Stock Option Agreement
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Exhibit 10.3 |
THIS STOCK OPTION AGREEMENT
(this “Agreement”) between
FBR CAPITAL MARKETS CORPORATION, a Virginia corporation (the “Company”),
and Xxxx Xxxxxxx (“Participant”), is
made pursuant and subject to the provisions of the Company’s 2006 Long-Term
Incentive Plan (the “Plan”), a copy of
which has been made available to Participant
1. Grant of Option. Pursuant to
the Plan, the Company, on February 9, 2010 (the “Date of Grant”),
granted to Participant, subject to the terms and conditions of the Plan and
subject further to the terms and conditions herein set forth, the right and
Option to purchase from the Company all or any part of an aggregate
of 250,000 Shares at the option price of $5.43 per Share (the “Option Price”) which
is not less than the Fair Market Value on the Date of Grant. This Option is not
intended to be an “incentive stock option” under Section 422 of the Code.
This Option will be exercisable as hereinafter provided. All
capitalized terms that are defined in the Plan have the meaning assigned by the
Plan.
2. Terms and Conditions. This
Option is subject to the following terms and conditions:
(a) Expiration Date. This Option
shall expire at 11:59 p.m. on the day preceding the tenth anniversary of the
Date of Grant (the “Expiration
Date”).
(b) Exercise of Option. This
Option shall be exercisable (“Vested”):
(i) with respect to one-third of the Shares subject to this Option on the
third anniversary of the Date of Grant; (ii) with respect to an additional
one-third of the Shares subject to this Option on the fourth anniversary of the
Date of Grant; and (iii) with respect to the remaining one-third of the Shares
subject to this Option on the fifth anniversary of the Date of
Grant. Once this Option becomes exercisable in accordance with the
preceding sentence, this Option shall continue to be exercisable until the
earlier of the termination of Participant’s rights hereunder pursuant to
Paragraphs 3, 4, 5 or 6 or until the Expiration Date. A partial exercise of this
Option shall not affect Participant’s right to exercise this Option with respect
to the remaining Shares purchasable under this Option, subject to the terms and
conditions of the Plan and this Agreement.
(c) Method of Exercise and Payment for
Shares. This Option shall be exercised in accordance with the Plan by
written notice to the Company’s Stock Plan Administration designated agent, with
a copy delivered to the attention of the Company’s Chief Financial Officer at
the Company’s principal executive office. The exercise date shall be (i) in
the case of notice by mail, the date of postmark, or (ii) if delivered in
person, the date of delivery. Such notice shall be accompanied by payment of the
Option Price in full, in cash or cash equivalent acceptable to the Committee, or
by the surrender of Shares that have been held by Participant for at least six
months with an aggregate Fair Market Value (determined as of the preceding
business day) which, together with any cash or cash equivalent paid by
Participant, is not less than the product of Option Price and the number of
Shares for which the Option is being exercised.
(d) Transferability. During
Participant’s lifetime, and subject to the provisions of Section 12.3 of
the Plan, this Option may not be transferred, sold, assigned, pledged or
otherwise encumbered, other than by will or by the laws of descent and
distribution, or pursuant to a qualified domestic relations order, and such
Option may only be exercised during the life of Participant only by Participant
or Participant’s legal guardian and representative. Notwithstanding the
foregoing, Participant may assign or transfer this Option with the consent of
the Committee, provided that such Permitted Assignee shall be bound by and
subject to all of the terms and conditions of the Plan and this Agreement
relating to the transferred Option and shall execute an agreement satisfactory
to the Company evidencing such obligations.
3. Exercise in the Event of Death or
Disability. Paragraph 2 of this Agreement to the contrary
notwithstanding, if Participant dies before the expiration of Participant’s
rights under this Option or if Participant’s employment with the Company and its
Subsidiaries and Affiliates terminates before the expiration of Participant’s
rights under this Option on account of disability, this Option shall be
immediately Vested and exercisable, in whole or in part, and remain exercisable
until the
first anniversary of Participant’s death or termination on account of
disability, as applicable (even if such anniversary is after the Expiration
Date). For purposes of this Agreement, “disability” means permanent and total
disability as determined by the Committee, in its sole discretion.
4. Exercise After Retirement.
Paragraph 2 of this Agreement to the contrary notwithstanding, if Participant’s
employment with the Company and its Subsidiaries and Affiliates terminates on
account of retirement before the expiration of Participant’s rights under this
Option, then (i) if this Option previously Vested it shall remain
exercisable, in whole or in part, until the earlier of the third anniversary of
Participant’s retirement and the Expiration Date and (ii) if this Option
was not Vested on the date of retirement it shall become exercisable if the
Option becomes Vested in accordance with Paragraph 2 before the third
anniversary of Participant’s retirement, in which case this Option may be
exercised, in whole or in part, until the earlier of the third anniversary of
Participant’s retirement or the Expiration Date. This paragraph shall apply only
if Participant enters into a non-compete, non-solicitation and confidentiality
agreement in a form approved by the Committee. For purposes of this Agreement,
“retirement” means retirement from employment with the Company, a Subsidiary or
an Affiliate of the Company as determined by the Committee, in its sole
discretion.
5. Termination for Cause.
Paragraph 2 of this Agreement to the contrary notwithstanding, upon
Participant’s termination for cause, all Options outstanding as of the date of
termination, whether Vested or not Vested, shall be immediately canceled. For
purposes of this Agreement, “Cause” means (1) conviction of Participant for
any crime (or upon entering a plea of guilty or nolo contendre to a charge of
any crime) constituting a felony, (2) dishonesty in the course of
fulfilling Participant’s employment duties or (3) willful and deliberate
failure on the part of Participant to perform his employment duties in any
material respect. Notwithstanding the foregoing, if Participant is a party to an
employment agreement with the Company or any Subsidiary or Affiliate of the
Company that contains a definition of “cause,” such definition shall apply to
Participant for purposes of this Agreement.
6.
Exercise After Other
Termination. Paragraph 2 of this Agreement to the contrary
notwithstanding, upon a termination of Participant’s employment with the Company
and its Subsidiaries and Affiliates before the expiration of Participant’s
rights under this Option and for any reason not described in paragraph 3, 4 or
5, then (i) if this Option Vested before Participant’s termination of
employment it shall remain exercisable, in whole or in part, until the earlier
of the ninetieth day after termination or the Expiration Date and (ii) if
this Option did not become Vested before Participant’s termination of employment
it shall be canceled as of the date of Participant’s termination of employment.
The Committee, in its discretion, may require Participant to enter into a
non-compete, non-solicitation and confidentiality agreement in a form acceptable
to the Committee as a condition to Participant’s right to exercise this Option
pursuant to this paragraph.
7. Fractional Shares. Fractional
shares shall not be issuable hereunder, and when any provision hereof may
entitle Participant to a fractional share such fraction shall be
disregarded.
8. Change in Capital Structure.
In the event of any merger, reorganization, consolidation, recapitalization,
dividend or distribution (whether in cash, shares or other property, but without
regard to the payment of any cash dividends by the Company in the ordinary
course), stock split, reverse stock split, spin-off or similar transaction or
other change in corporate structure affecting the Shares or the value thereof,
the terms of this Option shall be adjusted as the Committee determines is
equitably required.
9. Change in
Control. In the event of a Change in Control, the provisions
of Sections 11.2 and 11.3 of the Plan shall apply.
10. Governing Law. This Agreement
shall be governed by the laws of the Commonwealth of Virginia.
11. Conflicts. In the event of any
conflict between the provisions of the Plan as in effect on the date hereof and
the provisions of this Agreement, the provisions of the Plan shall govern. All
references herein to the Plan shall mean the Plan as in effect on the date
hereof.
12. Participant Bound by Plan.
Participant hereby acknowledges that a copy of the Plan has been made available
to Participant and agrees to be bound by all the terms and provisions
thereof.
13. No Right to Continued Service.
This Option does not confer upon Participant any right with respect to
continuance of service to the Company or an Affiliate or membership on the Board
of Directors.
14. Binding Effect. Subject to the
limitations stated above and in the Plan, this Agreement shall be binding upon
and inure to the benefit of the legatees, distributees, and personal
representatives of Participant and the successors of the Company.
15. Additional Provisions. Any
provision of this Agreement, the Plan or the Employment Agreement by and between
the Company and the Participant (the “Employment Agreement”) to the contrary
notwithstanding:
(a) Performance
Termination. If the Participant’s employment is terminated by the
Company before this Option becomes fully vested and exercisable, and if the
Board of Directors determines, in its sole discretion, that such termination is
as a result of the Participant’s performance (including, without limitation,
performance relating to risk management or regulatory compliance), then the
portion of the Option that is not vested and exercisable upon the date of such
termination shall be forfeited.
(b) Severance Calculation. The
Company and the Participant acknowledge and agree that neither the Option
granted hereunder nor any compensation attributable to such Option shall
constitute a performance bonus for purposes of the calculation of severance
benefits under Section 6.2 of the Employment Agreement or any successor
provision thereto.
IN WITNESS WHEREOF, the
Company has caused this Agreement to be signed by a duly authorized officer, and
Participant has affixed his/her signature hereto.
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FBR
CAPITAL MARKETS CORPORATION
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| By: | /s/ Xxxx X. Xxxxxxxx | ||
| Name: Xxxx X. Xxxxxxxx | |||
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Title:
Chairman of the Board of Directors,
FBR
Capital Markets Corporation
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| /s/ Xxxxxxx X. Xxxxxxx |
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| Xxxxxxx X. Xxxxxxx | |||
