U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1995
Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file number 1-8631
Dover Investments Corporation
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 94-1712121
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
350 California Street, Suite 1650, San Francisco, CA 94104
(Address of Principal Executive Offices)
(415) 951-0200
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of each of the issuer's classes of
common stock, as of July 23, 1995, were as follows:
Class A Common Stock, $.01 par value 768,619 Shares of Common Stock
Class B Common Stock, $.01 par value 327,338 Shares of Common Stock
Transitional Small Business Disclosure Statement
Yes No X
THIS REPORT CONSISTS OF 13 SEQUENTIALLY NUMBERED PAGES.
DOVER INVESTMENTS CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets
as of June 30, 1995 and December 31, 1994................ 3
Consolidated Statements of Operations for the Three
Months and Six Months Ended June 30, 1995 and 1994....... 4
Consolidated Statement of Stockholders'
Equity for the Six Months Ended June 30, 1995............ 5
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1995 and 1994.......... 6
Notes to Consolidated Financial Statements............... 7
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operation........................9
PART II. OTHER INFORMATION ................................11
SIGNATURES ....................................................13
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1995 and December 31, 1994
(in thousands except share amounts)
ASSETS 06-30-95 12-31-94
Cash $ 591 $ 381
Restricted Cash 87 92
Securities Purchased under
Agreement to Resell 500 2,400
Cash and Securities Held in
Trust Account 2,500 2,500
Homes Held for Sale 1,477 1,291
Property Held for Development 22,309 22,231
Other Assets 1,772 923
TOTAL ASSETS $29,236 $29,818
LIABILITIES AND STOCKHOLDERS' EQUITY
Income Taxes Payable $ 230 $ 230
Accrued Interest and Other Liabilities 4,493 3,576
Notes Payable 9,422 10,400
TOTAL LIABILITIES 14,145 14,206
Minority Interest in Joint Venture 49 297
STOCKHOLDERS' EQUITY
Class A Common Stock par value, $.01
per share--Authorized 2,000,000 shares;
issued 768,619 at 6/30/95 and
795,020 at 12/31/94 8 8
Class B Common Stock par value, $.01
per share--Authorized 1,000,000 shares;
issued 327,338 at 6/30/95 and
327,338 at 12/31/94 3 3
Additional paid-in capital 14,715 14,715
Retained Earnings from January 1, 1993 438 606
Treasury Stock (Class A Common Stock
31,400 shares at 6/30/95 and 5,000
shares at 12/31/94) (122) (17)
TOTAL STOCKHOLDERS' EQUITY 15,042 15,315
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $29,236 $29,818
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Home Sales $ 1,568 $ 3,906 $ 2,575 $ 4,285
Cost of Sales (1,333) (2,942) (2,152) (3,217)
Gross Profit 235 964 423 1,068
Selling Expenses (174) (333) (307) (412)
General and Administrative
Expenses (159) (253) (327) (386)
(333) (586) (634) (798)
Operating (Loss) Profit (98) 378 (211) 270
Other Income
Interest 14 140 43 166
Other - - - 22
Total Other Income 14 140 43 188
(Loss) Income before Taxes (84) 518 (168) 458
Provision for Taxes - (182) - (186)
Net (Loss) Income $ (84) $ 336 $ (168) $ 272
Net (Loss) Income Per Share $ (0.08) $ 0.30 $ (0.15) $ 0.24
See accompanying notes to Consolidated Financial Statements.
<TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 1995
(in thousands)
<CAPTION>
Additional Treasury
Common Stock Paid-In Retained Stock
Class A Class B Capital Earnings at Cost Total
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 $ 8 $ 3 $14,715 $ 606 $ (17) $15,315
Repurchase of 31,400 shares
of Class A Common Stock
at 6/30/95 $ - - - - (105) (105)
Net Loss $ - - - (168) - (168)
Balance at June 30, 1995 $ 8 $ 3 $14,715 $ 438 $ (122) $15,042
See accompanying notes to Consolidated Financial Statements.
</TABLE>
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months ended June 30, 1995 and 1994
(in thousands)
Six Months
Ended June 30,
1995 1994
Increase in Cash
Cash Flows from Operating Activities:
Net (Loss) Income $ (168) $ 272
Reconciliation of Net (Loss) Income to Net Cash
(Used in) Provided by Operating Activities:
Changes in Assets and Liabilities:
Restricted Cash 5 231
Property Held for Development (78) (2,169)
Homes Held for Sale (434) (3)
Other Assets (849) 1,088
Income Taxes Payable - (56)
Accrued Interest and Other
Liabilities, Net 917 2,112
Net Cash (Used in) Provided by
Operating Activities: (607) 1,475
Cash Flows from Investment Activities:
Securities Sold under Agreement
to Resell 1,900 300
Cash and Securities Held in Trust Account - (2,431)
Cash Flows from Financing Activities:
Payments of Notes Payable (978) (442)
Treasury Stock (105) -
Net Increase (Decrease) in Cash 210 (1,098)
Cash at Beginning of Period 381 1,667
Cash at End of Period $ 591 $ 569
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1995
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim consolidated
balance sheets as of June 30, 1995, and December 31, 1994, the related
consolidated statements of operations for the three month and six month
periods ended June 30, 1995 and 1994, and the consolidated statements of
stockholders' equity and cash flows for the six month periods ended June 30,
1995 and 1994, reflect all adjustments (consisting of normal recurring
accruals and elimination of significant intercompany transactions and
balances) necessary for a fair presentation of Dover Investments Corporation
("Dover") and its wholly-owned subsidiaries (collectively with Dover, the
"Company").
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Accordingly, these statements
should be read in conjunction with the statements and notes thereto included
in the Company's 1994 Form 10-KSB and the Notes to the Consolidated Financial
Statements, included therein. The results of operations for the three months
and six months ended June 30, 1995, are not necessarily indicative of the
results which may be expected for the entire year.
Prior year financial statements have been reclassified to conform to current
year presentation.
The symbols for the Class A Common Stock and the Class B Common Stock are
"DOVR-A" and "DOVR-B", respectively.
2. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed, on a combined basis, for the two
classes of common stock, Class A and Class B. Computations are based upon
the weighted average number of common shares outstanding. The weighted
average number of Class A and Class B share equivalents used to compute net
income per share was 1,113,558 at June 30, 1995, and 1,127,360 at June 30,
1994.
3. CONTINGENCIES
The Company, as the parent company of a group of affiliated corporations
filing consolidated Federal income tax returns, was contingently liable for
any liabilities arising with respect to Homestead Savings and Loan
Association (the "Association") from such returns filed for tax years through
August 6, 1991. The Internal Revenue Service ("IRS") has completed
examinations of all such federal income tax returns from 1985 through 1990;
no examination of the 1991 return is anticipated. The resolution of such
examinations involved settlements which were approved by the Congressional
Joint Tax Committee. Pursuant to such settlements, the Company received a
check from the IRS in July 1995, for $3,987,918.66, of which
$1,029,660.89 represents interest. Additionally, the Company has been
allowed a loss carryforward (from 1990) of $34,682,841, due to the
worthlessness of the stock of the Association, which occurred in the taxable
year ended December 31, 1990.
The Franchise Tax Board ("FTB") of the State of California has also made tax
claims against the Company for certain years when combined returns were filed
with the Association. The Resolution Trust Corporation ("RTC") is handling
these claims, all of which are attributable to the operations of the
Association. The FTB and RTC have verbally advised representatives of the
Company that the amount of tax in controversy has been agreed to by the RTC
and FTB and is approximately $1,000,000 plus interest.
The Company filed a lawsuit against the RTC in 1994 based on the RTC's
disallowance of certain claims made against the RTC by the Company in its
capacity as a creditor of the Association. Most of the claims made by the
Company against the RTC had to do with the Company's potential liability to
the IRS and FTB arising from the tax controversies referred to above, which
have now been resolved.
A settlement agreement has been entered into by the Company and the RTC
providing that: (1) of approximately $2,500,000 which is held in a Trust
Account, $707,395, plus interest, will be distributed to the Company; (2) the
balance of such Trust Account will be distributed to the RTC; and (3) the RTC
will pay to the FTB the tax deficiency and interest referred to above. The
timing of the foregoing distributions from the Trust Account, under the terms
of the settlement, depends upon when the RTC makes its payment to the FTB.
The Company has an agreement to indemnify its directors who formerly served
as directors and/or officers of the Association and its subsidiaries. The
RTC, in a letter dated March 10, 1993, advised the present and former
directors and officers of the Association and its subsidiaries of potential
claims that the RTC may assert against them for the recovery of losses
suffered by the Association and its subsidiaries in connection with certain
specified actions and loan transactions. The Company maintained a directors
and officers liability insurance policy to cover such potential liabilities.
The Company cannot estimate at this time its liability under the indemnity
agreement nor can it estimate the extent of its insurance coverage with
respect to such potential claims.
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND PART I
RESULTS OF OPERATIONS ITEM 2
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1995, the Company's investment in property held for development
and homes held for sale increased by $264,000 from its carrying value at
December 31, 1994. This increase resulted from the capitalized expenditures
for the ongoing development of real property located in San Leandro,
California (the "Marina Vista property"), and the subdivision in Tracy,
California (the "Tracy Joint Venture"). At June 30, 1995, the Company has
improved 97 lots, and has built seventy houses at the Marina Vista property.
Aside from four model homes, which are not for sale, all but three of the
houses have been sold. The Company has recently commenced construction on an
additional 10 homes, five of which have been sold but have not closed. In
addition, the Marina Vista property has land for an additional 152 lots. The
Tracy Joint Venture property currently has an approved tentative subdivision
map for 160 lots. At June 30, 1995, the Tracy Joint Venture had
substantially completed the off-tract improvement plans and final subdivision
map for the first phase of 50 lots. Concurrently with the processing
described above, The Tracy Joint Venture is proceeding to process a new
subdivision map for the entire property which would subdivide the property
into approximately 383 lots; there should be a proportionate increase in the
value of the property which will enhance the eventual development or sale of
the property.
During the six months ended June 30, 1995, the Company's primary liquidity
needs were to fund expenditures in connection with the Marina Vista property,
the Tracy Joint Venture, and its general and administrative expenses. The
Company met its funding requirements primarily from cash reserves and from
revenues from home sales. The Company also obtained construction financing
from private sources secured by the homes under construction. The Company's
primary source of liquidity in the future will continue to be from revenues
generated from home sales and from construction financing when deemed
appropriate. The Company believes that it will have sufficient cash
available to complete the development and construction of the Marina Vista
property, has the ability to pay off the debt discussed below when it becomes
due, and make its required contributions to the Tracy Joint Venture.
The Company is the obligor on a $7,500,000 promissory note carried back by
the seller of the Marina Vista property. The Company paid an additional
principal payment of $1,500,000 on December 6, 1994, therefore reducing the
required principal payment on September 29, 1995, to $1,000,000. The note
requires a principal payment of $2,500,000 on September 29, 1996, and the
balance of unpaid principal on March 29, 1997. At June 30, 1995, the Company
has outstanding construction borrowing of $1,361,100 secured by lots and
homes under construction with a maturity date of September 28, 1995. The
Company has also obtained an $802,000 loan secured by the four model homes.
The loan on the model homes matures on June 30, 1998. The interest rates on
the construction loan and model homes range between prime plus one and one
half percent and eleven and one quarter percent.
RESULTS OF OPERATIONS
For the quarter ended June 30, 1995, the Company had a net loss of $84,000,
compared to a net income of $336,000 for the same period in 1994. For the
six months ended June 30, 1995, net loss was $168,000, compared to a net
income of $272,000 for the same period in 1994. The net loss for the first
six months of 1995 resulted from relatively slow home sales.
The interest income of $14,000 in the second quarter of 1995 and $43,000 for
the six months in 1995 were attributable to the Company investing its funds
in overnight investments which are collateralized by mortgage-backed
certificates and are held on behalf of the Company by the dealers who
arranged the transaction. At June 30, 1995, such overnight investments, with
an average interest rate of 5.80% and a market value of the underlying
collateral of $500,956, totaled $500,000.
For the six months ended June 30, 1995, general and administrative expenses
decreased by $59,000, from those expenses incurred in the same period in
1994. The decrease resulted from reductions in professional fees and other
administrative expenses. At June 30, 1995, the cost of sales decreased by
$1,065,000, compared to the same period in 1994. The decrease resulted from
the construction of fewer homes.
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEDURES
Information required by this item is incorporated by reference to
footnote 4 to the notes to the Consolidated Unaudited Financial
Statements included herein and to Item 3 of the Annual Report on
Form 10-KSB for the year ended December 31, 1994 of the Company.
There have been no material developments since the filing of such
report except as to the income tax disclosure described in footnote
4.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 7, 1995, the Company held its annual meeting of
stockholders for the purpose of electing directors, ratifying and
approving the amendment to the stock option plan for nonemployee
directors, ratifying and approving the Company's 1995 stock option
plan and ratifying the appointment of the Company's auditors. All
of the Company's nominees were elected directors as follows:
Arnold Addison, 445,339 votes for and 4,182 votes withheld; Michael
Raddie, 445,349 votes for and 4,182 votes withheld; Larry Freels,
2,650,020 votes for and 89,210 votes withheld; John Gilbert,
2,650,020 votes for and 89,210 votes withheld; Lawrence Weissberg,
2,649,800 votes for and 89,430 votes withheld; and Will C. Wood,
2,650,020 votes for and 89,210 votes withheld. The proposal to
ratify and approve the stock option plan for nonemployee directors
was approved with 3,061,502 votes for, 110,816 votes against and
16,211 votes abstaining. The proposal to ratify and approve the
Company's 1995 stock option plan was approved with 2,792,405 votes
for, 144,328 votes against and 14,823 votes abstaining. The
proposal to ratify the appointment of Grant Thornton as the
Company's independent public accountant for the year ended December
31, 1994, was approved with 3,172,528 votes for, 3,652 votes
against and 12,376 votes abstaining.
Item 5. OTHER INFORMATION
The Company's Class A Common Stock and Class B Common Stock are
traded on the National Quotation Bureau pink sheets and on the NASD
OTC Bulletin Board under the symbols DOVR-A and DOVR-B.
Item 6. EXHIBITS AND FINANCIAL DATA SCHEDULE AND REPORTS ON FORM 8-K
A. Exhibits
The exhibits listed below are filed with this report.
10.10 Stock Option Plan for Nonemployee Directors.
10.11 Form of Nonqualified Stock Option Agreement as of November
16, 1994.
10.12 1995 Stock Option Plan.
10.13 Form of Incentive Stock Option Agreement.
10.14 Form of Nonqualified Stock Option Agreement.
27.1 Financial Data Schedule for the Quarter Ended June 30,
1995.
B. Reports on Form 8-K
A report on Form 8-K, dated April 28, 1995, reported a tax
settlement with the IRS for tax years 1985 - 1990.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DOVER INVESTMENTS CORPORATION
Date: August 9, 1995 By: /s/Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board, President
and Chief Executive Officer
DOVER INVESTMENTS CORPORATION
STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
(Effective September 29, 1989
and as amended through November 16, 1994)
ARTICLE I
GENERAL
1. PURPOSE.
This Stock Option Plan for Nonemployee Directors (the
"Plan") is intended to attract and retain the services of
experienced and knowledgeable independent directors of Dover
Investments Corporation (the "Company") for the benefit of the
Company and its stockholders and to provide additional incentives
for such directors to continue to work for the best interests of
the Company and its stockholders.
2. ADMINISTRATION.
The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the
"Committee"). The Committee shall, subject to the provisions of
the Plan, grant options under the Plan and shall have the power to
construe the Plan, to determine all questions arising thereunder
and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable.
The interpretation and construction by the Committee of
any provision of the Plan or of any option granted under it shall
be final. No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan
or any option granted under it.
3. ELIGIBILITY.
Each director of the Company who is not otherwise an
employee of the Company or any subsidiary and has not been an
employee of the Company or any subsidiary for all or any part of
the preceding fiscal year shall automatically be granted options to
purchase 1,000 shares of the Company's Class A Common Stock, $.01
par value per share (the "Class A Stock") (subject to adjustment as
provided in Article III hereof) on November 16, 1994. Thereafter,
options to purchase 500 shares of Class A Stock (subject to
adjustment as provided in Article III hereof) shall automatically
be granted to each such director; provided, however, that such
automatic option grants shall be made only if the director (i) has
served on the Board of Directors for the entire two preceding
fiscal years, (ii) is not otherwise an employee of the Company or
any subsidiary on the date of grant, and (iii) has not been an
employee of the Company or any subsidiary for all or any part of
the preceding fiscal year.
In addition, on the earlier of the date that any person
is for the first time appointed to the Board of Directors or
elected by the stockholders of the Company to the Board of
Directors, options to purchase 1,000 shares of Class A Stock
(subject to adjustment as provided in Article III hereof) shall
automatically be granted to such newly appointed or elected
director; provided, however, that such automatic option grant shall
be made only if the director is not otherwise an employee of the
Company or any subsidiary on the date of such appointment or
election and has not been an employee of the Company or any
subsidiary for all or any part of the preceding fiscal year.
Thereafter, on the date of such appointment or election, as the
case may be, options to purchase 500 shares of Class A Stock
(subject to adjustment as provided in Article III hereof) shall
automatically be granted to such director; provided, however, that
such automatic option grants shall be made only if the director (i)
has served on the Board of Directors for the entire fiscal year,
(ii) is not otherwise an employee of the Company or any subsidiary
on the date of grant, (iii) has not been an employee of the Company
or any subsidiary for all or any part of the preceding fiscal year,
and (iv) has attended at least four board meetings during the
preceding fiscal year.
In the event that the number of shares of Class A Stock
subject to future grant under the Plan is insufficient to make all
automatic grants required to be made on a particular date, then all
nonemployee directors entitled to a grant of options on such date
shall share ratably in the number of options on shares of the Class
A Stock then available for grant under the Plan.
4. SHARES OF STOCK SUBJECT TO THE PLAN.
The shares that may be issued under the Plan shall be
authorized and unissued or reacquired shares of the Class A Stock.
The aggregate number of shares which may be issued under the Plan
shall not exceed 12,500 shares of Class A Stock, unless an
adjustment is required in accordance with Article III
5. AMENDMENT OF THE PLAN.
The Board of Directors may, insofar as permitted by law,
from time to time, suspend or discontinue the Plan or revise or
amend it in any respect whatsoever, except that no such amendment
shall alter or impair or diminish any rights or obligations under
any option theretofore granted under the Plan without the consent
of the person to whom such option was granted. In addition,
without further stockholder approval, no such amendment shall
increase the number of shares subject to the Plan (except as
authorized by Article III), change the designation in Section 3 of
Article I of the class of persons eligible to receive options under
the Plan, provide for the grant of options having an option price
per share less than fair market value (as defined in Section 11 of
this Article I) on the date of grant, extend the term during which
options may be exercised, extend the final date upon which options
under the Plan may be granted, or otherwise amend the Plan in a way
that would require stockholder approval under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, as required by such Rule 16b-3, the provisions of
Section 3 of Article I regarding the formula for determining the
amount, exercise price and timing of grants of options shall in no
event be amended more than once every six months, other than to
comport with changes in the Internal Revenue Code of 1986, as
amended.
6. APPROVAL OF STOCKHOLDERS.
All options granted under the Plan before the Plan is
approved by affirmative vote at the 1990 annual meeting of
stockholders of the Company, or any adjournment thereof, of the
holders of a majority of the outstanding shares of Class A Stock
and Class B Stock, $.01 par value per share, of the Company, voting
together as a single class, present in person or by proxy and
entitled to vote at the meeting shall be subject to such approval.
No option granted hereunder may become exercisable unless and until
such approval is obtained.
7. TERM OF PLAN.
Options may be granted under the Plan until September 28,
1999, the date of termination of the Plan. Notwithstanding the
foregoing, each option granted under the Plan shall remain in
effect until such option has been satisfied by the issuance of
shares or terminated in accordance with its terms and the terms of
the Plan.
8. RESTRICTIONS.
All options granted under the Plan shall be subject to
the requirement that, if at any time the Committee shall determine,
in its discretion, that the listing, registration or qualification
of the shares subject to options granted under the Plan upon any
securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary
or desirable as a condition of, or in connection with, the granting
of such option or the issuance, if any, or purchase of shares in
connection therewith, such option may not be exercised in whole or
in part unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any
conditions not acceptable to the Committee.
9. NONASSIGNABILITY.
No option shall be assignable or transferable by the
grantee except by will or by the laws of descent and distribution.
During the lifetime of the optionee, the option shall be
exercisable only by him, and no other person shall acquire any
rights therein.
10. WITHHOLDING TAXES.
Whenever shares of Class A Stock are to be issued under
the Plan, the Company shall have the right to require the optionee
to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares.
11. DEFINITION OF "FAIR MARKET VALUE".
For the purposes of this Plan, the term "fair market
value", when used in reference to the date of grant of an option or
the date of surrender of Class A Stock in payment for the purchase
of shares pursuant to the exercise of an option, as the case may
be, shall mean the closing sale price of the Class A Stock on the
New York Stock Exchange as shown on the Composite Tape for New York
Stock Exchange -- Listed Stocks. If the Class A Stock is not
listed on the New York Stock Exchange, the term "fair market value"
shall mean the highest closing sale price on such date on the
principal United States securities exchange registered under the
Exchange Act on which such stock is listed, or, if such stock is
not listed on any such securities exchange, the highest closing
sale price or bid quotation with respect to a share of such stock
on such date on the NASDAQ/National Market System or the National
Association of Securities Dealers, Inc. Automated Quotations System
or any successor system, or, if no such quotations are available,
the fair market value on such date of a share of such stock as
determined in good faith by the Committee.
ARTICLE II
STOCK OPTIONS
1. AWARD OF STOCK OPTIONS.
Awards of stock options shall be made under the Plan
under all the terms and conditions contained herein. Each option
granted under the Plan shall be evidenced by an option agreement
duly executed on behalf of the Company and by the director to whom
such option is granted, which option agreements may but need not be
identical and shall comply with and be subject to the terms and
conditions of the Plan. Any option agreement may contain such
other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Committee.
2. TERM OF OPTIONS AND EFFECT OF TERMINATION.
Notwithstanding any other provision of the Plan, no
option granted under the Plan shall be exercisable after the
expiration of 10 years from the date of its grant.
In the event that any outstanding option under the Plan
expires by reason of lapse of time or otherwise is terminated for
any reason, then the shares of Class A Stock subject to any such
option which have not been issued pursuant to the exercise of the
option shall again become available in the pool of shares of Class
A Stock for which options may be granted under the Plan.
3. TERMS AND CONDITIONS OF OPTIONS.
Options granted pursuant to the Plan shall be evidenced
by agreements in such form as the Committee shall from time to time
determine, which agreements shall comply with the following terms
and conditions.
A. Number of Shares
Each option agreement shall state the number of
shares to which the option pertains.
B. Option Price
Each option agreement shall state the option price
per share (or the method by which such price shall be computed),
which shall be equal to 100% of the fair market value of a share of
the Class A Stock on the date such option is granted.
C. Medium and Time of Payment
The option price shall be payable upon the exercise
of an option in the legal tender of the United States or, in the
discretion of the Committee, in shares of the Class A Stock or in
a combination of such legal tender and such shares. Upon receipt
of payment, the Company shall deliver to the optionee (or person
entitled to exercise the option) a certificate or certificates for
the shares of Class A Stock to which the option pertains.
D. Exercise of Options
Options granted under the Plan shall become
exercisable in installments to the extent of one-half of the shares
covered by the option on the date one year after the date of grant,
and the remaining one-half of the shares covered by the option on
the date two years after the date of grant.
To the extent that an option has become exercisable
and subject to the restrictions and limitations set forth in this
Plan and in the option agreement, it may be exercised in whole or
in such lesser amount as may be authorized by the option agreement;
provided, however, that no option shall be exercised for fewer than
100 shares. If exercised in part, the unexercised portion of an
option shall continue to be held by the optionee and may therefore
be exercised as herein provided.
E. Termination of Directorship Except by Death
In the event that an optionee shall cease to be a
director of the Company for any reason other than his death, his
option shall be exercisable, to the extent it was exercisable at
the date he cease to be a director, for a period of 30 days after
such date, and shall then terminate. Such option may be exercised
at any time within such 30-day period and prior to the date on
which the option expires by its terms.
F. Death of Optionee and Transfer of Option
If an optionee dies while a director of the Company,
or within the 30-day period after termination of such status during
which he is permitted to exercise an option in accordance with
subsection 3(E) of this Article II, such option may be exercised at
any time within six months after the optionee's death, but only to
the extent the option was exercisable at the time of death. Such
option may be exercised at any time within such six-month period
and prior to the date on which the option expires by its terms.
During such period, such option may be exercised by any person or
persons designated by the optionee on a Beneficiary Designation
Form adopted by the Committee for such purpose, or, if there is no
effective Beneficiary Designation Form on file with the Committee,
by the executors or administrators of the optionee's estate or by
any person or persons who shall have acquired the option directly
from the optionee by his will or the applicable laws of descent and
distribution.
ARTICLE III
RECAPITALIZATIONS AND REORGANIZATIONS
The number of shares of Class A Stock covered by the
Plan, the number of shares and price per share of each outstanding
option, and the number of shares subject to each grant provided for
in Article I, Section 3 hereof shall be proportionately adjusted
for any increase or decrease in the number of issued and
outstanding shares of Class A Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any
other increase or decrease in the number of issued and outstanding
shares of Class A Stock effected without receipt of consideration
by the Company.
If the Company shall be the surviving corporation in any
merger or consolidation, each outstanding option shall pertain to
and apply to the securities to which a holder of the same number of
shares of Class A Stock that are subject to that option would have
been entitled. A dissolution or liquidation of the Company, or a
merger or consolidation in which the Company is not the surviving
corporation, shall cause each outstanding option to terminate,
unless the agreement of merger or consolidation shall otherwise
provide; provided that, in the event such dissolution, liquidation,
merger or consolidation will cause outstanding options to
terminate, each optionee shall have the right immediately prior to
such dissolution, liquidation, merger or consolidation to exercise
his option in whole or in part without regard to any limitations on
the exercisability of such option other than (i) the expiration
date of the option, (ii) the limitation set forth in Section 9 of
Article I, and (iii) the 100 share limitation set forth in
subsection 3(D) of Article II.
To the extent that the foregoing adjustments relate to
stock or securities of the Company, such adjustments shall be made
by the Committee, whose determination in that respect shall be
final, binding and conclusive.
The grant of an option pursuant to the Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its
business or assets.
ARTICLE IV
MISCELLANEOUS PROVISIONS
1. RIGHTS AS A STOCKHOLDER.
An optionee or a transferee of an option shall have no
rights as a stockholder with respect to any shares covered by an
option until the date of the receipt of payment (including any
amounts required by the Company pursuant to Section 10 of Article
I) by the Company. No adjustment shall be made as to any option
for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for
which the record date is prior to such date, except as provided in
Article III.
2. PURCHASE FOR INVESTMENT.
Unless the shares of Class A Stock to be issued upon
exercise of an option granted under the Plan have been effectively
registered under the Securities Act of 1933 as now in force or
hereafter amended, the Company shall be under no obligation to
issue any shares of Class A Stock covered by any option unless the
person who exercises such option, in whole or in part, shall give
a written representation and undertaking to the Company which is
satisfactory in form and scope to counsel to the Company and upon
which, in the opinion of such counsel, the Company may reasonably
rely, that he is acquiring the shares of Class A Stock issued to
him pursuant to such exercise of the option for his own account as
an investment and not with a view to, or for sale in connection
with, the distribution of any such shares of Class A Stock, and
that he will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer
under the Securities Act of 1933, or any other applicable law, and
that if shares of Class A Stock are issued without such
registration, a legend to this effect may be endorsed upon the
securities so issued.
3. OTHER PROVISIONS.
The option agreements authorized under the Plan shall
contain such other provisions, including, without limitation,
restrictions upon the exercise of the option or restrictions
required by any applicable securities laws, as the Committee shall
deem advisable.
4. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of
Class A Stock pursuant to the exercise of options will be used for
general corporate purposes.
5. NO OBLIGATION TO EXERCISE OPTION.
The granting of an option shall impose no obligation upon
the optionee to exercise such option.
DOVER INVESTMENTS CORPORATION
STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into effective as of
______________, by and between Dover Investments Corporation, a
Delaware corporation (the "Company"), and ____________, a director
of the Company (the "Optionee"), as follows:
WHEREAS, the Company previously adopted the Stock Option Plan
for Nonemployee Directors (the "Plan") on September 29, 1989, and
as amended November 16, 1994, providing for the granting to its
nonemployee directors of nonqualified stock options to purchase
shares of its Class A Common Stock (the "Class A Stock"); and
WHEREAS, the Optionee is a director who is in a position to
make an important contribution to the long-term performance of the
Company.
WHEREAS, this option agreement has been restated to reflect
the one-for-ten reverse stock split previously adopted by the
Company.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants hereinafter set forth and other good and valuable
consideration, the parties agree as follows:
1. The Company hereby grants to the Optionee a nonqualified
stock option to purchase ___ shares of the Class A Stock at the
price set forth in Paragraph 2, on the terms and conditions
hereinafter stated, in consideration for which the Optionee hereby
agrees to continue to serve as a director of the Company during the
term for which he was elected.
2. The purchase price per share is__________________________
($_____) which is agreed to be 100% of the fair market value of
such Class A Stock at the date of grant. The purchase price shall
be payable in the legal tender of the United States or, in the
discretion of the Compensation Committee of the Board of Directors
of the Company (the "Committee"), in share of Class A Stock or in
a combination of such shares and such legal tender.
3. Subject to any required action by the stockholders, the
number of shares of Class A Stock covered hereby and the price per
share thereof will be proportionately adjusted for any increase or
decrease in the number of issued shares of Class A Stock resulting
from a subdivision or consolidation of shares or the payment of a
stock dividend or any other increase or decrease in the number of
issued and outstanding share of Class A Stock effected without
receipt of consideration by the Company. Subject to any required
action by the stockholders, if the Company shall be the surviving
corporation in any merger or consolidation, this option (to the
extent that it is still outstanding) shall pertain to and apply to
the securities to which a holder of the same number of shares of
Class A Stock that are subject to the option would have been
entitled. A dissolution or liquidation of the Company or a merger
or consolidation in which the Company is not the surviving
corporation shall cause this option to terminate, unless the
agreement of merger or consolidation provides otherwise, except
that the Optionee will in such event have the right immediately
prior to such dissolution or liquidation, or merger or
consolidation in which the Company is not the surviving
corporation, to exercise this option in whole or in part without
regard to any limitations on exercisability, other than (i) the
expiration date of the option; (ii) the 100 share limitation set
forth in the final paragraph of Paragraph 4 of this Agreement; and
(iii) the limitation set forth in Paragraph 4 of this Agreement
relating to the period of time required to have elapsed after the
date of this Agreement.
To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by the
Committee, whose determination in that respect shall be final,
binding and conclusive. The grant of this option will not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve,
liquidate or sell or transfer all or any part of its business or
assets.
4. This option may not be exercised until 12 months have
elapsed from the effective date of this Agreement. Subject to the
conditions stated herein, this option shall become exercisable in
installments to the extent of one-half of the shares covered by the
option on the date one year after the effective date of this
Agreement, and the remaining one-half of the shares covered by the
option on the date two years after the effective date of this
Agreement. Shares entitled to be purchased but not so purchased
during any period described in the foregoing sentence may be
purchased during any subsequent period within the 10-year term of
the option.
No partial exercise of this option will be permitted for less
than 100 shares, and fractional shares will not be issued.
5. In the event the Optionee ceases to be a director of the
Company for any reason other than his death, this option will be
exercisable for a period of 30 days after the date he ceases to be
a director to the extent exercisable on such date and shall
thereafter terminate.
6. In the event the Optionee dies while a director of the
Company, or during the 30-day period after he ceases to be a
director during which he is permitted to exercise this option
pursuant to Paragraph 5 hereof, this option may be exercised at any
time within six months after the Optionee's death by the Optionee's
transferee to the same extent as the Optionee could have exercised
the option immediately prior to his death. The Optionee's
transferee shall be the person or persons designated by the
Optionee on a Beneficiary Designation Form furnished by the
Committee, except that if at the time of the Optionee's death no
effective Beneficiary Designation Form is on file with the
Committee, the Optionee's transferee shall be deemed to be the
executor or administrator of his estate or any person who shall
have acquired the option from the Optionee by his will or the
applicable law of descent and distribution. Any such transferee
exercising this option must furnish the Company upon request of the
Committee (a) written notice of his status as transferee, (b)
evidence satisfactory to the Company to establish the validity of
the transfer of the option in compliance with any laws or
regulations pertaining to said transfer, and (c) written acceptance
of the terms and conditions of the option as prescribed in this
Agreement.
7. Unless the shares of Class A Stock to be issued upon
exercise of the option evidenced by this Agreement have been
effectively registered under the Securities Act of 1933 as now in
force or hereafter amended, the Company shall be under no
obligation to issue any shares of Class A Stock covered by this
option unless the person who exercises such option, in whole or in
part, shall give a written representation and undertaking to the
Company which is satisfactory in form and scope to counsel to the
Company and upon which, in the opinion of such counsel, the Company
may reasonably rely, that he is acquiring the shares of Class A
Stock issued to him pursuant to such exercise of the option for his
own account as an investment and not with a view to, or for sale in
connection with, the distribution of any such shares of Class A
Stock, and that he will make no transfer of the same except in
compliance with any rules and regulations in force at the time of
such transfer under the Securities Act of 1933, or any other
applicable law, and that if shares of Class A Stock are issued
without such registration, a legend to this effect may be endorsed
upon the securities so issued.
8. The option may be exercised by the person then entitled
to do so as to any share which may then be purchased by giving
written notice of exercise to the Company specifying the number of
full shares to be purchased and accompanied by full payment of the
purchase price thereof and the amount of any income tax the Company
is required by law to withhold by reason of such exercise.
9. Neither the Optionee nor any person claiming under or
through him shall be, or have any of the rights or privileges of,
a stockholder of the Company in respect of any of the shares
issuable upon the exercise of the option, until the date of receipt
of payment by the Company in accordance with the terms hereof.
10. Any notice to be given to the Company under the terms of
this Agreement shall be addressed to Dover Investments Corporation,
in care of its Secretary, 350 California Street, Suite 1650, San
Francisco, California 94104, or at such other address as the
Company may hereafter designate in writing. Any notice to be given
to the Optionee shall be addressed to the Optionee at the address
set forth beneath his signature hereto, or at any such other
address as the Optionee may hereafter designate in writing. Any
such notice shall be deemed to have been duly given if and when
enclosed in a properly sealed envelope, addressed as aforesaid,
registered and deposited, postage and registry fee prepaid, in a
post office or branch post office regularly maintained by the
United States Government.
11. Except as otherwise provided herein, the option herein
granted and the rights and privileges conferred hereby shall not be
transferred, assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise) and shall not be subject to sale
under execution, attachment or similar process upon the rights and
privileges conferred hereby. Upon any attempt to transfer, assign,
pledge or otherwise dispose of said option, or of any right or
privilege conferred hereby, contrary to the provisions hereof, or
upon any attempted sale under any execution, attachment or similar
process upon the rights and privileges conferred hereby, said
option and the rights and privileges conferred hereby shall
immediately become null and void.
12. Notwithstanding any other provision of this Agreement,
this option is not exercisable after the expiration of 10 years
from the date of this Agreement.
13. Subject to the limitations on transferability contained
herein, this Agreement shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors and assigns
of the parties hereof.
14. The rights awarded hereby are subject to the requirement
that, if at any time the Committee shall determine, in its sole
discretion, that the listing, registration or qualification of the
shares of Class A Stock subject to such rights upon any securities
exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of
such rights may not be exercised or paid in whole or in part unless
such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not
acceptable to the Committee.
15. Stock certificates issued upon exercise of this option,
or any portion thereof, may bear such restrictive legends as the
Company in its sole discretion deems appropriate or necessary, and
said Class A Stock may not be sold in violation of said legends.
Additionally, appropriate restrictions on stock transfers may be
noted in the stock records of the Company.
16. Nothing in this Agreement shall be construed as giving
the Optionee the right to be retained as a director of the Company.
17. If shares of Class A Stock are issued to the Optionee in
satisfaction of the rights conferred hereby, the Company has the
right to require the Optionee to remit to the Company an amount
sufficient to satisfy federal, state and local withholding tax
requirements prior to the delivery of any certificate or
certificates for such shares. Whenever payments are to be made in
cash, such payments shall be net of an amount sufficient to satisfy
federal, state and local withholding tax requirements.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, in duplicate, the day and year first above written.
DOVER INVESTMENTS CORPORATION
By___________________________
Title: President and
Chairman of the Board
ACCEPTED:
________________________________
(Name)
________________________________
Address
________________________________
DOVER INVESTMENTS CORPORATION
1995 STOCK OPTION PLAN
(Effective January 17, 1995)
ARTICLE I
GENERAL
1. PURPOSE.
This 1995 Stock Option Plan (the "Plan") is intended to contribute
to maintaining the Company's performance by providing certain officers and
key employees of the Company with long-term incentives in the form of options
to purchase shares of the Company's Class A Common Stock, $.01 par value per
share (the "Class A Common Stock"), Class B Common Stock, $.01 par value per
share (the "Class B Common Stock"), or any combination thereof.
2. ADMINISTRATION.
The plan shall be administered by the Compensation Committee of the
Board of Directors of the Company, a standing committee (the "Committee").
The Committee shall from time to time at its discretion make determinations
with respect to the officers and key employees of the Company to whom options
shall be granted and the amount of such options. The Committee shall consist
of not less than two (2) members of the Board of Directors. Each member of
the Committee shall be a "disinterested person" within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended.
The interpretation and construction by the Committee of any
provisions of the Plan or of any option granted under it shall be final. No
member of the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any option granted under it.
3. ELIGIBILITY.
Subject to Section 2 of this Article I, the persons who shall be
eligible to receive options under the Plan shall be such officers and key
employees (including directors who are also salaried employees of the
Company) of the Company as the Committee shall select. The terms "officers
and key employees" as used herein shall mean officers and assistant officers,
both elective and appointive, presidents and general managers of divisions
and subsidiaries and such other key employees as may be determined by the
Committee in its sole discretion.
Except where the context otherwise requires, the term "Company," as
used herein, shall include (i) Dover Investments Corporation and (ii) any of
its "subsidiary corporations" which meet the definition of subsidiary
corporation contained in Section 425(f) of the Internal Revenue Code of 1986,
as amended, as now in effect or as hereafter amended (the "Code"), and the terms
"officers and key employees of the Company," and words of similar import,
shall include officers and key employees of each such subsidiary corporation,
as well as officers and key employees of Dover Investments Corporation.
4. SHARES OF STOCK SUBJECT TO THE PLAN.
The shares that may be issued under the Plan shall be authorized
and unissued or reacquired shares of the Company's Class A Common Stock and
Class B Common Stock. The aggregate number of shares which may be issued
under the Plan shall not exceed 200,000 shares of Class A Common Stock,
200,000 shares of Class B Common Stock or an aggregate of 200,000 shares of
any combination of shares of Class A Common Stock and Class B Common Stock,
unless an adjustment is required in accordance with Section 3(I) of Article
II hereof.
5. AMENDMENT OF THE PLAN.
The Board of Directors of the Company may, insofar as permitted by
law, from time to time, suspend or discontinue the Plan or revise or amend it
in any respect whatsoever, except that no such amendment shall alter or
impair any rights or obligations under any option theretofore granted under
the Plan without the consent of the Person to whom such option was granted.
Furthermore, without further stockholder approval, no such amendment shall
increase the number of shares subject to the Plan (except as authorized by
Section 3(I) of Article II hereof), change the designation in Section 3 of
Article I of the class of employees eligible to receive options under the
Plan, provide for the grant of stock options having a purchase price less
than the fair market value on the date of grant, extend the term during which
stock options granted under the Plan may be exercised, extend the date
pursuant to which options under the Plan may be granted, or otherwise amend
the Plan in a way that would require stockholder approval promulgated under
Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
6. TERM OF PLAN.
Awards may be made under the Plan until January 16, 2005, the date
of termination of the Plan. Notwithstanding the foregoing, all options
granted under the Plan shall remain in effect until such options have been
satisfied by the issuance of shares or terminated in accordance with their
terms and the terms of the Plan.
7. RESTRICTIONS.
All options granted under the Plan shall be subject to the
requirement that, if at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to stock options granted under the Plan upon any securities exchange
or under any state or federal law, or the consent or approval of any
government regulatory body, is necessary or desirable as a condition of, or
in connection with, the granting of such option or the issue or purchase of
shares thereunder, such option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.
8. NONASSIGNABILITY.
No stock option shall be assignable or transferable by the grantee
except by will or by the laws of descent and distribution. During the life
of the grantee, any stock options which have been granted to the grantee
shall be exercisable only by the grantee.
9. WITHHOLDING TAXES.
Whenever under the Plan shares of Class A Common Stock, Class B
Common Stock or any combination thereof are to be issued, the Company shall
have the right to require the grantee to remit to the Company an amount
sufficient to satisfy federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such shares.
10. CERTAIN INFORMATION.
The Company shall provide to each optionee, during the period that
such optionee has one or more outstanding options, copies of all annual
reports and other information which are provided to all stockholders of the
Company. The Company shall not be required to provide such information to
key employees whose duties in connection with the Company assure their access to
equivalent information.
ARTICLE II
STOCK OPTIONS
1. AWARD OF STOCK OPTIONS.
Awards of stock options may be made under the Plan. It is intended
that certain options granted pursuant to the Plan shall constitute incentive
stock options within the meaning of Section 422 of the Code ("incentive stock
options"), and that certain options granted pursuant to the Plan shall not
constitute incentive stock options ("nonqualified stock options"). The
aggregate fair market value (determined at the time the option is granted) of
the stock with respect to which incentive stock options are exercisable for
the first time by such individual during any calendar year (under all
incentive stock option plans of the individual's employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000. The date on
which an option is granted shall be the date of the Committee's authorization
of such grant or such later date as may be determined by the Committee at the
time such grant is authorized.
2. EFFECT OF TERMINATION OF OPTIONS.
In the event that any outstanding option under the Plan terminates
before it would otherwise have expired under its terms or expires by its
terms without being fully exercised, the shares of Class A Common Stock,
Class B Common Stock or any combination thereof subject to such option not
issued pursuant to the exercise of such option shall again become available
in the pool of shares provided under the Plan.
3. TERMS AND CONDITIONS OF OPTIONS.
Stock options granted pursuant to the Plan shall be evidenced by
agreements in such form as the Committee shall from time to time determine,
which agreements shall comply with the following terms and conditions:
(A) Optionee's Agreement
Each optionee shall agree to remain in the employ of and to
render to the Company his or her services for a period of one (1) year
from the date of the option, but such agreement shall not impose upon
the Company any obligation to retain the optionee in its employ for any
period.
(B) Number of Shares
Each option agreement shall state the class and number of
shares to which the option pertains.
(C) Option Price
Each option agreement shall state the option price per share,
which shall be not less than 100% of the fair market value of the Class
A Common Stock or Class B Common Stock, as the case may be, on the date
that the option is granted. Notwithstanding the foregoing, the option
price per share of an incentive stock option granted to a person who,
on the date of such grant and in accordance with Section 425(d) of the
Code, owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company shall be not less than 110%
of the fair market value of a shares of the Class A Common Stock or
Class B Common Stock, as the case may be, on the date that the option is
granted. Fair market value as used herein shall be the mean of the
closing sales prices of the Class A Common Stock or Class B Common Stock,
as the case may be, on the Composite Tape for New York Stock Exchange--
Listed Stocks on the date that such option is granted or, if the option
date is not a trading date, the trading date next following the option
date. If the Class A Common Stock or the Class B Common Stock is not
listed on the New York Stock Exchange, fair market value shall be the
highest closing sales price on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as
amended, on which such stock is listed, or, if such stock is not listed
on any such securities exchange, the highest closing sales price or bid
quotation with respect to a share of such stock on the date such option
is granted on the National Association of Securities Dealers, Inc.
Automated Quotations System or any successor system or, if no such
quotations are available, the fair market value on the date in question
of a share of such stock as determined in good faith by the Board of
Directors.
(D) Medium and Time of Payment
The option price shall be payable upon the exercise of an
option in the legal tender of the United States or, in the discretion of
the Committee, in shares of the Class A Common Stock, Class B Common
Stock, in a combination of such legal tender and such shares or in the
form of such other consideration (including, without limitation,
promissory notes). Upon receipt of payment, the Company shall deliver
to the optionee (or person entitled to exercise the option) a
certificate or certificates for the shares of Class A Common Stock or
Class B Common Stock, as the case may be, to which the option pertains.
(E) Terms and Exercise of Option
Each option shall state the time or times when it becomes
exercisable, which shall be determined by the Committee; provided,
however, that, except as otherwise provided herein, no option shall
become exercisable until six months has elapsed from the date of grant
and no incentive stock option shall become exercisable until one (1)
year has elapsed from the date of grant. The Committee may specify such
option exercise schedule, if any, for each option as it, in its
discretion, deems appropriate. To the extent that an option has become
exercisable, it may be exercised in whole or in such lesser amount as
authorized by the option agreement. If exercised in part, the
unexercised portion of an option shall continue to be held by the
optionee and may thereafter be exercised as herein provided.
Notwithstanding any other provision of the Plan, no option granted under
the Plan shall be exercisable after the expiration of ten (10) years
from the date of its grant, subject, in the Committee's discretion, to
Section 3(H) of this Article II. In addition, no incentive stock option
granted under the Plan to a person who, at the time such option is
granted and in accordance with Section 425(d) of the Code, owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company shall be exercisable after the expiration
of five (5) years from the date of its grant. During the lifetime of the
optionee, the option shall be exercisable only by the optionee and shall
not be assignable or transferable by the optionee, and no other person
shall acquire any rights therein.
(F) Termination of Employment Except Disability or Death
In the event that an optionee shall cease to be employed by
the Company for any reason other than the optionee's death or disability,
the optionee's option shall terminate 30 days after the date of
cessation of employment; provided, however, that if such cessation of
employment is with the consent of the Board of Directors of the Company,
expressed in the form of a resolution, or is pursuant to the optionee's
retirement under the provisions of any pension, profit sharing or other
retirement plan of the Company then in effect, such option may be
exercised within three (3) months after the date that he ceases to be an
employee of the Company, but only to the extent such option was
exercisable or would have been exercisable but for the existence of
earlier-granted incentive stock options on the date of such cessation of
employment; and, provided, further, that if such cessation of employment
occurs after a Change in Control (as defined in Section 3(l)(i) of
Article II hereof) and the provisions of Section 3(l)(i) are applicable
to such option, such option shall terminate upon the earlier of 180 days
after the date of such cessation of employment or the expiration date of
such option.
(G) Disability of Optionee
If an optionee shall cease to be employed by the Company by
reason of the optionee becoming permanently and totally disabled within
the meaning of Section 22(e)(3) of the Code and shall not have fully
exercised the optionee's option, such option may be exercised to the
extent it was exercisable immediately prior to the optionee's disability
at any time within one (1) year after cessation of employment due to
such disability.
(H) Death of Optionee and Transfer of Option
If an optionee should die while in the employ of the Company,
or within a period of three (3) months after a termination of the
optionee's employment with the Company during which the optionee is
still permitted to exercise an option in accordance with Subsection 3(F)
of this Article II and shall not have fully exercised the optionee's
option, such option may be exercised to the extent it was exercisable
immediately prior to the optionee's death at any time within one (1)
year after the optionee's death. Such option may be exercised to the
extent it was exercisable immediately prior to the optionee's death by
the executors or administrators of the optionee's estate or by any person
or persons who shall have acquired the option directly from the optionee
by the optionee's will or the applicable law of descent and distribution.
(I) Recapitalizations and Reorganizations
The number of shares of Class A Common Stock and Class B Common
Stock covered by the Plan, and each outstanding option hereunder and the
price per share thereof, shall be proportionately adjusted for any
increase or decrease in the number of issued and outstanding shares of
Class A Common Stock and Class B Common Stock resulting from a
subdivision or consolidation of shares or the payment of a stock dividend
in excess of 2% or any other increase or decrease in the number of issued
and outstanding shares of Class A Common Stock and Class B Common Stock
effected without receipt of consideration by the Company.
If the Company shall be the continuing or surviving corporation
in any reorganization, consolidation or merger, each outstanding option
shall pertain to and apply to the securities, if any, to which a holder
of the same number of shares of Class A Common Stock and/or Class B
Common Stock that are subject to that option would have been entitled.
A "Change in Control" of the Company (as defined below) shall
cause each outstanding option to terminate, unless any agreement
relating to a Change in Control shall otherwise provide or unless such
Change in Control is an event described in clauses (a)(2) or (a)(3) of
the following paragraph; provided, however, that each optionee holding
an outstanding option in the event of a Change in Control shall have the
right immediately prior to such a Change in Control, regardless of
whether such option will terminate, to exercise his or her option in
whole or in part without regard to any limitations on exercisability and
thereafter such option shall be considered fully vested.
For the purposes hereof, a "Change in Control" shall be deemed
to have occurred when (a) there shall be consummated (1) any
reorganization, consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation, or (2) any
reorganization, consolidation or merger of the Company in which the
Company is the continuing or surviving corporation and pursuant to which
shares of the Company's Class A Common Stock and Class B Common Stock
would be converted into cash, securities or other property, or (3) any
sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all, or substantially all, of the assets of
the Company, or (b) the stockholders of the Company approve a plan or
proposal for the liquidation or dissolution of the Company, or (c) the
Board of Directors of the Company or the Committee shall have been
determined that such a "Change in Control" otherwise has occurred.
To the extent that the foregoing adjustments in this Section 3(I)
relate to stock or securities of the Company, such adjustments shall be
made by the Committee, whose determination in that respect shall be
final, binding and conclusive.
The grant of an option pursuant to the Plan shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations of changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets.
(J) Rights as a Stockholder
An optionee or a transferee of an option shall have no rights
as a stockholder with respect to any shares covered by his or her option
until the date of the receipt of payment by the Company and the issuance
of a stock certificate to him or her for such shares pursuant to Section
3(D) of this Article II. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is
prior to such date, except as provided in Section 3(I) of this Article II.
(K) Modification, Extension and Renewal of Options
Subject to the terms and conditions and within the limitations
of the Plan, the Committee may modify, extend, renew or cancel
outstanding options granted under the Plan. Notwithstanding the
foregoing, however, no modification of an option shall, without the
consent of the optionee, alter or impair any right or obligations under
any option theretofore granted under the Plan.
(L) Other Provisions
The option agreements authorized under the Plan shall contain
such other provisions, including, without limitation, restrictions upon
the exercise of the option or restrictions required by any applicable
securities laws, as the Committee, in its discretion, shall deem
advisable.
4. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Class A Common
Stock, Class B Common Stock or any combination thereof pursuant to options
will be used for general corporate purposes.
5. NO OBLIGATION TO EXERCISE OPTION.
The granting of an option shall impose no obligation upon the
optionee to exercise such option.
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO (AND QUALIFICATION
THEREOF UNDER THE CALIFORNIA CORPORATE SECURITIES LAW OF 1968, AS AMENDED
(THE "LAW")), OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE LAW.
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK AGREEMENT (the "Agreement") made and entered
into as of the __________ day of __________, ____, by and between Dover
Investments Corporation, a Delaware corporation (the "Company"), and
____________________, an employee of the Company (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the 1995 Stock Option Plan (the
"Plan"), providing for the granting to its employees of stock options relating
to shares of its Class A Common Stock, $.01 par value per share (the "Class A
Common Stock"), and its Class B Common Stock, $.01 par value per share (the
"Class B Common Stock"); and
WHEREAS, the Plan provides for the grant of certain options which
are intended to be incentive stock options ("incentive stock options") within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"); and
WHEREAS, the Employee is a key employee who is in a position to
make an important contribution to the long-term performance of the Company;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Effective ______________ __, ____, pursuant to the action of
the Company's Board of Directors, the Company hereby grants to the Employee an
incentive stock option to purchase __________ shares of the Class ___________
Common Stock at the price set forth in Paragraph 2 hereof, on the terms and
conditions hereinafter stated. In consideration of the grant of this option
and the other rights which are being concurrently granted to him or her, the
Employee hereby agrees to continue in the employment of the Company for a
period of at least one year from the date of grant of this option.
2. The purchase price per share is ____________________ dollars
($__________) (which is hereby agreed to be 100% or more of the fair market
value of such shares at the date of grant, or if the employee holds shares
with more than 10% of the Company's total voting power, 110% or more of the
fair market value of such shares at the date of grant).
3. The number of shares of the class of common stock covered
hereby and the price per share thereof shall be proportionately adjusted for
any increase or decrease in the number of issued and outstanding shares of the
class of common stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend in excess of 2% or any other increase or
decrease in the number of issued and outstanding shares of the class of
common stock effected without receipt of consideration by the Company.
If the Company shall be the continuing or surviving corporation in
any reorganization, consolidation or merger, each outstanding option shall
pertain to and apply to the securities, if any, to which a holder of the same
number of shares of Class A Common Stock and/or Class B Common Stock that are
subject to that option would have been entitled.
A "Change in Control" of the Company (as defined below) shall cause
each outstanding option to terminate, unless any agreement relating to a
Change in Control shall otherwise provide or unless such Change in Control is
an event described in clauses (a)(2) or (a)(3) of the following paragraph;
provided, however, that each optionee holding an outstanding option in the
event of a Change in Control shall have the right immediately prior to such a
Change in Control, regardless of whether such option will terminate, to
exercise his or her option in whole or in part without regard to any
limitations on exercisability and thereafter such option shall be considered
fully vested.
For the purposes hereof, a "Change in Control" shall be deemed to
have occurred when (a) there shall be consummated (1) any reorganization,
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation, or (2) any reorganization, consolidation
or merger of the Company in which the Company is the continuing or surviving
corporation and pursuant to which shares of the Company's Class A Common
Stock and Class B Common Stock would be converted into cash, securities or
other property, or (3) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (b) the stockholders of the Company approve a
plan or proposal for the liquidation or dissolution of the Company, or
(c) the Board of Directors of the Company or the Compensation Committee of the
Board of Directors (the "Committee") shall have been determined that such a
"Change in Control" otherwise has occurred.
To the extent that the foregoing adjustments in this Paragraph 3
relate to stock or securities of the Company, such adjustments shall be made
by the Committee, whose determination in this respect shall be final, binding
and conclusive.
The grant of this option shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure or to merge or to consolidate
or to dissolve, liquidate or sell, or transfer all or any part of its business
assets.
4. Except as provided in Paragraph 3 above, this option may not
be exercised in whole or in part until twelve months has elapsed from the date
of this Agreement.
The number of shares subject to this option shall be exercisable
in accordance with the following schedule:
_____________ shares exercisable on or after ____________, ______, plus
_____________ shares exercisable on or after ____________, ______, plus
_____________ shares exercisable on or after ____________, ______, plus
_____________ shares exercisable on or after ____________, ______.
No partial exercise of this option will be permitted for less than
ten shares.
5. In the event of termination of the Employee's employment for
any reason other than his death or disability, this option shall immediately
terminate 30 days after the date of cessation of employment; provided,
however, that if such cessation of employment is with the consent of the
Board of Directors, expressed in the form of a resolution, or is pursuant to
his or her retirement under the provisions of any pension, profit sharing or
other retirement plan of the Company then in effect, this option may be
exercised (subject to the provisions of Paragraph 13 hereof) within three
months after the date he ceases to be an employee of the Company, but only to
the extent that it was exercisable on the date of such cessation of
employment; and, provided, further, that if such cessation of employment
occurs after a Change in Control, this option shall terminate 180 days after
the date of such cessation of employment.
6. This option shall be exercisable during the Employee's
lifetime only by him and shall be nontransferable by the Employee otherwise
than by will or the laws of descent and distribution.
7. In the event of Employee's ceasing to be employed by the
Company on account of permanent and total disability within the meaning of
Section 22(e)(3) of the Code, this option may be exercised (subject to the
provisions of paragraph 13 hereof) at any time within one year after cessation
of employment due to such disability, but only to the extent this option was
exercisable immediately prior to the disability.
8. In the event of the Employee's death while in the employ of
the Company, or during a three-month period following termination of
employment during which the Employee is permitted to exercise this option
pursuant to Paragraph 5 hereof, this option may be exercised (subject to the
provisions of Paragraph 13 hereof) at any time within one year after the
Employee's death by the Employee's to the extent it was exercisable
immediately prior to his or her death by the executors or administrators of
his or her estate or by any person or persons who shall have acquired this
option directly from him or her by will or the applicable law of descent and
distribution. Any such transferee exercising this option must furnish the
Company upon request of the Committee (a) written notice of his or her status
as transferee, (b) evidence satisfactory to the Company to establish the
validity of the transfer of this optionin compliance with any laws or
regulations pertaining to said transfer, and (c) written acceptance of the
terms and conditions of this optionas prescribed in this Agreement.
9. This option may be exercised by the person then entitled to
do so as to any shares which may then be purchased by giving notice of
exercise to the Company, specifying the number of full shares to be purchased
and accompanied by full payment of the purchase price thereof and the amount
of any income tax the Company is required by law to withhold by reason of such
exercise. The purchase price shall be payable in legal tender of the United
States [or, in shares of the same class of common stock or in a combination
of legal tender of the United States and such shares]. For purposes of
computing the purchase price, shares surrendered will be valued at their fair
market value on the date of exercise.
10. Neither the Employee nor any person claiming under or through
him or her shall be or have any of the rights or privileges of a stockholder
of the Company in respect of any of the shares issuable upon the exercise of
the option, until the date of the receipt of payment by the Company and the
issuance of a stock certificate to him or her for such shares in accordance
with the terms hereof.
11. Any notice to be given to the Company under the terms of this
Agreement shall be addressed to Dover Investments Corporation, in care of its
Secretary, at 350 California Street, Suite 1650, San Francisco, California
94104, or at such other address as the Company may hereafter designate in
writing. Any notice to be given to the Employee shall be addressed to the
Employee at the address set forth beneath his or her signature hereto, or at
any such other address as the Employee may hereafter designate in writing.
Any such notice shall be deemed to have been duly given if and when enclosed
in a properly sealed envelope, addressed as aforesaid, registered and
deposited, postage and registry fee prepaid, in a post office or branch post
office regularly maintained by the United States Government.
12. Except as otherwise provided herein, this option herein
granted and the rights and privileges conferred hereby shall not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to sale under
execution, attachment or similar process upon the rights and privileges
conferred hereby. Upon any attempt to transfer, assign, pledge or otherwise
dispose of said option, or of any right or privilege conferred hereby,
contrary to the provisions hereof, or upon any attempted sale under any
execution, attachment or similar process upon the rights and privileges
conferred hereby, said option and the rights and privileges conferred hereby
shall immediately become null and void.
13. Notwithstanding any other provisions of this Agreement, this
option is not exercisable after the expiration of ten [five if the employee is
a more-than-10% shareholder] years from the date hereof.
14. Subject to the limitations on transferability contained
herein, this Agreement shall be binding upon and inure to the benefit of the
heirs, legal representatives, successors and assigns of the parties hereto.
15. The rights awarded hereby are subject to the requirement that,
if at any time the Committee shall determine, in its sole discretion, that the
listing, registration or qualification of the shares subject to such rights
upon any securities exchange or under any state or federal law, or the consent
or approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such rights or the issue
of shares in connection therewith, such rights may not be exercised or paid in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
16. By receipt of the option, by execution of this Agreement and
by exercise in whole or in part, the Employee represents to the Company that
the Employee understands that:
(a) both this optionand any shares purchased upon its exercise are
securities, the issuance by the Company of which requires compliance with
federal and state securities laws;
(b) these securities are made available to the Employee only on
the condition that he or she makes the representations contained in this
Paragraph 16 to the Company;
(c) the Employee has made a reasonable investigation of the
affairs of the Company sufficient to be well informed as to the rights and the
value of these securities;
(d) the Employee understands that the securities have not been
registered under the Securities Act of 1933, as amended (the "Act"), or
qualified under the California Corporate Securities Law of 1968, as amended
(the "Law"), in reliance upon one or more specific exemptions contained in the
Act and the Law, which may depend upon (i) the Employee's bona fide investment
intention in acquiring these securities; (ii) the Employee's intention to hold
these securities for his or her own benefit for an indefinite period;
(iii) the Employee having no present intention of selling or transferring any
part thereof (recognizing that this optionis not transferable); and
(iv) there being certain restrictions on transfer of the shares subject to the
option;
(e) The employee understands that the shares subject to the
option, in addition to other restrictions on transfer, must be held
indefinitely unless subsequently registered under the Act, or unless an
exemption from registration is available; that Rule 144, the usual exemption
from registration, is only available after the satisfaction of certain holding
periods and in the presence of a public market for the shares; that there is
no certainty that a public market for the shares will exist; and that
otherwise it will be necessary that the shares be sold pursuant to another
exemption from registration which may be difficult to satisfy; and
(f) The Employee understands that the certificate representing the
shares will bear a legend prohibiting their transfer in the absence of their
registration and qualification or the opinion of counsel for the Company that
registration and qualification is not required.
17. Each stock certificate for shares issued to the Employee shall
have conspicuously written, printed, typed or stamped upon the face thereof,
or upon the reverse thereof with a conspicuous reference on the face thereof,
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND QUALIFICATION UNDER THE CORPORATE SECURITIES LAW OF 1968, AS
AMENDED, AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF
REGISTRATION AND QUALIFICATION THEREUNDER OR APPLICABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
THE QUALIFICATION REQUIREMENTS OF SUCH LAW. SUCH SHARES MAY NOT
BE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED OR OTHERWISE
DISPOSED OF IN ANY MANNER EXCEPT IN ACCORDANCE WITH AND SUBJECT
TO THE TERMS OF THE INCENTIVE STOCK OPTION AGREEMENT, A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. SUCH
INCENTIVE STOCK OPTION AGREEMENT PROHIBITS ANY TRANSFER,
ASSIGNMENT, PLEDGE OR HYPOTHECATION OF SUCH SHARES TO SECURE ANY
OBLIGATION OF THE HOLDER HEREOF. EVERY CREDITOR OF THE HOLDER
HEREOF AND ANY PERSON ACQUIRING OR PURPORTING TO ACQUIRE THIS
CERTIFICATE OR THE SHARES HEREBY EVIDENCED OR ANY INTEREST
THEREIN IS HEREBY NOTIFIED OF THE EXISTENCE OF SUCH INCENTIVE STOCK
OPTION AGREEMENT, AND ANY ACQUISITION OR PURPORTED ACQUISITION
OF THIS CERTIFICATE OR THE SHARES HEREBY EVIDENCED OR ANY INTEREST
THEREIN SHALL BE SUBJECT TO ALL RIGHTS AND OBLIGATIONS OF THE
PARTIES TO SUCH STOCK OPTION AGREEMENT AS THEREIN SET FORTH.
18. In consideration of the granting of this option, the Employee
agrees that, as part of the Company's key management, executive and/or
technical staff, he or she will at all times exercise the highest degree of
loyalty to the Company. This obligation requires of the Employer a standard
of conduct which is not less than that which is required under applicable law
regarding corporate fiduciaries, self-dealing, and the usurpation of corporate
opportunities. In addition, the Employee agrees that during the period of
employment covered by this Agreement he or she will increase his or her
efforts on behalf of the Company, not compete with the Company, and not engage
in preparation to compete.
19. The parties hereto agree that any action relating to this
Stock Option Agreement shall be instituted and processed in the courts in San
Francisco County, California, and each party waives the right to change of
venue.
20. Subject to any employment contract with the Employee, the
terms of employment of the Employee shall be determined from time to time by
the Company or the subsidiary employing the Employee, as the case may be, and
the Company, or the subsidiary employing the Employee, as the case may be,
shall have the right, which is hereby expressly reserved, to terminate the
employee or change the terms of the employment at any time for any reason
whatsoever, with or without good cause.
21. Whenever shares are to be issued to the Employee in
satisfaction or payment of the rights conferred hereby, the Company shall have
the right to require the grantee to remit to the Company an amount sufficient
to satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. Whenever
payments are to be made in cash, such payments shall be net of an amount
sufficient to satisfy federal, state and local withholding tax requirements.
22. In the event the Employee disposes of any of the shares that
may be acquired hereunder within two years of the date hereof or within one
year of the date this option is exercised, Employee agrees to notify the
Company in writing within ten days of the date of such disposition of the
number of shares disposed of, the nature of the transaction, and the amount
received (if any) upon such disposition. Employee understands that such a
disposition may result in imposition of withholding taxes.
23. The Committee shall have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon Employee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this Agreement.
24. In the event that any provision in this Agreement shall be
invalid or unenforceable, such provision shall be severable from, and such
invalidity or unenforceability shall not be construed to have any effect on
the remaining provisions of this Agreement.
25. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
the conflicts of law principles thereof.
IN WITNESS HEREOF, the parties hereto have executed this Agreement,
in duplicate, this ______th day of __________, _____.
DOVER INVESTMENTS CORPORATION
By:
ACCEPTED:
Employee
(Address)
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO (AND QUALIFICATION
THEREOF UNDER THE CALIFORNIA CORPORATE SECURITIES LAW OF 1968, AS AMENDED
(THE "LAW")), OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE LAW.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement")
made and entered into as of the __________ day of __________, ____, by and
between Dover Investments Corporation, a Delaware corporation (the "Company"),
and ____________________, an employee of the Company (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the 1995 Stock Option Plan (the
"Plan"), providing for the granting to its employees of stock options relating
to shares of its Class A Common Stock, $.01 par value per share (the "Class A
Common Stock"), and its Class B Common Stock, $.01 par value per share (the
"Class B Common Stock"); and
WHEREAS, the Plan provides for the grant of certain options
("nonqualified stock options") which are not intended to be incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"); and
WHEREAS, the Employee is a key employee who is in a position to make
an important contribution to the long-term performance of the Company;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Effective ________________ __, ____, pursuant to the action of
the Company's Board Directors, the Company hereby grants to the Employee a
nonqualified stock option to purchase __________ shares of the Class
___________ Common Stock at the price set forth in Paragraph 2 hereof, on the
terms and conditions hereinafter stated. In consideration of the grant of
this option and the other rights which are being concurrently granted to him
or her, the Employee hereby agrees to continue in the employment of the
Company for a period of at least one year from the date of grant of this
option.
2. The purchase price per share is ____________________ dollars
($__________) (which is hereby agreed to be 100% or more of the fair market
value of such shares at the date of grant).
3. The number of shares of the class of common stock covered
hereby and the price per share thereof shall be proportionately adjusted for
any increase or decrease in the number of issued and outstanding shares of the
class of common stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend in excess of 2% or any other increase or
decrease in the number of issued and outstanding shares of the class of
common stock effected without receipt of consideration by the Company.
If the Company shall be the continuing or surviving corporation in
any reorganization, consolidation or merger, each outstanding option shall
pertain to and apply to the securities, if any, to which a holder of the same
number of shares of Class A Common Stock and/or Class B Common Stock that are
subject to that option would have been entitled.
A "Change in Control" of the Company (as defined below) shall cause
each outstanding option to terminate, unless any agreement relating to a
Change in Control shall otherwise provide or unless such Change in Control is
an event described in clauses (a)(2) or (a)(3) of the following paragraph;
provided, however, that each optionee holding an outstanding option in the
event of a Change in Control shall have the right immediately prior to such a
Change in Control, regardless of whether such option will terminate, to
exercise his or her option in whole or in part without regard to any
limitations on exercisability and thereafter such option shall be considered
fully vested.
For the purposes hereof, a "Change in Control" shall be deemed to
have occurred when (a) there shall be consummated (1) any reorganization,
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation, or (2) any reorganization, consolidation
or merger of the Company in which the Company is the continuing or surviving
corporation and pursuant to which shares of the Company's Class A Common Stock
and Class B Common Stock would be converted into cash, securities or other
property, or (3) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (b) the stockholders of the Company approve a
plan or proposal for the liquidation or dissolution of the Company, or
(c) the Board of Directors of the Company or the Compensation Committee of the
Board of Directors (the "Committee") shall have been determined that such a
"Change in Control" otherwise has occurred.
To the extent that the foregoing adjustments in this Paragraph 3
relate to stock or securities of the Company, such adjustments shall be made
by the Committee, whose determination in this respect shall be final, binding
and conclusive.
The grant of this option shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure or to merge or to consolidate
or to dissolve, liquidate or sell, or transfer all or any part of its business
assets.
4. Except as provided in Paragraph 3 above, this option may not be
exercised in whole or in part until twelve months has elapsed from the date
of this Agreement.
The number of shares subject to this option shall be exercisable in
accordance with the following schedule:
_____________ shares exercisable on or after ____________, ______, plus
_____________ shares exercisable on or after ____________, ______, plus
_____________ shares exercisable on or after ____________, ______, plus
_____________ shares exercisable on or after ____________, ______.
No partial exercise of this option will be permitted for less than
ten shares.
5. In the event of termination of the Employee's employment for
any reason other than his death or disability, this option shall immediately
terminate 30 days after the date of cessation of employment; provided,
however, that if such cessation of employment is with the consent of the Board
of Directors, expressed in the form of a resolution, or is pursuant to his or
her retirement under the provisions of any pension, profit sharing or other
retirement plan of the Company then in effect, this option may be exercised
(subject to the provisions of Paragraph 13 hereof) within three months after
the date he ceases to be an employee of the Company, but only to the extent
that it was exercisable on the date of such cessation of employment; and,
provided, further, that if such cessation of employment occurs after a Change
in Control, this option shall terminate 180 days after the date of such
cessation of employment.
6. This option shall be exercisable during the Employee's lifetime
only by him and shall be nontransferable by the Employee otherwise than by
will or the laws of descent and distribution.
7. In the event of Employee's ceasing to be employed by the
Company on account of permanent and total disability within the meaning of
Section 22(e)(3) of the Code, this option may be exercised (subject to the
provisions of paragraph 13 hereof) at any time within one year after cessation
of employment due to such disability, but only to the extent this option was
exercisable immediately prior to the disability.
8. In the event of the Employee's death while in the employ of the
Company, or during a three-month period following termination of employment
during which the Employee is permitted to exercise this option pursuant to
Paragraph 5 hereof, this option may be exercised (subject to the provisions of
Paragraph 13 hereof) at any time within one year after the Employee's death by
the Employee's to the extent it was exercisable immediately prior to his or
her death by the executors or administrators of his or her estate or by any
person or persons who shall have acquired this option directly from him or
her by will or the applicable law of descent and distribution. Any such
transferee exercising this option must furnish the Company upon request of the
Committee (a) written notice of his or her status as transferee, (b) evidence
satisfactory to the Company to establish the validity of the transfer of this
option in compliance with any laws or regulations pertaining to said transfer,
and (c) written acceptance of the terms and conditions of this option as
prescribed in this Agreement.
9. This option may be exercised by the person then entitled to do
so as to any shares which may then be purchased by giving notice of exercise
to the Company, specifying the number of full shares to be purchased and
accompanied by full payment of the purchase price thereof and the amount of
any income tax the Company is required by law to withhold by reason of such
exercise. The purchase price shall be payable in legal tender of the United
States or, in the sole discretion of the Committee, in shares of the same
class of common stock or in a combination of legal tender of the United States
and such shares. For purposes of computing the purchase price, shares
surrendered will be valued at their fair market value on the date of exercise.
10. Neither the Employee nor any person claiming under or through
him or her shall be or have any of the rights or privileges of a stockholder
of the Company in respect of any of the shares issuable upon the exercise of
this option, until the date of the receipt of payment by the Company and the
issuance of a stock certificate to him or her for such shares in accordance
with the terms hereof.
11. Any notice to be given to the Company under the terms of this
Agreement shall be addressed to Dover Investments Corporation, in care of its
Secretary, at 350 California Street, Suite 1650, San Francisco, California
94104, or at such other address as the Company may hereafter designate in
writing. Any notice to be given to the Employee shall be addressed to the
Employee at the address set forth beneath his or her signature hereto, or at
any such other address as the Employee may hereafter designate in writing.
Any such notice shall be deemed to have been duly given if and when enclosed
in a properly sealed envelope, addressed as aforesaid, registered and
deposited, postage and registry fee prepaid, in a post office or branch post
office regularly maintained by the United States Government.
12. Except as otherwise provided herein, this option herein granted
and the rights and privileges conferred hereby shall not be transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to sale under execution, attachment or
similar process upon the rights and privileges conferred hereby. Upon any
attempt to transfer, assign, pledge or otherwise dispose of said option, or of
any right or privilege conferred hereby, contrary to the provisions hereof, or
upon any attempted sale under any execution, attachment or similar process
upon the rights and privileges conferred hereby, said option and the rights
and privileges conferred hereby shall immediately become null and void.
13. Notwithstanding any other provisions of this Agreement other
than Paragraphs 5, 7 and 8, this option is not exercisable after the
expiration of ten years from the date hereof. In no event is this option
exercisable after the expiration of eleven years from the date hereof.
14. Subject to the limitations on transferability contained herein,
this Agreement shall be binding upon and inure to the benefit of the heirs,
legal representatives, successors and assigns of the parties hereto.
15. The rights awarded hereby are subject to the requirement that,
if at any time the Committee shall determine, in its sole discretion, that the
listing, registration or qualification of the shares subject to such rights
upon any securities exchange or under any state or federal law, or the consent
or approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such rights or the issue
of shares in connection therewith, such rights may not be exercised or paid in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
16. By receipt of this option, by execution of this Agreement and
by exercise in whole or in part, the Employee represents to the Company that
the Employee understands that:
(a) both this option and any shares purchased upon its exercise are
securities, the issuance by the Company of which requires compliance with
federal and state securities laws;
(b) these securities are made available to the Employee only on the
condition that he or she makes the representations contained in this Paragraph
16 to the Company;
(c) the Employee has made a reasonable investigation of the affairs
of the Company sufficient to be well informed as to the rights and the value
of these securities;
(d) the Employee understands that the securities have not been
registered under the Securities Act of 1933, as amended (the "Act"), or
qualified under the California Corporate Securities Law of 1968, as amended
(the "Law"), in reliance upon one or more specific exemptions contained in the
Act and the Law, which may depend upon (i) the Employee's bona fide investment
intention in acquiring these securities; (ii) the Employee's intention to hold
these securities for his or her own benefit for an indefinite period;
(iii) the Employee having no present intention of selling or transferring any
part thereof (recognizing that this option is not transferable); and
(iv) there being certain restrictions on transfer of the shares subject to
this option;
(e) The employee understands that the shares subject to this
option, in addition to other restrictions on transfer, must be held
indefinitely unless subsequently registered under the Act, or unless an
exemption from registration is available; that Rule 144, the usual exemption
from registration, is only available after the satisfaction of certain holding
periods and in the presence of a public market for the shares; that there is
no certainty that a public market for the shares will exist; and that
otherwise it will be necessary that the shares be sold pursuant to another
exemption from registration which may be difficult to satisfy; and
(f) The Employee understands that the certificate representing the
shares will bear a legend prohibiting their transfer in the absence of their
registration and qualification or the opinion of counsel for the Company that
registration and qualification is not required.
17. Each stock certificate for shares issued to the Employee shall
have conspicuously written, printed, typed or stamped upon the face thereof,
or upon the reverse thereof with a conspicuous reference on the face thereof,
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND QUALIFICATION UNDER THE CORPORATE SECURITIES LAW OF 1968, AS
AMENDED, AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF
REGISTRATION AND QUALIFICATION THEREUNDER OR APPLICABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
THE QUALIFICATION REQUIREMENTS OF SUCH LAW. SUCH SHARES MAY NOT
BE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED OR OTHERWISE
DISPOSED OF IN ANY MANNER EXCEPT IN ACCORDANCE WITH AND SUBJECT
TO THE TERMS OF THE NONQUALIFIED STOCK OPTION AGREEMENT, A COPY
OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. SUCH
NONQUALIFIED STOCK OPTION AGREEMENT PROHIBITS ANY TRANSFER,
ASSIGNMENT, PLEDGE OR HYPOTHECATION OF SUCH SHARES TO SECURE ANY
OBLIGATION OF THE HOLDER HEREOF. EVERY CREDITOR OF THE HOLDER
HEREOF AND ANY PERSON ACQUIRING OR PURPORTING TO ACQUIRE THIS
CERTIFICATE OR THE SHARES HEREBY EVIDENCED OR ANY INTEREST
THEREIN IS HEREBY NOTIFIED OF THE EXISTENCE OF SUCH NONQUALIFIED
STOCK OPTION AGREEMENT, AND ANY ACQUISITION OR PURPORTED
ACQUISITION OF THIS CERTIFICATE OR THE SHARES HEREBY EVIDENCED OR
ANY INTEREST THEREIN SHALL BE SUBJECT TO ALL RIGHTS AND
OBLIGATIONS OF THE PARTIES TO SUCH NONQUALIFIED STOCK OPTION
AGREEMENT AS THEREIN SET FORTH.
18. In consideration of the granting of this option, the Employee
agrees that, as part of the Company's key management, executive and/or
technical staff, he or she will at all times exercise the highest degree of
loyalty to the Company. This obligation requires of the Employer a standard
of conduct which is not less than that which is required under applicable law
regarding corporate fiduciaries, self-dealing, and the usurpation of corporate
opportunities. In addition, the Employee agrees that during the period of
employment covered by this Agreement he or she will increase his or her
efforts on behalf of the Company, not compete with the Company, and not engage
in preparation to compete.
19. The parties hereto agree that any action relating to this
Agreement shall be instituted and processed in the courts in San Francisco
County, California, and each party waives the right to change of venue.
20. Subject to any employment contract with the Employee, the
terms of employment of the Employee shall be determined from time to time by
the Company or the subsidiary employing the Employee, as the case may be, and
the Company, or the subsidiary employing the Employee, as the case may be,
shall have the right, which is hereby expressly reserved, to terminate the
employee or change the terms of the employment at any time for any reason
whatsoever, with or without good cause.
21. Whenever shares are to be issued to the Employee in
satisfaction or payment of the rights conferred hereby, the Company shall have
the right to require the grantee to remit to the Company an amount sufficient
to satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. Whenever
payments are to be made in cash, such payments shall be net of an amount
sufficient to satisfy federal, state and local withholding tax requirements.
22. The Committee shall have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon Employee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this Agreement.
23. In the event that any provision in this Agreement shall be
invalid or unenforceable, such provision shall be severable from, and such
invalidity or unenforceability shall not be construed to have any effect on
the remaining provisions of this Agreement.
24. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to the conflicts
of law principles thereof.
IN WITNESS HEREOF, the parties hereto have executed this Agreement, in
duplicate, this ______th day of __________, _____.
DOVER INVESTMENTS CORPORATION
By:
ACCEPTED:
Employee
(Address)
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