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EXHIBIT 10.12
LIBERTE INVESTORS
INCENTIVE STOCK OPTION AGREEMENT
(1995 EQUITY INCENTIVE PLAN)
This Stock Option Agreement ("Agreement") is made and entered
into as of the Date of Grant indicated below by and between Liberte Investors,
a Massachusetts business trust (the "Company"), and the person named below
("Participant").
WHEREAS, Participant is a full-time employee of the Company
and/or one or more of its subsidiaries; and
WHEREAS, pursuant to the Company's 1995 Equity Incentive Plan
(the "Plan"; capitalized terms not defined herein shall have the meanings
ascribed to them in the Plan), the Compensation Committee of the Board of
Trustees of the Company (the "Committee") has approved the grant to Participant
of options to purchase shares of beneficial interest, no par value, of the
Company (the "Shares"), on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants set forth herein, the Company and Participant hereby agree as
follows:
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The
Company hereby grants to Participant, and Participant hereby accepts, as of the
Date of Grant, options to purchase the number of Shares indicated below (the
"Options") at the Exercise Price per Share indicated below. Subject to certain
anti-dilution adjustments, each Option entitles Participant to purchase one
Share. The Options shall expire at 5:00 o'clock p.m. (local time at the
Company's principal executive office) on the Expiration Date indicated below
(unless earlier terminated pursuant to Section 2 hereof), and shall be subject
to all of the terms and conditions set forth in this Agreement. Subject to
Section 16 hereof, beginning on January 1, 1996, and on each anniversary
thereof, Participant may exercise the Options to purchase that number of Shares
(rounded to the nearest whole Share) equal to the total number of Shares
multiplied by the Annual Vesting Rate indicated below.
PARTICIPANT: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
DATE OF GRANT: FEBRUARY 15, 1995
NUMBER OF SHARES PURCHASABLE: 246,000
EXERCISE PRICE PER SHARE: $1.625
EXPIRATION DATE: FEBRUARY 15, 2005
ANNUAL VESTING RATE: 25%
The Options are intended to qualify as incentive stock options
("Incentive Stock Options" or "ISOs") under Section 422 of the Internal Revenue
Code of 1986, as amended ("Code"). In connection therewith, the Company hereby
represents that (a) the Date of Grant is not more than 10 years after the date
the Plan was adopted by the Board, or the date the Plan was approved by the
shareholders of the
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Company, whichever is earlier; (b) Participant is a full-time employee of the
Company or one of its subsidiaries ("Employee"); (c) the Expiration Date is not
more than 10 years after the Date of Grant, and (d) the Exercise Price per
share is not less than the Fair Market Value per share on the Date of Grant.
Participant hereby represents that, on the Date of Grant, Participant does not
own (after application of the family and other attribution rules of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or of its parent or subsidiary corporations.
Moreover, the Options shall not be transferable by Participant
otherwise than by will or the laws of descent and distribution, and shall be
exercisable, during Participant's lifetime, only by Participant.
Finally, to the extent that the aggregate Fair Market Value
(determined as of the date such Options are granted) of the Shares with respect
to which Incentive Stock Options are exercisable for the first time by
Participant during any calendar year (under the Plan and all other stock option
plans of the Company and its Parents and Subsidiaries) exceeds $100,000, then
such excess over $100,000 shall not be considered as subject to Incentive Stock
Options, but rather shall automatically be considered as subject to
non-qualified options. Under this rule, the Company takes into account Shares
subject to Incentive Stock Options that are purchasable for the first time in
the calendar year, in the order in which such Incentive Stock Options were
granted.
2. ACCELERATION AND TERMINATION OF OPTION.
(a) Termination of Employment or Other Status. The
following rules shall apply when Participant ceases to be an Employee (such
event shall be referred to herein as the "Termination" of such Participant or
such Participant being "Terminated") and only to the extent that the Options
have not terminated earlier due to their Expiration Date.
(i) Death. If Participant is Terminated by
reason of his or her death (or if he or she dies
within one year after ceasing to be an Employee
because of his or her "Permanent Disability," or
within three months after ceasing to be an Employee
for other reasons), then the portion of the Options
that has not vested on or prior to the date of such
Termination shall continue to vest in accordance with
the Annual Vesting Rate in Section 1 hereof, and the
Options may only be exercised by the executor or
administrator of Participant's estate or any person
or persons who shall have acquired the ISOs directly
from Participant by bequest or inheritance.
(ii) Permanent Disability. If Participant is
Terminated by reason of his or her "Permanent
Disability," then the Options that have not vested on
or prior to the date of such Termination shall
immediately vest in full, except that if the
aggregate Fair Market Value of the Shares for which
Options are exercisable for the first time in the
calendar year in which such Termination occurs would
exceed $100,000, the Options shall vest only to the
extent that such Fair Market Value does not exceed
$100,000. The remainder of such unvested Options, if
any, shall vest in full on
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the first day of the calendar year after the calendar
year in which such Termination occurs. All Options
held by the Participant may be exercised in
accordance with this Agreement, until one year from
the date of such Termination, at which time the
remaining Options shall terminate. "Permanent
Disability" shall be deemed to have occurred if:
(A) as a result of Participant's incapacity due
to physical or mental illness, Participant shall have
been continuously absent from his or her duties for
at least six (6) consecutive months, and
(B) the Company shall have given Participant
written notice of the termination of the
Participant's employment or other Status on account
of Participant's incapacity, and
(C) thirty (30) days shall have elapsed after
the giving of such notice, and
(D) the Participant shall not have resumed his or
her duties on a full time basis prior to the
expiration of such thirty (30) day period.
(iii) Other Reasons. Except as provided below, if
Participant is Terminated by the Company for any
reason other than death or Permanent Disability, or
if Participant's Termination was voluntary due to
normal retirement on or after his normal retirement
age (as determined by the Committee), then (A) the
portion of the Options that has not vested on or
prior to the date of such Termination shall vest
immediately and in full on such date, and (B) the
Options shall terminate upon the earlier of the
Expiration Date or the completion of three (3) months
after the date of such Termination. However, if the
Termination was at the election of the Participant,
other than for normal retirement in accordance with
the preceding sentence, or was for "cause," as
defined below, the accelerated vesting shall not
occur and the Options shall terminate immediately
upon such Termination. For purposes hereof, "cause"
shall mean Termination of the Participant's
employment or other status by the Company (or, if
applicable, a Subsidiary thereof) because of: (A)
Participant's conviction for or plea of nolo
contendere to any felony or crime involving moral
turpitude, (B) Participant's commission of an act of
personal dishonesty or breach of fiduciary duty
involving personal profit in connection with
Participant's employment or other Status by the
Company, (C) Participant's commission of an act
involving intentional misconduct on the part of
Participant in the conduct of his or her duties, (D)
Participant's willful failure to execute lawful
policies of the Company, (E) chronic alcoholism or
any other form of addiction to drugs on the part of
Participant, or (F) a material breach by Participant
of any material provision of any employment agreement
or other agreement with the Company to which he or
she may be a party.
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(b) Other Events Causing Acceleration of Options. The
Committee, in its sole discretion, may accelerate the exercisability of the
Options at any time and for any reason. In addition, upon a Change of Control,
the remaining unvested Options shall immediately vest in full, unless the Fair
Market Value of the Shares underlying the Options so vested pursuant to this
Section 2(b), less any applicable excise tax pursuant to Code Section 4999,
does not exceed the Fair Market Value of the Shares underlying the number of
Options that could vest upon a Change in Control without subjecting Participant
to such an excise tax, in which case the Options shall vest only to the extent
that such vesting would not cause the Participant to become subject to an
excise tax pursuant to Code Section 4999. To the extent any such Options do
not vest upon a Change of Control pursuant to the preceding sentence, and such
Options are not otherwise terminated, such Options shall continue to vest in
accordance with the Annual Vesting Rate set forth in Section 1 hereof.
(c) Other Events Causing Termination of Options.
Notwithstanding anything to the contrary in this Agreement, the Options shall
terminate upon the consummation of any of the following events or upon such
later date as shall be determined by the Committee: (i) the dissolution or
liquidation of the Company; or (ii) a sale of substantially all of the property
and assets of the Company, unless the terms of such sale shall provide for the
continuance or substitution of such Options.
3. ADJUSTMENTS. If the outstanding securities of the
class then subject to the Options are reclassified, changed into or exchanged
for a different number or kind of securities, or cash, property, and/or
securities are distributed in respect of such outstanding securities, in any
such case as a result of a reorganization, merger, consolidation, or similar
transaction (other than a regular cash dividend), or in the event that
substantially all of the property and assets of the Company are sold, then,
unless such event shall cause the Options to terminate pursuant to Section 2(c)
hereof, the Committee shall make appropriate and proportionate adjustments in
the number and type of shares or other securities or cash or other property
that may thereafter be acquired upon the exercise of the Options; provided,
however, that any such adjustments in the Options shall be made without
changing the aggregate Exercise Price of the then unexercised portion of the
Options.
4. EXERCISE. The Options shall be exercisable during
Participant's lifetime only by Participant, and after Participant's death only
by the person or entity entitled to do so under Participant's last will and
testament or applicable intestate law. The Options may only be exercised by
the delivery to the Company of a written notice of such exercise, which notice
shall specify the number of Shares to be purchased and the aggregate Exercise
Price for such shares, together with payment in full of such aggregate Exercise
Price in cash or by check payable to the Company; provided, however, that, with
the prior approval of the Committee, payment of such aggregate Exercise Price
may instead be made, in whole or in part:
(a) by the delivery to the Company of a promissory note
in a form and amount satisfactory to the Committee, provided that the principal
amount of such note shall not exceed the excess of such aggregate Exercise
Price over the aggregate par value of the purchased Shares; or
(b) by the delivery to the Company of a certificate or
certificates representing Shares, duly endorsed or accompanied by a duly
executed stock powers, which delivery effectively transfers to the Company good
and valid title to such Shares,
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free and clear of any pledge, commitment, lien, claim or other encumbrance
(such Shares to be valued on the basis of the aggregate fair market value
thereof on the date of such exercise), provided that the Company is not then
prohibited by any contractual obligation or legal restriction from purchasing
or acquiring such Shares.
5. PAYMENT OF WITHHOLDING TAXES.
(a) If the Company is obligated to withhold an amount on
account of any federal, state, or local tax, including, but not limited to, any
income tax, F.I.C.A. tax, disability insurance tax, or other employment tax,
imposed for any reason, including, without limitation, upon the exercise of the
Options or subsequent disposition of the underlying shares of beneficial
interest, then the Participant, upon the occurrence of the taxable event and
providing the Participant is still an Employee, shall pay the applicable
withholding liability (the "Withholding Liability") to the Company in cash or
by check payable to the Company; provided, however, that, in the discretion of
the Committee, Participant may, pursuant to an irrevocable election of
Participant (a "Withholding Election") made on or prior to the date of the
occurrence of such taxable event, instead pay all or any part of the
Withholding Liability by the delivery to the Company of a share certificate or
certificates representing Shares, duly endorsed or accompanied by a duly
executed stock power, which delivery effectively transfers to the Company good
and valid title to such shares, free and clear of any pledge, commitment, lien,
claim, or other encumbrance (such shares to be valued on the basis of the
aggregate Fair Market Value thereof on the date of such exercise), provided
that the Company is not then prohibited by any contractual obligation or legal
restriction from purchasing or acquiring such Shares.
(b) The Committee, in its sole discretion, may (1) impose
such additional conditions under Sections 4 and 5 as may be required to comply
with Rule 16b-3 promulgated under the Exchange Act, and (2) waive any of the
restrictions in Sections 4 and 5 in the event that either (A) the transaction
would not result in liability under Section 16(b) of the Exchange Act, or (B)
the Participant consents to liability thereunder and consents to disgorge any
profits relating thereto to the Company.
(c) The Committee shall have sole discretion to approve
or disapprove any Withholding Election and may adopt such rules and regulations
as are consistent with and necessary to implement the foregoing. The Committee
may permit Participant to make a Withholding Election to pay withholding taxes
in excess of the minimum amount required by law, provided that the amount of
withholding taxes so paid does not exceed the estimated total federal, state,
and local tax liability of Participant attributable to such exercise.
6. STOCK EXCHANGE REQUIREMENTS. Notwithstanding
anything to the contrary in this Agreement, no Shares purchased upon exercise
of the Option, and no certificate representing all or any part of such shares,
shall be issued or delivered if (a) such shares have not been admitted to
listing upon official notice of issuance on each stock exchange or the National
Association of Securities Dealers Automated Quotation System upon which the
Shares are then listed, or (b) in the opinion of counsel to the Company, such
issuance or delivery would cause the Company to be in violation of or to incur
liability under any federal, state or other securities law, or any requirement
of any listing agreement to which the Company is a party, or any other
requirement of law or of any administrative or regulatory body having
jurisdiction over the Company.
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7. STATE OF RESIDENCE. Participant represents to the
Company that Participant is a bona fide resident of the State of Texas (the
"State"). Notwithstanding anything to the contrary herein, this Agreement
shall not become effective until the making of all applicable securities
filings under the laws of the State and the effectiveness thereof. Participant
shall promptly notify the Company in writing if the Participant becomes a bona
fide resident of any jurisdiction other than the State.
8. NONTRANSFERABILITY. Neither the Options nor any
interest therein may be sold, assigned, conveyed, gifted, pledged, hypothecated
or otherwise transferred in any manner other than by will or the laws of
descent and distribution.
9. SALE RESTRICTIONS. Except as otherwise permitted
under Section 16 of the Exchange Act (including any Rules promulgated
thereunder), no Participant, if he or she is subject to liability under Section
16 of the Exchange Act, may sell any Option Share issued hereunder until the
expiration of the six (6) month period commencing on the Date of Grant, unless
the same would either not result in liability under said Section 16 or the
Participant consents to such liability and consents to disgorge any profits
relating thereto to the Company.
10. PLAN. The Options are granted pursuant to the Plan,
as in effect on the Date of Grant, and is subject to all the terms and
conditions of the Plan, as the same may be amended from time to time; provided,
however, that (a) no such amendment shall deprive any Participant of any
Options theretofore granted (or rights thereunder) under the Plan without the
consent of such Participant; and (b) without the approval of a majority of the
shareholders of the Company, the Board may not amend the Plan to make any other
change requiring shareholder approval under (i) any applicable rule,
regulation, or procedure of any national securities exchange or securities
association upon which any securities of the Company are listed (or any listing
agreement with any such securities exchange or securities association), (ii)
Rule 16b-3 promulgated under the Exchange Act, or (iii) other applicable law.
The interpretation and construction by the Committee of the
Plan, this Agreement, the Options granted hereunder, and such rules and
regulations as may be adopted by the Committee for the purpose of administering
the Plan, shall be final and binding upon Participant. Until the Options shall
expire, terminate, or be exercised in full, the Company shall, upon written
request therefor, send a copy of the Plan, in its then-current form, to
Participant or any other person or entity then entitled to exercise the
Options.
11. STOCKHOLDER RIGHTS. No person or entity shall be
entitled to vote, receive dividends, or be deemed for any purpose the holder of
any Shares until the Options shall have been duly exercised in accordance with
the provisions of this Agreement.
12. STATUS. No provision of this Agreement or of the
Options granted hereunder shall (a) confer upon Participant any right to
continue in his or her Status with the Company or any of its subsidiaries, (b)
affect the right of the Company and each of its subsidiaries to Terminate the
Status of Participant, with or without cause, or (c) confer upon Participant
any right to participate in any employee benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. Participant hereby
acknowledges and agrees that the Company and each of its subsidiaries may
terminate the employment of Participant at any time and for any
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reason, or for no reason, unless Participant and the Company or such subsidiary
are parties to a written employment agreement that expressly provides
otherwise.
13. NOTICES. Any notice to be given to the Company shall
be personally delivered to or addressed to the Secretary of the Company, at its
principal office, and any notice to be given to the Participant shall be
addressed to him or her at the address given beneath his or her signature
hereto, or at such other address as the Participant may hereafter designate in
writing to the Company. Any notice to the Company is deemed given when
received by the Company. Any notice to the Participant is deemed given when
enclosed in a properly sealed envelope addressed as aforesaid, and deposited,
postage prepaid, in a post office or branch post office regularly maintained by
the United States.
14. SUCCESSOR AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the Company and Participant, Participant's
beneficiaries, heirs, executors, and administrators, and the Company's
successors and assigns.
15. GOVERNING LAW. THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS SHALL GOVERN THIS AGREEMENT AND THE OPTIONS GRANTED HEREUNDER,
EXCEPT TO THE EXTENT THAT THE FEDERAL LAW OF THE UNITED STATES OF AMERICA
PREEMPTS SUCH LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL APPLY.
16. AGREEMENT CONTINGENT ON SHAREHOLDER APPROVAL.
Notwithstanding the Annual Vesting Rate set forth in Section 1 hereof, the
Options granted hereunder are granted contingent on the shareholders of the
Company approving the Plan within one year from Board approval of the Plan. No
Options shall vest until the Plan is duly approved by the shareholders of the
Company, and in the event the shareholders do not approve the Plan within one
year from such Board approval, this Agreement (and all Options granted
hereunder) shall be null and void. Upon receiving such shareholder approval,
the Annual Vesting Rate in Section 1 shall become effective, except that if
Options would have previously vested thereunder but for lack of shareholder
approval, the vesting date of such Options shall be the date of such
shareholder approval.
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IN WITNESS WHEREOF, the Company and Participant have duly
executed and delivered this Agreement effective as of the Date of Grant.
LIBERTE INVESTORS
By: /s/ R. ▇▇▇ ▇▇▇▇▇ III
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Name: R. ▇▇▇ ▇▇▇▇▇ III
Title: President and Chief Executive Officer
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Social Security Number
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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