XXXXXXX XXXX HOMES
STOCK OPTION AGREEMENT
EXHIBIT 7.3
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into as
of the date set forth on Exhibit A hereto by and between Xxxxxxx Xxxx Homes, a
Delaware corporation (the "Company"), and the individual set forth on Exhibit A
hereto (the "Optionee").
A. Pursuant to the Xxxxxxx Xxxx Homes 2000 Stock Incentive Plan (the
"Plan"), the Administrator has determined that it is to the advantage and best
interest of the Company to grant to Optionee this option (the "Option") to
purchase the number of shares of the Common Stock of the Company (the "Shares")
set forth on Exhibit A hereto, at the exercise price determined as provided
herein, and in all respects subject to the terms, definitions and provisions of
the Plan, which is incorporated herein by reference.
B. Unless otherwise defined herein, capitalized terms used in this
Agreement shall have the meanings set forth in the Plan.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the Optionee and the Company hereby agree as follows:
1. Grant and Terms of Stock Option.
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1.1 Grant of Option. The Company hereby grants to the Optionee the right
and option to purchase, subject to the terms and conditions set forth in the
Plan and this Agreement, all or any part of the number of shares of the Common
Stock of the Company set forth on Exhibit A hereto at the purchase price per
share equal to the exercise price per Share set forth on Exhibit A.
1.2 Vesting and Exercisability. Subject to the provisions of the Plan and
the other provisions of this Agreement, this Option shall vest and become
exercisable with respect to 33.4% of the Shares subject to this Option on the
initial vesting date set forth on Exhibit A hereto (the "Initial Vesting Date").
Thereafter, on each subsequent anniversary of the Initial Vesting Date, this
Option shall become vested and exercisable with respect to an additional 33.3%
of the Shares subject to this Option. In the event of termination of Optionee's
Continuous Status as an Employee, Director or Consultant for any reason, with or
without Cause, including as a result of death or Disability, this Option shall
immediately cease vesting and shall be cancelled to the extent of the number of
Shares as to which this Option has not vested as of the date of termination.
1.3 Term of Option. No portion of this Option may be exercised more than
ten years from the date of this Agreement. In the event of termination of
Optionee's Continuous Status as an Employee, Director or Consultant, this Option
shall be cancelled as to any unvested Shares as provided in Section 1.2, and
shall terminate and be cancelled with respect to any vested Shares on the
earlier of (i) the expiration of the ten year period set forth in the first
sentence of this Section 1.3, or (ii) 30 days after termination of Optionee's
Continuous Status as an Employee, Director or Consultant (or 6 months in the
case of termination as a result of Optionee's Disability or death); provided,
however, if Optionee's Continuous Status as an Employee, Director or Consultant
is terminated for Cause, this entire Option shall be cancelled and terminated as
of the date of such termination and shall no longer be exercisable as to any
Shares, whether or not previously vested.
2. Method of Exercise.
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2.1 Delivery of Notice of Exercise. This Option shall be exercisable by
written notice in the form attached hereto as Exhibit B which shall state the
election to exercise this Option, the number of Shares in respect of which this
Option is being exercised, and such other representations and agreements with
respect to such Shares as may be required by the Company pursuant to the
provisions of this Agreement and the Plan. Such written notice shall be signed
by Optionee (or by Optionee's beneficiary or other person entitled under the
Plan to exercise this Option in the event of Optionee's death) and shall be
delivered in person or by certified mail to the Secretary of the Company. The
written notice shall be accompanied by payment of the exercise price. This
Option shall not be deemed exercised until the Company receives such written
notice accompanied by the exercise price and any other applicable terms and
conditions of this Agreement are satisfied. This Option may not be exercised for
a fraction of a Share.
2.2 Restrictions on Exercise. No Shares will be issued pursuant to the
exercise of this Option unless and until there shall have been full compliance
with all applicable requirements of the Securities Act of 1933, as amended
(whether by registration or satisfaction of exemption conditions), all
Applicable Laws, and all applicable listing requirements of any national
securities exchange or other market system on which the Common Stock is then
listed. As a condition to the exercise of this Option, the Company may require
Optionee to make any representation and warranty to the Company as may be
necessary or appropriate, in the judgment of the Administrator, to comply with
any Applicable Law.
2.3 Method of Payment. Payment of the exercise price shall be made in full
at the time of exercise in cash or by check payable to the order of the Company,
or, subject in each case to the advance approval of the Administrator in its
sole discretion, by delivery of shares of Common Stock already owned by
Optionee, by delivery of a full recourse promissory note made by Optionee in
favor of the Company or by any combination of the foregoing. Shares of Common
Stock used to satisfy the exercise price of this Option shall be valued at their
Fair Market Value determined on the date of exercise (or if such date is not a
business day, as of the close of the business day immediately preceding such
date). In addition, the Administrator may impose such other conditions in
connection with the delivery of shares of Common Stock in satisfaction of the
exercise price as it deems appropriate in its sole discretion, including without
limitation a requirement that the shares of Common Stock delivered have been
held by the Optionee for a specified period of time. Any promissory note
delivered pursuant to this Section 2.3 shall have terms and provisions
(including, without limitation, those relating to the maturity date, payment
schedule and interest rate) as determined by the Administrator in its sole
discretion, shall be secured by the Shares acquired and shall comply with all
Applicable Laws (including, without limitation, state and federal margin
requirements).
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3. Non-Transferability of Option. This Option may not be transferred in any
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manner otherwise than by will or by the laws of descent or distribution or to a
beneficiary designated pursuant to the Plan, and may be exercised during the
lifetime of Optionee only by Optionee. Subject to all of the other terms and
conditions of this Agreement, following the death of Optionee, this Option may,
to the extent it remained unexercised (but vested and exercisable by Optionee in
accordance with its terms) on the date of death, be exercised by Optionee's
beneficiary or other person entitled under the Plan to exercise this Option in
the event of Optionee's death. Notwithstanding the first sentence of this
Section 3, (i) if this Option is a Nonqualified Stock Option, this Option may be
assigned pursuant to a qualified domestic relations order as defined by the
Code, and exercised by the spouse of the Optionee who obtained such Option
pursuant to such qualified domestic relations order, and (ii) this Option may be
assigned, in connection with the Optionee's estate plan, in whole or in part,
during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more of such
immediate family members. Rights under the assigned portion may be exercised by
the person or persons who acquire a proprietary interest in such Option pursuant
to the assignment. The terms applicable to the assigned portion shall be the
same as those in effect for the Option immediately before such assignment and
shall be set forth in such documents issued to the assignee as the Administrator
deems appropriate. For purposes of this Section 3, the term "immediate family"
means an individual's spouse, children, stepchildren, grandchildren and parents.
3.1 Optionee's Beneficiary Designation Form. Attached to this Agreement as
Exhibit C is a form pursuant to which Optionee may designate a beneficiary, and
if such beneficiary predeceases Optionee, a contingent beneficiary. If Optionee
is married and designates a beneficiary other than Optionee's spouse, Optionee's
spouse must sign the spousal consent form on Exhibit C for such designation to
be effective. Any transfer of Options to a beneficiary shall be subject to, and
in compliance with, the terms and conditions of this Agreement, the Plan, and
all applicable laws.
4. General.
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4.1 Governing Law. This Agreement shall be governed by and construed under
the laws of the state of Delaware applicable to Agreements made and to be
performed entirely in Delaware, without regard to the conflicts of law
provisions of Delaware or any other jurisdiction.
4.2 Notices. Any notice required or permitted under this Agreement shall
be given in writing by express courier or by postage prepaid, United States
registered or certified mail, return receipt requested, to the address set forth
below or to such other address for a party as that party may designate by 10
days advance written notice to the other parties. Notice shall be effective upon
the earlier of receipt or 3 days after the mailing of such notice.
If to the Company: Xxxxxxx Xxxx Homes
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx X. Cable, President and C.O.O.
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If to Optionee, at the address set forth on Exhibit A hereto.
4.3 Community Property. Without prejudice to the actual rights of the
spouses as between each other, for all purposes of this Agreement, the Optionee
shall be treated as agent and attorney-in-fact for that interest held or claimed
by his or her spouse with respect to this Option and the parties hereto shall
act in all matters as if the Optionee was the sole owner of this Option. This
appointment is coupled with an interest and is irrevocable.
4.4 Modifications. This Agreement may be amended, altered or modified only
by a writing signed by each of the parties hereto.
4.5 Additional Documents. Each party agrees to execute any and all further
documents and writings, and to perform such other actions, which may be or
become reasonably necessary or expedient to be made effective and carry out this
Agreement.
4.6 No Third-Party Benefits. Except as otherwise expressly provided in
this Agreement, none of the provisions of this Agreement shall be for the
benefit of, or enforceable by, any third-party beneficiary.
4.7 Successors and Assigns. Except as provided herein to the contrary,
this Agreement shall be binding upon and inure to the benefit of the parties,
their respective successors and permitted assigns.
4.8 No Assignment. Except as otherwise provided in this Agreement, the
Optionee may not assign any of his, her or its rights under this Agreement
without the prior written consent of the Company, which consent may be withheld
in its sole discretion. The Company shall be permitted to assign its rights or
obligations under this Agreement, but no such assignment shall release the
Company of any obligations pursuant to this Agreement.
4.9 Severability. The validity, legality or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect.
4.10 Equitable Relief. The Optionee acknowledges that, in the event of a
threatened or actual breach of any of the provisions of this Agreement, damages
alone will be an inadequate remedy, and such breach will cause the Company
great, immediate and irreparable injury and damage. Accordingly, the Optionee
agrees that the Company shall be entitled to injunctive and other equitable
relief, and that such relief shall be in addition to, and not in lieu of, any
remedies they may have at law or under this Agreement.
4.11 Arbitration.
4.11.1 General. Any controversy, dispute, or claim between the parties
to this Agreement, including any claim arising out of, in connection with, or in
relation to the formation, interpretation, performance or breach of this
Agreement shall be settled exclusively by arbitration, before a single
arbitrator, in accordance with this section 4.11 and the then most applicable
rules of the American Arbitration Association. Judgment upon any award rendered
by the arbitrator may be entered by any state or federal court having
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jurisdiction thereof. Such arbitration shall be administered by the American
Arbitration Association. Arbitration shall be the exclusive remedy for
determining any such dispute, regardless of its nature. Notwithstanding the
foregoing, either party may in an appropriate matter apply to a court for
provisional relief, including a temporary restraining order or a preliminary
injunction, on the ground that the award to which the applicant may be entitled
in arbitration may be rendered ineffectual without provisional relief. Unless
mutually agreed by the parties otherwise, any arbitration shall take place in
the City of Newport Beach, California.
4.11.2 Selection of Arbitrator. In the event the parties are unable to
agree upon an arbitrator, the parties shall select a single arbitrator from a
list of nine arbitrators drawn by the parties at random from a list of nine
persons (which shall be retired judges or corporate or litigation attorneys
experienced in stock options and buy-sell agreements) provided by the office of
the American Arbitration Association having jurisdiction over Newport Beach,
California. If the parties are unable to agree upon an arbitrator from the list
so drawn, then the parties shall each strike names alternately from the list,
with the first to strike being determined by lot. After each party has used four
strikes, the remaining name on the list shall be the arbitrator. If such person
is unable to serve for any reason, the parties shall repeat this process until
an arbitrator is selected.
4.11.3 Applicability of Arbitration; Remedial Authority. This
agreement to resolve any disputes by binding arbitration shall extend to claims
against any parent, subsidiary or Affiliate of each party, and, when acting
within such capacity, any officer, director, shareholder, employee or agent of
each party, or of any of the above, and shall apply as well to claims arising
out of state and federal statutes and local ordinances as well as to claims
arising under the common law. In the event of a dispute subject to this
paragraph the parties shall be entitled to reasonable discovery subject to the
discretion of the arbitrator. The remedial authority of the arbitrator (which
shall include the right to grant injunctive or other equitable relief) shall be
the same as, but no greater than, would be the remedial power of a court having
jurisdiction over the parties and their dispute. The arbitrator shall, upon an
appropriate motion, dismiss any claim without an evidentiary hearing if the
party bringing the motion establishes that he or it would be entitled to summary
judgement if the matter had been pursued in court litigation. In the event of a
conflict between the applicable rules of the American Arbitration Association
and these procedures, the provisions of these procedures shall govern.
4.11.4 Fees and Costs. Any filing or administrative fees shall be
borne initially by the party requesting arbitration. The Company shall be
responsible for the costs and fees of the arbitration, unless the Optionee
wishes to contribute (up to 50%) of the costs and fees of the arbitration.
Notwithstanding the foregoing, the prevailing party in such arbitration, as
determined by the arbitrator, and in any enforcement or other court proceedings,
shall be entitled, to the extent permitted by law, to reimbursement from the
other party for all of the prevailing party's costs (including but not limited
to the arbitrator's compensation), expenses, and attorneys' fees.
4.11.5 Award Final and Binding. The arbitrator shall render an award
and written opinion, and the award shall be final and binding upon the parties.
If any of the provisions of this paragraph, or of this Agreement, are determined
to be unlawful or
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otherwise unenforceable, in whole or in part, such determination shall not
affect the validity of the remainder of this Agreement, and this Agreement shall
be reformed to the extent necessary to carry out its provisions to the greatest
extent possible and to insure that the resolution of all conflicts between the
parties, including those arising out of statutory claims, shall be resolved by
neutral, binding arbitration. If a court should find that the arbitration
provisions of this Agreement are not absolutely binding, then the parties intend
any arbitration decision and award to be fully admissible in evidence in any
subsequent action, given great weight by any finder of fact, and treated as
determinative to the maximum extent permitted by law.
4.12 Headings. The section headings in this Agreement are inserted only as
a matter of convenience, and in no way define, limit, extend or interpret the
scope of this Agreement or of any particular section.
4.13 Number and Gender. Throughout this Agreement, as the context may
require, (a) the masculine gender includes the feminine and the neuter gender
includes the masculine and the feminine; (b) the singular tense and number
includes the plural, and the plural tense and number includes the singular; (c)
the past tense includes the present, and the present tense includes the past;
(d) references to parties, sections, paragraphs and exhibits mean the parties,
sections, paragraphs and exhibits of and to this Agreement; and (e) periods of
days, weeks or month mean calendar days, weeks or months.
4.14 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.15 Complete Agreement. This Agreement and the Plan constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof.
[SIGNATURE PAGE FOLLOWS]
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[COMPANY SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth herein above.
XXXXXXX XXXX HOMES
By: /s/ XXXXXXX XXXX
------------------------------------
Xxxxxxx Xxxx
Chairman and C.E.O.
By: /s/ XXXX X. CABLE
------------------------------------
Xxxx X. Cable
President and C.O.O.
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[OPTIONEE SIGNATURE PAGE]
GRANT DATE: 5-9-00
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
SECTION 1.2 HEREOF IS EARNED ONLY BY CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR
OR CONSULTANT AS DEFINED IN THE PLAN (NOT THROUGH THE ACT OF BEING HIRED OR
RETAINED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT OF THE COMPANY FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL.
NOTHING IN THIS AGREEMENT OR THE PLAN SHALL LIMIT IN ANY MANNER WHATSOEVER THE
RIGHT OR POWER OF THE COMPANY OR THE OPTIONEE TO TERMINATE OPTIONEE'S
RELATIONSHIP WITH THE COMPANY WITH OR WITHOUT CAUSE.
OPTIONEE ACKNOWLEDGES RECEIPT OF A COPY OF THE PLAN. OPTIONEE REPRESENTS
THAT HE IS FAMILIAR WITH THE TERMS AND PROVISIONS OF THE PLAN, AND HEREBY
ACCEPTS THIS OPTION SUBJECT TO ALL OF THE TERMS AND PROVISIONS THEREOF. OPTIONEE
ALSO ACKNOWLEDGES THAT THE GRANT OF THIS OPTION, THE PURCHASE OF SHARES UPON
EXERCISE OF THIS OPTION, AND THE SALE OF SUCH SHARES HAS IMPORTANT TAX
IMPLICATIONS. OPTIONEE HAS REVIEWED THE PLAN AND THIS OPTION IN THEIR ENTIRETY,
HAS HAD AN OPPORTUNITY AND HAS BEEN ENCOURAGED TO OBTAIN THE ADVICE OF HIS OR
HER INDEPENDENT LEGAL COUNSEL AND TAX ADVISOR PRIOR TO EXECUTING THIS OPTION AND
FULLY UNDERSTANDS ALL PROVISIONS OF THIS OPTION. OPTIONEE HEREBY AGREES TO
ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE
BOARD OR THE ADMINISTRATOR UPON ANY QUESTIONS ARISING UNDER THE PLAN.
/s/ XXXX X. CABLE
-----------------------------------------
Optionee's Signature
Name Printed: XXXX X. CABLE
---------------------------
Date Signed: 8/11/00
---------------------------
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CONSENT OF SPOUSE TO AGREEMENT
GRANT DATE: 5-9-00
By his or her signature below, the spouse of Optionee affirms that he/she
has read in its entirety and agrees to be bound by all of the terms and
conditions of the foregoing Agreement and the Plan, including, but not limited
to, the provisions of the Plan which state that an Optionee's beneficiary
designation shall be deemed automatically revoked if the Optionee names a spouse
as beneficiary and the marriage is later dissolved, and that the interest in
Options of a spouse of an Optionee who has predeceased the Optionee or whose
marriage has been dissolved shall automatically pass to the Optionee, and shall
not be transferable by such spouse in any manner.
/s/ XXXXX X. CABLE
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Optionee's Spouse's Signature:
Name Printed: XXXXX X. CABLE
--------------------------------
Date Signed: 8/11/00
--------------------------------
OR Optionee Check Here if Not Applicable _____
==
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EXHIBIT A
STOCK OPTION GRANT INFORMATION
Date of Grant: 5-9-00
Name of Optionee: Xxxx X. Cable
Number of Shares of Common Stock: 50,000
Exercise Price per Share: $8.6875
Nature of the Option: Nonqualified Stock Option
Initial Vesting Date: 33.4% on 5-9-01;
33.3% on 5-9-02;
33.3% on 5-9-03.
Expiration Date: 5-9-10
Optionee Address: Xxxx X. Cable
0 Xxxxxxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
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EXHIBIT B
NOTICE OF EXERCISE OF STOCK OPTION
----------------------------------
Xxxxxxx Xxxx Homes
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxx X. Cable, President and C.O.O.
Ladies and Gentlemen:
The undersigned hereby elects to exercise the option indicated below::
Option Grant Date: 5-9-00
Type of Option: Nonqualified Stock Option
Number of Shares Being Exercised: ____________
Exercise Price Per Share: $8.6875
Total Exercise Price: $_____________
Method of Payment: ______________
Enclosed herewith is payment in full of the total exercise price and a copy
of the Option Agreement.
My exact name, current address and social security number for purposes of
the stock certificates to be issued and the shareholder list of the Company are:
Name:__________________________________
Address:_______________________________
_______________________________
Social Security Number:________________
Sincerely,
Dated:_________________ ________________________________________
(Optionee's Signature)
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EXHIBIT C
OPTIONEE'S BENEFICIARY DESIGNATION
----------------------------------
GRANT DATE: 5-9-00
Beneficiary's Name: /s/ XXXXX X. CABLE
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Beneficiary's Relationship to Optionee: Wife
----------------------------------------
Beneficiary's Address: 1 Pinehurst
---------------------------------------------------------
Newport Beach
---------------------------------------------------------
California 92660
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Contingent Beneficiary's Name:
-------------------------------------------------
Contingent Beneficiary's Relationship to Optionee:
-----------------------------
Contingent Beneficiary's Address:
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********************************************************************************
Note: If a married Optionee designates a Beneficiary other than the Optionee's
==== ----------
spouse, the Optionee's spouse must acknowledge and approve below:
------------------------------------------------
Optionee's Spouse's Signature
Name Printed:
----------------------------------
Date Signed:
-----------------------------------
OR Optionee Check Here if Not Applicable _______
==
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