FIRST CENTRAL FINANCIAL CORPORATION
STOCK OPTION
OPTION dated this 31st day of October 1996, granted by First Central
Financial Corporation, a New York corporation (hereinafter the "Company"), to
Xxxxxx X. Xxxxxxxxxxx (the "Holder").
WHEREAS, in order to induce the Holder to render services on behalf of
the Company as President and Chief Operating Officer or in such other offices in
which the Holder shall serve as a result of agreement between the Company and
the Holder, the Company desires to afford the Holder the opportunity to purchase
shares of its Common Stock, par value $.10 per share (the "Common Stock"), as
hereinafter provided; and
WHEREAS, on October 31, 1996, the Board of Directors authorized the
grant of the option conferred hereby to the Holder.
NOW, THEREFORE, in consideration of the foregoing premises, the Company
hereby agrees as follows:
1. Grant of Option. (a) Subject to the authorization by the Company's
shareholders as provided for in paragraph 1(b) below, the Company hereby grants
to the Holder an option (the "Option") to purchase up to an aggregate of 50,000
shares of Common Stock (such number of shares being subject to adjustment as
provided in paragraph 6 hereof) on the terms and subject to the conditions
hereinafter set forth. The Holder shall not have any of the rights of a
shareholder of the Company with respect to the shares of Common Stock covered by
the Option except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option.
(b) In accordance with Section 505(d) of the Business
Corporation Law of the State of New York, the grant of the Option is subject to
approval at a meeting of the Company's shareholders by the affirmative vote of
the holders of a majority of all outstanding shares entitled to vote thereon and
the Option shall be subject to such authorization. If the shareholders shall
fail to approve the Option, the Option shall be null and void. If the
shareholders shall approve the Option, the Option shall be deemed granted and
effective on October 31, 1996, (the "Effective Date"). The date of such
shareholder approval shall hereinafter be referred to as the "Approval Date."
2. Purchase Price. The purchase price per share of the shares of Common
Stock to be issued upon exercise of the Option shall be the arithmetic mean of
the high and low trading prices of a share of the Common Stock on the American
Stock Exchange on (i) the Effective Date or (ii) the Approval Date, whichever is
lower.
3. Expiration Date; Vesting of Option. (a) Subject to the provisions of
paragraph 5 hereof, the Option shall expire at 5:00 P.M. New York time on
October 30, 2006 (the "Expiration Date"), and any portion of the Option
remaining unexercised after such time shall be cancelled without further notice
or action.
(b) Subject to the provisions of paragraph 5 hereof, the
Option may be exercised according to the following vesting schedule: 25% of the
shares covered by the Option may be exercised after the first anniversary of the
Effective Date and an additional 25% of the shares covered by the Option may be
exercised after each successive anniversary of the Effective Date.
4. Non-transferability. The Option, and the rights and privileges
conferred hereby, are not transferable by the Holder other than by will or under
the laws of descent and distribution. During the Holder's lifetime, no one other
than the Holder shall have the right or entitlement to exercise the Option. The
Option may not be assigned (by contract or by operation
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of law), transferred (except as provided above), pledged, hypothecated or
otherwise encumbered. Any attempted assignment, transfer, pledge, hypothecation
or other disposition of the Option contrary to the provisions hereof, and the
levy of any execution, attachment or similar process upon the Option, shall
render the Option null and void.
5. Termination of Employment. (a) In the event that the employment of
the Holder is terminated by the Company or a subsidiary of the Company for
"Cause" (as defined in the Employment Agreement dated as of October 31, 1996
between the Company and Holder) the Option shall expire upon such termination of
employment. So long as the Holder shall continue to be an employee of the
Company or any of its subsidiaries, the Option shall not be affected by any
change of duties or position. Nothing contained in the Option shall confer upon
the Holder any right to continue in the employ of the Company or its
subsidiaries or interfere with the right of the Company or any such subsidiary
to terminate the Holder's employment at any time.
(b) If the Holder shall die while employed by the Company or
its subsidiaries, the Option may be exercised at any time prior to the first
anniversary of the Holder's death or the expiration date of the Option,
whichever shall first occur, by the person or persons to whom the Holder's
rights under the Option shall pass by will or the laws of descent and
distribution, but only to the extent that the Holder was entitled to exercise
the Option at the date of Holder's death.
(c) If termination of employment occurs by reason other than
for Cause, the Holder may exercise the Option at any time prior to (i) the
expiration of twelve months from the date of such termination of employment, or
(ii) the expiration date of the Option, whichever shall first occur but only to
the extent that the Holder was entitled to exercise the Option on the date of
such termination of employment.
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6. Adjustments upon Changes in Capitalization. (a) The aggregate number
and class of shares of Common Stock covered by the Option and the price per
share thereof (but not the total price) shall be proportionately adjusted for
any increase or decrease in the number of outstanding shares of Common Stock
issued by the Company as a result of a stock split, split-up or consolidation of
shares or any like capital adjustment or reclassification of shares, or the
payment of any stock dividend, or any other similar increase or decrease in the
number of outstanding shares of Common Stock, without receipt of consideration
by the Company.
(b) Subject to any required action by its shareholders, if the
Company shall be the surviving corporation in any merger or consolidation,
except as otherwise provided below, the aggregate number of shares of Common
Stock subject to the Option shall be adjusted so as to pertain and apply to the
securities to which the Holder would have been entitled in such merger or
consolidation had he exercised the Option prior to such merger or consolidation.
(c) Upon the dissolution or liquidation of the Company or upon
a merger or consolidation of the Company in a transaction in which all or
substantially all of the shareholders of the Company receive cash, securities of
another company or other consideration in exchange for their shares of Common
Stock, whether or not the Company is the surviving corporation, or upon a sale
of all or substantially all of the assets of the Company, the Option shall
terminate, but the Holder may, immediately prior to any such transaction
exercise the Option, in whole or in part, as to the full number of shares which
he or she would otherwise have been entitled to purchase during the remaining
term of the Option irrespective of any vesting provisions herein.
Notwithstanding the foregoing, the Company may elect not to permit the Holder to
exercise the Option immediately prior to such event in accordance with the
foregoing, but in lieu thereof the Company may, in its discretion and
immediately prior to any such dissolution, liquidation, merger, consolidation or
sale, substitute or cause to be substituted a new option for the Option, such
new option to be applicable to the stock of the surviving or acquiring
corporation or any of its affiliates and to be on terms no less favorable to the
Holder than those contained in the Option.
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(d) Adjustments under this Section 6 shall be made by the
Stock Option Committee ("Committee") of the Board of Directors whose
determination as to adjustments shall be final, binding and conclusive.
7. Securities Regulations. (a) If at any time the Committee shall in
its discretion determine that the listing, registration or qualification of the
shares of Common Stock subject to the Option upon any securities exchange or
under any federal or state law, or the approval or consent of any governmental
regulatory body, is necessary or desirable in connection with the issuance or
purchase of such shares hereunder, upon the determination of the Committee, the
Option shall not be exercisable in whole or in part unless such listing,
registration, qualification, approval or consent shall have been effected or, in
lieu thereof, the Committee may impose such conditions upon exercise of the
Option, as it determines to be appropriate.
(b) Unless at the time of the exercise of the Option a
registration statement under the Securities Act of 1933, as amended (the "Act"),
is in effect as to such shares, any shares of common stock purchased by the
Holder upon exercise of the Option shall be acquired for investment and not for
sale or distribution, and if the Company so requests, upon any exercise of the
Option, in whole or in part, the Holder will execute and deliver to the Company
a certificate to such effect. The Company shall not be obligated to issue any
shares pursuant to the Option if, in the opinion of counsel to the Company, the
shares to be so issued are required to be registered or otherwise qualified
under the Act or under any other applicable statute, regulation or ordinance
affecting the sale of securities, unless and until such shares have been so
registered or otherwise qualified.
(c) The Holder understands and acknowledges that, under
existing law, unless at the time of the exercise of the Option a registration
statement under the Act is in effect as to shares of Common Stock covered by the
Option: (i) any shares purchased by the Holder upon exercise of the Option may
be required to be held indefinitely unless such shares are subsequently
registered under the Act or an exemption from such registration is available;
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(ii) any sales of such shares made in reliance upon Rule 144 promulgated under
the Act may be made only in accordance with the terms and conditions of that
Rule (which, under certain circumstances, restricts the number of shares which
may be sold); (iii) in the case of securities to which Rule 144 is not
applicable, compliance with Regulation A promulgated under the Act or some other
disclosure exemption will be required; (iv) certificates for shares to be issued
to the Holder hereunder shall bear a legend to the effect that the shares have
not been registered under the Act and that the shares may not be sold,
hypothecated or otherwise transferred in the absence of an effective
registration statement under the Act relating thereto or an opinion of counsel
satisfactory to the Company that such registration is not required; and (v) the
Company will place an appropriate "stop transfer" order with its transfer agent
with respect to such shares. In addition, the Holder understands and
acknowledges that the Company has no obligation to furnish to the Holder
information necessary to enable the Holder to make sales under Rule 144.
(d) As soon as reasonably practicable after the Approval Date,
the Company will use its best efforts to register under the Act the shares
subject to the Option pursuant to a registration statement on Form S-8. In the
event a registration statement under the Act is not in effect as to the shares
of Common Stock covered by the Option and an exemption from registration under
the Act is not available with respect to the sale of shares of Common Stock
acquired by the Holder from the exercise of the Option (the "Purchased Shares"),
within 15 days after the Company's receipt of the Holder's written request, the
Company shall purchase the Purchased Shares at a price equal to the fair market
value of the Common Stock. For the purpose of this paragraph 7(d), fair market
value shall be deemed to be the arithmetic mean of the high and low trading
prices for such shares on the American Stock Exchange or any other national
securities exchange on which the Company's Common Stock may be listed, on the
date the Holder's request is received by the Company, or if such date shall not
be a day during which shares of the Common Stock were traded, then on the next
date immediately preceding such date during which such trades were effected.
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8. Loans and Financial Accommodations to Grantees. (a) In order to
assist the Holder with the acquisition of shares of Common Stock pursuant to the
exercise of the Option, including the payment of any taxes resulting from such
exercise, the Committee may, in its discretion authorize (i) the extension of a
loan to the Holder by the Company, (ii) the payment by the Holder of the
purchase price of such shares in installments, (iii) the guarantee by the
Company of a loan obtained by the Holder from a third party or (iv) make such
other reasonable arrangements to facilitate the exercise of the Option in
accordance with applicable law.
(b) The Committee shall determine the terms of any loan or
guarantee made pursuant hereto, including the interest rate and other terms of
repayment thereof, and whether such loan or guarantee shall be secured or
unsecured. Each loan shall be evidenced by a promissory note having a maximum
term to maturity of not more than sixty (60) months. The maximum amount of any
loan or guarantee shall be the option price for shares purchased upon exercise
of the Option plus (i) related interest payments and (ii) the amount of tax
liability incurred by the Holder as a result of the exercise of the Option. No
amount loaned to the Holder and no amount the repayment of which is guaranteed
by the Company shall be used for any purpose other than payment of (i) the
purchase price of shares acquired upon the exercise of the Option, (ii) taxes
attributable to such exercise and (iii) interest.
9. Method of Exercising Option. (a) The Option may be exercised by
executing and delivering an Option Exercise Notice in the form attached hereto
as Exhibit A. Such notice shall be accompanied by payment of the full purchase
price as follows: (i) in cash by certified or bank check payable to the order of
the Company or (ii) at the discretion of the Committee by delivering Common
Stock already owned by the Holder, each such share of Common Stock to be valued
at its fair market value (as defined in paragraph 9(b)), (iii) by delivering a
combination of a certified or bank check and Common Stock (each such share of
Common Stock to be valued in accordance with paragraph 9(b)) or (iv) by any
other proper method specifically approved by the Committee.
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(b) For the purpose of any computation under paragraph 9(a) of
the fair market value per share of Common Stock, such value shall be deemed to
be the arithmetic mean of the high and low trading prices for such shares on the
American Stock Exchange or any other national securities exchange on which the
Company's Common Stock may be listed, on the date of exercise of the Option, or
if such date shall not be a day during which shares of the Common Stock were
traded, then on the next date immediately preceding such date during which such
trades were effected.
(c) If the Option should be exercised in part only, the
Company shall, upon surrender of the Option for cancellation, execute and
deliver a new option evidencing the rights of the Holder to purchase the balance
of the shares of Common Stock purchasable hereunder. All shares purchased
hereunder shall be deemed to be fully paid and non-assessable.
10. Conditions to Issuance of Shares. The Company shall not be required
to issue any certificate for shares of Common Stock purchased upon the exercise
of the Option unless (i) such shares are at the time of such exercise listed on
the American Stock Exchange or any other national securities exchange on which
the Company's Common Stock may then be listed and (ii) the prior approval of
such issuance has been obtained from any state regulatory body having
jurisdiction (but nothing herein contained shall be deemed to require the
Company to register or qualify as a foreign corporation in any state or, except
as to any matter or transaction relating to the issuance or delivery of such
shares, to consent to service of process in any state).
11. General. The Option shall be construed in accordance with the laws
of the State of New York and shall be binding upon the Company and inure to the
benefit of the Holder and any successors of the business of the Company, but
neither the Option nor any rights or privileges conferred hereunder shall be
assignable by the Holder.
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IN WITNESS WHEREOF, the Company has caused the Option to be duly
executed by its duly authorized officer, on the day and year first above
written.
FIRST CENTRAL FINANCIAL CORPORATION
By: /S/ XXXXXX X. XXXXX
-------------------------------------
Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
Agreed and Accepted:
/S/ XXXXXX X. XXXXXXXXXXX
------------------------
Xxxxxx X. Xxxxxxxxxxx
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EXHIBIT A
FORM OF OPTION EXERCISE NOTICE
___________ ___, 199__
First Central Financial Corporation
000 Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: President
Ladies and Gentlemen:
The undersigned hereby irrevocably elects to exercise the within
Option to the extent of purchasing _____ shares of Common Stock at $____ per
share for an aggregate purchase price of $__________.
Enclosed is payment of the purchase price as follows (check
applicable box):
[ ] 1. Payment in Cash.
Certified or bank check in the aggregate amount of the exercise
price, payable to First Central Financial Corporation.
[ ] 2. Payment with Common Stock or Common Stock and Cash.
(a) Delivery of Certificate No.(s)__________ representing
_________ shares of Common Stock, duly endorsed to
First Central Financial Corporation. The shares of
Common Stock evidenced by such certificate have been
valued at $_____ per share, in accordance with Section
9(b) of the Option. I understand that if the enclosed
certificate represents more full shares of Common
Stock than are necessary to cover the exercise price,
the Company will deliver to the undersigned a
certificate covering the excess number of full shares.
(b) Check for the remaining exercise price of $_______,
payable to First Central Financial Corporation
(required if a fractional share is involved or if
payment is being made only partly with Common Stock).
A-1
Please have the certificate representing said shares forwarded
to me as indicated below.
Instructions: PLEASE PRINT YOUR NAME BELOW (FIRST, MIDDLE
INITIAL, LAST). If joint tenancy is requested, please mark the box below and
list both names in full.
Mr. Soc. Sec. #
Mrs. Xxx. Sec. #
Miss Soc. Sec. #
Ms. Soc. Sec. #
Joint Tenancy [ ]
Street Address___________________________________
City________________ State_________ Zip Code______
Very truly yours,
______________________
(Signature)
______________________
(Signature)
A-2
