1997 AMERICAN CAPITOL INSURANCE COMPANY
KEY EMPLOYEE INCENTIVE STOCK OPTION PLAN
GRANT OF INCENTIVE STOCK OPTION
(Grant No. -------)
THIS AGREEMENT is made as of the 2nd day of September, 1997 (the "Grant
Date"), by American Capitol Insurance Company, a Texas corporation (the
"Company") and Xxxx X. Xxxxxxx (the "Grantee"), an employee of the Company,
pursuant to the 1997 American Capitol Insurance Company Key Employee
Incentive Stock Option Plan (the "Plan"). A copy of the Plan is appended
and made a part of this Agreement.
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
has adopted the Plan for the benefit of certain employees of the Company;
and
WHEREAS, the undersigned comprise all of the duly elected, qualified and
acting members of the Compensation Committee of the Board of Directors and,
as such, are authorized to select and designate employees of the Company as
key employees and to grant Incentive Stock Options pursuant to the Plan; and
WHEREAS, pursuant to the Plan, the Board of Directors regards the Grantee
as a key employee and has determined that it would be in the interest of the
Company and its shareholders to grant the option provided herein in order to
encourage the Grantee to acquire a greater proprietary interest in the
success of the Company, to continue employment with the Company and to
render superior performance during such employment; and
WHEREAS, the Grantee does not own 10% or more of the voting stock of the
Company;
NOW THEREFORE, the Company, acting by and through this unanimous action of
the Compensation Committee of its Board of Directors, and Grantee confirm
the foregoing recitations and agree as follows:
1. Grant of Option. Subject to the terms and conditions herein, the
Company grants to the Grantee, an option (the "Option"), effective on
the above Grant Date, to purchase one hundred (100) shares (the "Option
Shares") of the Common Stock of Acap Corporation ("Acap"), par value of
$.10 per share (the "Common Stock"), at a price of $240 per share (the
"Option Price"), which price is equal to the Fair Market Value (as
defined in Section 1.2 of the Plan) per share of the Option Shares on
the Grant Date. Such Option is intended to qualify as an Incentive
Stock Option pursuant to Section 422 of the Internal Revenue Code, as
amended.
2. Conditions of Exercise. The Option is exercisable only in accordance
with the conditions stated in this paragraph.
(a) Except as provided in subparagraph (b) of paragraph 8, the Option
may be exercised to the extent the Option Shares are available for
purchase in accordance with the following schedule:
Anniversary of Percentage of
Grant Date Shares Available for Purchase
Prior to the 5th Zero
After the 5th 100%
After the 10th Zero
(b) To the extent an Option is exercisable, such option may be
exercised in whole or in part (at any time) until such option
lapses.
3. Manner of Exercise. The Option shall be considered exercised on the
latest of (i) the date of exercise designated in the written notice
referred to in subparagraph (a), (ii) if the date so designated is not
a business day, the first business day following such date or (iii) the
earliest business day by which the Company has received all of the
following:
(a) Written notice, in such form as the Company may require,
designating, among other things, the date of exercise and the
number of Option Shares to be purchased;
(b) If the Option is to be exercised, payment of the Option Price in
such form as the Company may require; and
(c) Any other documentation that the Company may reasonably require.
4. Withholding for Taxes. Xxxxxxx agrees to pay or reimburse the Company
for any federal, state or local taxes required to be withheld by the
Company upon the exercise of the Option, at such time and upon such
terms and conditions as the Company may prescribe.
5. Delivery by the Company. After receipt of all items referred to in
paragraph 3 and any payment required by paragraph 4, the Company shall
deliver to the Grantee a certificate or certificates issued in
Grantee's name for the number of Option Shares purchased by exercise of
the Option. If delivery is by mail, delivery of shares of Common Stock
shall be deemed effected for all purposes when the certificate or
certificates, as the case may be, shall have been deposited in the
United States mail, addressed to the Grantee. In no event shall the
Company be liable for any delay in the issuance of the stock
certificate or certificates, as the case may be, if its delay, if any,
shall be reasonable under the circumstances or for cause.
6. Nontransferability of Option. During Xxxxxxx's lifetime, the Option is
not transferable (voluntarily or involuntarily) and is exercisable only
by Xxxxxxx, provided, however, if Grantee ceases to have legal capacity
to act, his or her duly appointed and qualified legal representative
shall be entitled to act on Xxxxxxx's behalf and such person shall be
deemed the Grantee. Following Xxxxxxx's death, the Option, if
otherwise exercisable, may be exercisable by the person to whom such
option passes according to Xxxxxxx's will or the laws of descent and
distribution, and such person shall be deemed the Grantee.
7. No Shareholder Rights. Grantee shall not be deemed for any purpose to
be a shareholder of the company with respect to any shares of Common
Stock as to which this Agreement relates until such shares shall have
been transferred to Grantee by the Company. Furthermore, the existence
of this Agreement shall not affect the right or power of the Company or
its shareholders, or Acap or its shareholders, to accomplish any
corporate act.
8. Adjustments.
(a) The Board of Directors, in accordance with Section 3.1 of the
Plan, shall make appropriate adjustments to the Option in the
event of a change in the Common Stock occurring after the Grant
Date.
(b) Upon the dissolution or liquidation of the Company or Acap, the
Option shall terminate; however, Grantee shall be given the
opportunity, prior to such termination, to exercise the Option
with regard to subparagraph (a) of paragraph 2.
(c) Except as provided in subparagraphs (a) and (b), the issuance by
Acap of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect this Agreement
or the rights granted herein.
9. Restrictions Imposed by Law. Notwithstanding any other provision of
this Agreement, Xxxxxxx agrees that Grantee will not exercise the
Option and that the Company will not be obligated to deliver any shares
of Common Stock, if counsel to the Company determines that such
exercise, delivery or payment would violate any law or regulation of
any governmental authority or any agreement between the Company, or
Acap, and any national securities exchange upon which the Common Stock
is listed. The Company shall in no event be obligated to take any
affirmative action in order to cause the exercise of the Option or the
resulting delivery of shares of Common Stock to comply with any law or
regulation of any governmental authority.
10. Termination of Option.
(a) The Option and all rights hereunder with respect thereto, to the
extent such rights shall not have been exercised, shall terminate
and become null and void after the expiration of ten (10) years
from the Date of Grant (the "Option Term").
(b) Upon the occurrence of the Grantee's ceasing for any reason to be
employed by the Employer (such occurrence being a "termination of
the Grantee's employment"), the Option, to the extent not
previously exercised, shall terminate and become null and void
immediately upon such termination of the Grantee's employment,
except in a case where the termination of the Grantee's employment
is by reason of retirement, disability or death. Upon a
termination of the Grantee's employment by reason of retirement,
disability or death, the Option may be exercised during the
following periods, but only to the extent that the Option was
outstanding and exercisable on any such date of retirement,
disability or death: (i) the one-year period following the date of
such termination of the Grantee's employment in the case of a
disability (within the meaning of Section 22(e)(3) of the Code),
(ii) the six-month period following the date of issuance of
letters testamentary or letters of administration to the executor
or administrator of a deceased Xxxxxxx, in the case of the
Grantee's death during his employment by the Employer, but not
later than one year after the Grantee's death, and (iii) the
three-month period following the date of such termination in the
case of retirement on or after attainment of age 65, or in the
case of disability other than as described in (i) above. In no
event, however, shall any such period extend beyond the Option
Term.
(c) In the event of the death of Grantee or in the event Grantee
ceases to have legal capacity to act, the Option may be exercised
by the Grantee's legal representative(s), but only to the extent
that the Option would otherwise have been exercisable by the
Grantee.
(d) A transfer of the Grantee's employment between the Company and any
affiliate of the Company, or between any affiliates of the
Company, shall not be deemed to be a termination of the Grantee's
employment.
(e) Notwithstanding any other provisions set forth herein or in the
Plan, if the Grantee shall (i) commit any act of malfeasance or
wrongdoing affecting the Company or any affiliate of the Company,
(ii) breach any covenant not to compete, or obligation of
confidentiality, or employment contract, with the Company or any
affiliate of the Company, or (iii) engage in conduct that would
warrant the Grantee's discharge for cause, any unexercised portion
of the Option shall immediately terminate and be void, and any
exercise of such a voidable Option shall be rescindable by the
Committee.
11. Notice. Unless the Company notifies Grantee in writing of a different
procedure, any notice or other communication to the Company with
respect to this Agreement shall be in writing and shall be sent by
first class mail, postage prepaid and addressed as follows:
1997 American Capitol Insurance Company Key Employee Incentive Stock
Option Plan
Attention: Chairman
P. O. Box 42814
Houston, TX 77042-2814
Any notice or communication to the Grantee with respect to this
Agreement shall be in writing and shall be sent by first class mail,
postage prepaid, to Xxxxxxx's address as listed in the records of the
Company on the Grant Date, unless the Company has received written
notification from the Grantee of a change of address.
12. Amendment. Notwithstanding any other provision hereof, this Agreement
may be amended, without the consent of the Grantee, as follows:
(a) The Agreement may be cancelled or amended by the Board of
Directors at any time if the Board of Directors determines that
cancellation or amendment is necessary or advisable because of any
change or clarification after the Grant Date of any law or
governmental regulation, including any applicable federal or state
securities law;
(b) Subject to any required approval by Company shareholders, the
Board of Directors may amend or cancel this Agreement at any time
for reasons other than those stated in subparagraph (a); provided
that such action shall not adversely affect the Option to the
extent then exercisable.
13. Grantee Employment. Nothing this Agreement shall limit the right of
the Company to terminate the Grantee's employment or otherwise impose
upon the Company an obligation to employ the Grantee.
14. Determinations. All decisions of the Committee upon questions
regarding the Plan or this Agreement shall be conclusive. This
Agreement is made pursuant to the Plan, which is incorporated by
reference thereto for all purposes, and reference is made to the Plan
in respect to all matters not expressly set forth in this Agreement.
In the event of any inconsistency between the terms of the Plan and
this Agreement, or any matter not expressly set forth in this
Agreement, the terms of the Plan shall control. The validity and
interpretation of this Agreement shall be determined, exclusively, in
accordance with the laws of the State of Texas.
15. Grantee Acceptance. Grantee shall signify acceptance of the terms and
conditions of this Agreement by signing in the space provided below and
returning a signed copy to the Company. THIS AGREEMENT IS CONTINGENT
UNTIL SUCH ACCEPTANCE. THE COMPANY MAY REVOKE THE OPTION, AND VOID ALL
OBLIGATIONS UNDER THIS AGREEMENT, AT ANY TIME BEFORE THE COMPANY HAS
RECEIVED A FULLY EXECUTED COPY OF THIS AGREEMENT FROM THE GRANTEE.
AMERICAN CAPITOL INSURANCE COMPANY
By: Members of the Compensation Committee:
/s/X. Xxxxxxxx Xxxx, Jr., M. D. /s/X. X. Xxxxxxx
------------------------------- ---------------------------
X. Xxxxxxxx Xxxx, Jr., M. D. R. W. Xxxxxxx
ACCEPTED:
/s/Xxxx X. Xxxxxxx, Grantee
--------------------------------
Xxxx X. Xxxxxxx, Grantee
