Exhibit 10.4
12-31-97(1)
KIMBALL HILL HOMES
NONSTATUTORY STOCK OPTION
PLAN
This Kimball Hill Homes Nonstatutory
Stock Option Plan (“Plan”) of Kimball Hill, Inc.,
an Illinois corporation, adopted effective as of December 31,
1997.
R E C I T A L S
A.
Kimball Hill, Inc.
(“Company”) adopted, effective as of October 31,
1995, the Kimball Hill Homes Incentive Stock Option Plan
(“Incentive Plan”) under which options could be granted
to certain designated managerial employees of the Company to
purchase shares of the Company stock. The Incentive Plan provides
for options intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code (“Code”)
as amended.
B.
The Incentive Plan was amended by
the Company effective as of October 31, 1996 and also as of
December 31, 1997. Under the Incentive Plan as amended through
the effective date of this Plan, options to acquire an aggregate
350,000 shares of stock of the Company have been granted to such
key employees of the Company through individual Kimball Hill Homes
Stock Option Agreements entered into between the Company and the
designated optionees.
C.
The Company desires to also offer
options to acquire stock of the Company to designated members of
the Board of Directors of the Company who are not also employees of
the Company, but such nonemployees of the Company are not eligible
for incentive stock options under Section 422 of the Code or
under any other provisions of the Code.
D.
Accordingly, the Company desires
through the provisions of this Plan, to make available to
designated nonemployee members of the Board of Directors and
perhaps to certain employees nonstatutory stock options under terms
and conditions generally parallel with the incentive stock options
offered under the Incentive Plan subject to differences required by
the Code.
E.
The Company desires to provide for
the terms of the conditions of the nonstatutory stock options in
this Plan.
1.
Purpose of the Plan
.
Under this Plan adopted by the
Company, options may be granted to eligible participants to
purchase shares of the Company stock. The Plan is designed to
enable the Company and its subsidiaries to afford certain
designated participants who may be employees or nonemployees,
who are expected to share in the responsibility for the continued
growth of the Company and its subsidiaries, an opportunity to
acquire a
proprietary interest in the Company
and thereby enable the Company and its subsidiaries to attract,
retain and motivate such participants. The Plan provides for
options (“Options”) which are not intended to qualify
as statutory stock options under Section 422 of the Code or
under any other Code provisions. Accordingly, the Options under
this Plan shall be considered nonstatutory.
2.
Stock Subject to Plan
.
(a)
The maximum number of shares of
stock subject to this Plan and for which Options granted under this
Plan may be exercised shall initially be 15,000 shares of the
Company’s common stock subject to adjustments as elsewhere
provided for in this Plan. As of the effective date of this Plan,
the Company has no other class of stock other than such common
stock. Shares of stock subject to the unexercised portions of any
Options granted under this Plan which expire or terminate or are
cancelled may again be subject to Options under the
Plan.
(b)
The Company expects to modify this
Plan to offer additional Options in subsequent years, but no
commitment to do so has been made or is intended.
3.
Eligible Participants
.
(a)
The participants
(“Optionee” or “Optionees”) eligible to be
considered for the grant of Options under this Plan are persons who
are (i) nonemployee members of the Board of Directors of the
Company or of any of its subsidiaries or (ii) regularly
employed by the Company or by any of its subsidiaries in a
managerial capacity on a full-time, salaried basis but who for any
reason have not been designated under the Incentive Plan to receive
statutory stock options or, if they have been so designated, are
not then eligible for additional statutory stock
options.
(b)
The initial Optionees designated by
the Company under this Plan, and the number of shares of stock of
the Company to be made available to them through the Options to be
granted to them under this Plan, are as follows:
|
Optionee
|
|
Number of Shares Available by
Option
|
|
|
|
|
|
|
|
Larry H. Dale
|
|
5,000
|
|
|
Brian Loftus
|
|
5,000
|
|
|
John P. Toren
|
|
5,000
|
|
|
|
|
|
|
|
TOTAL:
|
|
15,000
|
|
(c)
If all of the Optionees exercise all
of their nonstatutory Options to acquire all such stock available
to them for purchase under this Plan, and if all of the
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optionees under the Incentive Plan
exercise all of their statutory options granted through the
effective date of this Plan, and if no other stock of the Company
was sold or reacquired, the stock of the Company would then be held
as follows:
|
Shareholder/Optionee
|
|
Number of Shares If All
Options are Exercised
|
|
% of Issued and Outstanding
Shares If All Options Are
Exercised
|
|
|
David K. Hill
|
|
2,703,955
|
|
73.78
|
|
|
Diane G. Hill
|
|
236,836
|
|
6.46
|
|
|
Diane G. Hill as Trustee for David
K. Hill, III
|
|
59,209
|
|
1.61
|
|
|
Bruce I. McPhee
|
|
328,000
|
|
8.95
|
|
|
Gregory A. Yakim
|
|
160,000
|
|
4.37
|
|
|
Hal H. Barber
|
|
44,000
|
|
1.20
|
|
|
Eugene K. Rowehl
|
|
40,500
|
|
1.10
|
|
|
Kirk T. Breitenwischer
|
|
37,500
|
|
1.02
|
|
|
Thomas F. Tylutki
|
|
30,000
|
|
.82
|
|
|
Lance Wright
|
|
10,000
|
|
.27
|
|
|
Larry H. Dale
|
|
5,000
|
|
.14
|
|
|
Brian Loftus
|
|
5,000
|
|
.14
|
|
|
John P. Toren
|
|
5,000
|
|
.14
|
|
|
TOTALS:
|
|
3,665,000
|
|
100
|
%
|
4.
Minimum Exercise Price
.
The exercise price for each Option
granted under this Plan shall be not less than 100% of the Fair
Market Value, as defined in paragraph 14 of this Plan, of the stock
being optioned. Fair Market Value shall be determined at the time
of the grant of the Option.
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5.
Non-transferability
.
Any option granted under this Plan
shall by its terms be non-transferable by the Optionee other than
by will or the laws of descent and distribution and shall be
exercisable during the Optionee’s lifetime only by the
Optionee or by the Optionee’s guardian or legal
representative.
6.
Adjustment of Shares by Reason of
Certain Transactions .
(a)
In the event of any change in the
outstanding shares of the Company through additional options, sales
of stock, merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, split-up, split-off, spin-off,
combination or exchange of shares, or other like change in capital
structure of the Company, an equitable adjustment may be made
to each outstanding Option such that each such Option shall
thereafter be exercisable for such securities, cash and/or other
property as would have been received in respect to the shares
subject to such Option had such Option been exercised in full
immediately prior to such change. Such adjustment shall be made
successively each time any such change shall occur.
(b)
In addition or instead, in the event
of any such change, the Committee, as established and otherwise
provided for pursuant to the provisions of paragraph
10(a) below, may make any further adjustment as
may be appropriate to the maximum number of shares subject to
the Plan and the number of shares and price per share subject to
outstanding Options as shall be equitable to prevent dilution or
enlargement of rights under such Option. The determination of the
Committee as to any such actions and matters shall be
conclusive.
7.
Maximum Option Term
.
The initial Options to be granted
under this Plan must be exercised within four (4) years of the
grant of each such Option.
8.
Plan Duration
.
Options may be granted under
this Plan for such period as may be designated by the
Company.
9.
Payment .
Payment for stock purchased upon any
exercise of an Option granted under this Plan will be made in full
in cash or check with currently available funds concurrently with
such exercise, provided, however, that the contract between the
Company and any Optionee (“Nonstatutory Stock Option
Agreement”) which grants a specific Option to a specific
Optionee may, at the discretion of the Company, provide for payment
terms.
4
10.
Administration
.
(a)
The Plan shall be administered by a
committee (“Committee”) of not less than two
(2) individuals selected by the Board of Directors
(“Board”). Any member of the Committee may be
removed at any time either with or without cause by resolution
adopted by the Board, and any vacancy on the Committee may at
any time be filled by resolutions adopted by the Board. The initial
Committee under this Plan shall consist of David K. Hill and James
A. Moehling.
(b)
Subject to the express provisions of
this Plan, the Committee shall have the authority in its discretion
to carry out and do the following:
(i)
To determine the participants to
whom Options shall be granted, the time when such Option shall be
granted, the number of shares which shall be subject to each
Option, the purchase price of each share will be subject to each
Option, the period during which such Option shall be exercised, and
the other terms and provisions of the respective Options, which
need not be identical;
(ii)
To prepare and modify individual
Nonstatutory Stock Option Agreements for each Optionee;
(iii)
To construe the Plan and each
Nonstatutory Stock Option Agreement on behalf of the
Company;
(iv)
To prescribe, amend and rescind
rules and regulations relating to the Plan; and
(v)
To otherwise administer and make all
other determinations necessary or advisable on behalf of the
Company under or in connection with the Plan and the Nonstatutory
Stock Option Agreements with each Optionee.
(c)
The interpretation and construction
by the Committee of any term or provision of the Plan or of any
Nonstatutory Stock Option Agreement shall be conclusive.
11.
Nonstatutory Stock Option
Agreements .
(a)
The Nonstatutory Stock Option
Agreements to be entered into by the Company and each individual
Optionee under this Plan shall contain such other terms and
provisions which are not inconsistent with this Plan as the
Committee may
5
authorize, including, without
limitation, provisions for possible forfeiture of Option rights and
restrictions on transfers of stock of the Company acquired by
Optionees upon exercise of their Option rights under this
Plan.
(b)
Any Nonstatutory Stock Option
Agreement entered into with an Optionee shall at all times be
considered to adopt by reference all of the provisions of this Plan
as it may be amended or terminated.
(c)
All Nonstatutory Stock Option
Agreements are intended to be consistent with all of the provisions
of this Plan, but to the extent of any conflict between the
provisions of this Plan and the provisions of the Nonstatutory
Stock Option Agreement, the provisions of this Plan shall be deemed
to be controlling.
12.
Corporate
Reorganizations .
Upon the dissolution or liquidation
of the Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the outstanding stock of the
Company then subject to Options under this Plan are changed into or
exchanged for property, including cash, rights or securities not
issued by the Company, or any combination thereof, or upon a sale
of substantially all of the assets of the Company to, or the
acquisition of stock representing more than 80% of the voting power
of the stock of the Company then outstanding by, another
corporation or person, this Plan shall terminate. Upon such
termination of this Plan, all Options granted under this Plan prior
to such occurrence shall terminate unless provision is made in
writing in connection with such transaction for the continuance of
the Plan and/or for the assumption of Options granted prior to such
occurrence, or the substitution for such Options of Options
covering the stock of a successor employer corporation, or a parent
or subsidiary of the successor, with appropriate adjustments in
accordance with paragraph 6 of this Plan as to the number and kind
of shares optioned and their exercise prices, in which event the
Plan and Options granted prior to such event shall continue in the
manner and under the terms so provided. The instrument evidencing
any Option may also provide for the acceleration of otherwise
unexercisable portions of the Option.
13.
Limitation of Rights of
Optionees .
(a)
Optionees shall have no interest in
the Option shares or in any dividend paid on such shares, and shall
have right to vote any such shares or have any other rights or
privileges of a stockholder of the Company with respect to such
shares, until the Option has been properly exercised and the
certificates for such shares have been issued and delivered to the
Optionee consistent with the requirements of this Plan and the
applicable Nonstatutory Stock Option Agreements.
(b)
No shares of stock issuable under
the Plan shall be issued and no certificate for such shares shall
be delivered if such security causes the Company to be
6
in violation of or to incur any
liability under any federal, state or other securities law, or any
other requirement of law or of any regulatory body having
jurisdiction over the Company, or if doing same would constitute a
breach by the Company of any loan agreement or similar contract or
commitment of the Company.
(c)
The receipt of an Option, the
exercise of it, the receipt of stock by reason of such exercise,
and the fact of a Nonstatutory Stock Option Agreement with the
Company, and none of the foregoing alone, shall give any Optionee
any right to continued election to the Board of Directors of or
employment by the Company or any subsidiary of the Company for any
period or for any level of compensation or directors fee or other
benefit or the right to receive any further Options. Likewise,
neither the receipt of an Option nor the exercise of it and the
receipt of any stock shall give the Company or any subsidiary any
right to the continued services of the Optionee for any period or
at any particular compensation or other benefit level.
(d)
Nothing contained in this Plan shall
constitute the granting of an Option or grant any director or
employee of the Company or any subsidiary of the Company any rights
whatsoever to any Option or any stock of the Company. An Option can
be granted only when expressly authorized by the Committee and upon
execution and delivery of a Nonstatutory Stock Option Agreement
executed by the Company and by the Optionee.
14.
Option Price
.
(a)
There shall be no cost or
consideration paid by any Optionee for the grant of an Option
itself.
(b)
The purchase price for each share
purchasable under any Option granted under the Plan shall be such
amount as the Committee shall, in its best judgment and in good
faith, determine to be not less than 100% of the fair market value
(“Fair Market Value”) per share on the date the Option
is granted.
(c)
Since no public market exists for
the shares of stock of the Company as of the date of adoption of
this Plan, the Committee shall in its sole discretion, best
judgment, and in good faith determine the Fair Market Value of each
share of stock of the Company. The Committee need not obtain any
appraisal of any kind to make such determination under this Plan at
any time. The determination by the Committee of the Fair Market
Value of a share at any time shall be conclusive and binding on all
parties.
(d)
As of the date of adoption of this
Plan, the exercise price has been set at $6.00 per share. The
Company and the Committee have determined that such $6.00 exercise
price is equal to or greater than the Fair Market Value of stock of
the Company as of the date of adoption of this Plan.
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(e)
The cash proceeds of the sale of
shares received by the Company upon the exercise of the Options are
to be added to the general funds of the Company and may be
used for its general corporate purposes as the Company shall
determine.
15.
Listing of Shares and Related
Matters .
If at any time the Company shall
determine in its discretion that the listing, registration or
qualification of the shares covered by the Plan upon any national
securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with,
the sale or purchase of shares under the Plan, no shares shall be
issued unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained or
otherwise provided for, free of any conditions not acceptable to
the Company.
16.
Amendment of the Plan
.
The Committee may from time to
time at its discretion amend this Plan. However, notwithstanding
anything to the contrary in this Plan, no amendment shall be made
without the approval of shareholders then holding a majority of the
voting stock of the Company if such amendment would
(a) increase the total number of shares reserved for Option
under the Plan other than an increase resulting from an adjustment
provided for in this Plan, (b) reduce the exercise price for
any Option granted hereunder below the price required in this Plan,
(c) modify the provisions of this Plan relating to
eligibility, or (d) materially increase the benefits accruing
to Optionees under the Plan. The rights and obligations under any
Option granted before amendment of the Plan or any unexercised
portion of such Option shall not be adversely affected by amendment
of the Plan or the Nonstatutory Stock Option Agreement without the
consent of the holder of the Option.
17.
Termination or Suspension of
Plan .
The Committee may at any time
and for any or no reason suspend or terminate the Plan. An Option
may not be granted while the Plan is suspended or after it is
terminated. Options granted while the Plan is in effect shall not
be altered or impaired by suspension or termination of the Plan,
except upon the consent of the Optionee. The power of the Committee
under this Plan to construe and administer the Plan and the
Nonstatutory Stock Option Agreements granted prior to the
termination or suspension of the Plan shall continue after such
termination or during such suspension.
18.
Miscellaneous
.
(a)
This Plan and all of the
Nonstatutory Stock Option Agreements shall be governed by and
construed and enforced in accordance with the internal laws of the
State of Illinois. Jurisdiction and venue for any disputes under
this Plan or the
8
Nonstatutory Stock Option Agreements
shall be in the Circuit Court of Cook County, in Chicago,
Illinois.
(b)
This Plan and the Nonstatutory Stock
Option Agreements constitute the entire Nonstatutory Stock Option
Plan and individual Options granted.
(c)
The invalidity or illegality of any
provision of this Plan shall not be deemed to effect the validity
of any other provision of this Plan.
(d)
The Recitals at the beginning of
this Plan are an integral part of this Plan.
IN WITNESS WHEREOF, the Company has
established this Plan effective commencing as of the date first
indicated in this Plan.
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Kimball Hill, Inc.
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ David K. Hill
|
|
|
|
|
David K. Hill, Chairman &
CEO
|
12-31-98(1)
9
FIRST AMENDMENT TO
KIMBALL HILL HOMES
NONSTATUTORY STOCK OPTION PLAN
This First Amendment to Kimball Hill
Homes Nonstatutory Stock Option Plan (“Amendment”) is
adopted by Kimball Hill, Inc., an Illinois corporation
(“Company”) effective as of December 31,
1998.
R E C I T A L S
A.
The Company adopted, effective as of
December 31, 1997, the Kimball Hill Homes Nonstatutory Stock
Option (“Plan”) under which it offered to designated
memb
