EXHIBIT 10.34
FORM OF
STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
THIS AGREEMENT made as of the _____ day of _________ (the "Grant Date")
by and between Everest Reinsurance Holdings, Inc. (the "Company") and
("Optionee").
WHEREAS, the Optionee is a non-employee member of the Board of
Directors of the Company (the "Board") who has been granted certain options, as
set forth herein;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
hereinafter set forth and for other good and valuable consideration, the parties
hereto agree as follows:
1. DEFINITION OF TERMS
a. Change in control of the Company shall be deemed to have occurred if:
(i) A tender offer or exchange offer is made whereby the
effect of such offer is to take over and control the
affairs of the Company, and such offer is consummated for
the ownership of securities of the Company representing
twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding voting securities.
(ii) The Company is merged or consolidated with another
corporation and, as a result of such merger or
consolidation, less than seventy-five percent (75%) of the
outstanding voting securities of the surviving or
resulting corporation shall then be owned in the aggregate
by the former stockholders of the Company, other than
affiliates within the meaning of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or any party
to such merger or consolidation.
(iii) The Company transfers substantially all of its assets to
another corporation or entity that is not a wholly owned
subsidiary of the Company.
(iv) Any person (as such term is used in Sections 3 (a) (9) and
13 (d) (3) of the Exchange Act) is or becomes the
beneficial owner, directly or indirectly, of securities of
the Company representing twenty-five percent (25%) or more
of the combined voting power of the Company's then
outstanding securities, and the effect of such ownership
is to take over and control the affairs of the Company.
(v) As the result of a tender offer, merger, consolidation,
sale of assets, or contested election, or any combination
of such transactions, the persons who were members of the
Board immediately before the transaction, cease to
constitute at least a majority thereof.
b. Disability shall mean an inability as determined by the Board to
perform duties and services as a director of the Company by
reason of a medically determinable physical or mental impairment,
supported by medical evidence, which can be expected to last for
a continuous period of not less than six (6) months.
c. Fair Market Value shall mean, unless otherwise provided in this
Agreement, the average of the highest and lowest sale price of
the Company's Common Stock as reported on the Composite
Transaction Tape of the New York Stock Exchange (or on such other
exchange, if any, on which the Stock is traded) on the relevant
date, or if no sale of the Company's Common Stock is reported for
such date, the next preceding day for which there is a reported
sale.
2. GRANT OF OPTION. The Company hereby grants to the Optionee the
option to purchase ___________ shares of Common Stock of the Company
(the "Option") at __________ per share (the "Option Price"). The
term of such grant shall be ten (10) years commencing on the Grant
Date (the "Term"). These options are subject to the conditions
hereinafter provided. The Option is a nonstatutory stock option
not intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code of 1986, as amended.
3. EXERCISE OF OPTION. The Option may be exercised only in accordance
with this Agreement, and not otherwise.
a. TIME OF EXERCISE OF OPTION. During its Term and prior to its
earlier termination in accordance with Section 4 of this
Agreement, the Option shall be exercisable, in whole or in
part, provided that the Optionee remains a member of the
Board, in accordance with the following schedule:
Percent of Award Exercisable as of
---------------- -----------------
33.4% Date of First Anniversary
Of the Grant Date
33.3% Date of Second Anniversary
Of the Grant Date
33.3% Date of Third Anniversary
Of the Grant Date
Notwithstanding the foregoing, the Option shall become immediately and
fully vested and exercisable upon (i) the death or disability (as defined
herein) of the Optionee or (ii) upon a change in control of the Company (as
defined herein); provided, however, in no event, may the Option be exercised
after the expiration of the Term.
Except as provided in Section 4 hereof, the Option shall not be
exercisable in whole or in part unless the Optionee, as of the time the Optionee
exercises the Option, is, and has been at all times since the date of the
Option, a member of the Board. The Option is exercisable during the lifetime
of the Optionee only by the Optionee or the Optionee's guardian or legal
representative. In the event of the Optionee's death, the Option is exercisable
by the executors, administrators, heirs or distributees of the estate of the
deceased Optionee.
The Option shall not be exercisable with respect to a fractional share
or with respect to the lesser of fifty (50) shares or the full number of shares
then subject to the Option. If a fraction share shall become subject to the
Option by reason of a stock dividend or otherwise, the Optionee shall not be
entitled to exercise the Option with respect to such fractional shares.
b. METHOD OF EXERCISE. To the extent then exercisable, the Option
may only be exercised by delivery of written notice of the
exercise to the Company specifying the number of shares to be
purchased and by making payment in full for the shares of
Common Stock being acquired thereunder at the time of
exercise; such payment shall be made either:
(i) in United States dollars by check or bank draft, or
(ii) by tendering to the Company Common Stock shares already owned
for at least six (6) months by the Optionee, which may include
shares received as the result of a prior exercise of an option,
and having a fair market value (as defined herein) equal to the
cash exercise price applicable to the Option, or
(iii) by a combination of United States dollars and Common Stock
shares as aforesaid.
If at any time the Board shall determine, in its discretion, that the
listing, registration or qualification of shares upon any national securities
exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the sale or purchase of shares hereunder, the Option may not be
exercised in whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Board in
the exercise of its reasonable judgment.
The Optionee shall, upon the exercise of the Option, execute and deliver to the
Company, a written statement, in form satisfactory to the Company, in which the
Optionee represents and warrants that the Optionee is purchasing or acquiring
the shares acquired pursuant to the Option for the Optionee's own account, for
investment only and not with a view to the resale or distribution thereof, and
represents and agrees that any subsequent offer for sale or distribution of any
of such shares shall be made only pursuant to either (i) a registration
statement on an appropriate form under the Securities Act of 1933, as amended
(the "Act"), which registration statement has become effective and is current
with regard to the shares being offered or sold, or (ii) a specific exemption
from the registration requirements of the Act, but in claiming such exemption
the Optionee shall, prior to any offer for sale or sale of such shares, obtain a
prior favorable written opinion, in form and substance satisfactory to the
Company, from counsel for or approved by the Company, as to the applicability of
such exemption thereto.
The Company may endorse such legend or legends upon the certificates for
shares upon exercise of the Option and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as, in its
discretion, it determines to be necessary or appropriate to prevent a violation
of, or to perfect an exemption from, the registration requirements of the Act.
In the event the Option is exercised by the executors, administrators,
heirs or distributees of the estate of the deceased Optionee, the Company shall
be under no obligation to issue Common Stock unless and until the Company is
satisfied that the person or persons exercising the Option are the duly
appointed legal representative of the deceased Optionee's estate or the proper
legatees or distributees thereof.
4. TERMINATION OF OPTION. Except as herein otherwise stated, the Option,
to the extent not theretofore exercised, shall terminate upon the
first to occur of the following:
a. the expiration of the term of the Option;
b. the expiration of three years after the date on which the Optionee's
service on the Board is terminated, or
c. the expiration of three years after the date on which the Optionee's
service on the Board is terminated, if termination is because of the
Optionee's death or disability (as defined herein).
5. RECLASSIFICATION, CONSOLIDATION OR MERGER. In the event that
during the Term of the Option there shall be any change in the
Company's outstanding Common Stock by reason of stock dividend,
reverse split, subdivision, recapitalization, merger (whether or
not the Company is the surviving corporation), consolidation,
split-up, combination or exchange of shares, reorganization, or
liquidation, extraordinary dividend payable in cash or property,
and the like, the number, class and the price of shares of Common
Stock subject to the Option shall be appropriately adjusted by the
Board, whose determination shall be conclusive.
6. NONTRANSFERABILITY. The Optionee's rights and interest under this
Agreement may not be assigned or transferred in whole or in part
either directly or by operation of law or otherwise (except in the
event of the Optionee's death, by will or the laws of descent and
distribution), including, but not by way of limitation, execution,
levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, and no such right or interest of any Optionee shall be
subject to any obligation or liability of such Optionee.
7. RIGHTS AS A STOCKHOLDER. The Optionee shall have no voting rights
or other rights of stockholders with respect to shares which are
subject to the Option, nor shall cash dividends, if any, accrue or
be payable with respect to any such shares, until, after proper
exercise of the Option, such shares shall have been recorded on
the Company's official stockholder records as having been issued
or transferred.
8. NO RIGHT TO BE RETAINED AS A DIRECTOR. Nothing contained herein
shall be construed as giving the Optionee any right to be retained in
the service of the Company as a director or otherwise.
9. EXECUTION. The Optionee shall have no rights under the Option unless
and until the Optionee shall have executed and delivered to the
Company this Agreement.
10. LIMIT OF LIABILITY. Any liability of the Company to the Optionee
or the Optionee's executors, administrators, heirs, or distributees,
as the case may be, with respect to an Option shall be based
solely on the contractual obligations created by this Option
Agreement. Neither the Company nor any member of the Board,
nor any other person participating in any determination
of any question under this Agreement, or in the
interpretation, administration or application of this Agreement,
shall have any liability to any party for any action taken or
not taken in connection with this Agreement.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
12. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
13. MODIFICATIONS. No change or modification of this Agreement shall be
valid unless it is in writing and signed by the parties hereto.
14. ENTIRE AGREEMENT. This Agreement sets forth all of the
promises, agreements, conditions, understandings, warranties and
representations, oral or written, express or implied, between the
parties hereto with respect to the Option.
15. NOTICES. Any and all notices required herein shall be addressed:
(i) if to the Company, to the principal executive office of the
Company; and (ii) if to the Optionee, to the Optionee's address as
reflected in the records of the Company.
16. INVALID OR UNENFORCEABLE PROVISIONS. The invalidity or
unenforceability of any particular provision of this Agreement shall
not affect the other provisions hereof, and this Agreement shall
be construed in all respects as if the invalid or unenforceable
provisions were omitted.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed as of the day and year first above written.
EVEREST REINSURANCE HOLDINGS, INC.
BY: ____________________________________
Xxxxxx X. Xxxxxxx
____________________________________
(Participant)
