Categories
stock options

Re-pay Company for Backdated Stock Options Language

From the Resignation Agreement between KB Home and Bruce Karatz:

6. Karatz acknowledges and agrees that the exercise price of each annual stock option granted to him since October 2, 1998 (the “Subject Options”) shall be changed to the closing price per share of the Company’s common stock on the new measurement dates selected by KB Home for such grants as reflected in the restated financial statements or adjusted books and records expected to be completed by KB Home. For each Subject Option exercised by Karatz prior to the date hereof, Karatz shall pay to KB Home, in cash, the product of (i) any positive difference between the exercise price and the fair market value of KB Home common stock on the new measurement date for the Subject Option and (ii) the number of shares subject to such Subject Option. KB Home will provide Karatz with a schedule containing reasonable detail regarding the new measurement dates and amounts payable by Karatz in respect of the Subject Options within 15 days of filing financial statements with the Securities and Exchange Commission and Karatz shall make the required payments and enter into amended option agreements within 90 days thereafter. Karatz acknowledges that KB Home makes no representation as to the tax treatment of Karatz’s KB Home stock options and shares of restricted stock and that he will be responsible for any tax obligations that may arise therefrom.

We’re not talking about loose change here. The accompanying press release states: “This is expected to involve an aggregate voluntary value transfer from Mr. Karatz to the Company of approximately $13 million.” Wow!

Categories
employment agreement severance agreement stock options

Stock Options Backdating Scandal Widens

New York Times: KB Home Ousts Its Chief and 2 Others. The longtime chief executive of KB Home, one of the nation’s largest home builders, resigned under pressure on Sunday night and agreed to return $13 million in profit from backdated stock options, the company said.

At first, I thought the stock options backdating problem was only a tech company issue. However, recent events indicate that this problem spans across companies from different industries and may be more widespread. I’ve posted KB Home contracts to the web site where you can find the employment agreement for Bruce Karatz from 1995 and 2001, as well as his recent resignation agreement with KB Home.

Categories
technology

Microsoft Hearts Novell

On November 2, 2006, Novell, Inc. (“Novell”) and Microsoft Corporation (“Microsoft”) announced that they had entered into a Business Collaboration Agreement, a Technical Collaboration Agreement, and a Patent Cooperation Agreement. This set of broad business and technical collaboration agreements is designed to build, market and support a series of new solutions to make Novell and Microsoft products work better together for customers.

You can find a summary of the three agreement in Novell’s 8-K. The actual agreements aren’t on EDGAR just yet. I have added Novell Inc. contracts to the website though. You can also read the earlier Settlement Agreemenet Between Microsoft and Novell.

Categories
ipo non-disclosure

Wrinkle Treatment Stock Sags

Reuters: Thermage IPO raises $42 mln, below range. Thermage Inc., a wrinkle treatment company, raised $42 million with an initial public offering on Thursday that priced below a forecast range, according to an underwriter.

I’ve added Thermage Inc. contracts to the website. Here’s an interesting Severance Agreement between Thermage and Keith Mullowney. So, the severange agreement has a confidentiality clause:

The Parties acknowledge that Employee’s agreement to keep the terms and conditions of this Agreement confidential was a material factor on which all parties relied in entering into this Agreement. Employee hereto agrees to use his/her best efforts to maintain in confidence the existence of this Agreement, the contents and terms of this Agreement, the consideration for this Agreement, and any allegations relating to the Company or his/her employment with the Company except as otherwise provided for in this Agreement (hereinafter collectively referred to as “Settlement Information”). Employee agrees to take every reasonable precaution to prevent disclosure of any Settlement Information to third parties, and agrees that there will be no publicity, directly or indirectly, concerning any Settlement Information. Employee agrees to take every precaution to disclose Settlement Information only to those attorneys, accountants, governmental entities, and family members who have a reasonable need to know of such Settlement Information. The Parties agree that an enforcement action shall be arbitrated pursuant to this Agreement and that, if Company proves that Employee breached this Confidentiality provision, it shall be entitled to an award of its costs spent enforcing this provision, including all reasonable attorneys’ fees associated with the enforcement action, without regard to whether the Company can establish actual damages from the breach by Employee.

So, after all that wasted ink, the company discloses the settlement agreement. Huh?