STOCK OPTION AGREEMENT
(Executive - Non-Plan)
This Stock Option Agreement ("Agreement") is made and entered into as of
the Date of Grant indicated below by and between XXXXX FINANCIAL, a
California corporation (the "Company"), and the person named below as
Employee.
WHEREAS, Employee is an employee of the Company, and
WHEREAS, the compensation committee of the Board of Directors of the
Company (the "Committee") has approved the grant to Employee of an option to
purchase shares of the common stock, no par value, of the Company (the
"Common Stock"), on the other terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company hereby
grants to Employee, and Employee hereby accepts, as of the Date of Grant, an
option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which
option shall expire at 5:00 o'clock p.m., Pacific Time, on the Expiration
Date indicated below and shall be subject to all of the terms and conditions
set forth in this Agreement (the "Option"). The Option shall become
exercisable to purchase ("vest with respect to") the Option Shares as
indicated below.
Employee:
Date of Grant: October 26, 1996
Number of share purchasable:
Exercise Price per share: $19.00
Vesting Period: 20% on Date of Grant, 20% per year on each
anniversary of the Date of Grant.
Expiration Date: October 25, 2006
The Option is not intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code (an "Incentive Stock Option").
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2. TERMINATION OF OPTION.
(a) Termination of Employment.
(i) Retirement. In the event that Employee shall cease to be an
employee of the Company or any of its subsidiaries (such event shall be
referred to herein as the "Termination" of Employee's "Employment") by reason of
Employee's retirement in accordance with the Company's then-current retirement
policy ("Retirement"), then the Option shall terminate upon the earlier of the
Expiration Date or six months following a Liquidity Event. However, if a
Liquidity Event has occurred prior to the Termination of Employment, then the
Option shall terminate upon the earlier of the Expiration Date or the first
anniversary of the date of such Retirement.
A "Liquidity Event" shall mean:
(X) the closing of a public offering pursuant to an effective
registration statement filed under the Securities Act of 1933, as
amended, covering the offer and sale of shares of Common Stock of
the Company in which the aggregate price paid for such shares by
the-public is equal to or greater than $20,000,000; or
(Y) the date the Company agrees to make a market for the securities
issuable upon exercise of this Option at the fair market value of
such securities.
(Z) the closing of an acquisition or merger of the Company as a
result of which the Option (pursuant to Section 3 hereof) becomes
exercisable for securities of a Company that are traded on a national
securities exchange or quoted through the NASDAQ National Market System.
(ii) DEATH OR PERMANENT DISABILITY. If Employee's Employment is
Terminated by reason of the death or Permanent Disability (as hereinafter
defined) of Employee, then the Option shall terminate upon the earlier of the
Expiration Date or six months following a Liquidity Event. However, if a
Liquidity Event has occurred prior to the Termination of Employment, then the
Option shall terminate upon the earlier of the Expiration Date or the first
anniversary of the date of such Termination of Employment. "Permanent
Disability" shall mean the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than 12 months.
Employee shall not be deemed to have a Permanent Disability until proof of
the existence thereof shall have been furnished to the Board in such form and
manner, and at such times, as the Board may require. Any determination by
the Board that Employee does not have a Permanent Disability shall be final
and binding upon the Company and Employee.
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(iii) OTHER TERMINATION. If Employee's Employment is Terminated for
no reason, or for any reason (including resignation) other than Retirement,
death, Permanent Disability or For Cause, then the Option shall terminate upon
the earlier of the Expiration Date or six months following a Liquidity Event.
However, if a Liquidity Event has occurred prior to the Termination of
Employment, then the Option shall terminate upon the earlier of the Expiration
Date or the first anniversary of the date of such Termination of Employment.
(iv) TERMINATION FOR CAUSE. If Employee's Employment is Terminated
For Cause, then the Option shall terminate 30 days after the date of such
Termination of Employment. "For Cause" shall mean commission of a felony, or
grossly negligent or willful injury to the Company.
(b) OTHER EVENTS CAUSING TERMINATION OF OPTION. Notwithstanding anything
to the contrary in this Agreement, the Option shall terminate upon the
consummation of any of the following events, or, if later, the thirtieth day
following the first date upon which such event shall have been approved by both
the Board and the shareholders of the Company:
(i) the dissolution of the Company;
(ii) a sale of substantially all of the property and assets of the
Company, unless the terms of such sale shall provide otherwise; or
(iii) any transaction the terms of which provide that the Employee
will immediately receive the spread between the fair market value of the
securities underlying this Option and the Exercise Price if the Board of
Directors, in their sole discretion, determine to so terminate this Option in
connection with such transaction.
3. ADJUSTMENTS. In the event that the outstanding securities of the class
then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of securities,
or cash, property and/or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split, spin-off or the like, or in the event that substantially all of the
property and assets of the Company are sold, then, unless such event shall cause
the Option to terminate pursuant to Section 2(b) hereof, the Committee shall
make appropriate and proportionate adjustments in the number and type of shares
or other securities or cash or other property that may thereafter be acquired
upon the exercise of the Option; provided, however, that any such adjustments in
the Option shall be made without changing the aggregate Exercise Price of the
then unexercised portion of the Option.
4. EXERCISE. The Option shall be exercisable during Employee's lifetime
only by Employee or by his or her guardian or legal representative, and after
Employee's death only by the person or entity entitled to do so under Employee's
last will and testament or
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applicable intestate law. The Option may only be exercised by the delivery
to the Company of a written notice of such exercise, which notice shall specify
the number of Option Shares to be purchased (the "Purchased Shares") and the
aggregate Exercise Price for such shares (the "Exercise Notice"), together with
payment in full of such aggregate Exercise Price in cash or by check payable to
the Company or, in whole or in part:
(a) by the delivery to the Company of a promissory note in a form and
amount satisfactory-to the Committee; or
(b) by the delivery to the Company of a certificate or certificates
representing shares of Common Stock which have been held by Employee for at
least six months, duly endorsed or accompanied by a duly executed stock powers,
which delivery effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate fair market
value (as determined by the Committee in their good faith and reasonable
judgment) thereof on the date of such exercise).
5. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated to
withhold an amount on account of any tax imposed as a result of the exercise of
the Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax, then Employee shall, on the first day upon which the Company becomes
obligated to pay such amount to the appropriate taxing authority, pay such
amount to the Company in cash or by check, or, in whole or in part, by the
delivery to the Company of a certificate or certificates representing shares of
Common Stock, duly endorsed or accompanied by duly executed stock powers, which
delivery effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance or by instructing the Company to withhold and retain that number of
shares otherwise issuable upon exercise of the Option having an aggregate fair
market value (as determined by the Committee in their good faith and reasonable
judgment) equal to such amount.
6. NOTICES. All notices and other communications required or permitted to
be given pursuant to this Agreement shall be in writing and shall be deemed
given if delivered personally or five days after mailing by certified or
registered mail, postage prepaid, return receipt requested, to the Company at:
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
or to Employee at the address set forth beneath his or her signature on the
signature page hereto, or at such other addresses as they may designate by
written notice in the manner aforesaid.
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7. STOCK EXCHANGE REQUIREMENTS: APPLICABLE LAWS. Notwithstanding anything
to the contrary in this Agreement, the Option may not be exercised and no
certificate representing all or any part of the shares issuable hereunder shall
be issued or delivered, if (a) such shares have not been admitted to listing
upon official notice of issuance on each stock exchange upon which shares of
that class are then listed or (b) in the opinion of counsel to the Company, such
exercisabilty, issuance or delivery would cause the Company to be in violation
of or to incur liability under any federal, state or other securities law, or
any requirement of any stock exchange listing agreement to which the Company is
a party, or any other requirement or law or of any administrative or regulatory
body having jurisdiction over the Company.
8. NONTRANSFERABILITY. Neither the Option nor any interest therein may be
sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred
in any manner other than by will or the laws of descent and distribution.
9. INTERPRETATION. The Option is not granted pursuant to the Company's
1994 Stock Incentive Plan. The interpretation and construction by the
Committee of this Agreement and the Option shall be final and binding upon
the Employee.
10. SHAREHOLDER RIGHTS. No person or entity shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of any Option Shares
until the Option shall have been duly exercised to purchase such Option Shares
in accordance with the provisions of this Agreement.
11. EMPLOYMENT RIGHTS, No provision of this Agreement or of the Option
granted hereunder shall (a) confer upon Employee any right to continue in the
employ of the Company or any of its subsidiaries, (b) affect the right of the
Company and each of its subsidiaries to terminate the employment of Employee,
with or without cause, or (c) confer upon Employee any right to participate in
any employee welfare or benefit plan or other program of the Company or any of
its subsidiaries other than participation in this Agreement. Employee hereby
acknowledges and agrees that the Company and each of its subsidiaries may
terminate the employment of Employee at any time and for any reason, or for no
reason, unless Employee and the Company or such subsidiary are parties to a
written employment agreement that expressly provides otherwise.
12. GOVERNING LAW. This Agreement and the Option granted hereunder shall
be governed by and construed and enforced in accordance with the laws of the
State of California.
13. FINANCIAL STATEMENTS. So long as this Option is outstanding, the
Company shall provide annual audited financial statements to the Employee.
IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement as of the Date of Grant.
XXXXX FINANCIAL
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By: __________________________
Title:
EMPLOYEE
______________________________
Signature
______________________________
Xxxxxx Xxxxxxx
______________________________
City, State and Zip Code
______________________________
Social Security Number
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