THE BANK OF NEW YORK COMPANY, INC. STOCK OPTION AGREEMENT
Exhibit 10.3
THE BANK OF NEW YORK COMPANY, INC.
2003 LONG-TERM INCENTIVE PLAN
June 25, 2007
| To: | Xxxxxx X. Xxxxxxx SSN: ___-__-____ |
Pursuant to the 2003 Long-Term Incentive Plan of the Bank of New York Company, Inc. (“Plan”)
and in connection with consummation of the transactions contemplated by the Agreement and Plan of
Merger between Mellon Financial Corporation and the Company, dated December 3, 2006 (as amended
and restated from time to time, the “Merger Agreement”), you are hereby granted, effective the
date set forth in Section 1, a non-statutory stock option to purchase shares of Common Stock upon
the following terms and conditions and the terms and conditions of the Plan (“Option”); provided
that if the Closing Date (as defined in the Merger Agreement) does not occur on or before December
31, 2007, the Option will not be granted and this agreement and your rights under it will be
cancelled.
| Grant Type | # of Option Shares Granted | |
Non-Qualified |
500,000 |
A copy of the Plan has been made available to you through The Bank of New York Employee
Stock Plan Website (xxx.xxxxxxxxxx.xxx/xxx). Unless defined herein, capitalized terms used
herein shall be as defined in the Plan.
1. Grant Date. The grant of the Option will be effective on the last trading day of the
Company’s Common Stock before the Closing (the “Grant Date”). However, if you are not employed by
the Company on the Grant Date for any reason, the Option will not be granted and this agreement and
your rights under it will be cancelled.
2. Option Price. The exercise price per share of the Option will be the closing price of the
Company’s Common Stock on the New York Stock Exchange on the Grant Date.
3. Term. The Option shall expire and cease to be exercisable ten years from the Grant Date
or, if earlier, on the expiration date provided for in Section 5 (the “Option Termination Date”).
4. Vesting and Exercise. Shares subject to the option will become vested and exercisable on
the following schedule:
(i) One third (1/3) of the shares subject to the Option will become vested and
immediately exercisable one year from the Grant Date (the “Initial Vesting Date”), and
(ii) One thirty-sixth (1/36) of the shares subject to the Option will become vested and
immediately exercisable on each one month anniversary of the Initial Vesting Date, so that
all of the shares subject to this Option will be vested and exercisable three years from the
Grant Date;
provided that the preceding vesting schedule may be accelerated in accordance with Section 11 of
the Plan (the date on which all shares subject to the Option become vested and immediately
exercisable in accordance with the foregoing, the “Final Vesting Date”). In addition, the
preceding vesting schedule may be accelerated in accordance with Section 5 of this agreement. The
Option may be exercised in whole or in part with respect to vested shares from the date of vesting
through and including the Option Termination Date (subject to any limits provided in Section 5).
The Option may not be exercised with respect to unvested shares.
5. Termination of Employment.
(i) If your employment with the Company and its Affiliates terminates for any reason on or
after the Final Vesting Date, the Option will continue to be outstanding and in effect through the
Option Termination Date subject to the conditions set forth in Section 5(iii) (the “Non-Compete
Condition”) and Section 5(iv) (the “Release Condition”).
(ii) If your employment with the Company and its Affiliates terminates before the Final
Vesting Date, the following provisions apply:
| (a) | Retirement or Other Voluntary Employment Termination. If such employment termination is by you for retirement or any other reason (other than death or Disability or a reason for which you would be eligible to receive severance payments under your letter agreement with the Company dated as of June 25, 2007 (your “Transition Agreement”)) and you have received the prior written consent of the Board of Directors, all of the shares subject to this Option will become vested and immediately exercisable from the date of such employment termination, and will continue to be outstanding and in effect through the Option Termination Date, subject to the Non-Compete Condition and the Release Condition. If such employment termination is by you (other than for death or Disability or a reason for which you would be eligible to receive severance payments under your Transition Agreement) and you have not received the prior written consent of the Board of Directors, this Option may be exercised by you to the extent (and only to the extent) that it is vested on the date of such employment termination and shall expire and cease to be exercisable upon the later of 30 days from the date of such employment termination or the end of any period during which you are legally prevented from exercising the Option, and any portion of this Option that has not become vested on or before the date of such employment termination will expire on the date of such employment termination. | ||
| (b) | For Cause. If such employment termination is by the Company for Cause (as defined in your Transition Agreement), this Option will expire on the date of such employment termination. | ||
| (c) | Death or Disability. If such employment termination is due to your death or Disability, all of the shares subject to the Option will become vested and immediately exercisable from the date of such employment termination. However, the Option will expire and cease to be exercisable three years from the date of employment termination (or, if earlier, on the Option Termination Date). For purposes of this |
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| Option only, your employment termination date for “Disability” is the date on which you become disabled, as determined in accordance with Section 409A of the Internal Revenue Code, and are eligible to receive benefits under the Company’s Long-Term Disability Plan as in effect from time to time. | |||
| (d) | Certain Other Terminations of Employment. If such employment termination is by the Company or by you and you are eligible to receive severance payments under your Transition Agreement, all of the shares subject to the Option will become vested and immediately exercisable from the date of such employment termination and will continue to be outstanding and in effect through the Option Termination Date, subject to the Non-Compete Condition and the Release Condition. |
(iii) If the Option is subject to the Non-Compete Condition in connection with your
termination of employment with the Company and its Affiliates, the Option will expire and will
cease to be exercisable if following such termination of your employment you are in material breach
of the covenants set forth in Section 3(c) of your Transition Agreement (after the Company has
provided you notice and a reasonable opportunity to cure the breach). The Option will be
unexercisable for any period beginning on the date of delivery by the Company of a notice of breach
as contemplated in the immediately preceding sentence and ending on the earlier of the cure of such
breach or the expiration of the related cure period, if applicable.
(iv) If the Option is subject to the Release Condition in connection with your termination of
employment with the Company and its Affiliates, you must execute and deliver to the Company, within
30 days of your employment termination, a release in the form attached to your Transition Agreement
and the release must become effective and irrevocable in accordance with its terms. The Option
will expire and will cease to be exercisable if following such termination of your employment you
do not execute the release within the 30-day period or you revoke the release before it becomes
effective and irrevocable. The Option will be unexercisable for the period beginning on such
termination of your employment and ending on the date the release becomes effective and
irrevocable.
6. You may direct the exercise of the Option through The Bank of New York Employee Stock Plan
Website or telephone call center (000-000-0000) or by delivering to the Plan Administrator written
direction thereof, including in any such direction the number of shares to be exercised. Payment of
the option price upon exercise of the Option shall accompany such direction and shall be made in
cash and/or shares of Common Stock in accordance with procedures established by the Committee.
Exercise of the Option shall take effect on the date the direction and payment are actually
received by the Plan Administrator.
7. After an Option is exercised, the Company shall cause to be issued to you, subject to
Section 8, the number of shares of Common Stock with respect to which the Option has been
exercised.
8. You agree that, upon exercise of the Option with respect to all or any portion of the
Option Shares, you shall pay to the Company the appropriate amount of taxes due for withholding
purposes as a result of such exercise or, in accordance with procedures established by the
Committee, permit the Company to retain shares of Common Stock from you to fulfill such withholding
liability.
9. This Option may be transferred by you to one or more immediate family members or to trusts
established in whole or in part for your benefit and/or the benefit of one or more of your
immediate family members. For this purpose, (i) the term “immediate family” shall mean your spouse
and issue (including adopted and step children) and (ii) the phrase “immediate family members and
trusts established in whole or in part for your benefit and/or the benefit of one or more of your
immediate
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family members” shall be further
limited, if necessary, so that neither the transfer of the
Option to such immediate family member or trust, nor your ability to make such a transfer, shall
have adverse consequences to you or the Company under the Internal Revenue Code. In making any
such transfer, you and the transferee shall execute any additional agreements as may be required by
the Committee.
10. These
terms and conditions (a) shall be binding upon and inure to the benefit of any
successor of the Company and any transferee of the Option pursuant to Section 9, (b) shall be
governed by the laws of the State of New York without regard to any choice of law provisions
thereof and (c) may not be amended except in writing. This grant shall in no way affect your
participation or benefits under any other plan or program maintained or provided by the Company.
All actions and proceedings relating to or arising from, directly or indirectly, this Option shall
be litigated in courts located within the City and State of New York; provided that nothing herein
will prevent the Company from enforcing its rights with respect to this Option under Section 3(h)
of your Transition Agreement pursuant to the dispute resolution provisions thereof. You further
hereby waive trial by jury in any judicial proceeding involving, directly or indirectly, any matter
(whether sounding in tort, contract or otherwise) in any way arising out of, related to, or
connected with this Option. In the event of a conflict between these terms and conditions and the
Plan, the Plan shall govern; provided, however, that in all events the Plan and these terms and
conditions shall be interpreted and administered in accordance with the provisions of Section 409A
of the Internal Revenue Code, to the extent applicable to the Plan and your Option Grant.
| THE BANK OF NEW YORK COMPANY, INC. | ||||||
| By: | /s/ Xxxx X. Xxxxxx | |||||
| Vice Chairman and General Counsel | ||||||
Accepted and Agreed to:
/s/ Xxxxxx X. Xxxxxxx |
June 25, 2007 | |||||
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