1
[NON-EMPLOYEE
DIRECTORS]
NCI BUILDING SYSTEMS, INC.
STOCK OPTION AGREEMENT
--------------------------------------------------------------------------------
NCI Building Systems, Inc. (the "Company") hereby grants an option to
purchase shares of its Common Stock, $0.01 par value, to:
---------------------------
Optionee
The option is granted on the following terms and conditions:
1. NUMBER OF SHARES AND PRICE. The number of shares subject to
this option, and the exercise price, are:
------------------ -------------------
Number of Shares Exercise Price
Per Share
2. OPTION PERIOD. The term of this option (the "Option Period")
will commence on the date of grant noted below, and will expire at 5:00 o'clock
p.m. Houston time on the earlier of (i) the 30th day after termination of
Optionee's directorship with the Company for any reason other than death,
permanent disability (as determined in the sole discretion of the Board of
Directors of the Company) or retirement at or after Normal Retirement Age; (ii)
one year after the death or permanent disability of Optionee or the retirement
of Optionee at or after Normal Retirement Age; or (iii) the expiration date
noted below. After the expiration date, no further shares may be purchased
under this option.
------------------ -------------------
Date of Grant Expiration Date
3. VESTING. Effective on each anniversary of the date of grant
of this option, 25% of the option shares shall become vested and will be
available thereafter for purchase by Optionee during the remaining term of the
Option Period, provided that, on each such vesting date, the Optionee has
served continuously as a director of the Company since the date of grant of
this option. If the Optionee dies or becomes permanently disabled (as
determined in the sole discretion of the Board of Directors of the Company) or
retires from such directorship at or after Normal Retirement Age, 100% of the
shares subject to his options will become vested and immediately available for
purchase by the Optionee, or in the case
2
of death of the Optionee, by the person(s) specified in Section 7(b) of this
Agreement.
4. VESTING UPON CHANGE OF CONTROL. If the Company proposes to
sell substantially all of its assets or to be a party to any merger,
consolidation or corporate reorganization, or if any other person or entity
makes a tender or exchange offer for stock of the Company, and as a result of
any such transaction the stockholders of the Company immediately prior to the
consummation thereof would own 50.1% or less of the equity or voting power of
the surviving, resulting or purchasing corporation that is outstanding
immediately following the consummation thereof, then 100% of the option shares
will become vested and immediately available for purchase by Optionee, and the
Optionee will be entitled to receive, for the aggregate exercise price payable
upon exercise of this option, in lieu of the Common Stock otherwise issuable to
him upon exercise of this option, the same kind and amount of securities or
assets as may be distributable upon such sale, merger, consolidation or
corporate reorganization, to a holder of the number of shares of Common Stock
of the company into which this option is convertible immediately prior to the
date of such transactions.
5. EXERCISE OF OPTION. Subject to Section 6 below, this option
shall be exercisable at any time and from time to time after the date of grant
and on or prior to its expiration date, in whole or in part with respect to any
portion of the option shares that has become vested at the time of exercise.
No fractional shares will be issued. If an exercise covers a fractional share,
the number of shares to be issued on exercise will be rounded to the next
lowest share and the exercise price for the fraction will be returned to
Optionee.
6. RIGHT TO EXERCISE; RESTRICTIONS. This option shall be
exercisable during its term only by Optionee and only if, at the time of
exercise, Optionee has served as director of the Company since the date of
grant of this option, except that:
(a) Optionee may exercise this option, with respect only
to shares that were vested on the date of termination of his
directorship with the Company, for a period of thirty days after such
termination;
(b) If Optionee should die while serving as a director of
the Company, this option may be exercised by the estate of Optionee or
by a person who acquired the right to exercise this option by bequest
or inheritance or by reason of the death of Optionee for a period of
one year after the death of Optionee; and
(c) If Optionee should become permanently disabled (as
determined in the sole discretion of the Board of Directors of the
Company) or retire at or after Normal Retirement Age while
2
3
serving as a director of the Company, Optionee may exercise this
option for a period of one year after such event.
For purposes of this option, a director shall have served continuously
as a director until such director resigns from the Board of Directors, is
removed with or without cause by the Board of Directors or stockholders or
fails to be re-elected as a director upon the expiration of his current term.
This option may not be exercised, or if exercised no shares need be
issued by the Company, unless and until the Company has obtained all necessary
approvals and consents of government authorities and other persons such as
lenders to the Company.
7. MANNER OF EXERCISE. This option shall be exercisable by a
written notice which:
(a) States the election to exercise this option and the
number of shares with respect to which it is being exercised;
(b) Contains an undertaking to provide such information as is
required, in the discretion of counsel for the Company, to determine
whether an exemption from registration of such shares is available
under federal and applicable state securities laws and to make such
representations and warranties regarding the Optionee's investment
intent as such counsel may require; and
(c) Is signed by the Optionee or other person or persons
authorized to exercise this option and, if signed by a person other
than the Optionee, is accompanied by appropriate evidence or proof of
the authority or right of such person to exercise this option.
The written notice shall be accompanied by cash or a check in the amount of the
exercise price for the total number of shares being purchased.
8. NON-TRANSFERABILITY. This option may not be transferred or
assigned in any manner by Optionee otherwise than by will or the laws of
descent and distribution, and may be exercised only by Optionee during his
lifetime.
9. RIGHTS AS STOCKHOLDER. Optionee shall have no rights as a
stockholder with respect to any shares covered by this option, until such time
as a certificate is issued to him for the shares. Except as provided in
Section 10, no adjustment will be made for dividends or other rights of
stockholders for which the record date is prior to the issuance of a
certificate for the shares.
10. CAPITAL ADJUSTMENTS. If all or any portion of this option is
exercised subsequent to any stock dividend, stock split,
3
4
combination or exchange of shares, recapitalization, merger, consolidation,
separation, reorganization or other similar transaction of or by the Company,
as a result of which shares of any class are issued with respect to outstanding
shares of Common Stock of the Company or the shares of Common Stock are changed
into the same or a different number of shares of the same or another class or
classes of shares, Optionee will be entitled to receive, for the aggregate
exercise price payable upon exercise of this option, the aggregate number and
class of shares equal to the number and class of shares the Optionee would have
had on the date of exercise had the shares been purchased for the same
aggregate purchase price at the date this option was granted and had not been
disposed of, taking into consideration such stock dividend, stock split,
combination or exchange of shares, recapitalization, merger, consolidation,
separation, reorganization or other similar transaction; provided that no
fractional share will be issued upon any such exercise and the aggregate price
paid will be appropriately reduced on account of any fractional share not
issued.
11. RESERVATION OF SHARES. The Company will reserve, out of its
treasury shares or out of authorized but previously unissued shares, such
number of the shares of its Common Stock or other class of shares as are from
time to time issuable hereunder.
12. NOTICES. Each notice relating to this option will be in
writing and delivered in person or by certified mail to the proper address.
Each notice will be deemed to have been given on the date it is received.
Notices to the Company will be mailed or delivered to it at its principal
office, 0000 Xxxxxxxx, Xxxxxxx, Xxxxx, 00000 Attention: Secretary. Notices to
Optionee will be addressed to Optionee at his home address as reflected on the
personnel records of the Company. Any party may change its address for notices
under this option by giving a notice to that effect in accordance with this
Section 12.
13. BENEFITS OF AGREEMENT. This option agreement shall inure to
the benefit of and be binding upon each successor of the Company, and upon the
heirs, legal representatives and successors of Optionee. This option agreement
shall be the sole and exclusive source of any and all rights which Optionee,
his heirs, legal representatives or successors may have with respect to the
shares subject to this option.
14. RESOLUTION OF DISPUTES. Any dispute or disagreement about the
interpretation, construction or application of this option agreement will be
determined by the Board of Directors of the Company. Any determination made by
the Board of Directors will be final, binding and conclusive for all purposes.
15. STOCK OPTION PLAN. This option is granted pursuant to the NCI
Nonqualified Stock Option Plan as amended from time to
4
5
time. In the event of any conflict or inconsistency between the terms and
conditions of the Plan and the terms and conditions of this option agreement,
the terms and provisions of the Plan shall be controlling. Capitalized terms
used in this option agreement and not otherwise deferred herein shall have the
meanings set forth in the Plan.
IN WITNESS WHEREOF, the Company and Optionee have caused this option
agreement to be executed as of the date of grant noted above.
OPTIONEE NCI BUILDING SYSTEMS, INC.
By:
----------------------------- --------------------------------------
Optionee C. A. Xxxxxxx, Jr.
Chairman of the Board
5
