EXHIBIT 4.1.1. INCENTIVE STOCK OPTION AGREEMENT
FIRST ALLIANCE CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement ("Option Agreement") is between
First Alliance Corporation, a Delaware corporation (the "Company"), and the
employee named in Section 1 below (the "Optionee").
W I T N E S S E T H:
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WHEREAS, the Company has adopted the First Alliance Corporation 1996
Stock Incentive Plan (the "Plan") for the purpose of encouraging ownership
of the Class A Common Stock, $.01 par value ("Common Stock"), of the Company
by eligible key employees, directors and independent contractors of the
Company and its subsidiaries, of providing increased incentive for such
persons to render services and to exert maximum effort for the business
success of the Company, and of further strengthening the identification of
such persons with the stockholders; and
WHEREAS, Section 422 of the Internal Revenue Code provides that an
employee shall not be taxed upon the exercise of an option that qualifies as
an incentive stock option, provided that the employee does not dispose of
the shares acquired upon exercise of such option until two years after the
option is granted to the employee and one year after the option is
exercised; and
WHEREAS, the Company, acting through the Stock Incentive Committee of
its Board of Directors (the "Committee") and through its stockholders, has
determined that its interests will be advanced by the issuance to Optionee
of an incentive stock option under the Plan;
NOW, THEREFORE, for and in consideration of these premises it is agreed
as follows:
1. IDENTIFYING PROVISIONS: As used in this Option Agreement, the
following terms shall have the following respective meanings:
(a) Optionee: ____________________________________________
(b) Date of Grant: _____________ ("Date of Grant")
(c) Number of shares subject to Option Agreement: ___________
(d) Exercise Price per share: $17.00 ("Exercise Price")
(e) Expiration Date: ________________ ("Expiration Date")
2. OPTION. Subject to the terms and conditions contained herein and to
stockholder approval of the Plan, the Company hereby grants to Optionee the
right and option ("Option") to purchase from the Company up to that number
of shares of its Common Stock specified in Section 1(c) of this Option
Agreement, at a price per share equal to the Exercise Price. This Option is
intended to qualify to the maximum extent possible as an incentive stock
option under Section 422 of the Internal Revenue Code, as amended (the
"Code") and therefore meets the following requirements: (i) the Exercise
Price is not less than the fair market value of the Common Stock on the date
when the Company completed the corporate action constituting an offer of
stock for sale to the Optionee; (ii) the Option is not exercisable more than
one year after the employee ceases to be employed because of death or a
disability (as defined in Section 22(e)(3) of the Code) or more than three
months after the Optionee otherwise ceases to be an employee of the Company
or its parent or a subsidiary, and (iii) the Optionee does not own stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company (or, if the Optionee does own such voting
power, such further conditions required under Code Section 422 have been
satisfied). The Plan has been approved by the Company's stockholders.
3. OPTION PERIOD. The Option herein granted may not be exercised, and
is not exercisable, after the Expiration Date. This Option shall not be
exercisable on the Date of Grant but, subject to such further terms and
limitations set forth herein, upon the expiration of six months after the
Date of Grant (the "Vesting Date"), and thereafter on each anniversary of
the Vesting Date this Option shall become exercisable to purchase, and shall
vest with respect to, a number of shares of Common Stock (rounded to the
nearest whole share) such that the aggregate number of shares of Common
Stock as to which this Option has become exercisable shall equal the total
number of shares subject to this Option Agreement (as specified in
Section 1(c)), multiplied by the percentage set forth below with respect to
the specified anniversary of the Vesting Date:
Additional Total
Percentage Percentage of
of Option Option
Date Exercisable Exercisable
---- ------------- -------------
Six months after the Date of Grant
(the "Vesting Date"): 25% 25%
On the first anniversary of the Vesting Date: 25% 50%
On the second anniversary of the Vesting Date: 25% 75%
On the third anniversary of the Vesting Date: 25% 100%
4. PROCEDURE FOR EXERCISE. The Option herein granted may be exercised
by written notice by Optionee to the Secretary of the Company setting forth
the number of shares of Common Stock with respect to which the Option is to be
exercised, and specifying such further information regarding delivery of
such shares as the Secretary of the Company may reasonably request. Payment
shall be by means of (i) cash, cashier's check or bank draft, payable to the
order of the Company, (ii) a non-cancellable commitment from a brokerage
firm acceptable to the Secretary of the Company to pay the aggregate
Exercise Price from the proceeds of a sale of Common Stock issuable upon
exercise of the Option, (iii) at the option of the Optionee, in Common Stock
theretofore owned by such Optionee for at least six months, or (iv) a
combination of cash, cashier's check or bank draft and Common Stock. As
promptly as practicable after exercise of this Option, the Company shall
issue or cause to be issued to Optionee the number of shares of Common Stock
with respect to which the Option has been so exercised. The Option may not
be exercised with respect to less than 25 shares.
5. TERMINATION OF EMPLOYMENT. If Optionee's employment with the Company
is terminated prior to the Expiration Date for any reason, including death or
disability, the Option shall immediately terminate to the extent it is not
exercisable on the date of Optionee's termination of employment. To the
extent that the Option is exercisable on the date of Optionee's termination
of employment for any reason, including death or disability, the Option may
be exercised at any time on or before the earlier of (i) the close of
business on the ninetieth (90th) day after such date of termination of
employment, and (ii) the Expiration Date.
6. TRANSFERABILITY. This Option shall not be transferable by Optionee
otherwise than by Optionee's will or by the laws of descent and
distribution. During the lifetime of Optionee, the Option shall be
exercisable only by him. Any heir or legatee of Optionee shall take rights
under this Option subject to the terms and conditions of this Option
Agreement. No such transfer of this Option Agreement to heirs or legatees
of Optionee shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of such evidence
as the Committee may deem necessary to establish the validity of the
transfer and the acceptance and assumption by the transferee or transferees
of the obligations of the Optionee and of the other terms and conditions
hereof.
7. NO RIGHTS AS STOCKHOLDER. Optionee shall have no rights as a
stockholder with respect to any shares of Common Stock covered by this
Option Agreement until the date of issuance of shares of Common Stock
purchased pursuant to this Option Agreement. Until such time, Optionee
shall not be entitled to dividends or to vote at meetings of the
stockholders of the Company. Except as provided in paragraph 8 hereof, no
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash or securities or other property) paid or distributions or other
rights granted in respect of any share of Common Stock for which the record
date for such payment, distribution or grant is prior to the date upon which
the Optionee shall have been issued share certificates, as provided
hereinabove.
8. ADJUSTMENTS. If the outstanding shares of Common Stock are increased,
decreased or exchanged for or converted into cash, property or a
different number or kind of shares or securities, or if cash, property or
shares or securities are distributed in respect of such shares of Common
Stock, in either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split,
reverse stock split, spin-off or the like, or if substantially all of the
property and assets of the Company are sold, then, unless the terms of such
transaction shall provide otherwise, 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 be acquired pursuant to the
Option and the exercise or settlement price of the Option, to the extent
permitted by Sections 162(m) and 422 of the Code, respectively.
9. COMPLIANCE WITH SECURITIES LAWS. Upon the acquisition of any shares
pursuant to the exercise of the Option herein granted, Optionee (or any
person acting under paragraph 6 of this Agreement) shall enter into such
written representations, warranties and agreements as the Company may
reasonably request in order to comply with applicable securities laws or
with this Option Agreement.
10. COMPLIANCE WITH LAWS. Notwithstanding any of the other provisions
hereof, Optionee agrees not to exercise the Option granted hereby, and that
the Company will not be obligated to issue any shares pursuant to this
Option Agreement, if the exercise of the Option or the issuance of such
shares of Common Stock would constitute a violation by the Optionee or by
the Company of any provision of any law or regulation of any governmental
authority. The certificates representing the shares of Common Stock
acquired pursuant to the exercise of the Option will be stamped or otherwise
imprinted with legends in such form as the Company or its counsel may
require with respect to any applicable restrictions on sale or transfer and
the stock transfer records of the Company will reflect stop-transfer
instructions with respect to such shares.
11. NOTICE OF SALE; WITHHOLDING OF TAX. Optionee shall promptly notify the
Company of the sale of any stock issued upon the exercise of the Option if
such sale takes place either within one year of the date of such exercise or
within two years of the Date of Grant. If the Company becomes obligated to
withhold an amount on account of any tax imposed as a result of the exercise
of the Option or the disposition of shares of Common Stock acquired by
exercise of this 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, the Optionee shall be obligated, as of the first
date on which the Company is so obligated, to pay such amounts to the
Company in cash or check, or other property acceptable to the Secretary of
the Company in his sole discretion; and, if the Optionee fails to make such
payment as and when due, the Company is hereby authorized by the Optionee
(i) to withhold from any payments then or thereafter payable to the
Optionee, any such amounts, and (ii) to refuse to issue or transfer any
shares otherwise required to be issued or transferred pursuant to the terms
hereof until all such amounts have been paid. The Committee may, in its
sole discretion, allow the Optionee to pay any such amounts through the
surrender of whole shares of Common Stock or by having the Company withhold
whole shares of Common Stock otherwise issuable upon the exercise of this
Option. Any such shares surrendered or withheld shall be valued at their
market value, determined by such method as the Secretary of the Company in
his sole discretion shall determine, and have a market value, as of the date
on which the amount of tax to be withheld is determined, which is equal to
the sums required to be withheld.
12. RESOLUTION OF DISPUTES. As a condition of the grant of the Option
hereby and of the ability to exercise the Option, the Optionee and his or
her heirs and successors agree that any dispute or disagreement which may
arise hereunder shall be determined by the Committee in its sole discretion
and judgment, and that any such determination and any interpretation by the
Committee of the terms of this Option Agreement shall be final and shall be
binding and conclusive, for all purposes, upon the Company, the Optionee and
his or her heirs, successors and personal representatives.
13. NOTICES. Every notice hereunder shall be in writing and shall
conclusively be deemed to be given only if given by personal delivery, by
courier or by registered or certified mail. All notices of the exercise of
any Option hereunder shall be directed to First Alliance Corporation, 00000
Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000-0000, Attention: Corporate
Secretary. Any notice given by the Company to Optionee directed to
Optionee's address on file with the Company shall be effective to bind
Optionee and any other person who shall have acquired rights hereunder. The
Company shall be under no obligation whatsoever to advise Optionee of the
existence, maturity or termination of any of Optionee's rights hereunder and
Optionee shall be deemed to have familiarized him- or herself with all
matters contained herein and in the Plan which may affect any of Optionee's
rights or privileges hereunder.
14. CONSTRUCTION AND INTERPRETATION. Whenever the term "Optionee" is
used herein under circumstances applicable to any other person or persons to
whom this award, in accordance with the provisions of Section 6 hereof, may
be transferred, the word "Optionee" shall be deemed to include such person or
persons. References to the masculine gender herein also include the
feminine gender for all purposes. This Option Agreement shall be
administered, interpreted and enforced under the laws of the State of
Delaware, without regard to its choice of law provisions.
15. AGREEMENT SUBJECT TO PLAN. This Option Agreement is subject to the
Plan (including any subsequent amendments thereto). In the event of a
conflict between any term or provision contained herein and a term or
provision of the Plan, the applicable terms and provisions of the Plan will
govern and prevail. All definitions of words and terms contained in the
Plan shall be applicable to this Option Agreement.
16. EMPLOYMENT RELATIONSHIP. For purposes of this Option Agreement, an
employee shall be considered to be in the employment of the Company as long
as Optionee remains an employee of the Company or any of its subsidiaries.
Any questions as to whether and when there has been a termination of such
employment and the cause of such termination shall be determined by the
Committee, and its determination shall be final. Nothing contained herein
shall be construed as conferring upon the Optionee the right to continue in
the employ of the Company, nor shall anything contained herein be construed
or interpreted to limit the 'employment at will' relationship between the
Optionee and the Company.
17. BINDING EFFECT. This Option Agreement shall be binding upon and
inure to the benefit of any successors to the Company.
IN WITNESS WHEREOF, this Option Agreement has been executed as of _________
________________, 199__.
FIRST ALLIANCE CORPORATION
By:________________________________
OPTIONEE
___________________________________
