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EXHIBIT 10.42
INCENTIVE STOCK OPTION AGREEMENT
(1997 Stock Award and Incentive Plan)
INCENTIVE STOCK OPTION AGREEMENT, dated as of ________________
(the "Agreement"), by and between Apartment Investment and Management Company, a
Maryland corporation (the "Company"), and _______________ (the "Optionee").
Capitalized terms used but not otherwise defined in this Agreement shall have
the respective meanings set forth in the Apartment Investment and Management
Company 1997 Stock Award and Incentive Plan, as amended (the "Plan").
WHEREAS, on _____________ (the "Grant Date") the Compensation
Committee (the "Committee") of the Board of Directors (the "Board") of the
Company awarded the Optionee an incentive stock option, exercisable to purchase
shares of the Company's Class A Common Stock, par value $.01 per share ("Common
Stock"), pursuant to, and subject to the terms and provisions of, the Plan.
NOW, THEREFORE, in consideration of the Optionee's services
to the Company and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Number of Shares and Purchase Price. The Company hereby
grants the Optionee an Incentive Stock Option (the "Option") to purchase
________________, shares of Common Stock (the "Option Shares") at a purchase
price per share equal to $ ___________ (the "Exercise Price"), pursuant to the
terms of this Agreement and the provisions of the Plan.
2. Period of Option and Conditions of Exercise.
(a) Unless the Option is previously terminated pursuant to
this Agreement or the Plan, the Option shall terminate on the tenth anniversary
of the Date of Grant (the "Expiration Date"). Upon the termination of the
Option, all rights of the Optionee hereunder shall cease.
(b) In the event that the January 21, 1998 amendment to the
Plan is not approved by the stockholders of the Company at the Company's 1998
Annual Meeting of Stockholders, this Option shall terminate and all rights of
the Optionee hereunder shall cease.
(c) Subject to the provisions of the Plan and this Agreement,
the Option shall be exercisable as follows: (i) ____% of the Option Shares on
the second anniversary of the Date of Grant, (ii) ____% of the Option Shares on
the third anniversary of the Date of Grant, (iii) ____% of the Option Shares on
the fourth anniversary of the Date of Grant, and (iv) ____% of the Option Shares
on the fifth anniversary of the Date of Grant, provided, however, that the
Option shall be immediately exercisable as to ____% of the Option Shares
following the occurrence of a Change of Control (as defined below).
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3. Termination of Employment.
(a) Except as provided in this Section 3, the Option may not
be exercised after the Optionee has ceased to be employed by the Company or one
of its affiliates. In the event that the Optionee ceases to be employed by the
Company or one of its affiliates, the Option may be exercised following such
termination, as follows:
(i) if the Optionee's termination of employment is
due to his or her death or Disability (as defined below), the Option
shall remain exercisable until the Expiration Date for all Option
Shares for which the Option was otherwise exercisable;
(ii) if the Optionee ceases to be employed by the
Company or an affiliate other than due to death, Disability or
termination for Cause, the Option shall remain exercisable for a
period of ninety (90) days following such termination (but in no event
later than the Expiration Date) with respect to all Option Shares for
which the Option was otherwise exercisable as of the date of such
termination, and shall thereafter terminate; and
(iii) if the Optionee's termination is by the
Company or one of its affiliates for Cause (as defined below), the
Option shall terminate immediately on the date of the such
termination.
4. Exercise of Option.
(a) The Option may be exercised only by the Optionee or, in
the event of the death or incapacity of the Optionee, the Optionee's successor,
heir or legal representative. The Option shall be exercised by delivery to the
Company of (i) a written notice, substantially in the form attached hereto as
Exhibit A, specify the number of Option Shares for which the Option is being
exercised to purchase, and (ii) full payment of the Exercise Price for such
number of Option Shares being purchased (in respect of such Option Shares, the
"Total Exercise Price"), in the manner provided below, and any transfer or
withholding taxes applicable thereto.
(b) Payment of the Exercise Price for any Option Shares being
purchased shall be made as follows:
(i) The Optionee may satisfy all or any portion of
the Total Exercise Price by delivery to the Company of cash, by
certified or cashier's check, or
(ii) The Optionee may satisfy the remaining portion
of the Total Exercise Price by (A) assignment, transfer and delivery
to the Company, free of any liens, claims or encumbrances, of shares
of Common Stock that the Optionee owns, or (B) assignment and transfer
to the Company, free of any liens, claims or encumbrances, of OP Units
that the Optionee owns. If the Optionee pays by assignment, transfer
and delivery of shares
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of Common Stock, the Optionee must include with the notice of exercise
the certificates for such shares of Common Stock, either duly endorsed
for transfer or accompanied by an appropriately executed stock power
in favor of the Company. If the Optionee pays by assignment and
transfer of OP Units, the Optionee must include with the notice of
exercise a duly executed assignment of all of the Optionee's interest
in such OP Units. For purposes of this Agreement, the value of all
such shares of Common Stock delivered by the Optionee will be their
Fair Market Value, and the value of all OP Units assigned by the
Optionee will be the Fair Market Value of the number of shares of
Common Stock for which such OP Units are then subject to exchange upon
a redemption of such OP Units. If the value of the shares of Common
Stock delivered, or OP Units assigned, by the Optionee exceeds the
amount required to be paid pursuant to this Section 4, the Company
will provide to the Optionee, as soon as practicable, cash or a check
in an amount equal to the value of any fractional portion of a share
of Common Stock or OP Unit, and will issue a certificate to the
Optionee for any whole share(s) of Common Stock or OP Units exceeding
the number of shares of Common Stock or OP Units required to pay the
Exercise Price for all Option Shares being purchased.
(c) Not less than 100 shares of Common Stock may be purchased
at any time upon the exercise of the Option, unless the number of shares of
Common Stock so purchased constitutes the total number of Option Shares for
which the Option is then exercisable. The Option may be exercised only to
purchase whole shares of Common Stock, and in no case may a fractional share of
Common Stock be purchased. The right of the Optionee to purchase Option Shares
for which the Option is then exercisable may be exercised, in whole or in part,
at any time or from time to time, prior to the Expiration Date.
(d) The Company may require the Optionee to pay, prior to the
delivery of any Option Shares to which the Optionee shall be entitled upon
exercise of the Option, an amount equal to the Federal, state and local income
taxes and other amounts required by law to be withheld by the Company with
respect thereto. Alternatively, the Optionee may authorize the Company to
withhold from the number of Option Shares he or she would otherwise receive
upon exercise of the Option, that number of Option Shares having a Fair Market
Value equal to the amount of such required tax.
(e) Any Option that is exercised in a manner that prevents
its qualification as an Incentive Stock Option shall be treated for all
purposes as a Non-qualified Stock Option.
5. Definitions. For purposes of this Agreement:
(a) "Cause" shall mean the termination of employment of an
individual with the Company as a result of (i) the performance by such
individual of any activity involving fraud or dishonesty, (ii) the conviction
of the individual of a felony or crime involving moral turpitude, (iii) the
failure or refusal of such individual to reasonably or satisfactorily perform
any material duties or responsibilities reasonably required of such individual
by the Company, (iv) the gross
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negligence or willful neglect or malfeasance by the individual in the
performance or non-performance of such individual's duties or responsibilities
to the Company, or (v) any unauthorized act or omission by such individual that
is injurious in any material respect to the financial condition or business
reputation of the Company.
(b) "Change in Control" shall mean the occurrence of any of
the following events:
(i) an acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting Securities) by
any "person" (as the term "person" is used for purposes of Section 13(d) or
Section 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) immediately after which such person has "beneficial ownership" (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) ("Beneficial
Ownership") of 20% or more of the combined voting power of the Company's then
outstanding Voting Securities; provided, however, in determining whether a
Change in Control has occurred, Voting Securities that are acquired in a
Non-Control Acquisition (as hereinafter defined) shall not constitute an
acquisition that would cause a Change in Control. "Non-Control Acquisition"
shall mean an acquisition by (A) an employee benefit plan (or a trust forming a
part thereof) maintained by (1) the Company or (2) any corporation, partnership
or other person of which a majority of its voting power or its equity
securities or equity interest is owned directly or indirectly by the Company or
in which the Company serves as a general partner or manager (a "Subsidiary"),
(B) the Company or any Subsidiary, or (C) any person in connection with a
Non-Control Transaction (as hereinafter defined);
(ii) the individuals who constitute the Board of
Directors of the Company as of the date hereof (the "Incumbent Board") cease
for any reason to constitute at least two-thirds (2/3) of the Board of
Directors; provided, however, that if the election, or nomination for election
by the Company's stockholders, of any new director was approved by a vote of at
least two-thirds (2/3) of the Incumbent Board, such new director shall be
considered as a member of the Incumbent Board; provided, further, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "election contest" (as described in Rule 14a-11 promulgated under
the Exchange Act) (an "Election Contest") or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board of Directors (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest; or
(iii) approval by stockholders of the Company of:
(A) a merger, consolidation, share exchange or reorganization involving the
Company, unless (1) the stockholders of the Company, immediately before such
merger, consolidation, share exchange or reorganization, own, directly or
indirectly immediately following such merger, consolidation, share exchange or
reorganization, at least 80% of the combined voting power of the outstanding
voting securities of the corporation that is the successor in such merger,
consolidation, share exchange or reorganization (the "Surviving Company") in
substantially the same proportion as
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their ownership of the Voting Securities immediately before such merger,
consolidation, share exchange or reorganization, (2) the individuals who were
members of the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation, share exchange or
reorganization constitute at least two-thirds (2/3) of the members of the board
of directors of the Surviving Company, and (3) no persons (other than the
Company or any Subsidiary, any employee benefit plan (or any trust forming a
part thereof) maintained by the Company, the Surviving Company or any
Subsidiary, or any person who, immediately prior to such merger, consolidation,
share exchange or reorganization had Beneficial Ownership of 15% or more of the
then outstanding Voting Securities has Beneficial Ownership of 15% or more of
the combined voting power of the Surviving Company's then outstanding voting
securities (a transaction described in clauses (1) through (3) is referred to
herein as "Non-Control Transaction"); (B) a complete liquidation or
dissolution of the Company; or (C) an agreement for the sale or other
disposition of all or substantially all of the assets of the Company to any
person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any person (a "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
that, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by such Subject Person,
provided that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by the Company,
and after such share acquisition by the Company, such Subject Person becomes
the Beneficial Owner of any additional Voting Securities that increases the
percentage of the then outstanding Voting Securities Beneficially Owned by such
Subject Person, then a Change in Control shall occur.
(c) The Optionee's employment will have terminated by reason
of "Disability" if, as a result of the Optionee's incapacity due to physical or
mental illness, the Optionee shall have been absent from his or her duties on a
full-time basis for the entire period of six (6) consecutive months, and within
thirty (30) days after written notice is given by the Company to the Optionee
(which may occur before or after the end of such six-month period), the
Optionee shall not have returned to the performance of his or her duties on a
full-time basis.
6. Tax Treatment; Tax Withholding.
(a) If the Optionee fails to comply with the requirements of
Section 422(a) of the Code (as from time to time redesignated or amended),
subsection (a)(1) of which currently re quires that any Shares acquired upon
exercise of the Option not be disposed of within two (2) years of the Date of
Grant or one (1) year from the date on which such Shares are acquired, Optionee
understands that the tax treatment otherwise applicable to the Option shall not
be available.
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(b) The Optionee understands that, to the extent that the
aggregate Fair Market Value of Option Shares (as of the Date of Grant) with
respect to which the Option is exercisable for the first time by the Optionee
during any calendar year under the Plan shall exceed $100,000, the Option shall
be treated as a Non-Qualified Stock Option.
(c) The Company shall have the power and the right to deduct
or withhold, or require a Optionee to remit to the Company, an amount
sufficient to satisfy any Federal, state, and local taxes (including the
Optionee's FICA obligation) required by law to be withheld as a result of any
taxable event arising in connection with the Option, in accordance with the
terms of the Plan.
(d) The Option shall be construed insofar as is practicable
to permit its continued qualification as an Incentive Stock Option; if,
however, the Option no longer so qualifies, it shall be treated for all
purposes as a Non-qualified Stock Option.
7. Miscellaneous.
(a) Entire Agreement. This Agreement and the Plan contain the
entire understanding and agreement of the Company and the Optionee concerning
the subject matter hereof, and supersede all earlier negotiations and
understandings, written or oral, between the parties with respect thereto.
(b) Captions. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience. They do not
define, limit, construe or describe the scope or intent of the provisions of
this Agreement.
(c) Counterparts. This Agreement may be executed in
counterparts, each of which when signed by the Company or the Optionee will be
deemed an original and all of which together will be deemed the same agreement.
(d) Notices. Any notice or communication having to do with
this Agreement must be given by personal delivery or by certified mail, return
receipt requested, addressed, if to the Company or the Committee, to the
attention of the Chief Financial Officer of the Company at the principal office
of the Company and, if to the Optionee, to the Optionee's last known address
contained in the personnel records of the Company.
(e) Succession and Transfer. Each and all of the provisions
of this Agreement are binding upon and inure to the benefit of the Company and
the Optionee and their successors, assigns and legal representatives; provided,
however, that the Option granted hereunder shall not be transferable by the
Optionee (or the Optionee's successor or legal representative) other than by
will or by the laws of descent and distribution and may be exercised during the
lifetime of the Optionee, only by the Optionee or by his or her guardian or
legal representative.
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(f) Amendments. Subject to the provisions of the Plan, this
Agreement may be amended or modified at any time by an instrument in writing
signed by the parties hereto.
(g) Governing Law. This Agreement and the rights of all
persons claiming hereunder will be construed and determined in accordance with
the laws of the State of Colorado without giving effect to the choice of law
principles thereof.
(h) Plan Controls. This Agreement is made under and subject
to the provisions of the Plan, and all of the provisions of the Plan are hereby
incorporated by reference into this Agreement. In the event of any conflict
between the provisions of this Agreement and the provisions of the Plan, the
provisions of the Plan shall govern. By signing this Agreement, the Optionee
confirms that he or she has received a copy of the Plan and has had an
opportunity to review the contents thereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By:
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Name:
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Title:
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OPTIONEE:
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