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 there-under,
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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Date After Which Option Maximum Cumulative Number
May Be Exercised of Shares as to Which Option
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.
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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 per-sons
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.
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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 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:
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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 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
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
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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. S#, Jr.
--------------------------------------
XXXXXXX X. XXXXXXX, XX., Senior Vice
President, Secretary & General Counsel
/s/ Xxxxxxx Xxxxxxxxx
--------------------------------------
XXXXXXX XXXXXXXXX
Optionee
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