Document:

exv10w3

 

EXHIBIT 10.3

EAGLE MATERIALS INC.

INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

     This option agreement (the “Option Agreement” or “Agreement”) entered into
between Eagle 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 (the “Plan”) on
                      (the “Award Date”) to purchase from the Company up to but
not exceeding in the aggregate
                      shares of Common Stock (as defined
in the Plan) at a price of $    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) “Net Earnings” for any fiscal year means the Company’s net earnings as
reported by the Company in its annual report to stockholders for such fiscal
year, as adjusted by the Committee in its reasonable discretion to take into
account events and circumstances not contemplated at the time of this award.

     (b) “Return on Equity” or “ROE” for any fiscal year means the percentage
obtained by dividing Net Earnings for such fiscal year by the Stockholders’
Equity at the beginning of such fiscal year.

     (c) “Stockholder Equity” means the Company’s Total Stockholders’ Equity as
reported in its annual report to stockholders, as adjusted by the Committee in
its reasonable discretion to take into account events and circumstances not
contemplated at the time of this award.

     (d) “Vesting Date” means March 31 of any given fiscal year on which Option
Shares vest, if any, in accordance with the Vesting Schedule.

     (e) “Vesting Period” means the period commencing on the Award Date and
ending on the last day of the fiscal year in which the Award may fully vest in
accordance with the Vesting Schedule.

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     (f) “Vesting Schedule” means the schedule provided in Section 2(a).

     2. Vesting and Exercise Schedule.

     (a) Vesting Schedule. The shares of Common Stock covered by this Option
(the “Options Shares”) shall vest based on the three year average ROE for the
three consecutive fiscal years ending with the applicable fiscal year in
accordance with the following schedule:

	 	 	 	 	 	 	 
	 	 	3 Year Average ROE Targets
	 	 	at FYE

	 Vesting	 	 	 	 	 	 
	Percentage
	 	March 31, 2005
	 	March 31, 2006
	 	March 31, 2007

	50%
	 	14.8%	 	16.3%	 	17.4%
	60%
	 	15.2%	 	16.7%	 	17.8%
	70%
	 	15.6%	 	17.1%	 	18.2%
	75%
	 	15.8%	 	17.3%	 	18.4%
	80%
	 	16.0%	 	17.5%	 	18.6%
	85%
	 	16.2%	 	17.7%	 	18.8%
	90%
	 	16.4%	 	17.9%	 	19.0%
	95%
	 	16.6%	 	18.1%	 	19.2%
	100%
	 	16.8%	 	18.3%	 	19.4%

     The exact vesting percentage attained from the Vesting Schedule shall be
calculated based on straight-line interpolation between the percentages shown
in the Vesting Schedule with fractional percentages rounded to the nearest
tenth of one percent; provided, however, in no event shall the Option Shares
vest below fifty percent.

     If the three year average ROE 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
Schedule 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
cancelled.

     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 of
vesting in order for the Option to vest with respect to additional shares of
Common Stock on such date.

     (b) Exercisability. One-third of the Option Shares that vest in
accordance with the Vesting Schedule on any Vesting Date shall become
exercisable as

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soon as administratively practicable following such date. The
remaining two-thirds shall become exercisable with one-third on the first anniversary of such
Vesting Date and one-third on the second anniversary of such 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 would otherwise become exercisable in order for the
Option to become exercisable with respect to additional shares of Common Stock
on such date.

     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. Calculations of ROE shall be made and approved by the
Committee. The Committee shall have the sole authority to approve the
calculations for purposes of the Vesting Schedule, 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) or
(b) 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 A to
this Agreement) within the Vesting Period, and fully exercisable (without
regard to the limitations set forth in subparagraph (b) above) upon a Change in
Control any time after the Vesting Period with respect to any Option Shares
which are vested as of the end of the Vesting Period, unless either (i) the
Committee determines that the terms of the transaction giving rise to the
Change in Control 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.

     (e) Revisions. The Committee shall have the authority to make adjustments
to terms and conditions of this Section 2 as it deems appropriate.

     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:

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     (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 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;

     (d) if Optionee’s employment with the Company and its Affiliates(and
service as a Director) is terminated due to the death of the Optionee at any
time after the Award Date and while in the employ of the Company or its
Affiliates or within 90 days after termination of such employment, then the
Option shall terminate on the first business day following the expiration of
the one-year period which began on the date of Optionee’s death.

     In the event the Option remains exercisable for a period of time following
the date of termination of Optionee’s employment, the Option may be exercised
during such period of time only to the extent it was exercisable as provided in
Section 2 on such date of termination of Optionee’s employment. The portion of
the Option not exercisable upon termination shall terminate and be of no force
and effect upon the date of the Optionee’s termination of employment.

     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 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

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Stock in the full amount of all federal and state withholding or other
employment taxes applicable to the taxable income of such Participant 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 deliver
to the Optionee upon such exercise a number of Option Shares equal to the
result obtained by dividing (a) the excess of the aggregate Fair Market Value
of the total number shares of Common Stock subject to the Option for which the
Option (or portion thereof) is being exercised over the purchase price payable
in respect of such exercise by (b) the Fair Market Value per Option Share
subject to the Option, and the Optionee may retain the shares of Common Stock
the ownership of which is attested.

     Notwithstanding anything to the contrary contained herein, the Optionee
agrees that he will not exercise the Option granted pursuant hereto, and the
Company will not be obligated to issue any Option Shares pursuant to this
Option Agreement, if the exercise of the Option or the issuance of such shares
would constitute a violation by the Optionee or by the Company of any provision
of any law or regulation of any governmental authority or any stock exchange or
transaction quotation system. The Optionee agrees that, unless the options and
shares covered by the Plan have been registered pursuant to the Securities Act
of 1933, as amended (the “Act”), the Company may, at its election, require the
Optionee to give a representation in writing in form and substance satisfactory
to the Company to the effect that he is acquiring such shares for his own
account for investment and not with a view to, or for sale in connection with,
the distribution of such shares or any part thereof.

     If any law or regulation requires the Company to take any action with
respect to the shares specified in such notice, the time for delivery thereof,
which would otherwise be as promptly as reasonably practicable, shall be
postponed for the period of time necessary to take such action.

     5. Notices.

     Notice of exercise of the Option must be made in the following manner,
using such forms as the Company may from time to time provide:

     (a) by electronic means as designated by the Committee, in which case the
date of exercise shall be the date when receipt is acknowledged by the Company;

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     (b) by registered or certified United States mail, postage prepaid, to
Eagle Materials Inc., Attention: Secretary, 3811 Turtle Creek, Suite 1100,
Dallas, Texas 75219, in which case the date of exercise shall be the date of
mailing; or

     (c) by hand delivery or otherwise to Eagle Materials Inc., Attention:
Secretary, 3811 Turtle Creek, Suite 1100, Dallas, Texas 75219, in which case
the date of exercise shall be the date when receipt is acknowledged by the
Company.

     Notwithstanding the foregoing, in the event that the address of the
Company is changed prior to the date of any exercise of this Option, notice of
exercise shall instead be made pursuant to the foregoing provisions at the
Company’s current address.

     Any other notices provided for in this Agreement or in the Plan shall be
given in writing or by such electronic means, as permitted by the Committee,
and shall be deemed effectively delivered or given upon receipt or, in the case
of notices delivered by the Company to the Optionee, five days after deposit in
the United States mail, postage prepaid, addressed to the Optionee at the
address specified at the end of this Agreement or at such other address as the
Optionee hereafter designates by written notice to the Company.

     6. Assignment of Option.

     Except as otherwise permitted by the Committee, the rights of the Optionee
under the Plan and this Award Agreement are personal; no assignment or transfer
of the Optionee’s rights under and interest in this Option may be made by the
Optionee otherwise than by will, by beneficiary designation, by the laws of
descent and distribution or by a qualified domestic relations order; and this
Option is exercisable during his lifetime only by the Optionee.

     After the death of the Optionee, exercise of the Option shall be permitted
only by the Optionee’s executor or the personal representative of the
Optionee’s estate (or by his assignee, in the event of a permitted assignment)
and only to the extent that the Option was exercisable on the date of the
Optionee’s death.

     7. Stock Certificates.

     Certificates representing the Common Stock issued pursuant to the exercise
of the Option will bear all legends required by law and necessary or advisable
to effectuate the provisions of the Plan and this Option. The Company may
place a “stop transfer” order against shares of the Common Stock issued
pursuant to the exercise of this Option until all restrictions and conditions
set forth in the Plan or this Agreement and in the legends referred to in this
Section 7 have been complied with.

     8. Withholding.

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     No certificates representing shares of Common Stock purchased hereunder
shall be delivered to or in respect of an Optionee unless the amount of all
federal, state and other governmental withholding tax requirements imposed upon
the Company with respect to the issuance of such shares of Common Stock has
been remitted to the Company or unless provisions to pay such withholding
requirements have been made to the satisfaction of the Committee. The
Committee may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with
this Option. The Optionee may pay all or any portion of the taxes required to
be withheld by the Company or paid by the Optionee in connection with the
exercise of all or any portion of this Option by delivering cash, or, with the
Committee’s approval, by electing to have the Company withhold shares of Common
Stock, or by delivering previously owned shares of Common Stock, having a Fair
Market Value equal to the amount required to be withheld or paid. The Optionee
must make the foregoing election on or before the date that the amount of tax
to be withheld is determined.

     9. Shareholder Rights.

     The Optionee shall have no rights of a shareholder with respect to shares
of Common Stock subject to the Option unless and until such time as the Option
has been exercised and ownership of such shares of Common Stock has been
transferred to the Optionee.

     10. Successors and Assigns.

     This Agreement shall bind and inure to the benefit of and be enforceable
by the Optionee, the Company and their respective permitted successors and
assigns (including personal representatives, heirs and legatees), except that
the Optionee may not assign any rights or obligations under this Agreement
except to the extent and in the manner expressly permitted herein.

     11. No Employment Guaranteed.

     No provision of this Option Agreement shall confer any right upon the
Optionee to continued employment with the Company or any Subsidiary.

     12. Governing Law.

     This Option Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Texas.

     13. Amendment.

     This Agreement cannot be modified, altered or amended except by an
agreement, in writing, signed by both the Company and the Optionee.

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	 	       EAGLE MATERIALS INC.
	 
	 	 
	Date:                                                         

	 	By:                                                             
	

	 	Name:                                                         
	

	 	Title:                                                           

     The Optionee hereby accepts the foregoing Option Agreement, subject to the
terms and provisions of the Plan and administrative interpretations thereof
referred to above.

	 	 	 
	

	 	OPTIONEE:
	 
	 	 
	Date:                                                         

	 	                                                                 
	

	 	[name]
	 
	 	 
	

	 	Optionee’s Address:
	 
	 	 
	

	 	                                                                 
	

	 	                                                                 
	

	 	                                                                 

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Exhibit A

Change in Control

     For the purpose of this Agreement, a “Change of Control” shall mean the
occurrence of any of the following events:

     (a) The acquisition by any Person of beneficial ownership of securities of
the Company (including any such acquisition of beneficial ownership deemed to
have occurred pursuant to Rule 13d-5 under the Exchange Act) if, immediately
thereafter, such Person is the beneficial owner of (i) 50% or more of the
total number of outstanding shares of any single class of Company Common Stock
or (ii) 40% or more of the total number of outstanding shares of all classes of
Company Common Stock, unless such acquisition is made (a) directly from the
Company in a transaction approved by a majority of the members of the Incumbent
Board or (b) by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company;

     (b) Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (or who is otherwise designated
as a member of the Incumbent Board by such a vote) shall be considered as
though such individual were a member of the Incumbent Board, except that any
such individual shall not be considered a member of the Incumbent Board if his
or her initial assumption of office occurs as a result of either an actual or
threatened election contest (as such term is used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;

     (c) The consummation of a Business Combination, unless, immediately
following such Business Combination, (i) more than 50% of both the total number
of then outstanding shares of common stock of the parent corporation resulting
from such Business Combination and the combined voting power of the then
outstanding voting securities of such parent corporation entitled to vote
generally in the election of directors will be (or is) then beneficially owned,
directly or indirectly, by all or substantially all of the Persons who were the
beneficial owners, respectively, of the outstanding shares of Company Common
Stock immediately prior to such Business Combination in substantially the same
proportions as their ownership immediately prior to such Business Combination
of the outstanding shares of Company Common Stock, (ii) no Person (other than
any employee benefit plan (or related trust) of the Company or any corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 40% or more of the total number of then outstanding shares of
common stock of the corporation resulting from such Business Combination or the

 

 

combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and (iii)
at least a majority of the members of the board of directors of the parent
corporation resulting from such Business Combination were members of the
Incumbent Board immediately prior to the consummation of such Business
Combination; or

     (d) Approval by the Board and the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) a Major Asset
Disposition (or, if there is no such approval by shareholders, consummation of
such Major Asset Disposition) unless, immediately following such Major Asset
Disposition, (A) Persons that were beneficial owners of the outstanding shares
of Company Common Stock immediately prior to such Major Asset Disposition
beneficially own, directly or indirectly, more than 50% of the total number of
then outstanding shares of common stock and the combined voting power of the
then outstanding shares of voting stock of the Company (if it continues to
exist) and of the Acquiring Entity in substantially the same proportions as
their ownership immediately prior to such Major Asset Disposition of the
outstanding shares of Company Common Stock; (B) no Person (other than any
employee benefit plan (or related trust) of the Company or such entity)
beneficially owns, directly or indirectly, 40% or more of the then outstanding
shares of common stock or the combined voting power of the then outstanding
voting securities of the Company (if it continues to exist) and of the
Acquiring Entity entitled to vote generally in the election of directors and
(C) at least a majority of the members of the Board of the Company (if it
continues to exist) and of the Acquiring Entity were members of the Incumbent
Board at the time of the execution of the initial agreement or action of the
Board providing for such Major Asset Disposition.

     For purposes of the foregoing,

     (i) the term “Person” means an individual, entity or
group;

     (ii) the term “group” is used as it is defined for
purposes of Section 13(d)(3) of the Exchange Act;

     (iii) the terms “beneficial owner”, “beneficially
ownership” and “beneficially own” are used as defined for
purposes of Rule 13d-3 under the Exchange Act;

     (iv) the term “Business Combination” means (x) a
merger, consolidation or share exchange involving the
Company or its stock or (y) an acquisition by the Company,
directly or through one or more subsidiaries, of another
entity or its stock or assets;

 

 

     (v) the term “Company Common Stock” shall mean the
Common Stock, par value $.01 per share, of the Company and
the Class B Common Stock, par value $.01 per share, of the
Company (or, if the context requires, shall mean either
such class);

     (vi) the term “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

     (vii) the phrase “parent corporation resulting from a
Business Combination” means the Company if its stock is not
acquired or converted in the Business Combination and
otherwise means the entity which as a result of such
Business Combination owns the Company or all or
substantially all of the Company’s assets either directly
or through one or more subsidiaries;

     (viii) the term “Major Asset Disposition” means the
sale or other disposition in one transaction or a series of
related transactions of 50% or more of the assets of the
Company and its subsidiaries on a consolidated basis; and
any specified percentage or portion of the assets of the
Company shall be based on fair market value, as determined
by a majority of the members of the Incumbent Board;

     (ix) the term “Acquiring Entity” means the entity that
acquires the largest portion of the assets sold or
otherwise disposed of in a Major Asset Disposition (or the
entity, if any, that owns a majority of the outstanding
voting stock of such acquiring entity entitled to vote
generally in the election of directors or members of a
comparable governing body); and

     (x) the phrase “substantially the same proportions,”
when used with reference to ownership interests in the
parent corporation resulting from a Business Combination or
in an Acquiring Entity, means substantially in proportion
to the number of shares of Company Common Stock
beneficially owned by the applicable Persons immediately
prior to the Business Combination or Major Asset
Disposition, but is not to be construed in such a manner as
to require that the same ratio or number of shares of such
parent corporation or Acquiring Entity be issued, paid or
delivered in exchange for or in respect of the shares of
each class of Company Common Stock.exv10w4

 

EXHIBIT 10.4

EAGLE MATERIALS INC.

INCENTIVE PLAN

NON-QUALIFIED DIRECTOR STOCK OPTION AGREEMENT

          This option agreement (the “Option Agreement” or “Agreement”) entered into
between Eagle Materials Inc., a Delaware corporation (the “Company”), and
                      (the “Optionee”), a director of the Company, with respect
to a right (the “Option”) awarded to the Optionee under the Eagle Materials
Inc. Incentive Plan (the “Plan”) on
                      (the “Award Date”) to
purchase from the Company up to but not exceeding in the aggregate                      shares of Common Stock (as defined in the Plan) at a price of
$                     
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:

          “Retirement” means termination of service on the Board at the Company’s
mandatory retirement age in accordance with the Company’s Director Retirement
Policy or earlier on such terms and conditions as approved by the Committee.

          2. Exercise Schedule.

          (a) Exercisability. This Option may be exercised to purchase the shares
of Common Stock covered thereby (the “Options Shares”) immediately on the Award
Date.

          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.

          (b) Change in Control. Upon the occurrence of a Change in Control (as
defined in Exhibit A to this Agreement), (i) this Option may 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 if the Committee
determines that the terms giving rise to the Change in Control provide for such
replacement, or (ii) the Option may be settled in cash in accordance with the
last sentence of this subparagraph (b). Upon a Change in Control, pursuant to
Section 16 of the Plan, the Company may,

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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 service as a Director is terminated by the Company 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
service; or

          (c) if Optionee’s service as a Director is terminated for any reason other
than death, Retirement 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 service; or

          (d) if Optionee’s service as a Director is terminated due to (i) the death
of the Optionee at any time after the Award Date and while in the service of
the Company or within 90 days after termination of such service or (ii) the
Retirement of the Optionee, then the Option shall terminate on the first
business day following the expiration of the one-year period which began on the
date of Optionee’s death or Retirement, as applicable.

          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 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

2

 

(e) by any combination thereof. 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 deliver
to the Optionee upon such exercise a number of Option Shares equal to the
result obtained by dividing (a) the excess of the aggregate Fair Market Value
of the total number shares of Common Stock subject to the Option for which the
Option (or portion thereof) is being exercised over the purchase price payable
in respect of such exercise by (b) the Fair Market Value per Option Share
subject to the Option, and the Optionee may retain the shares of Common Stock
the ownership of which is attested.

          Notwithstanding anything to the contrary contained herein, the Optionee
agrees that he will not exercise the Option granted pursuant hereto, and the
Company will not be obligated to issue any Option Shares pursuant to this
Option Agreement, if the exercise of the Option or the issuance of such shares
would constitute a violation by the Optionee or by the Company of any provision
of any law or regulation of any governmental authority or any stock exchange or
transaction quotation system. The Optionee agrees that, unless the options and
shares covered by the Plan have been registered pursuant to the Securities Act
of 1933, as amended (the “Act”), the Company may, at its election, require the
Optionee to give a representation in writing in form and substance satisfactory
to the Company to the effect that he is acquiring such shares for his own
account for investment and not with a view to, or for sale in connection with,
the distribution of such shares or any part thereof.

          If any law or regulation requires the Company to take any action with
respect to the shares specified in such notice, the time for delivery thereof,
which would otherwise be as promptly as reasonably practicable, shall be
postponed for the period of time necessary to take such action.

          5. Notices.

          Notice of exercise of the Option must be made in the following manner,
using such forms as the Company may from time to time provide:

          (a) by electronic means as designated by the Committee, in which case the
date of exercise shall be the date when receipt is acknowledged by the Company;

3

 

          (b) by registered or certified United States mail, postage prepaid, to
Eagle Materials Inc., Attention: Secretary, 3811 Turtle Creek Blvd., Suite
1100, Dallas, Texas 75219, in which case the date of exercise shall be the date
of mailing; or

          (c) by hand delivery or otherwise to Eagle Materials Inc., Attention:
Secretary, 3811 Turtle Creek Blvd., Suite 1100, Dallas, Texas 75219, in which
case the date of exercise shall be the date when receipt is acknowledged by the
Company.

          Notwithstanding the foregoing, in the event that the address of the
Company is changed prior to the date of any exercise of this Option, notice of
exercise shall instead be made pursuant to the foregoing provisions at the
Company’s current address.

          Any other notices provided for in this Agreement or in the Plan shall be
given in writing or by such electronic means, as permitted by the Committee,
and shall be deemed effectively delivered or given upon receipt or, in the case
of notices delivered by the Company to the Optionee, five days after deposit in
the United States mail, postage prepaid, addressed to the Optionee at the
address specified at the end of this Agreement or at such other address as the
Optionee hereafter designates by written notice to the Company.

          6. Assignment of Option.

          Except as otherwise permitted by the Committee, the rights of the Optionee
under the Plan and this Award Agreement are personal; no assignment or transfer
of the Optionee’s rights under and interest in this Option may be made by the
Optionee otherwise than by will, by beneficiary designation, by the laws of
descent and distribution or by a qualified domestic relations order; and this
Option is exercisable during his lifetime only by the Optionee.

          After the death of the Optionee, exercise of the Option shall be permitted
only by the Optionee’s executor or the personal representative of the
Optionee’s estate (or by his assignee, in the event of a permitted assignment)
and only to the extent that the Option was exercisable on the date of the
Optionee’s death.

          7. Stock Certificates.

          Certificates representing the Common Stock issued pursuant to the exercise
of the Option will bear all legends required by law and necessary or advisable
to effectuate the provisions of the Plan and this Option. The Company may
place a “stop transfer” order against shares of the Common Stock issued
pursuant to the exercise of this Option until all restrictions and conditions
set forth in the Plan or this Agreement and in the legends referred to in this
Section 7 have been complied with.

4

 

          8. Shareholder Rights.

          The Optionee shall have no rights of a shareholder with respect to shares
of Common Stock subject to the Option unless and until such time as the Option
has been exercised and ownership of such shares of Common Stock has been
transferred to the Optionee.

          9. Successors and Assigns.

          This Agreement shall bind and inure to the benefit of and be enforceable
by the Optionee, the Company and their respective permitted successors and
assigns (including personal representatives, heirs and legatees), except that
the Optionee may not assign any rights or obligations under this Agreement
except to the extent and in the manner expressly permitted herein.

          10. No Service Guaranteed.

          No provision of this Option Agreement shall confer any right upon the
Optionee to continued service with the Company.

          11. Governing Law.

          This Option Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Texas.

          12. Amendment.

          This Agreement cannot be modified, altered or amended except by an
agreement, in writing, signed by both the Company and the Optionee.

5

 

	 	 	 	 	 	 	 
	 	 	 	 	EAGLE MATERIALS INC.
	 
	 	 	 	 	 	 
	Date:

	 	 	 	By:	 	 
	

	 	

	 	 	 	

	

	 	 	 	Name:	 	 
	

	 	 	 	 	 	

	

	 	 	 	Title:	 	 
	

	 	 	 	 	 	

          The Optionee hereby accepts the foregoing Option Agreement, subject to the
terms and provisions of the Plan and administrative interpretations thereof
referred to above.

	 	 	 	 	 
	

	 	 	 	OPTIONEE:
	 
	 	 	 	 
	Date:
	 	 	 	 
	

	 	

	 	

	

	 	 	 	[name]
	 
	 	 	 	 
	

	 	 	 	Optionee’s Address:
	 
	 	 	 	 
	

	 	 	 	

	 	 			
	

	 	 	 	

	 	 	 	 	 
	

	 	 	 	

6

 

Exhibit A

Change in Control

          For the purpose of this Agreement, a “Change of Control” shall mean the
occurrence of any of the following events:

          (a) The acquisition by any Person of beneficial ownership of securities of
the Company (including any such acquisition of beneficial ownership deemed to
have occurred pursuant to Rule 13d-5 under the Exchange Act) if, immediately
thereafter, such Person is the beneficial owner of (i) 50% or more of the
total number of outstanding shares of any single class of Company Common Stock
or (ii) 40% or more of the total number of outstanding shares of all classes of
Company Common Stock, unless such acquisition is made (a) directly from the
Company in a transaction approved by a majority of the members of the Incumbent
Board or (b) by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company;

          (b) Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (or who is otherwise designated
as a member of the Incumbent Board by such a vote) shall be considered as
though such individual were a member of the Incumbent Board, except that any
such individual shall not be considered a member of the Incumbent Board if his
or her initial assumption of office occurs as a result of either an actual or
threatened election contest (as such term is used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;

          (c) The consummation of a Business Combination, unless, immediately
following such Business Combination, (i) more than 50% of both the total number
of then outstanding shares of common stock of the parent corporation resulting
from such Business Combination and the combined voting power of the then
outstanding voting securities of such parent corporation entitled to vote
generally in the election of directors will be (or is) then beneficially owned,
directly or indirectly, by all or substantially all of the Persons who were the
beneficial owners, respectively, of the outstanding shares of Company Common
Stock immediately prior to such Business Combination in substantially the same
proportions as their ownership immediately prior to such Business Combination
of the outstanding shares of Company Common Stock, (ii) no Person (other than
any employee benefit plan (or related trust) of the Company or any corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 40% or more of the total number of then outstanding shares of
common stock of the corporation resulting from such Business Combination or the

A-1

 

combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and (iii)
at least a majority of the members of the board of directors of the parent
corporation resulting from such Business Combination were members of the
Incumbent Board immediately prior to the consummation of such Business
Combination; or

          (d) Approval by the Board and the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) a Major Asset
Disposition (or, if there is no such approval by shareholders, consummation of
such Major Asset Disposition) unless, immediately following such Major Asset
Disposition, (A) Persons that were beneficial owners of the outstanding shares
of Company Common Stock immediately prior to such Major Asset Disposition
beneficially own, directly or indirectly, more than 50% of the total number of
then outstanding shares of common stock and the combined voting power of the
then outstanding shares of voting stock of the Company (if it continues to
exist) and of the Acquiring Entity in substantially the same proportions as
their ownership immediately prior to such Major Asset Disposition of the
outstanding shares of Company Common Stock; (B) no Person (other than any
employee benefit plan (or related trust) of the Company or such entity)
beneficially owns, directly or indirectly, 40% or more of the then outstanding
shares of common stock or the combined voting power of the then outstanding
voting securities of the Company (if it continues to exist) and of the
Acquiring Entity entitled to vote generally in the election of directors and
(C) at least a majority of the members of the Board of the Company (if it
continues to exist) and of the Acquiring Entity were members of the Incumbent
Board at the time of the execution of the initial agreement or action of the
Board providing for such Major Asset Disposition.

          For purposes of the foregoing,

     (i) the term “Person” means an individual, entity or
group;

     (ii) the term “group” is used as it is defined for
purposes of Section 13(d)(3) of the Exchange Act;

     (iii) the terms “beneficial owner”, “beneficially
ownership” and “beneficially own” are used as defined for
purposes of Rule 13d-3 under the Exchange Act;

     (iv) the term “Business Combination” means (x) a
merger, consolidation or share exchange involving the
Company or its stock or (y) an acquisition by the Company,
directly or through one or more subsidiaries, of another
entity or its stock or assets;

A-2

 

     (v) the term “Company Common Stock” shall mean the
Common Stock, par value $.01 per share, of the Company and
the Class B Common Stock, par value $.01 per share, of the
Company (or, if the context requires, shall mean either
such class);

     (vi) the term “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

     (vii) the phrase “parent corporation resulting from a
Business Combination” means the Company if its stock is not
acquired or converted in the Business Combination and
otherwise means the entity which as a result of such
Business Combination owns the Company or all or
substantially all of the Company’s assets either directly
or through one or more subsidiaries;

     (viii) the term “Major Asset Disposition” means the
sale or other disposition in one transaction or a series of
related transactions of 50% or more of the assets of the
Company and its subsidiaries on a consolidated basis; and
any specified percentage or portion of the assets of the
Company shall be based on fair market value, as determined
by a majority of the members of the Incumbent Board;

     (ix) the term “Acquiring Entity” means the entity that
acquires the largest portion of the assets sold or
otherwise disposed of in a Major Asset Disposition (or the
entity, if any, that owns a majority of the outstanding
voting stock of such acquiring entity entitled to vote
generally in the election of directors or members of a
comparable governing body); and

     (x) the phrase “substantially the same proportions,”
when used with reference to ownership interests in the
parent corporation resulting from a Business Combination or
in an Acquiring Entity, means substantially in proportion
to the number of shares of Company Common Stock
beneficially owned by the applicable Persons immediately
prior to the Business Combination or Major Asset
Disposition, but is not to be construed in such a manner as
to require that the same ratio or number of shares of such
parent corporation or Acquiring Entity be issued, paid or
delivered in exchange for or in respect of the shares of
each class of Company Common Stock.

A-3

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