POINT WEST CAPITAL CORPORATION
Incentive Stock Option Agreement
--------------------------------
INCENTIVE STOCK OPTION AGREEMENT, dated as of November 17,1997
(this "Agreement"), between ("Optionee") and Point West Capital
-------------
Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Optionee is an employee of the Company;
WHEREAS, the execution of an incentive stock option agreement
in the form hereof has been duly authorized by a resolution of the Compensation
Committee (the "Committee") of the Board of Directors ("the Board") of the
Company duly adopted at a special meeting of the Committee held on November 17,
1997 (the "Date of Grant") and incorporated herein by reference; and
WHEREAS, the option granted hereunder is intended to be an
"incentive stock option" within the meaning of that term under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements herein contained, the parties hereto hereby agree as follows:
1.(a) Option. Pursuant to the Company's 1995 Stock Option Plan
------
(the "Plan"), the Company hereby grants to Optionee an option (the "Option") to
purchase 10,000 shares (the "Option Shares") of the Company's Common Stock, par
value $.01 per share ("Common Shares"), at the price of $3.438 per share (the
"Option Price"), which is the fair market value of the Common Shares (as
determined by the Committee) on the Date of Grant, and agrees to cause
certificates for any Common Shares purchased hereunder to be delivered to
Optionee upon payment in full of the Option Price, subject to the applicable
terms and conditions of the Plan and the terms and conditions hereinafter set
forth.
2. Vesting of Option Shares.
------------------------
(a) Unless and until terminated as hereinafter provided, the
Option shall become exercisable to the extent of 20% of the Option Shares on
November 17, 1998 and to the extent of an additional 20% on each of the first
through the fourth anniversary of November 17, 1998 so long as Optionee has
remained in the continuous employ of the Company or a Subsidiary from thedate
hereof through such date. For the purposes of this Agreement, the continuous
employment of Optionee with the Company or a Subsidiary shall not be deemed to
have been interrupted, and Optionee shall not be deemed to have ceased to be an
employee of the Company or a Subsidiary, by reason of (i) the transfer of
Optionee's employment among the Company and its Subsidiaries or (ii) a leave of
absence approved by the Board of not more than 90 days, unless Optionee has a
statutory or contractual right to reemployment with the Company or a Subsidiary
following an approved leave of absence of more than 90 days. To the extent that
the Option shall have so become exercisable, it may be exercised in whole or in
part from time to time.
(b) Notwithstanding the provisions of paragraph 2(a) above,
the Option shall become immediately exercisable to the extent of 100% of the
Option Shares upon the occurrence of a Change in Control. If any event or
series of events constituting a Change in Control shall be abandoned, the
effect thereof shall be null and of no further force and effect and the
provisions of Section 2(a) shall be reinstated but without prejudice to any
exercise of the Option that may have occurred prior to such nullification.
(c) Notwithstanding the provisions of paragraph 2(a) above,
the Option shall become immediately exercisable to the extent of 100% of the
Option Shares upon the death or Disability of Optionee.
3. Exercises.
---------
(a) This Option, to the extent exercisable as provided in
Section 2, may be exercised by Optionee by delivery to the Company of (i) an
Exercise Notice in the form attached to this Agreement as Annex A,
appropriately completed and duly executed and dated by Optionee, (ii) payment
in full of the Option Price for the number of Option Shares which Optionee is
purchasing hereunder, and (iii) payment in full to the Company of any amounts
required to be paid pursuant to Section 3(c).
(b) The Option Price shall be payable (a) in cash or check
acceptable to the Company, (b) by transfer to the Company of Common Shares that
have been owned by Optionee for (i) more than one year prior to the date of
exercise and for more than two years from the date on which the option was
granted, if they were originally acquired by Optionee pursuant to the exercise
of an incentive stock option, or (ii) more than six months prior to the date of
exercise, if they were originally acquired by Optionee other than pursuant to
the exercise of an incentive stock option, or (c) by a combination of any of
the foregoing methods of payment. The requirement of payment in cash shall be
deemed satisfied if Optionee shall have made arrangements satisfactory to the
Company with a broker who is a member of the National Association of Securities
Dealers, Inc. to sell on the date of exercise a sufficient number of the Common
Shares being purchased so that the net proceeds of the sale transaction will at
least equal the aggregate Option Price, plus interest at the applicable federal
rate for the period from
the date of exercise to the date of payment, and pursuant to which the broker
undertakes to deliver the aggregate Option Price, plus such interest, to the
Company not later than the date on which the sale transaction will settle in
the ordinary course of business.
(c) If the Company shall be required to withhold any federal,
state, local or foreign tax in connection with an exercise of the Option, it
shall be a condition to the exercise that Optionee pay the tax or make
provisions that are satisfactory to the Company for the payment thereof.
4. Termination of Option.
----------------------
The Option shall terminate on the earliest of the following
dates:
(a) The date on which Optionee ceases to be an employee of
the Company or a Subsidiary unless he ceases to be such an employee in a
manner described in (b) or (c) below.
(b) 90 days after Optionee ceases to be an employee of the
Company or any Subsidiary if (A) Optionee retires from employment with the
Company or any Subsidiary after reaching the age of 65 years, or (B)
Optionee's employment is terminated under circumstances determined by the
Committee to be for the convenience of the Company.
(c) One year after the date on which Optionee's employment is
terminated as a result of Optionee's death or Disability (as hereinafter
defined).
(d) Ten years from the Date of Grant.
In the event that Optionee commits an act that the Board determines to have been
intentionally committed and materially inimical to the interests of the Company,
the Option shall terminate as of the time of the commission of that act,
notwithstanding any other provision of this Agreement. In the event that
Optionee's employment is terminated by the Company for Cause, the Option shall
terminate as of the time Optionee's employment is terminated, notwithstanding
any other provision of this Agreement.
5. No Transfer of Option.
----------------------
The Option may not be transferred except by will or the laws
of descent and distribution and may not be exercised during the lifetime of
Optionee except by Optionee or Optionee's guardian or legal representative
acting on behalf of Optionee in a fiduciary capacity under state law and court
supervision.
6. Limitations on Exercise of Option.
----------------------------------
Notwithstanding any other provision of this agreement, the
Option shall not be exercisable if the exercise would involve a violation of any
applicable federal or state securities law, and the Company shall make
reasonable efforts to comply with all such laws.
7. Adjustments.
-----------
(a) The Committee may make or provide for such adjustments in
the number and kind of Option Shares (including shares of another issuer) and
in the Option Price, as the Committee may in good faith determine to be
equitably required in order to prevent dilution or expansion of the rights of
Optionee that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital
structure of the Company, or (b) any merger, consolidation, spin-off, spin-out,
split-off, split-up, reorganization, partial or complete liquidation or other
distribution of assets, issuance of warrants or other rights to purchase
securities or any other corporate transaction or event having an effect similar
to the foregoing.
(b) In the event of any such transaction or event, the
Committee may provide in substitution for the Option such alternative
consideration as it may in good faith determine to be equitable under the
circumstances and may require in connection therewith the surrender of the
Option.
8. No Right to Employment.
----------------------
No provision of this agreement shall limit in any way
whatsoever any right that the Company or a Subsidiary may otherwise have to
terminate the employment of Optionee at any time.
9. Rights as a Stockholder.
-----------------------
The holder of this Option shall not be, nor have any of the
rights or privileges of, a holder of Common Shares in respect of any Option
Shares unless and until certificates representing such shares have been issued
by the Company to such holder.
10. Limitation on Incentive Stock Options.
-------------------------------------
Notwithstanding the intent that the Option be an "incentive
stock option" within the meaning of that term under Section 422 of the Code, the
option will be treated as a non-qualified stock option to the extent that the
fair market value of the shares with respect to which any incentive stock
options are exercisable for the first time by Optionee during any calendar year
(under all of the Company's plans and those of any of its subsidiaries) exceed
$100,000. This rule shall be applied by taking any options into account in the
order in which they were granted.
11. Required Holding Period.
------------------------
Notwithstanding the provisions of Section 2(b), to the extent
necessary for the Option, its exercise or the sale of Option Shares acquired
thereunder to be exempt from Section 16(b) of the Exchange Act of 1934, as
amended, (i) except in the case of Optionee's death or Disability, Optionee
shall not be entitled to exercise the Option until the expiration of the
six-month period following the Date of Grant, or (ii) at least six months shall
elapse from the Date of Grant to the date of disposition of the Option Shares
acquired upon exercise of the Option.
12. Definitions.
-----------
For the purposes of this Agreement, the following terms have
the following meanings:
(a) "Cause" means (i) the commission by Optionee of an act of
fraud or embezzlement against the Company or an act which the Optionee knew to
be in gross violation of Optionee's duties to the Company (including the
unauthorized disclosure of confidential information), (ii) Optionee's continual
failure to render services to the Company, which failure (A) amounts to gross
neglect of Optionee's duties to the Company and (B) is not remedied within 10
days after notice thereof by the Company, or (iii) Optionee's conviction of a
felony.
(b) "Change in Control" means the occurrence of any of the
following events:
(i) The execution by the Company of an agreement for the
merger, consolidation or reorganization into or with another
corporation or other legal person; provided, however, that no such
-------- -------
merger, consolidation or reorganization shall constitute a Change in
Control if as a result of such merger, consolidation or reorganization
not less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person immediately
after such transaction are held in the aggregate by the holders of
securities of the Company entitled to vote generally in the election of
Directors ("Voting Stock") immediately prior to such transaction;
(ii) The execution by the Company of an agreement for the sale
or other transfer of all or substantially all of its assets to another
corporation or other legal person; provided, however, that no such sale
-------- -------
or other transfer shall constitute a Change in Control if as a result
of such sale or transfer not less than a majority of the combined
voting power of the then-outstanding securities of such corporation or
person immediately after such sale or transfer is held in the aggregate
by the holders of Voting Stock immediately prior to such sale or
transfer.
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated
pursuant to the Exchange Act disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) (other than The Echelon Group of Companies, LLC, Bradley
N. Rotter, Alan B. Perper or John Ward Rotter) has or intends to become
the beneficial owner (as the term "beneficial owner" is defined under
Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of securities representing 20% or more of the combined
voting power of the then-outstanding Voting Stock, including, without
limitation, pursuant to a tender offer or exchange offer;
(iv) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute the
directors of the Company cease for any reason to constitute at least a
majority thereof; provided, however, that for purposes of this
-------- -------
subsection (iv) each director who is first elected, or first nominated
for election by the Company's stockholders, by a vote of at least
two-thirds of the directors of the Company (or a committee thereof)
then still in office who were directors of the Company at the beginning
of any such period shall be deemed to have been a director of the
Company at the beginning of such period; or
(v) except pursuant to a transaction described in the proviso
to subsection (i) of this Section 12(b), the Company adopts a plan for
the liquidation or dissolution of the Company.
(c) "Disability" means, as of any date, becoming disabled
within the meaning of such term in Section 22(e)(3) of the Code.
(d) "Subsidiary" means any corporation in which the Company
directly or indirectly owns or controls more than 50 percent of the total
combined voting power of all classes of stock issued by the corporation.
13. Severability.
------------
In the event that one or more of the provisions of this
agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
14. Governing Law.
-------------
This agreement is made under, and shall be construed in
accordance with, the laws of the State of Delaware.
This Agreement is executed by the Company as of the 17th day
of November, 1997.
POINT WEST CAPITAL CORPORATION
By:
---------------------------
John Ward Rotter
CFO
The undersigned Optionee hereby acknowledges receipt of an
executed original of this Incentive Stock Option Agreement and the Plan and
accepts the Option subject to the applicable terms and conditions of the Plan
and the terms and conditions hereinabove set forth.
------------------------------
Optionee (Signature)
Name: -----------------------
Dated as of November 17, 1997
ANNEX A
to
Incentive Stock Option Agreement
--------------------------------
Form of Exercise Notice
------------------------
Pursuant to the Incentive Stock Option Agreement dated as of
November17, 1997 between the undersigned and Point West Capital Corporation (the
"Company"), the undersigned hereby elects to exercise his option as follows:
(a) Number of shares purchased:
--------------------
(b) Total purchase price ((a) x Option Price):$
--------
Please issue a single certificate for the shares being purchased
in the name of the undersigned. The registered address on such certificate
should be:
---------------
---------------
The undersigned's social security number is: .
---------------.
Date: -------------------------
--------------- Optionee