Exhibit 10.10
LOCAL FINANCIAL CORPORATION STOCK
OPTION AGREEMENT WITH XXXXXX X. XXXXXXXX
Local Financial Corporation, a Delaware corporation (the
"Company"), desiring to afford an opportunity to the Grantee, namely, Xxxxxx X.
Xxxxxxxx, a resident of the State of Oklahoma, to purchase certain shares of the
Company's common stock, par value $0.01 per share ("Common Stock"), hereby
grants to the Grantee, and the Grantee hereby accepts, options to purchase the
number of shares specified below, during the term ending at midnight, Central
Standard Time, on the expiration dates of these Options, at the option exercise
price specified below, subject to and upon the terms and conditions specified
below. This stock option is being granted to Grantee, Xxxxxx X. Xxxxxxxx, in
fulfillment of the terms and conditions of that certain Employment Agreement
entered into by and between Company and its wholly-owned subsidiary federal
stock savings bank, Local Federal Bank, F.S.B. and Xxxxxx X. Xxxxxxxx dated
September 8, 1997, and is the Stock Option Agreement referenced therein and
attached thereto.
1. Identifying Provisions. As used in this Agreement, the
following terms shall have the following respective meanings:
(a) Grantee: Xxxxxx X. Xxxxxxxx.
(b) Date of Grant: At the effective time of the
closing of a private placement offering of 19,700,000 shares of the
Company's Common Stock under a Private Placement Memorandum (the
"Offering"). The grant of the Option shall be contingent upon the close
of the Offering.
(c) Number of Shares Option: 811,640 shares of the
Company's Common Stock constituting the number of shares equal to four
percent (4%) of the total number of shares of Common Stock outstanding
immediately after the close of the Offering (including shares subject
to the warrants being granted to the Placement Agent pursuant to the
Offering).
(d) Option Exercise Price Per Share: The exercise
price for the acquisition of the Common Stock upon exercise of the
option being granted pursuant to this Stock Option Agreement shall be
equal to the offering price per share of the Common Stock in the
Offering.
(e) Expiration Date: The Options shall expire ten
(10) years from the dates the Options first become exercisable by
Grantee hereunder; provided that the Incentive Options granted to
Grantee hereunder shall expire ten (10) years from Date of Grant.
2. Timing of Exercises. The Options shall be exercisable in
three (3) equal, annual installments, commencing with the end of the first
twelve (12) month period following the Date of Grant and continuing in like,
successive twelve (12) month periods until all of the Options are exercisable.
3. Restrictions on Exercise. The following additional
provisions shall apply to the exercise of Options hereunder:
(a) Termination of Employment. In the event the
Grantee's employment by the Company or by Local Federal Bank, F.S.B. is
terminated without cause in the manner provided in Grantee's Employment
Agreement with the Company referenced above (the "Employment
Agreement") which Grantee and Company have entered into
contemporaneously herewith, then, and in such event, all unexercised
portions of the Options granted to Grantee under this Agreement shall
become immediately exercisable by the Grantee hereunder, including all
portions of the Options which would, but for this provision, not yet be
exercisable under the terms of Section 2 of this Agreement; i.e., any
portion of the total Options for 811,640 shares of the Company's Common
Stock, as described in Section 1(c), above, which have not yet become
exercisable pursuant to Section 2, above, and such exercisable Options
shall expire on their respective expiration dates hereunder; provided
that all exercisable Incentive Options shall expire three (3) months
after such termination of Grantee's employment. If, on the other hand,
the Grantee's employment by the Company is terminated for cause, or if
he voluntarily terminates employment, only those Options exercisable at
the time of such termination of employment may thereafter be exercised,
and the exercisable Options shall expire on their respective expiration
dates; provided, that exercisable Incentive Options shall expire three
(3) months after such termination of the employment of Grantee. "Cause"
shall have the same meaning used in the Grantee's Employment Agreement
referenced above. In all other respects, the Options shall terminate
upon such termination of the employment of Grantee by Company or Local
Federal Bank, F.S.B.
(b) Death of Grantee. If the Grantee shall die during
the term of this Option Agreement, then, and in such event, all
unexercised portions of the Options granted to Grantee under this
Agreement shall become immediately exercisable by the person or persons
entitled to do so under the Grantee's Last Will and Testament or under
applicable intestate laws hereunder, including all portions of the
Options which would, but for this provision, not yet be exercisable
under the terms of this Option Agreement, and such exercisable Options
shall expire on their respective, expiration dates hereunder; provided
that all exercisable Incentive Options shall expire one (1) year after
Grantee's death. In all other respects, the Options shall terminate
upon such termination of Grantee's employment by Company or Local
Federal Bank, F.S.B. due to his death.
(c) Disability of Grantee. If the Grantee's
employment is terminated because of his disability pursuant to the
provisions of his Employment Agreement with the Company and Local
Federal Bank, F.S.B., all unexercised portions of the Options granted
to Grantee under this Agreement shall become immediately exercisable by
the Grantee or his guardian or legal representative or representatives,
hereunder, including all
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portions of the Options which would, but for this provision, not yet be
exercisable under the terms of this Agreement, and such exercisable
options shall expire on their respective, expiration dates hereunder;
provided that all exercisable Incentive Options shall expire one (1)
year after such termination of Grantee's employment by reason of such
disability. In all other respects, the Options shall terminate upon
such termination of Grantee's employment by Company, or Local Federal
Bank, F.S.B. due to his disability.
4. Incentive Options. The Options shall quality as Incentive
Options under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), to the extent that the aggregate fair market value of the shares
underlying the Incentive Option portion that is first exercisable within the
same calendar year does not exceed $100,000.00. The Grantee may not dispose of
the shares underlying Incentive Options within two (2) years of the Date of
Grant or one (1) year of the date of exercise of the Option. The Grantee may not
transfer Incentive Options except by Last Will and Testament or the laws of
descent and distribution. Incentive Options shall be subject to such other
restrictions as are necessary to qualify them as Incentive Options under the
Code.
5. Transferability. Subject to the limitations regarding
Incentive Options, the Grantee may transfer the Options by Last Will and
Testament or the laws of descent and distribution, and by such other means as
may be permitted by the Board or the Committee.
6. Adjustments and Corporate Reorganizations. Subject to the
provisions of the Company's Stock Option Plan under which the Options are
granted, if the outstanding shares of Common Stock are increased or decreased,
or are changed into or exchanged for a different number or kind of shares or
securities, as a result of one or more reorganizations, recapitalizations, stock
splits, reverse stock splits, stock dividends or the like, appropriate
adjustments shall be made in the number and/or kind of shares or securities for
which the unexercised portions of this Option may thereafter be exercised, all
without any change in the aggregate exercise price applicable to the unexercised
Options, but with a corresponding adjustment in the exercise price per share or
other unit. No fractional share of Common Stock shall be issued under the
options or in connection with any such adjustment. Such adjustments shall be
made by or under the authority of the Board, whose determinations as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive on all parties.
Upon the dissolution or liquidation of the Company,
or upon a reorganization, merger or consolidation of the Company as a result of
which the outstanding securities of the class then subject to the Options are
changed into or exchanged for cash or property or securities not of the
Company's issue, or upon a sale of substantially all of the property of the
Company to, or the acquisition of stock representing more than eighty percent
(80%) of the voting power of the stock of the Company then outstanding by,
another corporation or person, the Options shall terminate, unless provision be
made in writing in connection with such transaction for the assumption of the
Options previously granted under the Stock Option Plan under which the Options
were granted, or the substitution for such Options of any Options
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covering the stock of a successor employer corporation, or a parent or a
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices, in which event the Options shall continue in the manner and
under the terms so provided. If the Options shall terminate pursuant to the
foregoing sentence, the Grantee shall have the right, at such time prior to the
consummation of the transaction causing such termination as the Company shall
reasonably designate, to exercise all Options granted to Grantee, including the
Options not yet exercisable by the Grantee under the terms of the Options.
7. Exercise, Payment for and Delivery of Stock. The Options
may be exercised by the Grantee, or other person then entitled to exercise it
for Grantee, by giving four (4) business days' written notice of exercise to the
Company specifying the number of shares to be purchased and the total purchase
price, accompanied by a check payable to the order of the Company in payment of
such price. If the Company is required to withhold for federal or state income
taxes as a result of such exercise, the notice of exercise shall be accompanied
by a check payable to the order of the Company in payment of the amount of such
withholding taxes.
8. Alternate Payment with Stock. Notwithstanding the foregoing
provisions requiring payment by check, payment of such purchase price or any
portion thereof, or payment of the withholding amount or any portion thereof,
may be made by tendering shares of the Company's Common Stock or surrendering
exercisable Options, if the shares are then publicly traded (as defined below).
Shares tendered or Options surrendered shall be credited towards such purchase
price or withholding amount on the valuation basis set forth below. In the case
of shares tendered, the stock certificates evidencing the shares so to be used
shall accompany the notice of exercise and shall be duly endorsed or accompanied
by duly executed stock powers to transfer the same to the Company. Payment in
Common Stock or Options instead of cash shall not be effective and shall be
rejected by the Company if (i) the Company is then prohibited from purchasing or
acquiring the shares, or (ii) the right or power of the person exercising the
Options to deliver such shares or Options in payment of the purchase price or
withholding amount is subject to the prior interest of any other person
(excepting the Company), as indicated by legends upon the certificate(s) or as
known to the Company. For purposes of this Paragraph: (a) "Publicly Traded
Shares" are those that are listed or admitted to unlisted trading privileges on
a national securities exchange or as to which bid and offer quotations are
reported in the automated quotations system ("NASDAQ") operated by the National
Association of Securities Dealers, Inc. ("NASD"), and (b) for credit toward the
purchase price or withholding amount, shares tendered or Options surrendered
shall be valued as of the day immediately preceding the delivery to the Company
of the certificates evidencing such shares, in the case of tendered shares, or
the Option Exercise Notice, in the case of surrendered Options. If such day is
not a trading day in the United States Securities Markets, the shares shall be
valued on the nearest preceding trading day. The valuation shall be made on the
basis of the closing price of the Common Stock as reported with respect to the
market (or the composite of the markets, if more than one) in which such shares
are then traded, or if no such closing prices are reported, the lowest
independent offer quotation reported therefor in Level 2 of NASDAQ, or if no
such quotations are reported, then on the basis of the most nearly comparable
valuation method acceptable to the Company. If the Company rejects the payment
in stock or Options, the tendered Notice of Exercise shall not be effective
under this Option Agreement unless promptly after being notified of such
rejection, the person exercising the Option pays the purchase price or the
withholding amount, as the case may be, in acceptable form as required above in
this Section.
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9. Rights in Shares Before Issuance and Delivery. No person
shall be entitled to the privileges of stock ownership in respect of any shares
issuable upon exercise of the Options, unless and until such shares have been
issued to such person as fully paid shares by the Company.
10. Requirements of Law and of Stock Exchanges. By accepting
the Options, the Grantee represents and agrees for himself and his transferees
that, unless a registration statement under the Securities Act of 1933 is in
effect as to shares purchased upon any exercise of any Options, (i) any and all
shares so purchased shall be acquired for his personal account and not with a
view to or for sale in connection with any distribution, and (ii) each notice of
the exercise of Options shall be accompanied by a representation and warranty in
writing, signed by the person entitled to exercise the same, that the shares are
being so acquired in good faith for his personal account and not with a view to
or for sale in connection with any distribution.
No certificate or certificates for shares of stock
purchased upon exercise of Options shall be issued and delivered prior to the
admission of such shares to listing on notice of issuance on any stock exchange
on which shares of that class are then listed, nor unless and until, in the
opinion of counsel for the Company, such securities may be issued and delivered
without causing the Company to be in violation of or incur any liability under
any federal, state or other securities law, any requirement of any securities
exchange listing agreement to which the Company may be a party, or any other
requirement of law or of any regulatory body having jurisdiction over the
Company.
11. Stock Option Plan. This Option Agreement is subject to,
and the Company and the Grantee agree to be bound by, all of the terms and
conditions of the Company's Stock Option Plan being adopted by Company's Board
contemporaneously herewith, under which the Options being granted hereunder were
granted, as the same shall have been amended from time to time in accordance
with the terms thereof, provided that no such amendment shall deprive the
Grantee, without his consent, of the Options or any of his rights under the
Plan. Pursuant to the Plan, the Board or the Committee (as defined in the Plan)
is vested with final authority to interpret and construe the Plan and the
Options, and is authorized to adopt rules and regulations for carrying out the
Plan. A copy of the Plan in its present form is available for inspection during
regular business hours by the Grantee or other persons entitled to exercise the
Options at the Company's principal offices.
12. Notices. Any notice to be given to the Company shall be
addressed to the Company in care of its Secretary at its principal office, and
any notice to be given to the Grantee shall be addressed to him at the address
given beneath his signature or at such other address as the Grantee may
designate in writing to the Company. Any such notice shall be deemed duly given
three (3) days after deposited with first class postage prepaid, in a post
office or branch post office regularly maintained by the United States Postal
Services, certified mail, return receipt requested.
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13. Laws Applicable to Construction. This Agreement has been
executed and delivered by the Company and by Grantee in the State of Oklahoma,
and this Agreement shall be construed and enforced in accordance with the laws
and decisions of the State of Oklahoma.
IN WITNESS WHEREOF, the Company has granted the Options on the
Date of Grant specified and defined above.
COMPANY: LOCAL FINANCIAL CORPORATION,
a Delaware corporation
By: /s/ Xxx X. Xxxxxx
-----------------------------------
President
GRANTEE: Accepted and Agreed to:
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
XXXXXX X. XXXXXXXX, Grantee
00000 Xxxxx 000
Xxxxx, Xxxxxxxx 00000
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