SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
AMERICAN HOME MORTGAGE HOLDINGS, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01
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(Title of Class of Securities)
02660M108
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(CUSIP Number)
MICHAEL STRAUSS, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN HOME MORTGAGE HOLDINGS, INC., 12 EAST 49TH STREET, NEW YORK, NY 10017
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
SEPTEMBER 30, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the
following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP NO. 02660M108
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SCHEDULE 13D
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CUSIP NO. 02660M108 PAGE 2 OF 34 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MICHAEL STRAUSS
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)(A) [ ]
(B) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
PF, OO
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7 SOLE VOTING POWER
5,089,606
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY - 0 -
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 5,089,606
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10 SHARED DISPOSITIVE POWER
- 0 -
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,089,606
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See
Instructions) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
67.9%
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14 TYPE OF REPORTING PERSON (See Instructions)
IN
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ITEM 1. SECURITY AND ISSUER.
This Statement relates to shares of common stock, $0.01 par value
per share (the "Common Stock"), of American Home Mortgage Holdings, Inc. (the
"Corporation"). The Corporation's principal executive office is located at 12
East 49th Street, New York, NY 10017.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This Statement is being filed by Michael Strauss (the "Reporting
Person").
(b) The business address of the Reporting Person is: c/o American
Home Mortgage Holdings, Inc., 12 East 49th Street, New York, NY 10017.
(c) The Reporting Person's present principal occupation is: Chairman
of the Board, Chief Executive Officer, President and Director of the
Corporation. The principal business of the Corporation is the provision (through
its wholly-owned subsidiary, American Home Mortgage Corp. (the "Subsidiary")) of
retail mortgage banking services and the origination of residential mortgage
loans. The address of the Corporation is: 12 East 49th Street, New York, NY
10017.
(d) During the past five years, the Reporting Person has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the past five years, the Reporting Person has not been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction, as a result of which he was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
(f) The Reporting Person is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The Reporting Person purchased 100 shares of Common Stock from the
Corporation on June 30, 1999, for $1,000. On September 29, 1999, the Reporting
Person acquired 4,999,900 shares of Common Stock in exchange for all of the
issued and outstanding shares held by the Reporting Person in the Subsidiary,
pursuant to the Stock Subscription Agreement, between the Reporting Person and
the Corporation, dated September 29, 1999 (the "Subscription Agreement"), a copy
of which is attached hereto as EXHIBIT A. On October 1, 1999, the Reporting
Person purchased an additional 89,606 shares of Common Stock for $500,002, in
connection with the Corporation's initial public offering of 2,500,000 shares of
Common Stock.
All of the cash used to purchase such shares was provided from
personal funds.
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ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Person has acquired his beneficial ownership in the
shares of Common Stock for investment purposes. The Reporting Person does not
have any present plan or proposal as a stockholder which relates to, or would
result in any action with respect to, the matters listed in paragraphs (b)
through (j) of Item 4 of Schedule 13D. In the future, the Reporting Person may
decide to purchase additional shares of Common Stock in the open market or a
private transaction, or to sell any or all of his shares of Common Stock.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) According to the Prospectus, dated September 30, 1999, relating
to the Corporation's offering of 2,500,000 shares of Common Stock, as of
September 30, 1999, the Corporation had issued and outstanding 7,500,000 shares
of Common Stock.
The Reporting Person is the beneficial owner of 5,089,606 shares of
Common Stock or 67.9% of the outstanding Common Stock.
(b) The Reporting Person has the sole power to vote, or to direct
the vote of, 5,089,606 shares of Common Stock and sole power to dispose of, or
to direct the disposition of, 5,089,606 shares of Common Stock.
(c) On September 29, 1999, the Reporting Person acquired 4,999,900
shares of Common Stock in exchange for all of the issued and outstanding shares
held by the Reporting Person in the Subsidiary, pursuant to the Subscription
Agreement. On October 1, 1999, the Reporting Person purchased an additional
89,606 shares of Common Stock for $500,002, in connection with the Corporation's
initial public offering of 2,500,000 shares of Common Stock.
(d) Not applicable.
(e) Not applicable.
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PAGE 5 OF 34 PAGES
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
The Reporting Person is a party to a Lock-up Agreement, dated
September 30, 1999 (the "Lock-up Agreement"), with Friedman, Billings, Ramsey &
Co., Inc. and Advest, Inc., as representatives of the underwriters party to the
Underwriting Agreement, dated September 30, 1999, executed by the Corporation in
connection with the public offering of 2,500,000 shares of Common Stock. The
Lock-up Agreement provides that for the 540-day period beginning September 30,
1999 and ending March 23, 2001, the Reporting Person will not (1) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any equity
securities of the Corporation or any securities convertible into or exercisable
or exchangeable for equity securities of the Corporation or (2) enter into any
swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of equity securities of the Corporation,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in cash or otherwise. A
copy of the Lock-up Agreement is attached hereto as EXHIBIT B.
Pursuant to the Employment Agreement, dated August 26, 1999, between
the Corporation and the Reporting Person (the "Employment Agreement"), a copy of
which is attached hereto as EXHIBIT C, the Reporting Person is entitled to
participate in all of the Corporation's incentive plans and equity compensation
plans in which senior officers of the Corporation participate, including the
Corporation's 1999 Omnibus Stock Incentive Plan (the "Stock Incentive Plan"), a
copy of which is attached hereto as EXHIBIT D. No options or other awards under
the Stock Incentive Plan have been granted to the Reporting Person to date. In
addition, the Employment Agreement provides that in the event of a Change in
Control (as defined in the Employment Agreement), the Reporting Person will be
granted stock-based incentives no less often than annually under terms and
conditions no less favorable than those granted to other senior officers or
previously granted to the Reporting Person during specified periods and in
specified minimum amounts.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A - Stock Subscription Agreement, dated September 29,
1999 between Michael Strauss and American Home Mortgage
Holdings, Inc.
Exhibit B - Lock-up Agreement, dated September 30, 1999, between
Michael Strauss, Friedman, Billings, Ramsey & Co., Inc.
and Advest, Inc., as representatives of the underwriters
party to the Underwriting Agreement, dated September 30,
1999, with American Home Mortgage Holdings, Inc.
Exhibit C - Employment Agreement, dated as of August 26,
1999 between American Home Mortgage
Holdings, Inc. and Michael Strauss.
Exhibit D - American Home Mortgage Holdings, Inc. 1999
Omnibus Stock Incentive Plan, effective as of September
23, 1999.
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SIGNATURE.
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: October 13, 1999
MICHAEL STRAUSS
/S/ MICHAEL STRAUSS
EXHIBIT A
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AMERICAN HOME MORTGAGE HOLDINGS, INC.
12 East 49th Street
New York, NY 10017
September 29, 1999
STOCK SUBSCRIPTION AGREEMENT
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American Home Mortgage Holdings, Inc., a Delaware corporation (the
"Company"), hereby accepts the offer from Michael Strauss, the sole shareholder
of American Home Mortgage Corp., a New York corporation (the "Subsidiary"),
exchanging 200 shares of the Subsidiary's common stock for 4,999,900 shares of
the Company's common stock.
Very truly yours,
AMERICAN HOME MORTGAGE HOLDINGS, INC.
By: /S/ MICHAEL STRAUSS
---------------------------------
Name: Michael Strauss
Title: Chief Executive Officer
/S/ MICHAEL STRAUSS
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Michael Strauss
EXHIBIT B
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LOCK-UP AGREEMENT FOR OFFICERS, DIRECTORS AND
STOCKHOLDERS
September 30, 1999
Friedman, Billings, Ramsey & Co., Inc.
Advest, Inc.
c/o Friedman, Billings, Ramsey & Co., Inc.
as Representatives of the several Underwriters
1001 19th Street North
Arlington, Virginia 22209
Ladies and Gentlemen:
The undersigned understands and agrees as follows:
1. Friedman, Billings, Ramsey & Co., Inc. ("FBR") and Advest, Inc.
propose to enter into an Underwriting Agreement (the "Underwriting
Agreement") with American Home Mortgage Holdings, Inc., a Delaware
corporation (the "Company"), providing for the public offering (the "Public
Offering") by the several Underwriters, including FBR and Advest, Inc. (the
"Underwriters"), of 2,500,000 shares (the "Shares") of the Common Stock,
$0.01 par value, of the Company (the "Common Stock"), and in connection
therewith, the Company has filed a registration statement, File No.
333-82409 (the "Registration Statement") with the Securities and Exchange
Commission.
2. After consultation, the Company, FBR and Advest, Inc., acting as
representatives of the Underwriters for the Public Offering, have agreed
that sales by the undersigned within the 540-day period after the date of
effectiveness of the Registration Statement could have an adverse effect on
the market price for the Common Stock and that the public to whom the
Common Stock is being offered should be protected for a reasonable time
from the impact of such sales.
3. It is in the best interest of the Company and its officers,
directors and stockholders to have a successful public offering and stable
and orderly public market thereafter.
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of FBR on behalf of the
Underwriters, he will not, during the period commencing on the effective date of
the Registration Statement and ending 540 days after the date of the final
prospectus relating to the Public Offering, (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option,
B-1
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right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any equity securities of the Company or any securities
convertible into or exercisable or exchangeable for equity securities of the
Company or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
equity securities of the Company, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without regard to principles of conflict of laws.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to the Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
/S/ MICHAEL STRAUSS
-------------------------------
Michael Strauss
12 East 49th Street
New York, NY 10017
B-2
EXHIBIT C
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EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of August 26, 1999 (this
"Agreement"), is by and between American Home Mortgage Holdings, Inc., a
Delaware corporation having (the "Company"), and Michael Strauss (the
"Executive").
Whereas the Company wishes to assure itself of the services of the
Executive, and the Executive desires to be employed by the Company, upon the
terms and conditions hereinafter set forth.
Now, therefore, the Company and the Executive hereby agree as
follows:
1. DEFINITIONS. Unless defined elsewhere in this Agreement,
capitalized terms contained herein shall have the meanings set forth or
incorporated by reference in Section 19.
2. EMPLOYMENT. The Company agrees to employ the Executive, and the
Executive hereby accepts such employment by the Company and/or any subsidiary of
the Company, during the term set forth in Section 3 and on the other terms and
conditions of this Agreement.
3. TERM.
(a) The term of this Agreement shall commence as of the closing of
the Company's initial public offering, and, subject to Section 3(b), shall
terminate at the close of business on the third anniversary of that date.
(b) The term of this Agreement set forth in Section 3(a) shall be
extended or further extended, as the case may be, without any action by the
Company or the Executive, on the third anniversary of the date hereof and on
each subsequent anniversary of the date hereof, for an additional period of one
year, until either party gives written notice to the other party in advance of
any anniversary of the date hereof, in the manner set forth in Section 15, that
the term in effect when such notice is given is not to be extended or further
extended, as the case may be, beyond the year following the next anniversary. If
the Executive shall continue in the full-time employment of the Company after
the term of this Agreement, such continued employment shall be at will, and
otherwise subject to the terms and conditions of this Agreement.
4. POSITION, DUTIES AND RESPONSIBILITIES, RIGHTS.
(a) During the term of this Agreement, the Executive shall serve as,
and be elected to and hold the office and title of Chairman of the Board,
President and Chief Executive Officer of the Company. As such, the Executive
shall report only to the Board of Directors of the Company, and shall have all
of the powers and duties usually incident to the office of Chairman of the Board
and Chief Executive Officer, and shall have powers to perform such other
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reasonable additional duties as may from time to time be lawfully assigned to
the Executive by the Board of Directors.
(b) During the term of this Agreement, the Board of Directors and
the stockholders of the Company shall cause the Executive to be elected and
re-elected to the Board of Directors of the Company or its subsidiaries (and to
be appointed to any committees thereof), and the Executive agrees, if elected,
to serve on such Board(s) of Directors and committee(s) during the term of this
Agreement, without any additional compensation beyond that provided in this
Agreement.
(c) During the term of this Agreement, the Executive agrees to
devote substantially all the Executive's time, efforts and skills to the affairs
of the Company during the Company's normal business hours, except for vacations,
illness and incapacity, but nothing in this Agreement shall preclude the
Executive from devoting reasonable periods to (i) manage the Executive's
personal investments, (ii) participate in professional, educational, public
interest, charitable, civic or community activities, including activities
sponsored by trade organizations, and (iii) serve as a director or member of an
advisory committee of any corporation not in competition with the Company or any
of its subsidiaries, or as an officer, trustee or director of any charitable,
educational, philanthropic, civic, social or industry organizations, or as a
speaker or arbitrator, provided that the performance of the Executive's duties
or responsibilities in any of such capacities does not materially interfere with
the regular performance of the Executive's duties and responsibilities
hereunder.
5. PLACE OF PERFORMANCE. In connection with the Executive's
employment by the Company, the Executive shall be based at the Company's
principal executive offices, and shall not be required to be absent therefrom on
travel status or otherwise for more than a reasonable time each year as
necessary or appropriate for the performance of the Executive's duties
hereunder.
6. COMPENSATION.
(a) During the term of this Agreement, the Company shall pay the
Executive, and the Executive agrees to accept a base salary at the rate of not
less than $ 350,000.00 per year, with increases in such rate in accordance with
the Company's regular administrative practices of salary increases applicable to
senior officers from time to time during the term of this Agreement (the annual
base salary as increased from time to time during the term of this Agreement
being hereinafter referred to as the "Base Salary"). The Base Salary shall be
paid in installments no less frequently than monthly. Any increase in Base
Salary or other compensation shall not limit or reduce any other obligation of
the Company hereunder, and once established at an increased specified rate, the
Executive's Base Salary hereunder shall not thereafter be reduced.
(b) During the term of this Agreement, the Executive shall be a full
participant in any and all of the Company's short and long-term incentive plans
and equity compensation plans in which senior officers of the Company
participate that are in effect on the date hereof or that may hereafter be
adopted, including, without limitation, the Company's 1999 Omnibus Stock
Incentive Plan (the "Stock Incentive Plan"), with at least the same reward
opportunities, if any, that are provided to other senior officers of the Company
from time to time
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during the term of this Agreement, provided that in no event shall the Executive
be granted stock options, restricted stock awards or other stock-based long-term
incentives after a Change in Control less often than annually, nor on terms and
conditions (including performance goals) less favorable to the Executive than
those which (a) are granted to officers or employees of similar position and
status in the Company, or (b) were granted to the Executive during the term of
this Agreement prior to such Change in Control (or, if shorter, during the three
years preceding the Change in Control), nor on fewer than the following number
of shares:
(i) the average annual number of shares awarded (in the case of
restricted stock awards), or underlying options granted, to the Executive
during the term of this Agreement prior to such Change in Control (or, if
shorter, during the two years preceding the Change in Control); or
(ii) if greater than the number described in clause (i) above,
the number of shares whose Fair Market Value on the date the shares are
optioned or awarded to the Executive equals the average annual Fair Market
Value (determined on the respective grant or award date) of the shares
that were optioned or awarded to the Executive during the term of this
Agreement prior to such Change in Control (or, if shorter, during the two
years preceding the Change in Control).
(c) During the term of this Agreement, the Executive shall be
eligible to receive a bonus in the discretion of the Company's Board of
Directors.
(d) During the term of this Agreement, the Executive shall be
entitled to (i) perquisites, including, without limitation, an office and
secretarial and clerical staff, (ii) use of an automobile, and expenses incurred
therewith by the Executive, and (iii) fringe benefits, including, without
limitation, parking and health insurance, in each case at least equal to, and on
the same terms and conditions as, those attached to the Executive's office on
the date hereof, as the same may be improved from time to time during the term
of this Agreement, as well as to reimbursement, upon proper accounting, of all
reasonable expenses and disbursements incurred by the Executive in the course of
the Executive's duties.
(e) The Executive, the Executive's dependents and beneficiaries
shall be entitled to all benefits and service credit for benefits during the
term of this Agreement to which senior officers of the Company and their
dependents and beneficiaries are entitled as the result of the employment of
such officers during the term of this Agreement under the terms of employee
plans and practices of the Company and its subsidiaries, including, without
limitation, any pension plans, profit sharing plans, any non-qualified deferred
compensation plans and related "rabbi" trusts, the Company's life insurance
plans, its disability benefit plans, its vacation and holiday pay plans, its
medical, dental and welfare plans, and other present or successor plans and
practices of the Company and its subsidiaries for which senior officers, their
dependents and beneficiaries are eligible, and to all payments and other
benefits under any such plan or practice subsequent to the term of this
Agreement as a result of participation in such plan or practice during the term
of this Agreement.
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7. TERMINATION OF EMPLOYMENT.
(a) The term of this Agreement shall terminate upon the death of the
Executive.
(b) The Company may terminate the Executive's employment during the
term of this Agreement for Cause as provided in Section 7(b)(i) or in the event
of Disability as provided in Section 7(b)(ii).
(i) This Agreement shall be considered terminated for "Cause'
only:
(A) if the Executive willfully and repeatedly fails to
substantially perform the Executive's duties hereunder, other than
by reason of a Disability;
(B) if the Executive is grossly negligent or engages in
gross misconduct in the performance of the Executive's duties
hereunder;
(C) if the Executive knowingly engages in an act of
dishonesty intended to result in substantial personal enrichment at
the expense of the Company, an act of fraud or embezzlement, or any
conduct resulting in a felony conviction;
and, in the case of each of clauses (A), (B) and (C) above, the applicable
conditions set forth in Section 7(e) are satisfied.
Anything in this Section 7(b) to the contrary notwithstanding, the
Executive's employment shall in no event be considered terminated by the
Company for Cause if termination takes place (I) as the result of bad
judgment or negligence on the part of the Executive other than gross
negligence or willful or reckless misconduct, (II) for any act or omission
in respect of which a determination could properly be made that the
Executive met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of expenses of an officer or
director under the Bylaws or Certificate of Incorporation of the Company
or the laws of the State of Delaware or the directors' or officers'
liability insurance of the Company in each case as in effect at the time
of such act or omission, (III) as the result of an act or omission which
occurred more than three calendar months prior to the Executive's having
been given Notice of Termination for such act or omission unless the
commission of such act or such omission was not or could not reasonably
have been, at the time of such commission or omission, known to a member
of the Board of Directors (other than the Executive) , in which case more
than three calendar months from the date the commission of such act or
such omission was or could reasonably have been so known, (IV) as the
result of a continuing course of action which commenced and was or could
reasonably have been known to a member of the Board of Directors (other
than the Executive) more than three calendar months prior to Notice of
Termination having been given to the Executive for such course of action,
or (V) because of an act or omission believed by the Executive in good
faith to have been in, or not opposed to, the interests of the Company.
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(ii) The term "Disability" as used in this Agreement means an
accident or physical or mental illness which prevents the Executive from
substantially performing the Executive's duties hereunder for six
consecutive months. The term of this Agreement shall end as of the close
of business on the last day of such six month period but without prejudice
to any payments due to the Executive in respect of disability under this
Agreement or any plan or practice of the Company. The amount of any
payments payable under Section 6(a) during such six month period shall be
reduced by any payments to which the Executive may be entitled for the
same period because of disability under any disability or pension plan or
arrangement of the Company or any subsidiary or affiliate thereof.
(c) The Executive may terminate the Executive's employment during
the term of this Agreement for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean (i) any assignment to the Executive without the
Executive's express written consent of any duties, functions, authority or
responsibilities other than those contemplated by, or any material limitation or
expansion without the Executive's express written consent of the duties,
functions authority or responsibilities of the Executive in any respect not
contemplated by, Section 4(a), including, without limitation, a change in
reporting relationships, any such assignment, limitation or expansion being
deemed a continuing breach of this Agreement, (ii) a reduction of the
Executive's rate of compensation or any other failure by the Company to comply
with Section 6, (iii) failure by the Company to comply with Section 5, (iv)
failure by the Company to obtain the assumption of, and the agreement to
perform, this Agreement by any successor as contemplated in Section 11(a), (v)
such assignment, limitation or expansion described in the foregoing clause (i),
reduction described in the foregoing clause (ii) or failure described in the
foregoing clauses (ii), (iii) or (iv), as the case may be, is not cured within
30 days after receipt by the Company of written notice from the Executive
describing such event or (vi) a determination by the Executive made in good
faith that, as a result of a detrimental change in circumstances after a Change
in Control significantly affecting the Executive's position, the Executive is
unable properly to carry out all of the authorities, powers, functions, duties
and responsibilities attached to the Executive's position and contemplated by
Section 4(a), and the situation is not remedied within 30 days after receipt by
the Company of written notice from the Executive of such determination.
(d) Notwithstanding anything to the contrary set forth herein,
subject to the Bylaws of the Company, the Board of Directors shall have the
right by majority vote of the entire membership of the Board of Directors to
terminate the Executive's employment for any reason other than Cause at any
time, subject to the consequences of such termination as set forth in Section 8.
(e) In no event shall the Company be entitled to terminate the
Executive's employment during the term of this Agreement for Cause pursuant to
Section 7(b), unless and until all of the following take place, provided that
Sections 7(e)(i) through (iii) shall not apply to any termination for Cause
pursuant to Section 7(b)(i)(C):
(i) the Secretary of the Company, pursuant to a resolution duly
adopted by the affirmative vote of not less than a majority of the entire
membership of the Board of Directors at a meeting called for that purpose,
gives written notice to the Executive (the "Warning Notice") setting forth
with particularity (A) the specific provision of this
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Agreement that the Executive is alleged to have failed to satisfy, (B) the
acts or omissions alleged to constitute such failure, (C) the date on
which the Executive shall be given a reasonable opportunity to appear
before and be heard by the Board of Directors concerning the allegations,
which date shall be not less than 30 nor more than 90 days after the
Executive's receipt of the Warning Notice, and (D) the loss of rights
under this Agreement that shall occur unless the Executive diligently and
in good faith takes reasonable steps to remedy such failure within 30 days
after the Executive's receipt of the Warning Notice; and
(ii) the Executive does not diligently and in good faith take
all reasonable steps to remedy such failure within 30 days after the
Executive's receipt of the Warning Notice; and
(iii) the Executive is given a reasonable opportunity to appear
before and be heard by the Board of Directors concerning the allegations,
in accordance with the Warning Notice; and
(iv) the Secretary of the Company gives the Executive a
certified copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board of Directors
after any opportunity to appear before the Board of Directors required by
Section 7(e)(iii), at a meeting called for that purpose, that sets forth
the Board of Director's finding that the Executive both (A) failed to
satisfy the specific provision of this Agreement set forth in the Warning
Notice previously given, or if no such Warning Notice is required pursuant
to this Section 7(c), the specific provision of the Agreement set forth in
such resolution, and (B) if Sections 7(e)(i) through (iii) apply, did not
diligently and in good faith take all reasonable steps to remedy such
failure within 30 days after the Executive's receipt of the Warning
Notice, and that in all cases specifies the particulars thereof in detail.
(f) Any termination by the Company pursuant to Section 7(b) or by
the Executive pursuant to Section 7(c) shall be communicated by a written Notice
of Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which indicates the specific
termination provision in this Agreement relied upon and sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provisions so indicated.
(g) "Date of Termination" shall mean (i) if the Executive's
employment is terminated by the Executive's death, the date of the Executive's
death, (ii) if the Executive's employment is terminated pursuant to Section
7(b)(ii), 30 days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of the Executive's duties
on a full-time basis during such 30 day period), and (iii) if the Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given.
8. COMPENSATION ON TERMINATION. The parties recognize and agree
that, if the Company terminates the Executive's employment during the term of
this Agreement other than pursuant to Section 7(b), or if, in connection with or
following a Change in Control, the Executive's position is eliminated or the
Executive is no longer the chief executive officer of the
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Company with all power, authority and responsibility normally attended to such
office and consistent with his prior position, or if the Executive terminates
the Executive's employment during the term of this Agreement for Good Reason
pursuant to Section 7(c), the actual damages to the Executive would be difficult
if not impossible to ascertain and agree that the Executive's sole remedy shall
be a right to receive amounts determined and paid in accordance with the
provisions of this Section 8. The Executive shall not be required to mitigate
the amount of any payment provided for in this Section 8 by seeking other
employment or otherwise, nor shall any compensation earned by the Executive in
other employment or otherwise reduce the amount of any payment provided for in
this Section 8.
(a) If the Company shall terminate the Executive's employment during
the term of this Agreement other than pursuant to Section 7(b), or if, in
connection with or following a Change in Control, the Executive's position is
eliminated or the Executive is no longer the chief executive officer of the
Company with all power, authority and responsibility normally attendant to such
office and consistent with his prior position, or if the Executive shall
terminate the Executive's employment during the term of this Agreement for Good
Reason pursuant to Section 7(c), then, as severance pay or liquidated damages or
both:
(i) the Company shall pay the Executive the Executive's full
Base Salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, together with any other amounts
payable to the Executive under Section 6 for periods prior to the Date of
Termination and all outstanding stock options shall become immediately
vested and exercisable;
(ii) the Company shall pay the Executive a lump sum payment, on
the tenth day after the Date of Termination, equal to 299% of (A) the Base
Salary at the rate in effect as of the Date of Termination, plus (B) the
average annual incentive award awarded to the Executive by the Company or
any subsidiary of the Company for any of the five most recent fiscal years
for which annual incentive award determinations were made before the Date
of Termination, except as limited by applicable law; provided, however,
that notwithstanding the foregoing, under no circumstances shall the
Company pay the Executive a payment that would result in an "Excess
Parachute Payment," as defined in Section 280G(b) of the Code; provided,
further, that in the event any payment under this clause (ii) would
constitute an Excess Parachute Payment, such payment shall be reduced to
the extent necessary so that the payment does not constitute an Excess
Parachute Payment; and
(iii) the Company shall pay any amounts payable under Section
17.
(b) If the Executive's employment terminates under any circumstance
that does not entitle the Executive to payments under Section 8(a) (including a
termination by reason of the death or Disability of the Executive, or by reason
of the Company or the Executive electing not to extend or further extend the
term of this Agreement pursuant to Section 3(b)), the Executive shall not be
entitled to receive any compensation under Section 6 accruing after the date of
such termination, or any payment under Section 8(a) (other than Section 9).
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(c) Nothing in Section 8(a) or 8(b) shall deprive the Executive of
any rights, payments, benefits or service credit for benefits after termination
of employment which were earned pursuant to any provision of this Agreement or
any plan or practice of the Company on or prior to such termination including,
without limitation, any pension or welfare benefits and any rights under the
Company's pension, deferred compensation or stock option or other benefit plans
and any legal fees and expenses payable pursuant to Section 17.
9. INDEMNIFICATION. The Company shall indemnify the Executive to the
fullest extent permitted by the General Corporation Law of the State of
Delaware, as amended from time to time, for all amounts (including, without
limitation, judgments, fines, settlement payments, expenses and attorneys' fees)
incurred or paid by the Executive in connection with any action, suit,
investigation or proceeding arising out of or relating to the performance by the
Executive of services for, or the acting by the Executive as a director, officer
or employee of, the Company, or any subsidiary of the Company or any other
Person at the Company's request. Nothing in this Section 9 or elsewhere in this
Agreement is intended to prevent the Company from indemnifying the Executive to
any greater extent than is required by this Section 9.
10. NON-COMPETITION; NON-SOLICITATION.
(a) In consideration of this Agreement, the Executive agrees that,
for the period ending on the later of (i) the first anniversary of the
termination of the Executive's employment with the Company by the Company for
Cause or by the Executive without Good Reason, and (ii) the third anniversary of
the closing of the Company's initial public offering (the "Non-Competition
Period"), the Executive will not, directly or indirectly (whether as a sole
proprietor, partner or venturer, stockholder, director, officer, employee,
consultant or in any other capacity as principal or agent or through any Person,
subsidiary or employee acting as nominee or agent):
(i) conduct or engage in or be interested in or associated with
any Person which conducts or engages in the AHM Business within the United
States;
(ii) take any action, directly or indirectly, to finance,
guarantee or provide any other material assistance to any Person engaged
in the AHM Business;
(iii) solicit, contact or accept business of any client or
counterparty whom the Company served or conducted business with or whose
name became known to the Executive as a potential client or counterparty
while in the employ of the Company or during the Non-Competition Period;
or
(iv) influence or attempt to influence any Person that is a
contracting party with the Company at any time during the Non-Competition
Period to terminate any written or oral agreement with the Company.
For purposes of this Section 10, the term "AHM Business" shall mean
the mortgage banking business as conducted by the Company and any business
involving the supply of services substaintially similar to services provided by
the Company at the time of the termination of the Executive's employment.
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(b) The Executive shall not, whether for the Executive's own account
or in conjunction with or on behalf of any other Person, solicit or entice away
from the Company any officer, employee or customer of the Company during the
term hereof or the Non-Competition Period nor engage, hire, employ, or induce
the employment of any such Person whether or not such officer, employee or
customer would commit a breach of contract by reason of leaving service or
transferring business.
(c) The restrictive provisions hereof shall not prohibit the
Executive from (i) having an equity interest in the securities of any entity
engaged in the Business or any business with respect to which the Executive
obtained confidential or proprietary data or information, which entity's
securities are listed on a nationally-recognized securities exchange or
quotation system or traded in the over-the-counter market, to the extent that
such interest does not exceed 5% of the outstanding equity interests of such
entity, (ii) investing as a passive investor in an entity engaging in the
Business that is not so listed or traded, so long as such interest does not
exceed 5% of the outstanding equity interests of such entity or (iii) with the
prior written consent of the Company, serving as a director or other advisor to
any other Person.
(d) The Executive agrees that the covenants contained in this
Section 10 are reasonable covenants under the circumstances, and further agrees
that if in the opinion of a court of competent jurisdiction, such restraint is
not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of these covenants
which as to such court shall appear not reasonable and to enforce the remainder
thereof as so amended.
11. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the extent
that the Company would be required to perform it if no such succession had taken
place; provided that no such agreement with a successor shall release the
Company without the Executive's express written consent. Failure of the Company
to obtain such agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to compensation
from the Company in the same amount and on the same terms as the Executive would
be entitled to hereunder if the Executive's employment were terminated by the
Company other than pursuant to Section 7(b), except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
(b) If the Executive should die while any amounts are due and
payable to the Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of the Agreement to the
Executive's devisees, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
(c) Except as to withholding of any tax under the laws of the United
States or any state or locality, neither this Agreement nor any right or
interest hereunder nor any amount payable at any time hereunder shall be subject
in any manner to alienation, sale, transfer,
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assignment, pledge, attachment, or other legal process, or encumbrance of any
kind by the Executive or the beneficiaries of the Executive or by legal
representatives without the Company's prior written consent, nor shall there be
any right of set-off or counterclaim in respect of any debts or liabilities of
the Executive, the Executive's beneficiaries or legal representatives against
any right or interest hereunder or any amount payable at any time hereunder to
the Executive, the Executives beneficiaries or legal representatives; provided,
however, that nothing in this Section 11 shall preclude the Executive from
designating a beneficiary to receive any benefit payable on the Executive's
death, or the legal representatives of the Executive from assigning any rights
hereunder to the Person or Persons entitled thereto under the Executive's will
or, in case of intestacy, to the Person or Persons entitled thereto under the
laws of intestacy applicable to the Executive's estate.
12. PARTIES. This Agreement shall be binding upon and shall inure to
the benefit of the Company and the Executive, the Executive's heirs,
beneficiaries and legal representatives.
13. ENTIRE AGREEMENT; AMENDMENT.
(a) This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof and supersedes any and all other
agreements between the parties with respect to the subject matter hereof.
(b) Any amendment of this Agreement shall not be binding unless in
writing and signed by both (i) an officer or director of the Company duly
authorized to do so and (ii) the Executive.
14. ENFORCEABILITY. In the event that any provision of this
Agreement is determined to be invalid or unenforceable, the remaining terms and
conditions of this Agreement shall be unaffected and shall remain in full force
and effect, and any such determination of invalidity or enforceability shall not
affect the validity or enforceability of any other provision of this Agreement.
15. NOTICES. All notices which may be necessary or proper for either
the Company or the Executive to give to the other shall be in writing and shall
be sent by hand delivery, registered or certified mail, return receipt
requested, overnight courier or facsimile, if to the Executive, to him at c/o
American Home Mortgage Holdings, Inc., 12 East 49th Street, New York, New York
10017 and, if to the Company, to it at its principal executive offices at 12
East 49th Street, New York, NY 10017, Attention: Human Resources Officer,
Facsimile: 212-546-6834, with a copy to Cadwalader, Wickersham & Taft, 100
Maiden Lane, New York, New York 10038, Attention: Louis Bevilacqua, Esq.,
Facsimile: 212-504-6666, and shall be deemed given when sent, provided that any
Notice of Termination or other notice given pursuant to Section 7 shall be
deemed given only when received. Either party may by like notice to the other
party change the address at which the Executive or it is to receive notices
hereunder.
16. GOVERNING LAW. THIS AGREEMENT IS EXECUTED IN THE STATE OF NEW
YORK AND SHALL BE GOVERNED BY, AND BE ENFORCEABLE IN
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ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
17. LEGAL FEES AND EXPENSES. To induce the Executive to execute this
Agreement and to provide the Executive with reasonable assurance that the
purposes of this Agreement will not be frustrated by the cost of its enforcement
should the Company fail to perform its obligations under this Agreement, the
Company shall pay and be solely responsible for any reasonable attorneys' fees
and expenses and court costs incurred by the Executive and any of the
Executive's beneficiaries, heirs or legal representatives as a result of the
Company's failure to perform this Agreement or any provision hereof to be
performed by the Company.
18. EFFECTIVE DATE. This Agreement shall become effective upon
completion of the Company's initial public offering.
19. DEFINITIONS. The following terms, when capitalized in this
Agreement, shall have the meanings set forth or incorporated by reference in
this Section 19.
(a) "Base Salary" shall have the meaning set forth in Section 6(a).
(b) "Board of Directors" means the Board of Directors of the
Company, as constituted from time to time.
(c) "Cause" shall have the meaning set forth in Section 7(b)(i).
(d) "Change in Control" means a change in control of the Company of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A under the Exchange Act, whether or not the
Company is subject to the Exchange Act at such time; provided, however, that
without limiting the generality of the foregoing, such a Change in Control shall
in any event be deemed to occur if and when:
(i) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), other than the Rhode Family Members, the
Company, its subsidiaries and affiliates (as defined in Rule 12b-2 under
the Exchange Act), becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing (A) more than 15% of the combined voting power of the
Company's then outstanding securities, and (B) more than the percentage of
the combined voting power of the Company's then outstanding securities
beneficially owned, directly or indirectly, at that time by the Rhode
Family Members;
(ii) stockholders approve a merger or consolidation as a result
of which securities representing less than 70% of the combined voting
power of the outstanding voting securities of the surviving resulting
corporation will be beneficially owned, directly or indirectly, in the
aggregate by the former stockholders of the Company;
(iii) stockholders approve either (A) an agreement for the sale
or disposition of all or substantially all of the Company's assets to an
entity which is not a subsidiary of the Company, or (B) a plan of complete
liquidation; or
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(iv) the Persons who were members the Board of Directors
immediately before a tender offer by any Person other than the Company or
a subsidiary or affiliate of the Company, or before a merger,
consolidation, or contested election, or before any combination of such
transactions, cease to constitute a majority of the Board of Directors as
a result of such transaction or transactions.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Company" means American Home Mortgage Holdings, Inc., a
Delaware corporation, and any successors to its business and/or assets, which
executes and delivers an agreement provided for in Section 11(a) or which
otherwise becomes bound by all the terms and conditions of this Agreement by
operation of law.
(g) "Date of Termination" shall have the meaning set forth in
Section 7(g).
(h) "Disability" shall have the meaning set forth in Section
7(b)(ii).
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Fair Market Value" means Fair Market Value as defined in the
Stock Incentive Plan.
(k) "Good Reason" shall have the meaning set forth in Section 7(c).
(l) "Non-Competition Period" shall have the meaning set forth in
Section 10(a).
(m) "Notice of Termination" shall have the meaning set forth in
section 7(f).
(n) "Person" means any individual, corporation, partnership, limited
liability company, limited duration company, trust or other entity of any nature
whatsoever.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
American Home Mortgage Holdings, Inc.
By: /S/ MICHAEL STRAUSS
---------------------------------
Name: Michael Strauss
Title: President and CEO
/S/ MICHAEL STRAUSS
-------------------------------------
Michael Strauss
EXHIBIT D
---------
AMERICAN HOME MORTGAGE HOLDINGS, INC.
1999 OMNIBUS STOCK INCENTIVE PLAN
Adopted on August 16, 1999
Effective as of September 23, 1999
1. Purpose. The purpose of the American Home Mortgage Holdings,
Inc. 1999 Omnibus Stock Incentive Plan (the "Plan") is to maintain the ability
of American Home Mortgage Holdings, Inc. (the "Company") and its subsidiaries to
attract and retain highly qualified and experienced employees, officers and
directors and to give such employees, officers and directors a continued
proprietary interest in the success of the Company and its subsidiaries.
Pursuant to the Plan, such employees, officers and directors will be offered the
opportunity to acquire the Company's Common Stock, par value $.0l per share (the
"Common Stock"), through the grant of options, stock appreciation rights in
tandem with such options, the award of restricted stock under the Plan, bonuses
payable in stock or a combination thereof. Unless the context clearly indicates
otherwise, references herein to "option" or "options" shall include any tandem
stock appreciation right that may be granted in connection with such option or
options in accordance with Section 6(f). As used herein, the term "subsidiary"
shall mean any present or future corporation which is or would be a "subsidiary
corporation" of the Company as the term is defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended from time to time (the "Code").
2. Administration of the Plan. The Plan shall be administered by
a compensation committee (the "Committee") as appointed from time to time by the
Board of Directors of the Company (the "Board"), which Committee shall consist
of not less than two members of the Board; provided, however, that with respect
to members of the Committee and any other directors who (i) are not employees of
the Company or any of its subsidiaries or affiliates and (ii) are otherwise not
eligible for selection to participate in any other plan of the Company or any of
its subsidiaries or affiliates that entitles the participant therein to acquire
securities or derivative securities of the Company ("Nonemployee Directors"),
the Plan shall be administered by the entire Board, and accordingly, with
respect to Committee members and other Nonemployee Directors, references herein
to "Committee" shall mean the entire Board. A majority of the members of the
Committee shall constitute a quorum. The vote of a majority of a quorum shall
constitute action by the Committee.
In administering the Plan, the Committee may adopt rules and
regulations for carrying out the Plan. The interpretation and decision with
regard to any question arising under the Plan made by the Committee shall be
final and conclusive on all employees and directors of the Company and its
subsidiaries participating or eligible to participate in the Plan. The Committee
may consult with counsel, who may be counsel to the Company, and shall not incur
any liability for any action taken in good faith in reliance upon the advice of
counsel. The Committee shall determine the employees and directors to whom, and
the time or times at which, grants or awards shall be made and the number of
shares to be included in the grants or awards. Within the limitations of the
Plan, the number of shares for which options will be granted from
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time to time and the periods for which the options will be outstanding will be
determined by the Committee.
Each option or stock or other awards granted pursuant to the Plan
shall be evidenced by an option agreement or award agreement (an "Agreement").
An Agreement shall not be a precondition to the granting of options or stock or
other awards; however, no person shall have any rights under any option or stock
or other awards granted under the Plan unless and until the person to whom such
option or stock or other award shall have been granted shall have executed and
delivered to the Company an Agreement. The Committee shall prescribe the form of
all Agreements. A fully executed original of the Agreement shall be provided to
both the Company and the recipient of the grant or award.
3. Shares of Stock Subject to the Plan. The total number of
shares that may be optioned or awarded under the Plan is 750,000 shares of
Common Stock except that said number of shares shall be adjusted as provided in
Section 13. Any shares subject to an option which for any reason expires or is
terminated unexercised and any restricted stock which is forfeited may again be
optioned or awarded under the Plan. Shares subject to the Plan may be either
authorized and unissued shares or issued shares acquired by the Company or its
subsidiaries.
4. Eligibility. Key salaried employees, including officers, and
directors of the Company and its subsidiaries are eligible to be granted options
and awarded restricted stock under the Plan and to have their bonuses payable in
stock. The maximum number of shares of Common Stock that shall be available for
the grant of options intended to be incentive stock options, as defined in
Section 422 of the Code, shall be 750,000 shares (subject to adjustment as
provided in Section 13 hereof). The employees and directors who shall receive
awards or options under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible, which may be based
upon information furnished to the Committee by the Company's management, and the
Committee shall determine, in its sole discretion, the number of shares to be
covered by the award or awards and by the option or options granted to each such
employee or director selected. Such key salaried employees and directors who are
selected to participate in the Plan shall be referred to collectively herein as
"Participants." In no event shall any Participant who is a key employee be
granted stock options with respect to more than 150,000 shares of Common Stock
in any calendar year (subject to adjustment as provided in Section 13 hereof).
5. Duration of the Plan. No award or option may be granted under
the Plan more than ten years from the date the Plan is adopted by the Board or
the date the Plan receives shareholder approval, whichever is earlier, but
awards or options theretofore granted may extend beyond that date.
6. Terms and Conditions of Stock Options. All options granted
under this Plan shall be either incentive stock options, as defined in Section
422 of the Code, or options other than incentive stock options; provided,
however, that all options granted to Nonemployee Directors shall be nonstatutory
stock options not intended to qualify as incentive stock options entitled to
special tax treatment under Section 422 of the Code. Each such option shall be
subject to all the applicable provisions of the Plan, including the following
terms and conditions,
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and to such other terms and conditions not inconsistent therewith as the
Committee shall determine.
(a) The option price per share shall be determined by the
Committee. However, subject to Section 6(k), the option price of incentive stock
options shall not be less than 100% of the Fair Market Value of a share of
Common Stock at the time the option is granted. For purposes of the Plan, the
"Fair Market Value" on any date, means (i) if the Common Stock is listed on a
national securities exchange or quotation system, the closing sales prices on
such exchange or quotation system on such date or, in the absence of reported
sales on such date, the closing sales price on the immediately preceding date on
which sales were reported, (ii) if the Common Stock is not listed on a national
securities exchange or quotation system, the mean between the bid and asked
prices as quoted by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") for such date or (iii) if the Common Stock
is neither listed on a national securities exchange or quotation system nor
quoted by NASDAQ, the fair value as determined by such other method as the
Committee determines in good faith to be reasonable.
(b) Each option shall be exercisable pursuant to the attainment of
such performance goals and/or during and over such period ending not later than
ten years from the date it was granted, as may be determined by the Committee
and stated in the Agreement. In no event may an option be exercised more than
ten years from the date the option was granted.
(c) Unless otherwise provided in the Agreement, no option shall be
exercisable within six months from the date of the granting of the option. An
option shall not be exercisable with respect to a fractional share of Common
Stock or with respect to the lesser of 50 shares or the full number of shares
then subject to the option. No fractional shares of Common Stock shall be issued
upon the exercise of an option. If a fractional share of Common Stock shall
become subject to an option by reason of a stock dividend or otherwise, the
optionee shall not be entitled to exercise the option with respect to such
fractional share.
(d) Each Agreement shall state whether the option(s) evidenced
thereby will or will not be treated as incentive stock option(s).
(e) Each option may be exercised by giving written notice to the
Company specifying the number of shares to be purchased, which shall be
accompanied by payment in full including, if required by applicable law, taxes,
if any. Payment, except as provided in the Agreement, shall be made as follows:
(i) in United States dollars by certified check or bank draft; or
(ii) by tendering to the Company shares of Common Stock already
owned for at least six months by the person exercising the option, which
may include shares received as the result of a prior exercise of an
option, and having a Fair Market Value on the date on which the option is
exercised equal to the cash exercise price applicable to such option; or
(iii) by a combination of United States dollars and shares of Common
Stock as aforesaid; or
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(iv) in accordance with a cashless exercise program established by
the Committee in its sole discretion under which either (A) if so
instructed by the optionee, shares may be issued directly to the
optionee's broker or dealer upon receipt of the purchase price in cash
from the broker or dealer, or (B) shares may be issued by the Company to
an optionee's broker or dealer in consideration of such broker's or
dealer's irrevocable commitment to pay to the Company that portion of the
proceeds from the sale of such shares that is equal to the exercise price
of the option(s) relating to such shares; or
(v) in such other manner as permitted by the Committee at the time
of grant or thereafter.
No optionee shall have any rights to dividends or other rights of a
shareholder with respect to shares of Common Stock subject to such optionee's
option until such optionee has given written notice of exercise of such
optionee's option and paid in full for such shares.
(f) Notwithstanding the foregoing, the Committee may, in its sole
discretion, grant to a grantee of an option a right (a "stock appreciation
right") to elect, in the manner described below, in lieu of exercising such
grantee's option for all or a portion of the shares of Common Stock covered by
such option, to relinquish such grantee's option with respect to any or all of
such shares and to receive from the Company a payment having a value equal to
the amount by which (a) the Fair Market Value of a share of Common Stock on the
date of such election, multiplied by the number of shares as to which the
grantee shall have made such election, exceeds (b) the total exercise price for
that number of shares of Common Stock under the terms of such option; provided,
however, that to the extent that a stock appreciation right is exercised by a
Participant who is or may be subject to Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), during the ten-day election period
described in Rule 1.6b-3(e) of the Exchange Act, the amount described in clause
(a) above shall be equal to the highest Fair Market Value of the shares of
Common Stock during such ten-day election period. A stock appreciation right
shall be exercisable at the time the tandem option is exercisable, and the
"expiration date" for the stock appreciation right shall be the expiration date
for the tandem option. A grantee who makes such an election shall receive
payment in the sole discretion of the Committee (i) in cash equal to such excess
or (ii) in the nearest whole number of shares of Common Stock of the Company
having an aggregate Fair Market Value, which is not greater than the cash amount
calculated in clause (i) above; or (iii) a combination of the forms of payment
described in clauses (i) and (ii) above. A stock appreciation right may be
exercised only when the amount described in clause (a) above exceeds the amount
described in clause (b) above. An election to exercise stock appreciation rights
shall be deemed to have been made on the day written notice of such election,
addressed to the Committee, is received at the Company's offices. An option or
any portion thereof with respect to which a grantee has elected to exercise the
stock appreciation rights described above shall be surrendered to the Company
and such option shall thereafter remain exercisable according to its terms only
with respect to the number of shares as to which it would otherwise be
exercisable, less the number of shares with respect to which stock appreciation
rights have been exercised. The grant of a stock appreciation right shall be
evidenced by such form of Agreement as the Committee may prescribe. The
Agreement evidencing stock appreciation rights shall be personal and will
provide that the stock appreciation rights will not be transferable by the
grantee otherwise than by will or the laws of
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descent and distribution and that they will be exercisable, during the lifetime
of the grantee, only by the grantee.
(g) Except as provided in the Agreement, an option may be
exercised only if at all times during the period beginning with the date of the
granting of the option and ending on the date of such exercise, the grantee was
an employee or director of either the Company or of a subsidiary of the Company
or of another corporation referred to in Section 421(a)(2) of the Code. The
Agreement shall provide whether, and if so, to what extent, an option may be
exercised after termination of continuous employment, but any such exercise
shall in no event be later than the termination date of the option. If the
grantee should die, or become permanently disabled as determined by the
Committee in accordance with the Agreement, at any time when the option, or any
portion thereof, shall be exercisable by such grantee, the option will be
exercisable within a period provided for in the Agreement, by the optionee or
person or persons to whom such optionee's rights under the option shall have
passed by will or by the laws of descent and distribution, but in no event at a
date later than the termination of the option. The Committee may require medical
evidence of permanent disability, including medical examinations by physicians
selected by it.
(h) The option by its terms shall be personal and shall not be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution as provided in Section 6(g). During the lifetime of an
optionee, the option shall be exercisable only by the optionee. In the event any
option is exercised by the executors, administrators, heirs or distributees of
the estate of a deceased optionee as provided in Section 6(g), the Company shall
be under no obligation to issue Common Stock thereunder unless and until the
Company is satisfied that the person or persons exercising the option are the
duly appointed legal representative of the deceased optionee's estate or the
proper legatees or distributees thereof.
(i) Notwithstanding any intent to grant incentive stock options,
an option granted will not be considered an incentive stock option to the extent
that it together with any earlier incentive stock options permits the exercise
for the first time in any calendar year of more than $100,000 in Fair Market
Value of Common Stock (determined at the time of grant).
(j) The Committee may, but need not, require such consideration
from an optionee at the time of granting an option as it shall determine, either
in lieu of, or in addition to, the limitations on exercisability provided in
Section 6(e).
(k) No incentive stock option shall be granted to an employee who
owns or would own immediately before the grant of such option, directly or
indirectly, stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company. This restriction does not apply if, at the
time such incentive stock option is granted, the option price is at least 110%
of the Fair Market Value of one share of Common Stock, as determined in
accordance with Section 6(a), on the date of grant and the incentive stock
option by its terms is not exercisable after the expiration of five years from
the date of grant.
(l) An option and any Common Stock received upon the exercise of
an option shall be subject to such other transfer restrictions and/or legending
requirements that are specified in the Agreement.
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7. Terms and Conditions of Restricted Stock Awards. All awards of
restricted stock under the Plan shall be subject to all the applicable
provisions of the Plan, including the following terms and conditions, and to
such other terms and conditions not inconsistent therewith, as the Committee
shall determine.
(a) Awards of restricted stock may be in addition to or in lieu
of option grants.
(b) During a period set by, and/or until the attainment of
particular performance goals based upon criteria established by, the Committee
at the time of each award of restricted stock (the "restriction period") as
specified in the Agreement, the recipient shall not be permitted to sell,
transfer, pledge, or otherwise encumber the shares of restricted stock; except
that such shares may be used, if the Agreement permits, to pay the option price
of any option granted under the Plan, provided an equal number of shares
delivered to the recipient shall carry the same restrictions as the shares so
used.
(c) If so provided in the Agreement, shares of restricted stock
shall become free of all restrictions if (i) the recipient dies, (ii) the
recipient's employment terminates by reason of permanent disability, as
determined by the Committee, (iii) the recipient retires under specific
circumstances set forth in the Agreement, or (iv) there is a Change in Control
(as defined in Section 9 hereof) of the Company. The Committee may require
medical evidence of permanent disability, including medical examinations by
physicians selected by it. If the Committee determines that any such recipient
is not permanently disabled, the restricted stock held by such recipient shall
be forfeited and revert to the Company.
(d) Unless and to the extent otherwise provided in the Agreement
in accordance with Section 7(c), shares of restricted stock shall be forfeited
and revert to the Company upon the recipient's termination of employment or
directorship during the restriction period, except to the extent the Committee,
in its sole discretion, finds that such forfeiture might not be in the best
interest of the Company and, therefore, waives all or part of the application of
this provision to the restricted stock held by such recipient.
(e) Stock certificates for restricted stock shall be registered in
the name of the recipient but shall be appropriately legended and returned to
the Company by the recipient, together with a stock power, endorsed in blank by
the recipient. The recipient shall be entitled to vote shares of restricted
stock and shall be entitled to all dividends paid thereon, except that dividends
paid in Common Stock or other property shall also be subject to the same
restrictions.
(f) Restricted stock shall become free of the foregoing
restrictions upon expiration of the applicable restriction period, and the
Company shall then deliver Common Stock certificates evidencing such stock to
the recipient.
(g) Restricted stock and any Common Stock received upon the
expiration of the restriction period shall be subject to such other transfer
restrictions and/or legending requirements that are specified in the Agreement.
8. Bonuses Payable in Stock. In lieu of cash bonuses otherwise
payable under the Company's or applicable subsidiary's compensation practices to
employees and directors eligible to participate in the Plan, the Committee, in
its sole discretion, may determine
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that such bonuses shall be payable in Common Stock or partly in Common Stock and
partly in cash. Such bonuses shall be in consideration of services previously
performed and as an incentive toward future services and shall consist of shares
of Common Stock subject to such terms as the Committee may determine in its sole
discretion. The number of shares of Common Stock payable in lieu of a bonus
otherwise payable shall be determined by dividing such amount by the Fair Market
Value of one share of Common Stock on the date the bonus is payable.
9. Change in Control.
(a) In the event of a Change in Control of the Company, the
Committee may, in its sole discretion, provide that any of the following
applicable actions be taken as a result, or in anticipation, of any such event
to assure fair and equitable treatment of Participants:
(i) accelerate restriction periods for purposes of vesting in, or
realizing gain from, any outstanding option or shares of restricted stock
awarded pursuant to this Plan;
(ii) offer to purchase any outstanding option or shares of
restricted stock made pursuant to this Plan from the holder for its
equivalent cash value, as determined by the Committee, as of the date of
the Change in Control; or
(iii) make adjustments or modifications to outstanding options or
with respect to restricted stock as the Committee deems appropriate to
maintain and protect the rights and interests of the Participants
following such Change in Control.
Any such action approved by the Committee shall be conclusive and
binding on the Company, its subsidiaries and all Participants; provided,
however, that notwithstanding the foregoing, under no circumstances shall the
Committee take or approve any action that would result in an "Excess Parachute
Payment," as defined in Section 280G(b) of the Code.
For purposes hereof, "Change in Control" means a change in control
of the Company of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A under the Exchange Act, whether or
not the Company is subject to the Exchange Act at such time; provided, however,
that without limiting the generality of the foregoing, such a Change in Control
shall in any event be deemed to occur if and when:
(i) any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act), the Company, its subsidiaries and affiliates (as
defined in Rule 12b-2 under the Exchange Act), becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 20% of the
combined voting power of the Company's then outstanding securities;
(ii) stockholders approve a merger or consolidation as a result of
which securities representing less than 51% of the combined voting power
of the outstanding voting securities of the surviving or resulting
corporation will be beneficially owned, directly or indirectly, in the
aggregate by the former stockholders of the Company;
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<PAGE>
(iii) stockholders approve either (A) an agreement for the sale or
disposition of all or substantially all of the Company's assets to an
entity which is not a subsidiary of the Company, or (B) a plan of complete
liquidation;
(iv) the persons who were members of the Board immediately before
the completion of a tender offer by any person other than the Company or a
subsidiary or affiliate of the Company, or before a merger, consolidation,
or contested election, or before any combination of such transactions,
cease to constitute a majority of the Board as a result of such
transaction or transactions; or
(v) a change in control of the Company occurs of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A under the Exchange Act if the Company were subject to the
provisions of the Exchange Act at the time such change in control occurs
(whether or not the Company is subject to the Exchange Act at that time),
and at the time such change in control occurs, the Company is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing (A) more
than 30% of the combined voting power of the Company's then outstanding
securities, and (B) more than the percentage of the combined voting power
of the Company's outstanding securities beneficially owned, directly or
indirectly, at that time by any other person (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act).
(b) In no event, however, may (i) any option be exercised prior to
the expiration of six months from the date of grant (unless otherwise provided
for in the Agreement), or (ii) any option be exercised after ten years from the
date it was granted.
10. Transfer, Leave of Absence. For the purpose of the Plan: (a) a
transfer of an employee from the Company to a subsidiary or affiliate of the
Company, whether or not incorporated, or vice versa, or from one subsidiary or
affiliate of the Company to another, and (b) a leave of absence, duly authorized
in writing by the Company or a subsidiary or affiliate of the Company, shall not
be deemed a termination of employment.
11. Rights of Employees and Directors.
(a) No person shall have any rights or claims under the Plan
except in accordance with the provisions of the Plan and the Agreement.
(b) Nothing contained in the Plan or Agreement shall be deemed to
give any employee or director the right to be retained in the service of the
Company or its subsidiaries.
12. Tax Withholding Obligations.
(a) If required by applicable law, the payment of taxes, upon the
exercise of an option pursuant to Section 6(e) or a stock appreciation right
pursuant to Section 6(f), shall be in cash at the time of exercise or on the
applicable tax date under Section 83 of the Code, if later; provided, however,
tax withholding obligations may be met by the withholding of Common Stock
otherwise deliverable to the optionee pursuant to procedures approved by the
Committee;
D-8
<PAGE>
provided, further, however, the amount of Common Stock so withheld shall not
exceed the minimum required withholding obligation.
(b) If required by applicable law, recipients of restricted stock,
pursuant to Section 7, shall be required to pay taxes to the Company upon the
expiration of restriction periods or such earlier dates as elected pursuant to
Section 83 of the Code; provided, however, tax withholding obligations may be
met by the withholding of Common Stock otherwise deliverable to the recipient
pursuant to procedures approved by the Committee. If tax withholding is required
by applicable law, in no event shall Common Stock be delivered to any awardee
until such awardee has paid to the Company in cash the amount of such tax
required to be withheld by the Company or has elected to have such awardee's
withholding obligations met by the withholding of Common Stock in accordance
with the procedures approved by the Committee or otherwise entered into an
agreement satisfactory to the Company providing for payment of withholding tax.
(c) the Company shall first withhold from any cash bonus described
in Section 8, an amount of cash sufficient to meet its tax withholding
obligations before the amount of Common Stock paid in accordance with Section 8
is determined.
13. Changes in Capital; Reorganization.
(a) Upon changes in the outstanding Common Stock by reason of a
stock dividend, stock split, reverse split, subdivision, recapitalization, an
extraordinary dividend payable in cash or property, combination or exchange of
shares, separation, reorganization or liquidation, and the like, the aggregate
number and class of shares available under the Plan as to which stock options
and restricted stock may be awarded, the number and class of shares under (i)
each option and the option price per share and (ii) each award of restricted
stock shall, in each case, be correspondingly adjusted by the Committee, such
adjustments to be made in the case of outstanding options without change in the
total price applicable to such options.
(b) In the event (i) the Company is merged or consolidated with
another entity and the Company is not the surviving corporation, or the Company
shall be the surviving corporation and there shall be any change in the Common
Stock of the Company by reason of such merger or consolidation, or (ii) all or
substantially all of the assets of the Company are acquired by another
corporation, or (iii) there is a reorganization or liquidation of the Company
(each, a "Reorganization Event"), or (iv) the Board shall propose that the
Company enter into a Reorganization Event, then the Board (acting solely through
members of the Board who were members of the Board prior to the occurrence of
the Reorganization Event) may in its discretion take any or all of the following
actions:
(i) by written notice to the holders of stock options or restricted
stock awards, provide that the stock options or restricted stock awards
shall be terminated unless exercised within 30 days (or such longer period
as the Board shall determine in its discretion) after the date of such
notice; and
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<PAGE>
(ii) advance the dates upon which (A) any or all outstanding stock
options and stock appreciation rights shall be exercisable or (B)
restrictions applicable to restricted stock awards shall lapse.
Whenever deemed appropriate by the Board, any action referred to in
this Section 13(b) may be made conditioned upon the consummation of the
applicable Reorganization Event.
(c) Any adjustments or other action pursuant to this Section 13
shall be made by the Board and the Board's determination as to what adjustments
shall be made or actions taken, and the extent thereof, shall be final and
binding.
14. Miscellaneous Provisions.
(a) The Plan Shall be Unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation of
assets to assure the issuance of shares or the payment of cash upon exercise of
any option or stock appreciation right under the Plan. Proceeds from the sale of
shares of Common Stock pursuant to options granted under this Plan shall
constitute general funds of the Company. The expenses of the Plan shall be borne
by the Company.
(b) It is understood that the Committee may, at any time and from
time to time after the granting of an option or the award of restricted stock or
bonuses payable in Common Stock hereunder, specify such additional terms,
conditions and restrictions with respect to such option or stock as may be
deemed necessary or appropriate to ensure compliance with any and all applicable
laws, including, without limitation, terms, restrictions and conditions for
compliance with federal and state securities laws and methods of withholding or
providing for the payment of required taxes.
(c) If at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of shares of Common
Stock upon any national securities exchange or quotation system or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
sale or purchase of shares of Common Stock hereunder, no option may be exercised
or restricted stock or stock bonus may be transferred in whole or in part unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Committee.
(d) By accepting any benefit under the Plan, each Participant and
each person claiming under or through such Participant shall be conclusively
deemed to have indicated such Participant's or person's acceptance and
ratification, and consent to, any action taken under the Plan by the Committee,
the Company or the Board.
(e) THE PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES
OF CONFLICTS OF LAWS THEREOF.
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15. Limits of Liability.
(a) Any liability of the Company or any of its subsidiaries to any
participant with respect to any option or award shall be based solely upon
contractual obligations created by the Plan and the Agreement.
(b) None of the Company or any of its subsidiaries, or any member
of the Committee or the Board, or any other person participating in any
determination of any question under the Plan, or in the interpretation,
administration or application of the Plan, shall have any liability to any party
for any action taken or not taken in connection with the Plan, except as may
expressly be provided by statute.
16. Amendments and Termination. The Board may, at any time, amend,
alter or discontinue the Plan; provided, however, no amendment, alteration or
discontinuation shall be made which, without the approval of the stockholders,
would:
(a) except as is provided in Section 13, increase the maximum
number of shares of Common Stock reserved for the purpose of the Plan;
(b) except as is provided in Section 13, decrease the option price
of an option to less than 100% of the Fair Market Value of a share of Common
Stock on the date of the granting of the option;
(c) change the class of persons eligible to receive an award of
restricted stock, options or bonuses payable in Common Stock under the Plan; or
(d) extend the duration of the Plan.
the Committee may amend the terms of any award of restricted stock or option
theretofore granted, retroactively or prospectively, but no such amendment shall
impair the rights of any holder without such holder's written consent.
17. Duration. The Plan shall be adopted by the Board as of the
date on which it is approved by a majority of the Company's stockholders, which
approval must occur within the period ending 12 months after the date the Plan
is adopted. The Plan shall terminate upon the earliest of the following dates or
events to occur:
(a) the adoption of a resolution of the Board, terminating the
Plan; or
(b) the date all shares of Common Stock subject to the Plan are
purchased according to the Plan's provisions; or
(c) ten years from the date hereof.
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