STOCK OPTION AGREEMENT
XXXXXXX X. XXXXXX (INVESTMENT INDUCEMENT)
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"), conditioned on the purchase by Employee of an aggregate of 30,000
shares of Common Stock either from the Company or one or more of its
shareholders (the "Condition") and 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") that all of the Option Shares on the later of
the Date of Grant or the date the Condition is satisfied.
Employee: Xxxxxxx X. Xxxxxx
Date of Grant: July 26, 1994
Number of share purchasable: 30,000
Exercise Price per share: 17.00
Expiration Date: July 26, 2004
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) TERMINATION WITHIN ONE YEAR AFTER CHANGE OF CONTROL. 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") for any reason, or for no reason, within one year after
a Change of Control (as hereinafter defined), then the Option shall terminate
upon the earlier of the Expiration Date or the first anniversary of the date of
such Termination of Employment. "Change of Control" shall mean the first to
occur of the following events:
(X) any date upon which the directors of the Company who
were nominated by the Board of Directors (the "Board") for election as
directors cease to constitute a majority of the directors of the
Company;
(Y) the date of the first public announcement that any
person or entity, together with all Affiliates and Associates (as such
capitalized terms are defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
such person or entity, shall have become the Beneficial Owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of voting
securities of the Company representing 50% or more of the voting power
of the Company (a "50% Stockholder"), provided, however, that the
terms "person" and "entity," as used in this clause (Y), shall not
include (1) the Company or any of its subsidiaries, (2) any employee
benefit plan of the Company or any of its subsidiaries including the
Company's Employee Stock Ownership Plan, (3) any entity holding voting
securities of the Company for or pursuant to the terms of any such
plan or (4) any person or entity if the transaction that resulted in
such person or entity becoming a 50% Stockholder was approved in
advance by the Board; or
(Z) a reorganization, merger or consolidation of the
Company (other than an reorganization, merger or consolidation the
sole purpose of which is to change the Company's domicile solely
within the United States) the consummation of which results in the
outstanding securities of any class then subject to the Option being
exchanged for or converted into cash, property and/or a different kind
of securities.
(ii) RETIREMENT. If Employee's Employment is Terminated by reason
of Employee's retirement in accordance with the Company's then-current
retirement policy ("Retirement"), and a Change of Control shall not have
occurred within one year prior thereto, then Option shall terminate upon the
earlier of the Expiration Date or the first anniversary of the date of such
Retirement.
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(iii) DEATH OR PERMANENT DISABILITY. If Employee's Employment is
Terminated by reason of the death or Permanent Disability (as hereinafter
defined) of Employee, and a Change of Control shall not have occurred within one
year prior thereto, 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.
(iv) OTHER TERMINATION. If Employee's Employment is Terminated for
no reason, or for any reason other than Retirement, death or Permanent
Disability, and a Change of Control shall not have occurred within one year
prior thereto, then the Option shall terminate 30 days after the date of such
Termination of Employment.
(b) DEATH FOLLOWING TERMINATION OF EMPLOYMENT. Notwithstanding anything
to the contrary in this Agreement, if Employee shall die at any time after the
Termination of his or her Employment and prior to the Expiration Date, then the
Option shall terminate on the earlier of the Expiration Date or the first
anniversary of the date of such death.
(c) 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; or
(ii) a sale of substantially all of the property and assets of the
Company, unless the terms of such sale shall provide otherwise.
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 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(c) 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
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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 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; provided, however, that
payment of such aggregate Exercise Price may instead be made, 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, 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 Board of Directors in their
good faith and reasonable judgment) thereof on the date of such exercise),
provided that the Company is not then prohibited from purchasing or acquiring
such shares of Common Stock.
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 payable to the Company.
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.
7. STOCK EXCHANGE REQUIREMENTS; APPLICABLE LAWS. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or
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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 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. INTERPRETATION. The Option is not granted pursuant to the Company's
1994 Stock Incentive Plan. The interpretation and construction by the Committee
of this Agreement and the Option such shall be final and binding upon Employee.
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 the Plan. 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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IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement as of the Date of Grant.
XXXXX FINANCIAL
By: /s/ XXXXX X. XXXX
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Title: President/CEO
EMPLOYEE
/s/ XXXXXXX X. XXXXXX
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Signature
0000 Xxxxxxxxxx Xxxxx
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Xxxxxx Xxxxxxx
Xxxxxxxx XX 00000
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City, State and Zip Code
000 00 0000
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Social Security Number
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