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Exhibit 10.46
XXXX NATIONAL CORPORATION
Nonqualified Stock Option Agreement
(1998 Plan/Time Vesting/Senior Executive)
This Nonqualified Stock Option Agreement (this "Agreement") is
entered into between the individual optionee named on the signature page hereof
(the "Optionee") and Xxxx National Corporation, a Delaware corporation (the
"Company"), as of the Grant Date shown on the signature page. Certain
capitalized terms used herein are defined in Paragraph 8.
WHEREAS, the Board of Directors of the Company has authorized
a grant of stock options on the terms hereof to the Optionee, who is employed in
the capacity shown on the signature page; and
WHEREAS, the stock option granted by this Agreement is
intended as a nonqualified stock option and will not be treated as an "incentive
stock option" within the meaning of that term under Section 422 of the Internal
Revenue Code of 1986.
NOW, THEREFORE, the Company hereby grants to the Optionee
options (the "Options") pursuant to the Company's 1998 Equity Performance and
Incentive Plan (the "Plan") to purchase the number of shares of Common Stock,
par value $.001 per share, of the Company ("Common Stock") shown as the Original
Award on the signature page hereof; and agrees to cause certificates for any
shares purchased hereunder to be delivered to the Optionee upon payment of the
purchase price in full, all subject, however, to the terms and conditions of the
Plan and the terms and conditions hereinafter set forth.
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1. EXERCISE. (a) Except as otherwise provided herein, the
Options (until terminated as hereinafter provided) will become vested and
exercisable as follows:
AMOUNT VESTED DATE EXERCISABLE
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1/3 of the Original Award The first date commencing on or after the first
anniversary of the Grant Date on which the
Stock Price has averaged at least 133% of the
Exercise Price for a continuous period of 21
Trading Days ending on such date; and
1/3 of the Original Award The first date commencing on or after the first
anniversary of the Grant Date on which the
Stock Price has averaged at least 167% of the
Exercise Price for a continuous period of 21
Trading Days ending on such date; and
1/3 of the Original Award The first date commencing on or after the first
anniversary of the Grant Date on which the
Stock Price has averaged at least 200% of the
Exercise Price for a continuous period of 21
Trading Days ending on such date.
All Unvested Shares Fifth anniversary of the Grant Date
To the extent exercisable, the Options may be exercised in whole or in part from
time to time.
(b) Upon the occurrence of a Change in Control prior
to the fifth anniversary of the date of this Agreement, the Options, in addition
to any vesting pursuant to the provisions of Paragraph 1(a) above, will become
exercisable in full as to any then Unvested Shares immediately prior to the
consummation of such Change in Control.
(c) If a Termination Event occurs prior to the fifth
anniversary of the Grant Date, the Options will, in addition to any prior
vesting pursuant to Paragraph 1(a) above, immediately become exercisable in full
with respect to all Unvested Shares.
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(d) If the Optionee dies or becomes permanently
disabled while in the employ of the Company or any Subsidiary, or the Optionee
with the consent of the Company's Board of Directors or the Compensation
Committee thereof (the "Compensation Committee") retires under a retirement plan
of the Company or any Subsidiary the Options will, in addition to any vesting
pursuant to Paragraph 1(a) above, immediately become exercisable in full with
respect to that portion of the Unvested Shares shown below:
Prior to the first anniversary of the Grant Date 1/3rd
On or after the first anniversary but prior to
the second anniversary of the Grant Date 2/3rds
Thereafter All
(e) Any exercise of the Options must be made in
writing by the Optionee delivered to the Secretary of the Company.
2. EXERCISE PRICE AND PAYMENT; RELOAD OPTIONS. (a) The
Options will be exercisable for Vested Shares (whether such vesting occurs
pursuant to Paragraph 1(a), 1(b), 1(c) or 1(d)) at the Exercise Price shown on
the signature page hereof.
(b) The Exercise Price for any shares may be paid
(i) in cash or by check, (ii) if approved by the Compensation Committee prior to
such exercise, by delivery to the Company of a promissory note or notes of the
Optionee; PROVIDED, HOWEVER, that the principal amount of such notes for all
optionees outstanding at any one time pursuant to the Plan, the Company's 1996
Management Stock Option Plan, the Company's 1993 Management Stock Option Plan
and the Company's 1992 Management Stock Option Plan shall not in the aggregate
exceed $3,000,000, (iii) by actual or constructive transfer to the Company of
Mature Shares, or (iv) by a combination of such methods of payment.
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(c) If the Optionee pays the Exercise Price of
shares by delivery of Mature Shares, additional option rights ("Reload Option
Rights") shall, subject to the provisions hereinafter set forth, be
automatically granted to the Optionee equal to the sum of (i) the number of
Mature Shares transferred to the Company with respect to such Exercise Price and
(ii) the number of shares of Common Stock surrendered to the Company in payment
of the Withholding Amount associated with the Options exercised through the
delivery of Mature Shares. Reload Option Rights shall be granted as set forth in
this Paragraph 2(c) with respect to Optionee's exercise of Options prior to
their termination pursuant to Paragraph 3. In no event, however, shall Reload
Option Rights be granted unless the remainder of the original ten (10) year term
of the option being exercised is greater than six (6) months at the time of such
exercise. Reload Option Rights will not be granted with respect to any Options
that have been transferred by the original Optionee. Reload Option Rights shall
not be exercisable during the six (6) month period immediately following the
date of grant of such Reload Option Rights. The Exercise Price of such Reload
Option Rights shall be one hundred (100) percent of the Stock Price per share on
the day of the exercise of the Options to which such Reload Option Rights
relate. Such Reload Option Rights shall terminate at such time as the Options
being exercised would have terminated had they not been exercised. Such Reload
Option Rights will be evidenced by an agreement in form substantially the same
as this Agreement, with appropriate changes.
3. TERMINATION. The Options will terminate and all Unvested
and Vested Options then outstanding will be forfeited on the earliest of the
following dates:
(a) On the date on which the Optionee voluntarily
resigns (unless otherwise provided in a written agreement relating to
employment) or ceases to be an employee of the Company or a Subsidiary by reason
of termination of employment for Cause;
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(b) Subject to possible extension pursuant to
Paragraph 3(c) below, five years after either (i) the date on which the Optionee
ceases to be an employee of the Company or a Subsidiary by reason of retirement
under a retirement plan of the Company or a Subsidiary at or after the earliest
voluntary retirement age provided for in such retirement plan or retirement at
an earlier age with the consent of the Company's Board of Directors or the
Compensation Committee or (ii) the date of permanent disability of the Optionee
if the Optionee becomes permanently disabled while an employee of the Company or
a Subsidiary;
(c) Five years after the date of the death of the
Optionee if the Optionee dies while an employee of the Company or a Subsidiary
or one year after the date of death of the Optionee if the Optionee dies during
the fifth year of the five year period referred to in Paragraph 3(b) above;
(d) One year after the date of a Termination Event;
or
(e) Ten years from the date on which these Options
were granted.
4. TRANSFERABILITY. Unless otherwise approved by the
Compensation Committee following a request from the Optionee or the Optionee's
guardian or legal representative, the Options are not transferable by the
Optionee otherwise than by will or the laws of descent and distribution if the
recipient of the Options enters into an agreement with the Company (in form and
substance acceptable to the Company) agreeing to be bound by the provisions of
this Agreement as if such transferee were the Optionee. If exercised during the
lifetime of the Optionee, the Options are exercisable only by the Optionee or by
the Optionee's guardian or legal representative or by any transferee authorized
as provided in this paragraph.
5. SECURITIES LAWS. The Options are not exercisable if such
exercise would involve a violation of any applicable federal, state or other
securities law, and the Company hereby
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agrees to make reasonable efforts to comply with such securities laws. The
Options are not exercisable unless under said laws at the time of exercise the
shares of Common Stock or other securities purchasable hereunder are exempt, are
the subject matter of an exempt transaction, or are registered in accordance
with such laws.
6. ADJUSTMENTS. (a) The Board of Directors or the
Compensation Committee shall make such adjustment in the option price and in the
number or kind of shares of Common Stock or other securities covered by the
Options as such Board or Committee may in good faith determine is equitably
required to prevent dilution or enlargement of the rights of the Optionee that
otherwise would result from (i) any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company, or (ii) any merger, consolidation, spin-off, split-off, spin-out, split
up, reorganization, partial or complete liquidation or other distribution of
assets, issuance of rights to purchase securities, or (iii) any distribution to
the holders of the Common Stock of rights or warrant to purchase equity
interests of the Company, or (iv) any other corporate transaction or event
having an effect similar to any of the foregoing. Moreover, in the event of any
such transaction or event, the Board of Directors or the Compensation Committee,
in its discretion, may provide in substitution for any or all outstanding awards
under the Options such alternative consideration as it, in good faith, may
determine to be equitable in the circumstances and may require in connection
therewith the surrender of all awards so replaced.
(b) In the event that any provision of this
Agreement would result in a calculation of a number of shares in amounts other
than a whole number, the number of shares so calculated will be reduced or
increased to the nearest whole number (rounding 0.50 up), with the effect of any
such rounding deemed to attach to the last group of shares to be so calculated
(with calculations to be conducted in alphabetical or numerical order, as
applicable).
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7. WITHHOLDING. If the Company is required to withhold any
federal, state, local or foreign tax in connection with the exercise of the
Options, it will be a condition to such exercise that the Optionee pay or make
provision satisfactory to the Company for payment of all such taxes. Upon
exercise of any Options, Optionee shall surrender to the Company, by the Company
withholding from the shares of Common Stock to be issued upon such exercise to
the Optionee in satisfaction of the Withholding Amount, shares of Common Stock
that have value in the aggregate that is equal to such Withholding Amount. In
the event that Optionee desires to have an amount greater than the Withholding
Amount withheld, the excess over the Withholding Amount must be paid to the
Company in cash.
8. DEFINITIONS. The following capitalized terms have meanings
as set forth below.
"Cause" means gross neglect of duty, dishonesty, conviction
of a felony, disloyalty, intoxication, drug addiction, or other similar
misconduct adverse to the best interests of the Company; PROVIDED THAT if the
Optionee is party to an employment agreement which contains a more restrictive
definition of "Cause" or "for cause," such more restrictive definition will
apply for purposes of this Agreement.
"Change in Control" means if at any time any of the following
events shall have occurred:
(a) the Company merges into itself, or is merged or
consolidated with, another corporation and as a result of such merger or
consolidation less than 51% of the voting power of the then-outstanding voting
securities of the surviving or resulting corporation immediately after such
transaction are directly or indirectly beneficially owned in the aggregate by
the former stockholders of the Company immediately prior to such transaction;
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(b) all or substantially all the assets accounted for on
the consolidated balance sheet of the Company are sold or transferred to one or
more corporations or persons, and as a result of such sale or transfer less than
51% of the voting power of the then-outstanding voting securities of such
corporation or person immediately after such sale or transfer is directly or
indirectly beneficially held in the aggregate by the former stockholders of the
Company immediately prior to such transaction or series of transactions;
(c) A person, within the meaning of Section 3(a)(9) or
13(d)(3) (as in effect on the date hereof) of the Securities Exchange Act of
1934, becomes the beneficial owner (as defined in Rule 13d-3 of the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934) of (i)
15% or more but less than 35% of the voting power of the then-outstanding voting
securities of the Company without the prior approval by the Board, or (ii) 35%
or more of the voting power of the then-outstanding voting securities of the
Company; PROVIDED, HOWEVER, that the foregoing does not apply to any such
acquisition that is made by (w) any subsidiary of the Company; (x) any employee
benefit plan of the Company or any Subsidiary or (y) any person or group of
which employees of the Company or of any Subsidiary control a greater than 25%
interest unless the Board of Directors of the Company determines that such
person or group is making a "hostile acquisition;"
(d) A majority of the members of the Board of Directors of
the Company or of any Subsidiary are not Continuing Directors, where a
"Continuing Director" is any member of the Board of Directors of the Company or,
with respect to a Subsidiary, of such Subsidiary who (x) was a member of the
Board of Directors of the Company or, with respect to a Subsidiary, of such
Subsidiary on the date hereof or (y) was nominated for election or elected to
such Board of
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Directors with the affirmative vote of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Exercise Price" means the exercise price per share
indicated as the Exercise Price per share on the signature page hereof.
"Grant Date" means the date of the Board or Compensation
Committee action awarding the Options to the Optionee as indicated on the
signature page hereof.
"Mature Shares" means (x) nonforfeitable, unrestricted shares
of Common Stock that have been owned by the Optionee for more than six (6)
months prior to the date of exercise, or (y) shares of Restricted Stock or other
shares of Common Stock that are forfeitable or subject to restrictions on
transfer, including, without limitation, shares of Common Stock issued pursuant
to the earn out of Performance Shares or Performance Units, in each instance
issued under the Plan, or (z) such other Company securities as the Company's
chief accounting officer, upon consultation with the Company's independent
accountants, determines will not adversely affect the Company's tax or
accounting position by accepting.
"Original Award" means the number of shares of Common Stock
indicated as the Original Award on the signature page hereof.
"Person" means any corporation, partnership, limited liability
company, association, firm, other entity or individual(s).
"Stock Price" means the closing price of the Common Stock on
the principal exchange on which the Common Stock is traded.
"Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of the
corporations (or a group of corporations that themselves are Subsidiaries) other
than the last corporation in the unbroken chain owns stock
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possessing fifty percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. For purposes of
this Agreement, the continuous employment of the Optionee with the Company or a
Subsidiary will not be deemed interrupted, and the Optionee will not be deemed
to have ceased to be an employee of the Company or any Subsidiary, by reason of
the transfer of his employment among the Company and its Subsidiaries.
"Termination Event" means the Optionee's ceasing to be an
employee of the Company or its continuing Subsidiaries by reason of either (i)
termination of the Optionee's employment without Cause or (ii) following
Constructive Termination (as such term is defined in the Employment Agreement
Optionee, the Company and certain of the Company's subsidiaries entered into as
of the date of this Agreement).
"Trading Days" means days on which the principal exchange on
which the Common Stock is traded is open for trading, regardless of whether
actual trading in the Common Stock occurs.
"Unvested Shares" means, as of any given time, those shares of
Common Stock relating to the Options that are not, at the time in question,
otherwise permitted, under the terms of this Agreement, to be acquired pursuant
to the exercise of the Options.
"Vested Shares" means, as of any given time, those shares of
Common Stock relating to the Options that are, at the time in question,
otherwise permitted, under the terms of this Agreement, to be acquired pursuant
to the exercise of the Options.
"Withholding Amount" means the minimum amount of withholding
taxes, including Federal, state and local income taxes and social security and
medicare taxes required to be withheld by the Company by the applicable taxing
authorities as the result of the exercise of an Option.
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9. ACKNOWLEDGMENT. The undersigned Optionee hereby
acknowledges receipt of an executed original of this Agreement and accepts the
Options granted hereunder.
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Nonqualified Stock Option
Agreement (1998 Plan/Employee)
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EXECUTED at Cleveland, Ohio as of the date first set forth
above.
XXXX NATIONAL CORPORATION
By /s/ XXXXXX X. XXXX
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Title Senior Vice President
/s/ XXXXXXX X. XXXX
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OPTIONEE
Name of Optionee: Xxxxxxx X. Xxxx
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Name of Employer: Xxxx National Group, Inc.
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Position: Chairman and Chief Executive Officer
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Number of Shares
in the Original Award: 250,000
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Date of Board Resolution
authorizing this Option: December 17, 1998
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Exercise Price per Share: $15.45
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