the Company in care of its Secretary at 000
Xxxx Xxxxxxx Xxxx Xxxx, Xxxxx X000, Xxxxxxx, Xxxxxxx 00000, or at its then
current corporate headquarters. Notice to be given to the Optionee shall be
addressed to him at his then current residential address as appearing on the
payroll records.
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Notice shall be deemed duly given when enclosed in a properly sealed envelope
and deposited by certified mail, return receipt requested, in a post office or
branch post office regularly maintained by the United States Government.
2.13 Notification of Disposition of Shares. The Optionee hereby
acknowledges that a disposition of shares of Common Stock acquired upon the
exercise of the Option within two (2) years from the Grant Date or within one
(1) year after the transfer of such shares of Common Stock to him would result
in detrimental income tax consequences to the Optionee.
The Optionee hereby agrees to promptly notify the Company of any disposition of
shares of Common Stock within either of the above time limitations.
2.14 Modification of Agreement. The Board may at any time and from time
to time direct that the Agreement be modified in such respects deemed advisable
in order that the Option shall constitute an incentive stock option pursuant to
Section 422A of the code.
2.15 Transferability of Option. The option shall not be transferable by
the Optionee otherwise than by the will or the laws of descent and distribution,
and may be exercised during the life of the Optionee only by the Optionee.
2.16 Optionee Not A Shareholder. The Optionee shall not be deemed for
any purposes to be a shareholder of the Company with respect to any of the
Optioned Shares except to the extent that the Option herein granted shall have
been exercised with respect thereto and a stock certificate issued therefor.
2.17 Disputes Or Disagreements. As a condition of the granting of the
Option herein granted, the Optionee agrees, for himself, his personal
representative and his beneficiary(s), that any disputes or disagreements which
may arise under or as a result of or pursuant to this Agreement shall be
determined by the Board in its sole discretion, and that any interpretation by
the Board of the terms of this Agreement shall be final, binding and conclusive.
IN WITNESS WHEREOF, the company has caused this instrument to be executed by its
duly authorized officer, and the Optionee has hereunto affixed his signature.
ATTEST:
CAVCO INDUSTRIES, INC.
/s/ Xxxxxx Xxxx /s/ Xx Xxxxxx
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Assistant Secretary President
/s/ Xxx Xxxxxx
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Optionee
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