EXHIBIT 10.22.1
STOCK OPTION AGREEMENT
UNDER THE
CITY NATIONAL CORPORATION
1985 STOCK OPTION PLAN
This STOCK OPTION AGREEMENT is made and entered into as of OCTOBER 16,
1995, by and between CITY NATIONAL CORPORATION, a Delaware corporation (the
"Company"), and XXXXXXX XXXXXXXXX, an employee of the Company or a subsidiary of
the Company (the "Optionee"), with reference to the following:
A. On April 16, 1986, the shareholders of the Company adopted the
City National Corporation 1985 Stock Option Plan (as amended from time to time
thereafter, the "Plan"), pursuant to which the Compensation Committee of the
Board of Directors (the "Committee") may grant selected officers and other
Company or Company subsidiary employees options to purchase shares of the
Company's common stock, $1.00 par value (the "Stock").
B. Optionee has entered into, and the Compensation Committee has
approved, an Employment Agreement (the "Employment Agreement") of even date
herewith, with City National Bank, a subsidiary of the Company, providing for
the grant to Optionee of an option, which is not an Incentive Stock Option, as
defined in Section 422 of the Internal Revenue Code and Treasury regulations
thereunder, to purchase shares of Stock pursuant to the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
performance of the mutual covenants contained herein, it is hereby agreed as
follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee the right
and option (the "Option") to purchase, upon the terms and conditions set forth
in this Agreement, all or any part of the following number of shares of Stock at
the following price per share:
Number of Shares Price Per Share
350,000 $13.375
The number of shares subject to the Option and the Option price are subject
to adjustment in certain events, as provided in the Plan.
2. TIME OF EXERCISE. The Option will vest in Optionee and may be
exercised at any time and from time to time after the dates set forth in the
following schedule and before the Termination Date (as defined below) as to all
or any number of full shares not exceeding in the aggregate that number of
shares set forth opposite each such date:
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Maximum Cumulative Number
Date After Which Option of Shares as to Which Option
May Be Exercised May Be Exercised
Date hereof 116,667
1 year after date hereof 233,334
2 years after date hereof 350,000
10 years after date hereof Any unexercised options
(the "Termination Date") will expire at this time
In the event of Optionee's death while employed by the Company or
termination of employment for reasons other than for good cause, as defined in
Paragraph 10(a) of the Employment Agreement ("Good Cause"), all unvested options
will vest on the date of death or termination of employment.
3. METHOD OF EXERCISE. The Option or any part thereof may be exercised
by giving written notice of exercise to the Secretary of the Company, which
notice must state the number of full shares to be purchased, and must be
accompanied by payment in full for the number of shares to be purchased; such
payment may be in cash or in shares of Stock, or a combination thereof. If any
part of such payment consists of Stock, such Stock must have been owned for at
least one year then last past and will be valued at the last sale price of such
Stock as reported by the New York Stock Exchange on the date of exercise. The
date such notice is received by the office of the Secretary will be the date of
exercise of the Option as to such number of shares. Not less than 100 shares
may be purchased at any one time unless the shares purchased are all of the
shares then purchasable under the Option.
The Company will issue and deliver to Optionee a certificate for the number
of shares purchased; provided, however, that if any federal or state law or
regulation of any securities exchange listing the Company's shares requires the
Company to take any action with respect to the exercised shares before issuance
thereof, then the date for issuance and delivery of such shares will be extended
for the period of time necessary to take such action.
4. TERMINATION OF OPTION. The Option and all rights granted under this
Agreement, to the extent such rights have not been exercised, will terminate on
the earlier of the Termination Date or the earliest to occur of the following:
4.1 Immediately upon termination of Optionee's employment for Good Cause.
4.2 If the employment of the Optionee terminates for any reason other than
for Good Cause, death, retirement or disability, three (3) months after the
date of such termination.
4.3 If Optionee's employment terminates by reason of retirement or
disability, three (3) years after the date of such termination.
4.4 If Optionee dies while employed by the Company or within three (3)
months after Optionee's employment is terminated under the conditions
specified in subparagraph 4.2 or 4.3 above, one (1) year after death.
After the Optionee's death, the Option and all rights granted under this
Agreement, to the extent such rights will not theretofore have been
exercised, may be exercised by Optionee's personal representative or by the
person or persons
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to whom the Option will pass by will or by the applicable laws of descent
and distribution.
Termination of Optionee's employment with the Company to accept employment
with a subsidiary of the Company, or vice versa, or to go on leave of absence at
the request, or with the approval, of the Company will not be deemed a
termination of employment for the purpose of this paragraph. In the event of
termination of employment under subparagraph 4.2 above, Optionee may exercise
the Option only to the extent vested under paragraph 2 above on the date of
termination.
5. LIMITATION ON TRANSFER. Except as provided in subparagraph 4.4 above,
the Option and all rights granted under this Agreement are personal to Optionee
and cannot be transferred, assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise) and will not be subject to execution,
attachment or similar processes.
6. RECEIPT OF PLAN. Optionee acknowledges that Optionee has received a
copy of the Plan. In the event of any conflict between the Plan and this
Agreement, the provisions of the Plan will prevail. Optionee's rights hereunder
are subject to modification or termination in certain events, as provided in the
Plan, including without limitation such rules and regulations as may from time
to time be adopted or promulgated in accordance with paragraph 1.3 of the Plan.
7. COMMITTEE DECISIONS. All decisions of the Compensation Committee (as
established pursuant to the Plan) with respect to any questions concerning the
application, administration or interpretation of the Plan will be conclusive and
binding on the Company and Optionee.
8. NO RIGHTS AS SHAREHOLDER. Optionee will have no rights as a
shareholder with respect to shares of the Company's Stock covered by this Option
until the date of the issuance of a stock certificate or stock certificates. No
adjustment will be made for cash dividends for which the record date is prior to
the date such stock certificate or certificates are issued.
9. COMPLIANCE WITH SECURITIES LAWS. No shares may be purchased or issued
upon the exercise of this Option unless and until any then applicable
requirements of the Securities and Exchange Commission, the California
Commissioner of Corporations, any national securities exchange upon which the
Stock of the Company may be listed and any other regulatory agency having
jurisdiction have been fully complied with.
10. BINDING EFFECT. This Agreement will bind and inure to the benefit of
the Company and its successors and assigns, and Optionee and any heir, executor
or administrator of Optionee as permitted by subparagraph 4.4.
11. ADJUSTMENTS; ACCELERATION. Notwithstanding any provisions of the Plan
to the contrary, the following will apply to this Agreement and the Option.
11.1 Adjustments. If the outstanding shares of Stock are changed into or
exchanged for cash, other property or a different number or kind of shares
or securities of the Company, or if additional shares or new or different
securities are distributed with respect to the outstanding shares of Stock,
through a reorganization or merger in which the Company is the surviving
entity, or through a combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock split, stock
consolidation, dividend or distribution of cash or property to the
shareholders of the Company or if there occurs any other extraordinary
corporate transaction or event in respect of the Stock or a sale of
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substantially all the assets of the Company as an entirety which in the
judgment of the Compensation Committee materially affects the Stock, then
the Compensation Committee will, in such manner and to such extent (if any)
as it deems appropriate and equitable (1) proportionately adjust any or all
terms of the Option (if and to the extent that a portion thereof remains
unexercised) including, but not limited to (A) the number and kind of
shares of Stock that are subject to or may be delivered under the
outstanding Option, or (B) the consideration payable with respect to the
Option; or (2) in the case of an extraordinary dividend or other
distribution, merger, reorganization, consolidation, combination, sale of
assets, split up, exchange, or spin off, make provision for a cash payment
or for the substitution or exchange of the outstanding Option or the cash,
securities or property deliverable to Optionee based upon the distribution
or consideration payable to holders of Stock upon or in respect of such
event; provided, however, in each case, that if there are then outstanding
options to purchase Stock granted to employees of the Company pursuant to
the Company's 1995 Omnibus Plan ("1995 Omnibus Plan Options"), such
adjustment or provision will be made if, and only if, the same
proportionate adjustment or a similar provision is made to or with respect
to the 1995 Omnibus Plan Options. In any of such events, the Compensation
Committee may take such action sufficiently prior to such event if
necessary to permit Optionee to realize the benefits intended to be
conveyed with respect to the underlying shares in the same manner as is
available to shareholders generally.
11.2 Acceleration of Option Upon Change in Control. Upon the occurrence
of a Change in Control Event, as defined below, the Option will become
immediately exercisable, provided, however, that in no event will the
Option be accelerated to a date less than six months after the date of this
Agreement. Notwithstanding the foregoing, prior to a Change in Control
Event, the Compensation Committee may determine that, upon its occurrence,
there will be no acceleration of benefits under the Option pursuant to this
subparagraph 11.2 or determine that only certain or limited benefits under
the Option will be accelerated pursuant to this subparagraph 11.2 and the
extent to which they are to be accelerated, and/or establish a different
time in respect of such event for such acceleration; provided, however, in
each case, that if 1995 Omnibus Plan Options are then outstanding, such
determination will be made if, and only if, the same determination is made
with respect to the 1995 Omnibus Plan Options. In that event, the
Compensation Committee will make provision in connection with such
transaction for continuance of the Option and the assumption thereof, or
the substitution for such with one or more new Options covering the stock
of a successor employer corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to number and kind of shares and prices.
In addition, the Compensation Committee may accord Optionee a right to
refuse any acceleration in such circumstances as the Compensation Committee
may approve. Any acceleration of the Option will comply with applicable
regulatory requirements.
11.3 Definition of Change in Control Event. For purposes of subparagraph
11.2, above, "Change in Control Event" means:
11.3.1 The acquisition by any individual (other than Xxxx
Xxxxxxxxx), entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of either (A) the then outstanding shares of Stock (the
"Outstanding Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally
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in the election of directors (the "Outstanding Voting
Securities"); provided, however, that the following acquisitions
do not constitute a Change in Control Event: (i) any acquisition
directly from the Company (except that an acquisition by virtue
of the exercise of a conversion privilege is not considered
within this clause (i) unless the converted security was itself
acquired directly from the Company), (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A) and (B) of
paragraph (3) below are satisfied;
11.3.2 Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual who becomes a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board will be
considered as though such individual were a member of the
Incumbent Board; but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the
Board; provided, however, that any transaction which does not
constitute a Change in Control Event by reason of an exception
contained in subparagraphs 11.3.1, 11.3.3 or 11.3.4, will not
constitute a Change in Control Event by reason of this
subparagraph 11.3.2; or
11.3.3 Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Transaction"),
unless, following such Transaction in each case, (A) more than
80% of, respectively, the then outstanding shares of common stock
of the corporation resulting from such Transaction and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Stock and
Outstanding Voting Securities immediately prior to such
Transaction and (B) no person (excluding the Company, Xxxx
Xxxxxxxxx, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such transaction and
any person beneficially owning, immediately prior to such
Transaction, directly or indirectly, 20% or more of the
Outstanding Stock or Outstanding Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Transaction or the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors; or
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11.3.4 Approval by the shareholders of the Company of (A) a
complete liquidation or dissolution of the Company or (B) the
sale or other disposition of all or substantially all of the
assets of the Company, unless such assets are sold to a
corporation and following such sale or other disposition, the
conditions described in clauses (A) and (B) of subparagraph
11.3.3, above, are satisfied with respect to the acquiring
corporation.
11.4 Possible Early Termination of Accelerated Awards. If the Option has
not been exercised prior to (i) a dissolution of the Company, (ii) a
reorganization event described in subparagraph 11.1 that the Company does
not survive, or (iii) the consummation of a reorganization event described
in subparagraph 11.1 that results in a Change in Control Event approved by
the Board and no provision has been made for the survival, substitution,
exchange or other settlement of the Option, the Option will thereupon
terminate.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year written above.
CITY NATIONAL CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------
XXXXXXX X. XXXXXXX, XX., Senior Vice
President, Secretary & General Counsel
/s/ Xxxxxxx Xxxxxxxxx
----------------------
XXXXXXX XXXXXXXXX
Optionee
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