STOCK OPTION AGREEMENT
(Executive)
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").
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. PLAN. The Option is being awarded pursuant to the Plan, as in
effect on the Date of Grant, and is subject to all the terms and conditions
of the Plan, as the same may be amended from time to time provided, however,
that no such amendment shall deprive Employee, without his or her consent, of
the Option or any of Employee's rights under this Agreement. The
interpretation and construction by the Committee of the Plan, this Agreement
and such rules and regulations as may be adopted by the Committee for the
purpose of administering the Plan shall be final and binding upon the
Employee. Until the Option shall be exercised or be forfeited, the Company
shall, upon written request therefor, send a copy of the Plan, in its current
form, to the holder of record of the Option.
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 the Plan
pursuant to 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.
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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 FINANClAL
By:
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Title:
EMPLOYEE
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Signature
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Xxxxxx Xxxxxxx
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Xxxx, Xxxxx and Zip Code
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Social Security Number
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