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CONNING CORPORATION
NON-QUALIFIED STOCK OPTION AWARD
Name of Option Recipient: [Name]
On December --, 1997, the Company awarded you a stock option. You were
granted an option to buy 1,000 shares of the Company's Common Stock, par
value $.01 per share, at the price of $----- per share.
You may purchase shares under the option as follows:
CUMULATIVE
NUMBER OF MAY BE PURCHASED
SHARES NOT BEFORE NOT AFTER
------ ---------- ---------
66.67 December --, 1998 December --, 2007
200 December --, 1999 December --, 2007
400 December --, 2000 December --, 2007
800 December --, 2001 December --, 2007
1,000 December --, 2002 December --, 2007
This option is not, and will not be treated as, an Incentive Stock
Option under Section 422 of the Code.
The award of this Option is subject to the closing of the Company's
initial public offering ("IPO") on or before December --, 1997. If the
IPO does not close by such date, this Option shall be null and void and
the Participant shall have no rights hereunder effective December --, 1997.
IMPORTANT: By signing below, you agree to be bound by, and
acknowledge receipt of, the attached Terms and Conditions of this stock
option.
Read and agreed CONNING CORPORATION
to this ----- day of
December 1997.
- ------------------------ By:---------------------------
Name:
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TERMS AND CONDITIONS
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NON-QUALIFIED STOCK OPTION AWARD GRANTED UNDER
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CONNING CORPORATION
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1997 FLEXIBLE STOCK PLAN
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1. Definitions
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(a) Option The option granted by the Option Award
(b) Option Award The Non-Qualified Stock Option Award to which
the Terms and Conditions are attached together
with, except where the context requires
otherwise, these Terms and Conditions.
(c) Plan The Conning Corporation 1997 Flexible Stock
Plan, as amended from time to time.
All capitalized terms not otherwise defined herein shall have the meanings
given to such terms by the Plan.
2. Evidence of Option Grant and incentive Stock Option
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The Option Award evidences a grant to the Participant of an
Option to purchase that number of shares ("Optioned Shares") of Common Stock,
par value $.01 per share, of the Company ("Stock") set forth on the Option
Award. The Participant may exercise the Option as shown on the Option Award.
in no event shall the Option or any part of the Option be exercisable after
December ---, 1997 (the "Option Expiration Date"). The Option is a
Non-Qualified Stock Option and is not intended to constitute an "Incentive
Stock Option" as defined in Section 422 of the Code.
3. Exercise of Option
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The Option shall be exercised by the Participant delivering a
written notice of exercise to the Company's Secretary or Chief Financial
Officer. This notice shall specify the number of Optioned Shares the
Participant then desires to purchase.
4. Payment of Option Price
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Payment for the Shares purchased under the Option shall be made
to the Company either:
(a) in cash (including cashier's check, bank draft or money
order); or
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(b) by the tender to the Company of shares owned by the
Participant and registered in his or her name having a
Fair Market Value equal to the amount due to the
Company; or
(c) in cash, but by means of a so-called "cashless
exercise"; or
(d) by any combination of the payment methods specified in
paragraphs (a) through (c) above.
In addition to the foregoing methods of payment, payment of the Option price
may, at the discretion of the Committee, be made in whole or in part in other
property, rights and credits, including, to the extent permitted by
applicable law, the Participant's promissory note.
5. Form of Notice of Exercise
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The Participant's notice as required by Section 3 shall be
signed by the Participant and shall be in substantially the following form
with appropriate adjustments depending on how the Option price is paid:
"I hereby exercise my Option to purchase ---------- Shares in
accordance with my Option Award dated ------------, 19--, granted under
the Company's 1997 Flexible Stock Plan.
The aggregate Option price of the Shares I am purchasing is $---------.
I hereby tender in payment of such price the following:
(a) my cashier's check, bank draft or money order made payable
to the Company in the amount of $----------------; and/or
(b) ------- Shares having a Fair Market Value of $----------.
I have forwarded to you under separate cover a stock power
(with signature guaranteed) authorizing you to transfer my -------
Shares as per the requirements of this letter and my Option Award.
I hereby represent to the Company that I own the ---------
Shares delivered herewith free and clear of all liens and encumbrances
and that I have the full and lawful right to transfer such Shares to
the Company.
If the Shares purchased have not been registered under the
Securities Act of 1933, I hereby further represent to the Company that
I am acquiring the -------- Shares that I am purchasing solely for
investment and solely for my own account and that I have no present
intention of selling or offering for sale any of such Shares to any
other person or persons."
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6. Stock Certificates
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Upon the exercise of the Option solely for cash or cash and
property (other than Shares), rights and/or credits specifically permitted by
the Committee, the Participant shall be entitled to one stock certificate
evidencing the Shares acquired upon exercise. However, if the Participant
delivers Shares of the Company when exercising the Option, then the
Participant shall be entitled to two or three certificates.
If the number of Shares tendered is less than or equal to the
number required to pay for all of the Shares purchased, then the Participant
shall be entitled to receive two certificates. One certificate shall
represent a number of Shares equal to the number of Shares delivered by the
Participant. The second certificate shall represent the additional Shares
acquired by the Participant upon the exercise of the Option.
If the number of Shares tendered is more than the number
required to pay for all of the Shares purchased, then the Participant shall
be entitled to receive three certificates, one for the portion of the number
of Shares purchased which is equal to the number of tendered Shares applied
to exercise the Option, a second for the remainder of the number of Shares
purchased upon exercise of the Option, and a third for the number of Shares
tendered which were not applied to purchase the Shares pursuant to the
Option.
7. Legends on Certificates
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The certificate or certificates to be issued under Section 6
shall be issued as soon as practicable. Such certificate or certificates
shall contain thereon a legend in substantially the following form if the
Shares evidenced by such certificate have not been registered under the
Securities Act of 1933, as amended:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or any applicable state
law. They may not be offered for sale, sold, transferred or pledged
without (1) registration under the Securities Act of 1933 and any
applicable state law, or (2) at holder's expense, an opinion
(satisfactory to the Company) that registration is not required."
The certificates shall also contain such other legends as may be appropriate
or required by law.
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8. Termination of Employment; Nonassignability
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8.1 Termination for Cause or Voluntary Quit. If, on or
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after the date that the Option shall have first become exercisable, the
Participant's employment shall be terminated for any reason other than as
described in Section 8.3, the Participant shall have the right, within 3
months after such termination (but not later than the Option Expiration
Date), to exercise such Option to the extent that such Option or any
installment thereof shall have accrued at the date of such termination and
shall not have been exercised. In the event of the Participant's death
during such 3-month (or shorter) period, the provisions of Section 8.4 shall
apply. For purposes of this Section, termination of a Participant's
employment shall mean the later of the termination of the Participant's
employment with an Employer or the Participant's ceasing to serve as a
director of the Company.
8.2 Disability. If, on or after the date that the Option
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shall first have become exercisable, the Participant's employment shall be
terminated for disability (as such term is defined at Section 422(c)(6) of
the Code), the Participant shall have the right, within 1 year after such
termination (but not later than the Option Expiration Date), to exercise such
Option to the extent that such Option or any installment thereof shall have
accrued at the date of such termination of employment and shall not have been
exercised. In the event of Participant's death during such 1-year (or
shorter) period, the provisions of Section 8.4 shall apply. For purposes of
this Section, termination of a Participant's employment shall mean the later
of the termination of the Participant's employment with an Employer or the
Participant's ceasing to serve as a director of the Company.
8.3 Retirement. If the Participant's employment shall be
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terminated by the Participant on or after (x) the Participant attains age 65
or (y) the Participant attains age 55 and has at least 10 years of service
with an Employer, then all installments of the Option granted hereunder shall
become immediately exercisable (if not already exercisable), and the
Participant shall have the right, within 3 months after such termination (but
not later than the Option Expiration Date), to exercise such Option to the
extent that such Option or any installment thereof shall not have been
exercised. In the event of the Participant's death during such 3-month (or
shorter) period, the provisions of Section 8.4 shall apply. For purposes of
this Section, termination of a Participant's employment shall mean the later
of the termination of the Participant's employment with an Employer or the
Participant's ceasing to serve as a director of the Company.
8.4 Death. If a Participant shall die within the 3-month
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(or shorter) period referred to in Section 8.1 or Section 8.3, the 1-year (or
shorter) period referred to in Section 8.2, or while serving as an employee
of an Employer or a director of the Company on or after the date that the
Option shall have first become exercisable, the beneficiary designed pursuant
to Section 8.6 hereof, or, if no such
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designation is in effect, the personal representative of the estate of the
decedent or the person or persons to whom the Option shall have been validly
transferred by such personal representative pursuant to will or the laws of
descent and distribution, shall have the right, within 1 year from the date of
the Participant's death (but no later than the Option Expiration Date), to
exercise the Participant's Option to the extent that such Option or any
installment thereof shall have accrued at the date of death and shall not have
been exercised. No transfer of the Option shall be effective to bind the
Company unless the Company shall have been furnished with written notice of such
transfer and a copy of the will and/or such other evidence as the Committee may
deem necessary to establish the validity of the transfer. No transfer shall be
effective without the acceptance by the transferee of the terms and conditions
of such Option.
8.5 Option Not Vested. Except as provided in Section 8.3,
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if the Participant's employment shall terminate before the Option shall have
first become exercisable, or before any installment or installments are
exercisable, then the Participant's full interest in the Option or such
installment or installments, as the case may be, shall terminate and all
rights thereunder shall cease. For purposes of this Section, termination of
a Participant's employment shall mean the later of the termination of the
Participant's employment with an Employer or the Participant's ceasing to
serve as a director of the Company.
8.6 Non-Transferability of Rights; Designation of
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Beneficiaries. The Option shall not be transferable by the Participant
- -------------
otherwise than by will or the laws of descent and distribution or as provided
in this Section 8.6. During the lifetime of the Participant the Option shall
be exercisable only by the Participant.
The Participant, however, may file with the Company a written
designation of a beneficiary or beneficiaries to exercise, in the event of
the Participant's death, the Option granted hereunder, subject to all of the
provisions of the Option Award and these Terms and Conditions, including this
Section 8. A Participant may from time to time revoke or change any such
designation of beneficiary and any designation of beneficiary under the Plan
shall be controlling over any other disposition, testamentary or otherwise;
provided, however, that if the Committee shall be in doubt as to the right of
any such beneficiary to exercise the Option, the Committee may determine to
recognize only an exercise by the personal representative of the estate of
the Participant, in which case the Company, the Committee and the members
thereof shall not be under any further liability to anyone.
8.7 Limitation on Extensions. Certain provisions hereof
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extend the date by which the Option must otherwise be exercised under the
provisions of Section 1 and the Option Award.
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Notwithstanding those provisions herein which otherwise extend the time period
in which the Option must be exercised, no extension may extend the Option later
than the Option Expiration Date.
9. Withholding
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The Company or any Subsidiary shall have the right to deduct
any sums that federal, state or local tax law requires to be withheld with
respect to the exercise of the Option, or as otherwise may be required by
law. The Company or any such Subsidiary may require as a condition to
issuing Shares upon the exercise of the Option that the Participant or other
person exercising the Option pay any sum that federal, state or local tax law
requires to be withheld with respect to such exercise. In the alternative,
the Participant or other person exercising the Option, may elect to pay such
sums to the Company or the Subsidiary by delivering written notice of that
election to the Company's Secretary or Chief Financial Officer prior to or
concurrently with exercise. There is no obligation that the Participant be
advised of the existence of the tax or the amount which the Company or a
Subsidiary will be so required to withhold.
10. Changes in Capital Structure
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If there is any change in the Common Stock of the Company by
reason of any stock dividend, spin-off, split-up, spin-out, recapitalization,
merger, consolidation, reorganization, combination or exchange of shares, the
number of SARs and number, kind and class of shares available for Options and
grants of Restricted Stock, Performance Shares and Other Stock Based Awards
and the number, kind or class of Shares subject to outstanding Options, SARs,
grants of Restricted Stock and Performance Shares, and Other Stock Based
Awards, and the price thereof, as applicable, shall be appropriately adjusted
by the Committee. The issuance of Shares for consideration and the issuance
of Share rights shall not be considered a change in the Company's capital
structure. No adjustment provided for in this section shall require the
issuance of any fractional shares.
11. Plan Controls
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The Option Award and these Terms and Conditions are subject to
all terms and provisions of the Plan, which terms and provisions are
incorporated herein by reference. In the event of any conflict, the Plan
shall control over the Option Award and these Terms and Conditions.