EXHIBIT 10.14(ii)
METRIS COMPANIES, INC.
LONG-TERM INCENTIVE AND STOCK OPTION PLAN
Non-Qualified Performance Accelerated Stock Option Agreement
This Non-Qualified Stock Option Agreement is made and entered into as of
_________, by and between ___________, (the "Optionee") and Metris Companies
Inc., a Delaware corporation, with its principal business office located in
Minnetonka, Minnesota (the "Company").
WHEREAS, the Compensation Committee (the "Committee") of the Board of
Directors of the Company (the "Board") desires to provide Optionee with an
option to purchase shares of common stock of the Company (the "Common Stock")
pursuant to the provisions of the Metris Companies Inc. Long-Term Incentive and
Stock Option Plan, as amended (the "Plan") and this Non-Qualified Stock Option
Agreement (the "Agreement"), and Optionee desires to acquire such option.
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises contained herein, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant of Option. The Company hereby grants to Optionee effective as of
______, (the "Date of Grant"), the option (the "Option") to purchase an
aggregate of __________ shares (the "Shares") of Common Stock, subject to the
terms and conditions set forth herein and in the Plan.
2. Option Price. The purchase price of the Shares subject to the Option
(the "Option Price") shall be $____ per share, subject to adjustment as provided
herein.
3. Term of Option; Time of Exercise.
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3.1 (a) The term of the Option shall be for a period of ten (10) years from
the Date of Grant.
(b) Subject to Section 3.1(c), the Option shall be exercisable in
accordance with the following schedule:
Anniversary of Date of Grant Percentage of Option Exercisable
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First 0%
Second 0%
Third 0%
Fourth 33%
Fifth 33%
Sixth 33%
(c) Notwithstanding Section 3.1(b), this Option may become exercisable at
such times and in such amounts as provided in the following schedule in the
event that, on the anniversary of the Date of Grant specified below, the
Committee determines that the Company has achieved a Company XXX (as defined in
Section 3.1(d)) that exceeds the applicable XXX Target (as defined in Section
3.1(e)) for the fiscal year end immediately preceding such anniversary of the
Date of Grant:
Percentage of Option
Exercisable if
Anniversary of Date of Grant Applicable XXX Target is Met
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First 33%
Second 33%
Third 33%
(e) "Company XXX" shall mean with respect to the applicable fiscal year end
shall mean the Company's "return on equity" as reported in the Company's Annual
Report on Form 10-K for such fiscal year.
(d) "XXX Target" shall mean, with respect to the applicable fiscal year
end, the five year average of the reported return on equity, as determined for
each such fiscal year end by the Committee, for an industry group of 50
companies in the consumer finance industry as selected by the Committee. The
Committee has determined that the XXX Target for the fiscal year ending December
31, shall be ____%. The XXX Target for each of the fiscal years ending December
31, shall be determined by the Committee in the second quarter of, respectively,
and thereafter shall be communicated to the Optionee.
3.2 This Option shall not under any circumstances be exercisable after, and
this Agreement and Option shall terminate as to all unexercised Shares at, 5:00
p.m. (Minnesota time) on the date that is ten (10) years from the Date of Grant
(the "Expiration Date"), unless terminated prior thereto pursuant to the
provisions of Section 5 hereof.
3.3 Notwithstanding the vesting provisions contained in Section 3.1 hereof,
but subject to the other terms and conditions set forth herein, the Option may
be exercised in full immediately following the date of a "Change in Control" (as
defined in Section 3.3(a)). For purposes of this Agreement, the following terms
shall have the definitions set forth below:
(a) "Change in Control" shall mean:
(i) a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
the Company is then subject to such reporting requirement;
(ii) the public announcement (which, for purposes of this definition, shall
include without limitation a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that such person has become the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the Exchange Act) directly or
indirectly of securities of the Company representing fifty percent (50%) or more
of the combined voting power of the Company's then outstanding securities;
provided, however, that notwithstanding the foregoing, no Change of Control
shall be deemed to have occurred for purposes of this Agreement by reason of
ownership of fifty percent (50%) or more of the total voting capital stock of
the Company then issued and outstanding by any subsidiary of the Company or any
employee benefit plan of the Company or of any subsidiary of the Company or any
entity holding shares of the Common Stock organized, appointed or established
for, or pursuant to the terms of, any such plan (any such person or entity
described in this proviso is referred to herein as a "Company Entity");
(iii) the announcement of a tender offer by any person or entity (other
than a Company Entity) for thirty percent (30%) or more of the Company's voting
capital stock then issued and outstanding, which tender offer has been approved
by the Board, a majority of the members of which are Continuing Directors (as
defined in Section 3.3(b)), and recommended to the shareholders of the Company;
(iv) the Continuing Directors cease to constitute a majority of the Board;
or
(v) the shareholders of the Company approve (A) any consolidation or merger
of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Company stock would be converted into
cash, securities or other property, other than a merger of the Company in which
shareholders immediately prior to the merger have the same proportionate
ownership of stock of the surviving corporation immediately after the merger;
(B) any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the assets of the
Company; or (C) any plan of liquidation or dissolution of the Company.
(b) "Continuing Director" shall mean any person who is a member of the
Board, while such person is a member of the Board, who is not an Acquiring
Person (as defined below) or an Affiliate or Associate (as defined below) of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and who (i) was a member of the Board on the date of
this Agreement as first written above or (ii) subsequently becomes a member of
the Board, if such person's initial nomination for election or initial election
to the Board is recommended or approved by a majority of the Continuing
Directors. For purposes of this subparagraph (b), "Acquiring Person" shall mean
any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) who or which, together with all Affiliates and Associates of such person,
is the "beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly of securities of the Company representing
fifty percent (50%) or more of the combined voting power of the Company's then
outstanding securities, but shall not include any Company Entity; and
"Affiliate" and "Associate" shall have the respective meanings ascribed to such
terms in Rule 12b-2 promulgated under the Exchange Act.
4. Exercise of Option.
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4.1 Subject to the terms and conditions of the Plan and this Section 4,
this Option may be exercised by Optionee in whole or in part by written notice
to the Company at its principal executive office addressed to the attention of
its General Counsel. Such notice shall specify Optionee's election to exercise
this Option and the number of Shares in respect of which it is being exercised,
and shall be signed by Optionee. The Company shall not, however, be required to
sell or issue any Shares pursuant to this Option if the issuance of such Shares
would constitute a violation by Optionee or the Company of any applicable law or
regulation of any governmental authority.
4.2 Notice of exercise of the Option by Optionee shall be accompanied by
payment of the full Option Price of the Shares as to which the Option is to be
exercised, together with payment of the amount determined by the Company to be
necessary to satisfy any applicable federal, state and local tax withholding
requirements arising from the exercise of the Option. The Company shall issue
and deliver a certificate or certificates representing such Shares as soon as
practicable after such notice and payments are received. Payment of such Option
Price shall be made in cash or check payable to the order of the Company or, in
lieu thereof, if the Committee in its sole discretion at the time of exercise so
permits, by tendering to the Company shares of Common Stock having a fair market
value equal to the Option Price. Payment by Optionee of any required amount of
withholding for tax purposes shall be made in cash or check payable to the order
of the Company. The certificate or certificates for the Shares as to which the
Option shall have been so exercised shall be registered in the name of Optionee
(or Optionee's Representative, (as defined in Section 5)) or at the direction of
Optionee or such Representative and shall be delivered as aforesaid to or upon
the written order of such person or persons. In the event that the Option shall
be exercised by any person or persons other than Optionee, such notice shall be
accompanied by appropriate proof of the authority and right of such person or
persons to exercise the Option. All Shares purchased upon the exercise of the
Option as provided herein shall be fully paid and nonassessable.
5. Termination of Option.
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(a) This Option shall terminate and may no longer be exercised if Optionee
ceases to be employed by the Company or one of its subsidiaries (a defined in
the Plan) except:
(i) if Optionee's employment shall be terminated for any reason other than
gross and willful misconduct, death, disability or retirement, Optionee may, at
any time before (A) the expiration of ninety (90) days after such termination or
(B) the Expiration Date, whichever shall first occur, exercise this Option (x)
to the extent that the Option was exercisable on the date of the termination of
employment in the case of voluntary termination or (y) to the extent that the
Option was or would become exercisable on or before the expiration of such
ninety (90) day period in the case of involuntary termination; provided,
however, that if, immediately prior to such termination of employment, Optionee
was an "officer" as defined in Rule 16a.1(f) promulgated under the Exchange Act,
the periods of exercisability referred to in clauses (x) and (y) above (but not
the acceleration of vesting referred to in clause (y)) shall be extended from
ninety (90) days to seven (7) months after the date of such termination;
(ii) if Optionee's employment shall be terminated by reason of Optionee's
gross and willful misconduct during the course of employment (as may be
determined by the Committee in its sole and absolute discretion), including but
not limited to wrongful appropriation of funds of the employer or the commission
of a gross misdemeanor or felony, this Option shall be terminated as of the date
of the misconduct and Optionee shall have no further rights hereunder;
(iii) if Optionee's employment shall be terminated by reason of Optionee's
death, this Option will become fully exercisable and may be exercised by
Optionee's Representative (as defined below) at any time before (A) the
expiration of three (3) years after the date of death or (B) the Expiration
Date, whichever shall first occur;
(iv) (A) if Optionee's employment shall be terminated by reason of
Optionee's disability (other than Total Disability), as may be determined by the
Committee in its sole and absolute discretion, this Option may be exercised, to
the extent that the Option was exercisable on the date of disability, by
Optionee or Optionee's guardian or legal representative, at any time before (x)
the expiration of one (1) year after the date Optionee's employment was
terminated by reason of such disability or (y) the Expiration Date, whichever
shall first occur or (B) if Optionee's employment shall be terminated by reason
of Optionee's Total Disability, this Option will become fully exercisable and
may be exercised by Optionee or Optionee's guardian or legal representative at
any time before (x) the expiration of three (3) years after the date Optionee's
employment was terminated by reason of such disability or (y) the Expiration
Date, whichever shall first occur;
(v) if Optionee's employment shall be terminated by Optionee's Retirement
(as defined below), this Option will become fully exercisable and may be
exercised by Optionee before (A) the expiration of three (3) years after such
date or (B) the Expiration Date, whichever shall first occur; or
(vi) if Optionee dies or becomes disabled (as may be determined by the
Committee in its sole and absolute discretion) during the time of exercisability
after termination of employment provided in clause (i) of this Section 5(a),
this Option may be exercised, to the extent that the Option was exercisable on
the date of death or disability: (A) in the case of death, by Optionee's
Representative or (B) in the case of disability, by Optionee or Optionee's
guardian or legal representative before (x) the expiration of one (1) year after
the date of death or the onset of such disability or (y) the Expiration Date,
whichever shall first occur.
(b) Notwithstanding the provisions contained in Section 5(a) above, but
subject to the other terms and conditions set forth herein, in the event that,
within one (1) year following a Change in Control, Optionee's employment is
terminated for any reason other than for gross and wilful misconduct (including
Optionee's voluntary termination), Optionee shall have the right to exercise the
Option in whole or in part at any time before (i) the expiration of one (1) year
after the date of such termination of employment or (ii) the Expiration Date,
whichever shall first occur.
(c) For purposes of this Agreement, the following terms shall be defined as
follows:
(i) "Retirement" shall mean any termination other than by death or gross
and willful misconduct after (A) Optionee has attained at least age fifty-five
(55) and (B) Optionee's age plus completed continuous years of service equals
sixty (60) or more; provided, however, that if Optionee is less than age
sixty-five (65) on the date of termination of employment Optionee must have
completed at least five (5) years of service.
(ii) "Representative" shall mean the person or persons to whom Optionee's
rights under this Agreement shall pass upon death, whether by will or by the
applicable laws of descent and distribution.
(iii) "Total Disability" shall have the meaning given to "permanent and
total disability" in Section 22(e)(3) of the Code (as defined in the Plan) and
shall be determined by the Committee in its sole and absolute discretion.
(d) Notwithstanding the foregoing provisions of Section 5(a), the Committee
shall have the authority, on a case by case basis, in its sole and absolute
discretion to extend for up to a period of two (2) years following the
termination of employment of Optionee the period of vesting referred to in
Section 3.1 and the period of exercisability, provided such extension does not
exceed the Expiration Date.
6. Leave of Absence; Related Employment. A leave of absence granted in
accordance with the Company's usual procedure which does not operate to
interrupt continuous employment for other benefits granted by the Company shall
not be considered a termination of employment under this Agreement. A period of
related employment during which Optionee is not employed by the Company nor a
subsidiary (as defined in the Plan) shall not be considered a termination of
employment under this Agreement if (i) such employment is undertaken by Optionee
at the request of the Company or a subsidiary, (ii) immediately prior to the
undertaking of such employment Optionee was an officer or employee of the
Company or a subsidiary or was engaged in related employment and (iii) such
employment is recognized by the Committee, in its sole discretion, as related
employment. The death or disability of Optionee during a period of related
employment shall be treated, for purposes of this agreement, as if such death or
the onset of such disability had occurred while Optionee was an officer or
employee of the Company.
7. Adjustments for Changes in Common Stock.
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7.1 In the event that the outstanding shares of Common Stock (other than
shares held by dissenting shareholders) shall be changed into, or exchanged for,
a different number or kind of shares of Common Stock or other securities of the
Company, or if further changes or exchanges of any Common Stock or other
securities into which the Common Stock shall have been changed, or for which it
shall have been exchanged, shall be made (whether by reason of merger,
consolidation, reorganization, recapitalization, stock dividend,
reclassification, split-up, combination of shares or otherwise), then for each
Share subject to the Option, there shall be substituted and exchanged therefor
the number and kind of shares of Common Stock or other securities into or for
which each outstanding share of Common Stock (other than shares held by
dissenting shareholders) shall be so changed or exchanged. If in the event of
any such changes or exchanges in order to prevent dilution or enlargement of
rights under this Agreement, it is necessary to make an adjustment in the
number, kind or option exercise price of the Shares then subject to the Option,
such adjustment shall be made by the Committee and shall be effective and
binding for all purposes of this Agreement.
7.2 All adjustments made pursuant to the provision of this Section 7 shall
be made by the Committee, whose determination as to which adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive.
8. Non-transferability of Option.
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(a) Except as provided in subsection 8(b) below, the Option granted under
this Agreement shall not be transferable by Optionee, either voluntarily or
involuntarily, except by will or the laws of descent and distribution. This
Option may not be transferred, assigned, pledged or hypothecated, whether by
operation of law or otherwise, or be subject to attachment, execution or similar
process. Any attempt to do so shall void this Option. During the lifetime of
Optionee, this Option may be exercised only by Optionee (or by Optionee's
guardian or legal representative in the case of disability) or by a permitted
transferee pursuant to a transfer as described below.
(b) To the extent such transfers are permitted under the Plan and are not
restricted by Rule l6b-3 promulgated under the Exchange Act, the Committee, in
its sole discretion, may establish, as permitted by applicable law, rules and
conditions under which an Optionee may transfer this Option to any member of
Optionee's "immediate family" (as such term is defined in Rule 16a- 1(e)
promulgated under the Exchange Act).
9. Rights as a Shareholder. No rights of a shareholder of the Company shall
attach to Optionee with respect to any of the Shares until this Option shall be
duly exercised as to such Shares and Optionee shall have become the holder of
record of such Shares. No adjustments shall be made for cash dividends or other
distributions or rights as to which there is a record date preceding the date
that Optionee becomes the holder of record of such Shares.
10. Securities Law Compliance. The exercise of all or any portion of this
Option shall only be effective at such time that the sale of Common Stock issued
pursuant to such exercise will not violate any state or federal securities or
other laws. The Company is under no obligation to effect any registration of the
stock subject to the Option under the Securities Act of 1933, as amended, or to
effect any state registration or qualification of such Common Stock. The Company
may, in its sole discretion, defer the effectiveness of any full or partial
exercise of the Option in order to ensure that the issuance of stock upon
exercise will be in compliance with federal or state securities laws and the
rules of the New York Stock Exchange (NYSE) or any other exchange upon which the
Common Stock is traded.
11. Limitation of Liability. Nothing in this Agreement shall be construed
to:
(a) limit in any way the right of the Company or a subsidiary to terminate
the employment of Optionee; or
(b) be evidence of any agreement or understanding, express or implied, that
the Company or a subsidiary shall employ Optionee in any particular position at
any particular rate of compensation or for any particular period of time.
12. Severability. It is intended that each provision of this Agreement
shall be viewed as separate and divisible. In the event that any provision
hereof shall be held to be invalid or unenforceable, the remaining provisions of
this Agreement shall continue to be in full force and effect.
13. Governing Law. The place of administration of the Plan and this
Agreement shall be in the State of Minnesota. The corporate law of the State of
Delaware shall govern issues relating to the validity and issuances of Shares.
Otherwise, this Agreement shall be construed and administered in accordance with
the laws of the State of Minnesota, without giving effect to principles relating
to conflict of laws.
14. Further Assurances. Upon the exercise of the Option by Optionee or at
such subsequent date as either the Company or Optionee may reasonably request,
each party hereto agrees to execute and deliver such further instruments and to
take such other action as shall be reasonably required to carry out the intent
and purposes of this Agreement.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document
16. Notices. All notices that are required or may be given pursuant to
the terms of this Agreement shall be in writing and delivered personally or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows and shall be deemed to have been given upon delivery to the
addressee:
To the Company:
Metris Companies Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
To Optionee:
At Optionee's residence address
listed in the Company's personnel records.
Notice of a change in address of one of the parties hereto shall be given
in writing to the other party as provided above, but shall be effective only
upon actual receipt.
17. Amendment. This Agreement may not be amended or modified by the parties
hereto in any manner, except by a written instrument signed by both parties
hereto.
18. Binding Effect; Assignment. This Agreement shall be binding upon the
heirs, successors and assigns of the parties hereto, subject to shareholder
approval of the Plan. This Agreement shall not be assigned by either party
hereto without the express written consent of the other party.
19. Entire Agreement. The Plan, the rules adopted by the Committee from
time to time and this Agreement constitute, except as to any written agreement
between the parties hereto which specifically references this Section 19, the
entire understanding between the parties hereto with respect to the matters
covered herein and supersede all previous written, oral or implied
understandings between the parties hereto with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement as of
the day and year first above written.
METRIS COMPANIES INC.
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Xxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
OPTIONEE
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[Name of Optionee]
Social Security #:
Date: ------------------------------
