EXHIBIT
4.3(a)
Form of Employee Incentive Stock Option
M.D.C. HOLDINGS, INC.
EMPLOYEE EQUITY INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made on and as of ______________________, 19___ (the
"Date of Grant") between M.D.C. HOLDINGS, INC., a Delaware corporation (the
"Company"), and _______________________ (the "Participant") pursuant to the
provisions of the Company's Employee Equity Incentive Plan (the "Plan"). The
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates. Capitalized terms not
otherwise defined in this Agreement shall have the meaning specified in the
Plan.
SECTION 1.1 - OPTION
"Option" shall mean the incentive stock option to purchase Common Stock,
$.01 par value (the "Common Stock"), of the Company granted under this
Agreement.
SECTION 1.2 - TERMINATION OF EMPLOYMENT
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Participant and the Company or a Subsidiary is
terminated for any reason, with or without cause, including, but not by way of
limitation, a termination by resignation, discharge, death or retirement but
excluding terminations where there is a simultaneous re-employment by the
Company or a Subsidiary.
ARTICLE II
GRANT OF OPTION
SECTION 2.1 - GRANT OF OPTION
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, on the date hereof, the Company irrevocably grants to the
Participant the option to purchase any part or all of an aggregate of
____________________ shares of its Common Stock upon the terms and conditions
set forth in this Agreement.
SECTION 2.2 - PURCHASE PRICE
The purchase price of the shares of Common Stock covered by the Option
shall be $__________ per share without commission or other charge.
SECTION 2.3 - NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in this Agreement or in the Plan shall confer upon the Participant
any right to continue in the employ of the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and its
Subsidiaries, which are hereby expressly reserved, to discharge the Participant
at any time for any reason whatsoever, with or without good cause.
SECTION 2.4 - ADJUSTMENTS IN OPTION
In the event that the outstanding shares of the Common Stock subject to the
Option are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend, combination of shares, rights offering, issuance of warrants or
otherwise, the Committee shall make a reasonable, appropriate and equitable
adjustment in the number and kind of shares as to which the Option, or portions
thereof then unexercised, shall be exercisable, to the end that after such event
the Participant's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in the Option shall be made without
change in the total price applicable to the Option or the unexercised portion of
the Option (except for any change in the aggregate price resulting from rounding
off of share quantities or prices) and with any necessary corresponding adjust-
ment in the price per share of the shares of Common Stock covered by the Option.
Any such adjustment made by the Committee shall be final and binding upon the
Participant, the Company and all other interested persons.
2
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) The Option shall not become exercisable in whole or in part prior to
the expiration of the six-month period commencing after the Date of Grant.
(b) Subject to the other provisions of this Section 3.1, the Option
granted hereunder shall be exercisable in whole or in part as follows:
(i) 33 1/3% of the shares covered by the Option on __________, 199_;
(ii) an additional 33 1/3% of the shares covered by the Option
on __________, 199_; (iii) and the remaining 33 1/3% of the shares covered
by the Option on _________, 199_.
(c) Notwithstanding any other provisions of this Section 3.1, the Option
shall not be exercisable unless the holder thereof shall have been an Employee
of the Company or a Subsidiary for a period of at least six months prior to such
exercise; provided, however, that a Participant need not be an Employee at the
time of exercise.
SECTION 3.2 - DURATION OF EXERCISABILITY
The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
SECTION 3.3 - EXPIRATION OF OPTION
The Option may not be exercised to any extent by anyone after the first to
occur of the following events:
(a) The expiration of three months from the date of the Participant's
Termination of Employment for any reason other than the Participant's death
or Disability; or
(b) The expiration of one year from the date of the Participant's
Termination of Employment by reason of the Participant's death or
Disability; or
(c) The expiration of six years from the Date of Grant; or
3
(d) The date of the Participant's Termination of Employment if such
Termination of Employment was for cause as reasonably determined by the
Board.
SECTION 3.4 - ACCELERATION OF EXERCISABILITY
(a) Notwithstanding Sections 2.4, 3.1(b) and 3.1(c) but subject to
Sections 3.1(a), 3.4(c) and 3.4(d), the Option, or any portion thereof,
granted under this Agreement that is not yet exercisable shall become
exercisable immediately prior to the occurrence of a merger or
consolidation of the Company with or into another corporation, the
acquisition by another corporation or person of all or substantially all of
the Company's assets or 80% or more of the Company's then outstanding
voting stock or the liquidation or dissolution of the Company (each, a
"Transaction"). At least ten days prior to the effective date of such
Transaction, the Company shall give the Participant holding the Option
notice of such event if the Option has not been fully exercised. During
this ten-day period, the Participant electing to exercise his or her
Options shall comply with all of the requirements of Sections 4.3 and 4.4
of this Agreement. In the event that such Transaction becomes effective,
the Option so exercised shall be deemed to have been exercised immediately
prior to the effective date of such Transaction. In the event that such
Transaction fails to transpire, the Participant's election under this
paragraph shall be of no effect and the Participant's Option shall remain
subject to the restrictions to which it was originally subject.
(b) In the event that a Transaction occurs, the Option, or any
portion thereof, that is not exercised prior to the occurrence of a
Transaction shall be cancelled, and the Participant holding such cancelled
Option shall receive in exchange therefor a cash payment equal to the
greater of (i) the Fair Market Value (as determined under Section 1.13 of
the Plan) of a share of Common Stock measured on the date immediately prior
to such Transaction less the per share exercise price set forth in the
Participant's Option, multiplied by the number of shares of Common Stock
purchasable under the Option; or (ii) the fair market value, as determined
by the Board in its reasonable discretion, of the cash, securities or other
consideration into which a share of Common Stock is to be exchanged
pursuant to the Transaction, less the exercise price set forth in the
Participant's Option, multiplied by the number of shares of Common Stock
purchasable under the Option.
(c) Notwithstanding the foregoing, Options that are not exercisable
on the date of a Transaction shall only become exercisable as described in
subsection (a) hereof or cancelled and settled for cash or other
consideration as described in subsection (b) hereof to the extent that such
exercise and issuance of shares of Common Stock or payment with respect to
the Participant continues to be deductible by the Company pursuant to
Section 280G of the Code. All determinations in applying this Section 3.4
shall be made by the Board in its reasonable discretion, and all such
determinations shall be final and binding on the Participant, the Company
and any interested party.
4
(d) Notwithstanding the foregoing, no such acceleration of
exercisability described in subsection (a) hereof or cancellation and
settlement described in subsection (b) hereof shall take place if:
(i) The Participant's Option becomes unexercisable under
Section 3.3; or
(ii) In connection with a Transaction, provision is made for an
assumption of the Participant's Option or a substitution therefor of a
new Option by the resulting or acquiring corporation or a parent or
subsidiary of such corporation under similar terms and conditions as
reflected in this Agreement.
ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Participant, only the Participant may exercise
the Option or any portion thereof. After the death of the Participant, any
exercisable portion of the Option may, prior to the time when such portion
expires or becomes unexercisable under Sections 3.3 or 3.4, be exercised by his
personal representative or by any person empowered to do so under the deceased
Participant's will or under the then applicable laws of descent and
distribution.
SECTION 4.2 - PARTIAL EXERCISE
Any exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Sections 3.3 or
3.4; provided, however, that each partial exercise shall be for not less than
100 shares (or the minimum installment set forth in Section 3.1, if a smaller
number of shares) and shall be for whole shares only.
SECTION 4.3 - MANNER OF EXERCISE
The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Director of Stockholder Relations of all of the following prior
to the time when the Option or such portion becomes unexercisable under Sections
3.3 or 3.4:
(a) Notice in writing signed by the Participant or other person then
entitled to exercise the Option or portion, stating that the Option or
portion is exercised, such notice complying with all applicable rules
established by the Committee and in such form as determined by the
Secretary of the Company; and
5
(b) (i) Full payment (by check) for the shares with respect to which
the Option or portion is thereby exercised; or
(ii) Full payment by delivery to the Company of shares of the
Common Stock owned by the Participant duly endorsed for transfer to the
Company by the Participant or other person entitled to exercise the Option
or portion thereof, with a Fair Market Value on the date of delivery equal
to the purchase price of the shares with respect to which such Option or
portion thereof is thereby exercised; or
(iii) Full payment in any other form approved by the Committee,
consistent with applicable law and the Plan; or
(iv) Any combination of the consideration provided in the
foregoing subsections (i), (ii) and (iii); and
(c) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the
Participant, appropriate proof of the right of such person or persons to
exercise the Option or portion thereof.
SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
(a) The Common Stock shall not be issued in respect of the Option
granted hereunder unless the exercise of the Option and the issuance and
delivery of shares of Common Stock pursuant thereto shall comply with all
relevant provisions of law, including the law of the Company's state of
incorporation, the Securities Act, the Exchange Act, the rules and
regulations thereunder and the requirements of any stock exchange upon
which the Common Stock may then be listed, and shall be further subject to
the approval of the Company's counsel with respect to such compliance.
(b) The Plan, this Agreement and the grant and exercise of the Option
to purchase shares of Common Stock hereunder, and the Company's obligation
to sell and deliver shares upon the exercise of rights to purchase shares,
shall be subject to all applicable federal and state laws, rules and
regulations, and to such approvals by any regulatory or governmental agency
which may, in the written opinion of counsel for the Company, be required.
SECTION 4.5 - RIGHTS AS STOCKHOLDER
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to the holder.
6
ARTICLE V
OTHER PROVISIONS
SECTION 5.1 - ADMINISTRATION
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, amend or revoke any
such rules. All actions taken and all interpretations and determinations made
by the Committee reasonably and in good faith shall be final and binding upon
the Participant, 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 the Option, and
all members of the Committee shall be fully protected by the Company with
respect to any such action, determination or interpretation. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan and this Agreement, excepting
those rights and duties that may only be performed by a Committee of
Disinterested Directors under Rule 16b-3 of the Exchange Act.
SECTION 5.2 - OPTION SUBJECT TO TERMS OF PLAN
This Option Agreement and the rights of the Participant hereunder are
subject to all the terms and conditions of the Plan, as the same may be amended
from time to time, as well as to such rules and regulations as the Committee may
adopt for administration of the Plan. Any inconsistency between this Option
Agreement and the Plan shall be resolved in favor of the Plan.
SECTION 5.3 - OPTION NOT TRANSFERABLE
Neither the Option nor any interest or right therein or part thereof shall
be subject to the debts, contracts or engagements of the Participant or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.3
shall not prevent transfers by will or by the applicable laws of descent and
distribution.
SECTION 5.4 - NOTICES
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Director of Stockholder
Relations, and any notice to be given to the Participant shall be addressed to
the Participant at the address given beneath his
7
signature hereto. By a notice given pursuant to this Section 5.4, either party
may hereafter designate a different address for notices to be given to him. Any
notice which is required to be given to the Participant shall, if the
Participant is then deceased, be given to the Participant's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall
be deemed duly given when (i) enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service,
(ii) upon deposit with a private overnight delivery service guaranteeing next
day service, or (iii) upon receipt of a facsimile indicating confirmation of
receipt.
SECTION 5.5 - TAX WITHHOLDING
The Company shall be entitled to require payment or deduction from other
compensation payable to the Participant of any sums required by federal, state
or local tax law to be withheld with respect to the grant or exercise of the
Option or any portion thereof. The Participant may elect to have the Company
withhold shares of Common Stock (or allow the return of shares of Common Stock)
having a Fair Market Value equal to the sums required to be withheld. If the
Participant elects to advance such sums directly, written notice of that
election shall be delivered on or prior to such exercise and, whether pursuant
to such election or pursuant to a requirement imposed by the Company, payment by
check of such sums for taxes shall be delivered within two days after the date
of exercise. If the Participant elects to have the Company withhold shares of
Common Stock (or allow the return of shares of Common Stock) having a Fair
Market Value equal to the sums required to be withheld, the value of the shares
of Common Stock to be withheld (or returned as the case may be) will be equal to
the Fair Market Value of such shares on the date that the amount of tax to be
withheld is to be determined (the "Tax Date"). An election by the Participant
to have shares of Common Stock withheld for this purpose will be subject to the
following restrictions: (1) the election must be made on or prior to the Tax
Date; (2) the election must be irrevocable; (3) the election shall be subject to
the disapproval of the Committee; and (4) if the Participant is an officer of
the Company within the meaning of Section 16 of the Exchange Act, the election
shall be subject to such additional restrictions as the Committee may impose in
an effort to secure the benefits of any regulations thereunder. The Committee
shall not be obligated to issue shares to the Participant upon exercise of the
Option or portion thereof until such payment has been received or shares have
been so withheld, unless withholding (or offset against a cash payment) as of or
prior to the date of such exercise is sufficient to cover all such sums due or
which may be due with respect to such exercise.
SECTION 5.6 - LOANS
The Committee may, in its discretion, extend one or more loans to the
Participant in connection with the exercise or receipt of outstanding Options
granted under this Plan. The terms and conditions of any such loan shall be set
by the Committee and may include, in the Committee's discretion, loans that are
secured, unsecured, recourse or nonrecourse.
8
SECTION 5.7 - COMPLIANCE WITH RULE 16b-3
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Agreement are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of the Plan, this Agreement or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.
SECTION 5.8 - TITLES
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
Section 5.9 - CONSTRUCTION
This Agreement shall be administered, interpreted and enforced under the
laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have caused this Option Agreement to be
executed to be effective as of the Date of Grant.
M.D.C. HOLDINGS, INC.
By:_________________________________
Name:__________________________
Title:_________________________
____________________________________
Employee's Signature
____________________________________
Print Name
____________________________________
____________________________________
Home Address
____________________________________
Social Security Number
9