Exhibit 10.5
EAGLE MATERIALS INC.
INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
This option agreement (the
“Option Agreement” or “Agreement”) entered
into between E agle
Materials Inc. , a Delaware corporation (the
“Company”), and ___(the “Optionee”), an
employee of the Company or its Affiliates, with respect to a right
(the “Option”) awarded to the Optionee under the Eagle
Materials Inc. Incentive Plan, as amended (the “Plan”),
on June 20, 2007, (the “Award Date”) to purchase
from the Company up to but not exceeding in the aggregate ___shares
of the Company’s common stock, par value $0.01 per share (the
“Common Stock”), at a price of $47.525 per share (the
“Exercise Price”), such number of shares and such price
per share being subject to adjustment as provided in the Plan, and
further subject to the following terms and conditions:
1. Relationship to
Plan
This Option is subject to all of the
terms, conditions and provisions of the Plan and administrative
interpretations thereunder, if any, which have been adopted by the
Company’s Compensation Committee (“Committee”)
and are in effect on the date hereof. Except as defined herein,
capitalized terms shall have the same meanings ascribed to them
under the Plan. For purposes of this Option Agreement:
(a)
“ Disability ” shall have the meaning assigned
to such term under the Plan, however, in the case of a Director,
for purposes of this Agreement, Disability shall be determined by
the Committee.
(b)
“ Operating Earnings ” for any fiscal year means
the Company’s Earnings Before Income Taxes adjusted for
Interest Expense, Net and Corporate General Expenses, as certified
by the Committee.
(c)
“ Earnings Per Share ” for any fiscal year means
the Company’s Earnings Per Share (diluted) as for such
fiscal year, as certified by the Committee.
(d)
“ Retirement ” means the cessation of employment
with the Company and all of its Affiliates: (i) on or after
age 62 with at least 10 years of service, provided that the
employee has given notice in writing at least 2 years in
advance of such cessation of employment; or (ii) under other
circumstances approved by the Committee.
(e)
“ Vesting Date ” means March 31 of any
given fiscal year in which the Option Shares (as defined below)
vest, if any, in accordance with Section 2(a) hereof.
(f)
“ Vesting Period ” means the period commencing
on April 1, 2007 and ending on March 31, 2014.
2. Vesting and Exercise
Schedules .
(a)
Vesting Schedule . The shares of Common Stock covered
by this Option (the “Option Shares”) shall vest based
on the financial targets measured by Operating Earnings and
Earnings
Per
Share, as more particularly described in the matrix (the
“Vesting Matrix”) attached to this Agreement as
Exhibit A .
The
exact vesting percentage attained from the Vesting Matrix shall be
calculated based on straight-line interpolation between the
percentages shown in the Vesting Matrix with fractional percentages
rounded to the nearest tenth of one percent.
If the
Operating Earnings and Earnings Per Share for any fiscal year
subsequent to the initial fiscal year within the Vesting Period
results in a vesting percentage, the applicable percentage of
Option Shares which shall vest on the applicable Vesting Date shall
equal: (i) the vesting percentage derived from the Vesting
Matrix for the given fiscal year-end less (ii) the vesting
percentage previously attained in prior fiscal year(s), if any. At
the end of the Vesting Period, if any Option Shares remain
unvested, such Option Shares shall be forfeited.
Except
as expressly set forth herein, the Optionee must be in continuous
employment with the Company or any of its Affiliates or serve as a
Director from the Award Date through the Vesting Date in order for
the Option Shares to vest as provided in this
Section 2(a).
(b)
Exercisability . The Option Shares that vest
in accordance with the provisions of Section 2(a) shall become
exercisable as soon as administratively practicable following the
applicable Vesting Date.
The
Optionee must be in continuous employment with the Company or any
of its Affiliates or serve as a Director from the Award Date
through the date the portion of the Option Shares would otherwise
become exercisable in order for the Option to become exercisable
with respect to additional Option Shares, unless Optionee’s
employment and service as a Director terminates by reason of
Retirement, otherwise such Option Shares shall be forfeited. In the
event Optionee’s employment and service as a Director
terminates by reason of death or Disability, the then exercisable
Option Shares shall continue to be exercisable as if the Optionee
had remained employed or continued to serve as a Director for a
period of two years following the Optionee’s death or
Disability. All remaining Option Shares will be forfeited. In the
event Optionee’s employment and service as a Director
terminates by reason of Retirement, this Option shall remain in
effect so that any then exercisable Option Shares shall continue to
be exercisable and any unvested Option Shares shall continue to
have the opportunity to vest as if the Optionee had remained
employed or continued to serve as a Director, until the expiration
of this Agreement.
To the
extent the Option becomes exercisable, such Option may be exercised
in whole or in part (at any time or from time to time, except as
otherwise provided herein) until expiration of the Option pursuant
to the terms of this Agreement or the Plan.
(c)
Calculations . The Committee shall have the sole
authority to approve the calculation of the Operating Earnings and
Earnings Per Share for purposes of vesting, and its approval of
such calculations shall be final, conclusive, and binding on all
parties.
(d)
Change in Control . This Option shall become
fully vested and exercisable, without regard to the limitations set
forth in subparagraph (a) above, provided that the Optionee
has been in continuous employment with the Company or any of its
Affiliates or served as a Director since the Award Date, upon the
occurrence of a Change in Control (as defined in
Exhibit B to this Agreement), with respect to any
Option Shares which have not been theretofore forfeited, unless
either (i) the Committee determines that the terms of the
transaction giving rise to the Change in Control
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provide
that the Option is to be replaced within a reasonable time after
the Change in Control with an option of equivalent value to
purchase shares of the surviving parent corporation or (ii) the
Option is to be settled in cash in accordance with the last
sentence of this subparagraph (d). Upon a Change in Control,
pursuant to Section 16 of the Plan, the Company may, in its
discretion, settle the Option by a cash payment equal to the
difference between the Fair Market Value per share of Common Stock
on the settlement date and the Exercise Price for the Option,
multiplied by the number of shares then subject to the
Option.
3. Termination of
Option .
The Option hereby granted shall
terminate and be of no force and effect with respect to any shares
of Common Stock not previously purchased by the Optionee at the
earliest time specified below:
(a) the
seventh anniversary of the Award Date;
(b) if
Optionee’s employment with the Company and its Affiliates and
service as a Director is terminated by the Company or a Subsidiary
for “cause” (as determined by the Committee) at any
time after the Award Date, then the Option shall terminate
immediately upon such termination of Optionee’s
employment;
(c) if
Optionee’s employment with the Company and its Affiliates and
service as a Director is terminated for any reason other than
death, Retirement, Disability or termination for
“cause,” then the Option shall terminate on the first
business day following the expiration of the 90-day period
beginning on the date of termination of Optionee’s employment
and service as a Director; or
(d) if
Optionee’s employment with the Company and its Affiliates and
service as a Director is terminated due to the death or Disability
of the Optionee at any time after the Award Date and while in the
employ of the Company or its Affiliates or service as Director, or
within 90 days after termination of such employment or service
for reasons other than “cause”, then the Option shall
terminate on the first business day following the expiration of the
two-year period which began on the date of Optionee’s death
or Disability. If Optionee’s employment with the Company and
its Affiliates and service as a Director is terminated due to the
Retirement of the Optionee at any time after the Award Date and
while in the employ of the Company or its Affiliates or service as
Director, then the Option shall terminate on the seventh
anniversary of the Award Date.
In the
event the Option remains exercisable for a period of time following
the date of termination of Optionee’s employment and service
as a Director, the portion of the Option not exercisable upon
termination, unless such termination is due to Retirement, shall
terminate and be of no force and effect upon the date of the
Optionee’s termination of employment and service as a
Director.
4. Exercise of
Option .
Subject to the limitations set forth
herein and in the Plan, this Option may be exercised by notice
provided to the Company as set forth in Section 5. The payment
of the Exercise Price for the Common Stock being purchased pursuant
to the Option shall be made (a) in cash, by check or cash
equivalent, (b) by tender to the Company, or attestation to
the ownership, of Common Stock owned by the Optionee having a Fair
Market Value (as determined by the Company without regard to any
restrictions on transferability applicable to such Common Stock by
reason of federal or state securities laws or agreements with an
underwriter for the Company) not less than the Exercise Price,
(c) by delivery of a properly executed notice together with
irrevocable instructions to a broker providing for the
assignment
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to the
Company of the proceeds of a sale or loan with respect to some or
all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to
time by the Board of Governors of the Federal Reserve System),
(d) by such other consideration as may be approved by the
Board from time to time to the extent permitted by applicable law,
or (e) by any combination thereof. Such notice shall be
accompanied by cash or Common Stock in the full amount of all
federal and state withholding or other employment taxes applicable
to the taxable income of such Optionee resulting from such exercise
(or instructions to satisfy such withholding obligation by
withholding Option Shares in accordance with Section 8). For
the purpose of determining the amount, if any, of the purchase
price satisfied by payment in Common Stock, such Common Stock shall
be valued at its Fair Market Value on the date of exercise.
If the Optionee desires to pay the
purchase price for the Option Shares by tendering Common Stock
using the method of attestation, the Optionee may, subject to any
such conditions and in compliance with any such procedures as the
Committee may adopt, do so by attesting to the ownership of Common
Stock of the requisite value, in which case the Company shall issue
or otherwise
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