Exhibit 4.3
CHARTERMAC
XXXX NON-QUALIFIED SHARE OPTION AGREEMENT
THIS NON-QUALIFIED SHARE OPTION AGREEMENT (this "Agreement") is made
as of November 17 , 2003 (the "Grant Date"), by and between CharterMac, a
Delaware statutory trust (the "Company"), and Xxxxxxx X. Xxxx (the "Optionee").
WHEREAS, pursuant to the terms of that certain Contribution Agreement,
dated as of December 17, 2002 (the "Contribution Agreement"), by and among
CharterMac Capital Company, LLC, a Delaware limited liability company and an
affiliate of the Company ("CCC"), and other parties named therein, and in
consideration of the Optionee agreeing to serve as Non-Executive Chairman of the
Board of Trustees of the Company ("Non-Executive Chairman"), the Company has
undertaken to issue to the Optionee an option to purchase Common Shares of
beneficial interest of the Company (the "Company Shares") in accordance with the
further terms of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Grant of Option.
The Company hereby grants to the Optionee the right and option (the
"Option") to purchase all or any part of an aggregate of 1,000,000 Common Shares
of beneficial interest of the Company (the "Option Shares"), subject to, and in
accordance with, the terms and conditions set forth in this Agreement. The
Option is not intended to qualify as an Incentive Stock Option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
Section 2. Purchase Price.
The price at which the Optionee shall be entitled to purchase Option
Shares upon the exercise of the Option shall be $17.78 per Option Share.
Section 3. Shares Subject to this Agreement.
The Company shall reserve for issuance, for the purposes of this
Agreement, out of its authorized but unissued Company Shares, or out of Company
Shares held in the Company's treasury, or partly out of each, the Option Shares.
If the Option expires or terminates, according to the applicable provisions
hereunder, for any reason without having been exercised in full, the Optionee
shall not have any rights with respect to the Company Shares subject to the
unexercised portion of the Option.
Section 4. Duration of the Option.
The Option shall be exercisable to the extent and in the manner
provided herein for a period of ten (10) years from the Grant Date (the
"Exercise Term"); provided, however, that the Option may be terminated earlier
as provided in Section 5(b), 7(a), 7(b), 11(a) or 11(b). Any unexercised portion
of the Option that is not exercised during the Exercise Term shall be deemed
terminated at the end of the Exercise Term (or at such earlier time as provided
in Section 5(b), 7(a), 7(b), 11(a) or 11(b)).
Section 5. Exercisability of Option.
(a) Unless otherwise provided in this Agreement, the Option shall
entitle the Optionee to purchase, in whole at any time, or in part from time to
time, one-fifth (1/5) of the total number of Option Shares covered by the Option
after the expiration of one (1) year from the Grant Date and an additional
one-fifth (1/5) of the total number of Option Shares covered by the Option after
the expiration of each of the second, third, fourth and fifth anniversaries of
the Grant Date, and each such right of purchase shall be cumulative and shall
continue, unless sooner exercised or terminated as herein provided, during the
remaining period of the Exercise Term.
(b) If the Optionee dies during the Exercise Term and the Option has
not otherwise terminated in accordance with the terms of this Agreement, all
Option Shares covered by the Option that have not already vested pursuant to
Section 5(a) shall vest upon the death of the Optionee and the unexercised
portion of the Option may be exercised during the Exercise Term by the executor
or administrator of the Optionee's estate, or by the person(s) to whom the
unexercised portion of the Option is transferred by will or the laws of decent
and distribution.
Section 6. Manner of Exercise and Payment.
(a) Subject to the terms and conditions of this Agreement, the Option
may be exercised by delivery of written notice to the Company, in substantially
the form attached hereto as Appendix I, at its principal executive office. Such
notice shall state that the Optionee is electing to exercise the Option and the
number of Option Shares to be exercised under the Option and shall be signed by
the Optionee. If requested by the Company, the Optionee shall (i) deliver this
Agreement to the Company which shall endorse thereon a notation of such exercise
and (ii) provide satisfactory proof as to the right of the Optionee to exercise
the Option.
(b) The notice of exercise described in Section 6(a) hereof shall be
accompanied by the full purchase price for the Option Shares to be acquired
under the Option by any one or a combination of the following: (i) cash (by
certified check or wire transfer of immediately available funds), (ii) if
requested by the Optionee, to the extent permitted by applicable law,
transferring fully paid Company Shares held at least six (6) months to the
Company with a Fair Value (as defined in Section 15(c) below) equal to the
aggregate purchase price (less any portion paid in cash pursuant to clause (i)
or by the surrender of a vested right to Option Shares pursuant to clause (iii))
or (iii) if requested by the Optionee, to the extent permitted by applicable
law, surrendering the vested right of the Optionee to exercise this Option for
Option Shares with a Fair Value in excess of the Exercise Price for such Option
Shares equal to the aggregate purchase price (less any portion paid in cash
pursuant to clause (i) or by transfer of Company Shares pursuant to clause
(ii)). In addition, the Optionee may provide instructions to the Company that
upon receipt of the Option purchase price in cash, by certified check or by wire
transfer of immediately available funds, from a broker or dealer acting at the
direction of the Optionee, in payment for any Option Shares pursuant to the
exercise of the Option, the Company shall issue such Option Shares directly to
the designated broker or dealer. Any Company Shares to be valued in connection
with a transfer of Company Shares to the Company or Option Shares to be valued
in connection with a surrender of vested rights to exercise this Option for
Option Shares as payment of the purchase price under the Option shall be valued
at their Fair Value on the day preceding the date of exercise of the Option. No
fractional Option Shares (or cash in lieu thereof) shall be issued upon exercise
of an Option and the number of Option Shares that may be purchased upon exercise
shall be rounded to the nearest number of whole Option Shares.
(c) Upon receipt of notice of exercise and full payment for the Option
Shares in respect of which the Option is being exercised, the Company shall,
subject to Section 9 of this Agreement, take such action as may be necessary to
effect the transfer to the Optionee of the number of Option Shares as to which
such exercise was effective within five (5) Business Days thereof, including,
without limitation, issuing and delivering the Option Shares to the Optionee and
entering the Optionee's name as a shareholder of record on the books of the
Company with respect to the Option Shares.
(d) The Optionee shall not be deemed to be the holder of, or to have
any of the rights of a holder with respect to, any Option Shares subject to the
Option until (i) the Option shall have been exercised pursuant to the terms of
this Agreement and the Optionee shall have paid the full purchase price for the
number of Option Shares to be acquired under the Option, (ii) the Company shall
have issued and
delivered the Option Shares to the Optionee, and (iii) the Optionee's name shall
have been entered as a shareholder of record on the books of the Company with
respect to the Option Shares, whereupon the Optionee shall have full voting and
other ownership rights with respect to such Option Shares. Except as otherwise
expressly provided in this Agreement, no adjustment shall be made for cash
dividends or other distributions or rights for which the record date is prior to
the date on which any Option Shares are issued.
Section 7. Termination of Option.
Service as Non-Executive Chairman. Except to the extent otherwise
provided in Section 5(b), if the Optionee resigns, retires or otherwise
voluntarily ceases to serve as Non-Executive Chairman or as a Managing Trustee
of the Company, the right to exercise the Option shall terminate immediately on
the date the Optionee resigns, retires or otherwise voluntarily ceases to serve
as Non-Executive Chairman or as a Managing Trustee with respect to any Option
Shares that have not vested on such date. The Optionee may exercise the Option
with respect to any Option Shares that have vested prior to such date during the
Exercise Period.
Breach of Future Relations Agreement. In the event the Optionee or the
Contributor Affiliated Parties (as defined in the Future Relations Agreement,
dated as of November 17, 2003 (the "Future Relations Agreement"), by and among
CCC, the Optionee, Related General II L.P. and The Related Companies, L.P.) are
in material breach of the Future Relations Agreement and such breach is not
cured within thirty (30) days following the giving by the Company of written
notice of such breach, specifying in reasonable detail the nature of such
breach, to the Optionee (or, if the breach is not capable of cure within such
thirty (30) day period and the Optionee is proceeding diligently to cure such
breach, within sixty (60) days following the giving by the Company of written
notice of such breach to the Optionee), the Option shall terminate immediately
upon the expiration of the thirty (30) day (or, if applicable, sixty (60) day)
cure period with respect to any Option Shares that have not vested on such date;
provided, however, that the Option shall not terminate if (i) the breach is a
single occurrence that is incapable of being cured and (ii) Optionee is able to
make the Company and CCC whole with respect to the breach and promptly does so
to the Company's and CCC's reasonable satisfaction following receipt by Optionee
of written notice of such breach from the Company. The Optionee may exercise the
Option with respect to any Option Shares that have vested prior to the
applicable termination date during the Exercise Period. Notwithstanding any
provision hereof to the contrary, the Optionee's right to exercise all or any
portion of the Option shall be suspended during the period beginning on the date
notice of breach is given to the Optionee and ending on the date that the breach
has been cured.
Section 8. Nontransferability.
The Option shall not be assignable or transferable by the Optionee,
either voluntarily or by operation of law, except by will or the laws of descent
and distribution; provided, however, that following the fifth anniversary of the
Grant Date the Option may be assigned or transferred to any Permitted Transferee
or any other Person consented to by the Company if such Permitted Transferee or
other Person shall furnish to the Company a written agreement to be bound by and
comply with the provisions of this Agreement applicable to the Optionee.
Section 9. General Restrictions.
(a) Optionee Representations. As a condition to any exercise of rights
to purchase Option Shares the Optionee shall be required to represent and
warrant that he is acquiring the Option Shares solely for his own account for
the purpose of investment and not with a view to or for sale in connection with
any distribution of any thereof. The Optionee shall be required to agree that he
will not, directly or indirectly, offer, transfer, sell, pledge, hypothecate or
otherwise dispose of the Option Shares (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of the Option Shares) except in compliance
with the Securities Act of 1933, as amended, and the rules and regulations
thereunder. Certificates representing the Option Shares issued upon exercise of
the Option shall bear such legends as
are deemed appropriate by legal counsel to the Company, unless the Optionee
provides a written opinion of legal counsel, satisfactory to the Company, that
any such legend is not required.
(b) Compliance with Securities Laws. The Company shall provide the
Optionee with such information, statements, discussions and analyses with
respect to the Company in such manner and at such times as may be required under
state or federal securities laws.
Section 10. Recapitalization.
In the event that the outstanding Company Shares are changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of any recapitalization, reclassification, stock split, stock
dividend, combination or subdivision, an appropriate and proportionate
adjustment shall be made in the number and kind of shares subject to this
Agreement and in the number, kind and per share exercise price of shares subject
to the unexercised portion of the Option. Any such adjustment to the unexercised
portion of the Option shall be made without change in the total price applicable
to the unexercised portion of the Option as of the date of such adjustment.
Section 11. Reorganization.
(a) In the event that the Company is merged, consolidated or otherwise
reorganized with another entity or person other than an Affiliate, and the
Company is not a surviving entity, the board of directors or other governing
body of any entity assuming the obligations of the Company shall either (i) make
appropriate provision for the protection of the unexercised portion of the
Option by the substitution on an equivalent basis of appropriate shares or other
securities of the merged, consolidated or otherwise reorganized entity that will
be issuable in respect of the Option Shares (provided that no additional
benefits shall be conferred upon the Optionee as a result of such substitution),
or (ii) upon written notice to the Optionee, provide that the unexercised
portion of the Option is vested in full (if not already so vested) and must be
exercised within a specified number of days of the date of such notice or the
unexercised portion of the Option will be terminated, or (iii) upon written
notice to the Optionee, provide that the unexercised portion of the Option is
vested in full (if not already so vested) and shall be purchased by the
successor entity within a specified number of days of the date of such notice at
a price equal to the value the Optionee would have received if he then exercised
his unexercised portion of the Option and immediately received full payment in
respect of such exercise, as determined in good faith by the successor entity;
provided, however, that in the event the common shareholders of the Company will
receive shares or other securities of the merged, consolidated or otherwise
reorganized entity, the board of directors or other governing body of any entity
assuming the obligations of the Company shall make appropriate provision for the
protection of the unexercised portion of the Option by the substitution on an
equivalent basis of such shares or other securities of the merged, consolidated
or otherwise reorganized entity that will be issuable in respect of the Option
Shares (provided that no additional benefits shall be conferred upon the
Optionee as a result of such substitution).
In the event that all or substantially all of the assets or more than
51% of the outstanding equity securities of the Company entitled to vote for
trustees is acquired by any other entity or person other than an Affiliate or an
entity or person or any Affiliate thereof owning 5% or more of the outstanding
voting stock of the Company, or there is a liquidation of the Company, the
Company may either (i) upon written notice to the Optionee, provide that the
unexercised portion of the Option is vested in full (if not already so vested)
and must be exercised within a specified number of days of the date of such
notice or the unexercised portion of the Option will be terminated, or (ii) upon
written notice to the Optionee, provide that the unexercised portion of the
Option is vested in full (if not already so vested) and shall be purchased by
the Company or its successor within a specified number of days of the date of
such notice at a price equal to the value the Optionee would have received if he
then exercised his unexercised portion of the Option and immediately received
full payment in respect of such exercise, as determined in good faith by the
Company.
Section 12. Trustee Rights.
Nothing contained in this Agreement shall constitute evidence of any
agreement or understanding, express or implied, that the Optionee has a right to
continue as a Managing Trustee for any period of time. Notwithstanding the
foregoing, if the Optionee continues to serve as a Managing Trustee during the
first three (3) years of the Exercise Term, the Optionee shall have the right to
serve as the Non-Executive Chairman of the Board of Trustees of the Company
during such period. This right is personal to Xxxxxxx X. Xxxx and shall not
inure to the benefit of any successor, assign or legal representative of Xxxxxxx
X. Xxxx.
Section 13. Withholding of Taxes and Notice of Disposition.
The Company shall have the right to deduct from any distribution of
cash to the Optionee an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld (the
"Withholding Taxes") with respect to the Option. In addition, if the Optionee is
entitled to receive Option Shares upon exercise of the Option, the Optionee
shall pay the Withholding Taxes to the Company in cash prior to the issuance, or
release from escrow, of such Option Shares. In satisfaction of the obligation to
pay Withholding Taxes to the Company, the Company may, in its discretion and
subject to compliance with applicable securities laws and regulations, withhold
Option Shares having an aggregate Fair Value on the date preceding the date of
such issuance equal to the Withholding Taxes.
Section 14. Modification of Agreement.
This Agreement may be modified, amended, suspended or terminated, and
any terms or conditions may be waived, but only by a written instrument executed
by the parties hereto (which, in the case of the Company, shall require the
approval of a majority of the independent trustees of the Company).
Section 15. Definitions.
(a) Affiliate. The term "Affiliate" shall mean a corporation or other
entity or person which, at the time of reference, directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the Company.
Business Day. The term "Business Day" shall mean any day that the
American Stock Exchange is open for business.
(b) Fair Value. The term "Fair Value" of an Option Share or a Company
Share, as applicable, shall mean (i) if the Company Shares are traded on a
national securities exchange, the closing price for the Company Shares on the
day immediately preceding the date of determination or if there is no closing
price on such date, the last preceding closing price, (ii) if the Company Shares
are not traded on a national securities exchange, the mean of the high bid and
ask quotes of the Company Shares as reported in the NASDAQ/NMS reports or the
National Quotation Bureau Inc.'s pink sheets or in the NASD Bulletin Board on
the day immediately preceding the date of determination or if there were no high
bid and ask quotes on such date, the last preceding day that there were, and
(iii) if neither (i) or (ii) are applicable, as determined in good faith by the
Company (which determination shall require the approval of a majority of the
independent trustees of the Company).
Managing Trustee. The term "Managing Trustee" shall have the meaning
ascribed thereto in the Second Amended and Restated Trust Agreement of the
Company dated as of November 17, 2003.
Permitted Transferee. The term "Permitted Transferee" shall mean: (i)
any spouse, parent, lineal descendent, parent-in-law, nephew, niece, brother,
sister, brother-in-law, sister-in-law, stepchild, son-in-law and daughter-in-law
of the Optionee or his spouse; (ii) any corporation, limited partnership or
limited liability company in which all of the shares, partnership interests or
membership
interests are owned by the Optionee or the persons listed in (i) above; (iii) in
case of the death of any of the foregoing persons, a transfer by will or by the
laws of the intestate succession to executors, administrators, testamentary
trustees, legatees or beneficiaries; or (iv) trusts, the only beneficiaries of
which are the Optionee, the persons listed in (i), (ii) and (iii) and/or are
charitable organizations.
Section 16. Severability.
Should any provision of this Agreement be held by a court of competent
jurisdiction to be unenforceable or invalid for any reason, the remaining
provisions of this Agreement shall not be affected by such holding and shall
continue in full force in accordance with their terms.
Section 17. Governing Law.
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without giving
effect to the conflicts of laws principles thereof.
Section 18. Successors in Interest.
This Agreement shall inure to the benefit of and be binding upon any
successor to the Company. This Agreement shall inure to the benefit of the
Optionee's legal representatives. All obligations imposed upon the Optionee and
all rights granted to the Company under this Agreement shall be final, binding
and conclusive upon the Optionee's heirs, executors, administrators and
successors.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above written.
CHARTERMAC
By: _____________________________
Name:
Title:
OPTIONEE:
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XXXXXXX X. XXXX