EXHIBIT 10.2
BNC MORTGAGE, INC.
1997 STOCK OPTION, DEFERRED STOCK
AND
RESTRICTED STOCK PLAN
Section a. General Purpose of Plan; Definitions.
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(a) This plan is intended to implement and govern the 1997 Stock Option,
Deferred Stock and Restricted Stock Plan (the "Plan") of BNC Mortgage , Inc., a
California corporation (the "Company"). The Plan was adopted by the Board of
Directors as of October 23, 1997, subject to the approval of the Company's
shareholders. The purpose of the Plan is to enable the Company and its
Subsidiaries to obtain and retain competent personnel who will contribute to the
Company's success by their ability, ingenuity and industry, and to provide
incentives to such personnel and members that are linked directly to increases
in shareholder value, and will therefore, inure to the benefit of all
shareholders of the Company.
(b) For purposes of the Plan, the following terms shall be defined as set
forth below:
(1) "Administrator" means the Board, or if the Board does not
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administer the Plan, the Committee in accordance with Section 2.
(2) "Award" means any award of Deferred Stock, Restricted Stock, Stock
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Appreciation Right, Limited Stock Appreciation Right or Stock Option.
(3) "Board" means the Board of Directors of the Company.
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(4) "Code" means the Internal Revenue Code of 1986, as amended from
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time to time, or any successor thereto.
(5) "Committee" means the Compensation Commit tee of the Board, or any
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other Committee the Board may subsequently appoint to administer the Plan. If
at any time the Board shall
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administer the Plan, then the functions of the Board specified in the Plan shall
be exercised by the Committee.
(6) "Company" means BNC Mortgage, Inc., a corporation organized under the
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laws of the State of California(or any successor corporation).
(7) "Deferred Stock" means an award made granted pursuant to Section 7
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below of the right to receive Stock at the end of a specified deferral period.
(8) "Disability" means permanent and total disability as determined under
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the Company's disability program or policy.
(9) "Effective Date" shall mean the date provided pursuant to Section 16.
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(10) "Eligible Employee" means an employee, consultant or advisor of the
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Company, any Subsidiary or Parent Corporation eligible to participate in the
Plan pursuant to Section 4.
(11) "Fair Market Value" means, as of any given date, with respect to any
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Awards granted hereunder, at the discretion of the Administrator and subject to
such limitations as the Administrator may impose, (A) the closing sale price of
the Stock on such date as reported in the Western Edition of the Wall Street
Journal Composite Tape, or (B) the average of the closing price of the Stock on
each day on which the Stock was traded over a period of up to twenty trading
days immediately prior to such date, or (C) if the Stock is not publicly traded,
the fair market value of the Stock as otherwise determined by the Administrator
in the good faith exercise of its discretion.
(12) "Incentive Stock Option" means any Stock option intended to be
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designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(13) "Limited Stock Appreciation Right" means a Stock Appreciation Right
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that can be exercised only in the event of a Change of Control as defined in
Section 10.
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(14) "Non-Qualified Stock Option" means any Stock Option that is not an
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Incentive Stock Option, including any Stock Option that provides (as of the time
such option is granted) that it will not be treated as an Incentive Stock
Option.
(15) "Parent Corporation" means any corporation (other than the Company) in
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an unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
(16) "Participant" means any Eligible Employee selected by the
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Administrator pursuant to the Administrator's authority in Section 2 below, to
receive grants of Stock Options or Awards or any combination of the foregoing.
(17) "Restricted Period" means the period set by the Administrator as it
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pertains to Deferred Stock or Restricted Stock awards pursuant to Section 7.
(18) "Restricted Stock" means an award of shares of Stock granted pursuant
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to Section 7 subject to restrictions that will lapse with the passage of time or
upon the attainment of performance objectives.
(19) "Stock" means the Common Stock, no par value per share, of the
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Company.
(20) "Stock Appreciation Right" means the right pursuant to an award
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granted under Section 6 below to receive an amount equal to the difference
between (A) the Fair Market Value, as of the date such Stock Appreciation Right
or portion thereof is surrendered, of the shares of Stock covered by such right
or such portion thereof and (B) the aggregate exercise price of such right or
such portion thereof.
(21) "Stock Option" means an option to purchase shares of Stock granted
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pursuant to Section 5.
(22) "Subsidiary" means any corporation (other than the Company) in an
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unbroken chain of corporations beginning with the Company, if each of the
corporations (other than the last
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corporation) in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
Section 1. Administration.
(a) The Plan shall be administered by the Board or by a Committee appointed
by the Board, which shall serve at the pleasure of the Board; provided, however,
that if the Committee does not consist solely of "Non-Employee Directors," as
defined in Rule 16b-3 as promulgated by the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934 (the "Exchange
Act"), and as such Rule may be amended from time to time, or any successor
definition adopted by the Commission, then the Plan shall be administered, and
each grant shall be approved, by the Board.
(b) The Administrator shall have the power and authority to grant to
Eligible Employees, pursuant to the terms of the Plan: (A) Stock Options, (B)
Stock Appreciation Rights or Limited Stock Appreciation Rights , (C) Deferred
Stock, (D) Restricted Stock, or (E) any combination of the foregoing.
In particular, the Administrator shall have the authority;
(1) to select those employees of the Company or any Subsidiary or
Parent Corporation who are Eligible Employees;
(2) to determine whether and to what extent Stock Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, Deferred Stock,
Restricted Stock or a combination of the foregoing, are to be granted to
Eligible Employees of the Company or any Subsidiary hereunder;
(3) to determine the number of shares of Stock to be covered by each
such Award;
(4) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any such Award including, but not limited to, (x) the
restricted period applicable to Deferred Stock or Restricted Stock awards, (y)
the date or dates on which restrictions applicable to such Deferred Stock or
Restricted Stock shall lapse during such period, and (z) when and
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in what increments shares covered by Stock Options may be purchased; and
(5) to determine the terms and conditions, not inconsistent with the
terms of the Plan, which shall govern all written instruments evidencing the
Stock Options, Stock Appreciation Rights, Limited Stock Appreciation Rights,
Deferred Stock, Restricted Stock or any combination of the foregoing.
(c) The Administrator shall have the authority, in its discretion, to
adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall from time to time deem advisable; to interpret
the terms and provisions of the Plan and any Award issued under the Plan (and
any agreements relating thereto); and to otherwise supervise the administration
of the Plan.
(d) All decisions made by the Administrator pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company, any
Subsidiaries, Parent Corporation and the Participants.
Section 2. Stock Subject to Plan.
(a) The total number of shares of Stock reserved and available for issuance
under the Plan shall be 800,000 shares. Such shares shall consist of authorized
but unissued shares.
(b) To the extent that (i) a Stock Option expires or is otherwise
terminated without being exercised or (ii) any shares of Stock subject to any
Deferred Stock or Restricted Stock award granted hereunder are forfeited, such
shares shall again be available for issuance in connection with future Awards
under the Plan. If any shares of Stock have been pledged as collateral for
indebtedness incurred by a Participant in connection with the exercise of a
Stock Option and such shares are returned to the Company in satisfaction of such
indebtedness, such shares shall again be available for issuance in connection
with future Awards under the Plan.
(c) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, a substitution or
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adjustment may be made in (i) the aggregate number of shares reserved for
issuance under the Plan, and (ii) the kind, number and option price of shares
subject to outstanding Stock Options granted under the Plan as may be determined
by the Administrator, in its sole discretion, provided that the number of shares
subject to any Award shall always be a whole number. Such other substitutions
or adjustments shall be made as may be determined by the Administrator, in its
sole discretion; provided, however, that with respect to Incentive Stock
Options, such adjustment shall be made in accordance with Section 424 of the
Code. An adjusted option price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation Right or
Limited Stock Appreciation Rights associated with any Stock Option.
Section 3. Eligibility.
(a) Officers and other key employees, directors and consultants and
advisors of the Company, any Subsidiary or Parent Corporation who are
responsible for or contribute to the management, growth and/or profitability of
the business of the Company, shall be eligible to be granted Non-Qualified Stock
Options, Stock Appreciation Rights, Limited Stock Appreciation Rights, and
Deferred Stock or Restricted Stock awards hereunder. Officers and other key
employees of the Company, any Subsidiary or Parent Corporation shall also be
eligible to be granted Incentive Stock Options hereunder. The Participants
under the Plan shall be selected from time to time by the Administrator, in its
sole discretion, from among the Eligible Employees recommended by the senior
management of the Company, and the Administrator shall determine, in its sole
discretion, the number of shares covered by each Award.
Section 4. Stock Option for Eligible Employees.
(a) Stock Options may be granted to Eligible Employees alone or in addition
to other Awards granted under the Plan. Any Stock Option granted under the Plan
shall be in such form as the Administrator may from time to time approve, and
the provisions of Stock Option awards need not be the same with respect to each
optionee. Recipients of Stock Options shall enter into a stock option agreement
with the Company, in such form as the Administrator shall determine, which
agreement shall set forth, among other things, the exercise price of the option,
the term of
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the option and provisions regarding exercisability of the option granted
thereunder.
The Stock Options granted under the Plan to Eligible Employees may be of
two types: (x) Incentive Stock Options and (y) Non-Qualified Stock Options.
(b) The Administrator shall have the authority under this Section 5 to
grant any optionee Incentive Stock Options, Non-Qualified Stock Options, or both
types of Stock Options (in each case with or without Stock Appreciation Rights
or Limited Stock Appreciation Rights); provided, however, that Incentive Stock
Options may not be granted to any individual who is not an employee of the
Company, its Subsidiaries or Parent Corporation. To the extent that any Stock
Option does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option. More than one option may be granted to the
same optionee and be outstanding concurrently hereunder.
(c) Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:
(i) Option Price. The option price per share of Stock purchasable
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under a Stock Option shall be determined by the Administrator in its sole
discretion at the time of grant but shall be not less than 100% of the Fair
Market Value of the Stock on such date, and shall not, in any event, be less
than the par value of the Stock. The option price per share of Stock
purchasable under a Non-Qualified Stock Option may be less than 100% of such
Fair Market Value. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company or any Parent
Corporation or Subsidiary and an Incentive Stock Option is granted to such
employee, the option price of such Incentive Stock Option (to the extent
required by the Code at the time of grant) shall be no less than 110% of the
Fair Market Value of the Stock on the date such Incentive Stock Option is
granted.
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(ii) Option Term. The term of each Stock Option shall be fixed by
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the Administrator, but no Stock Option shall be exercisable more than ten years
after the date such Stock Option is granted; provided, however, that if an
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employee owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all classes of
stock of the Company or any Parent Corporation or Subsidiary and an Incentive
Stock Option is granted to such employee, the term of such Incentive Stock
Option (to the extent required by the Code at the time of grant) shall be no
more than five years from the date of grant.
(iii) Exercisability. Stock Options shall be exercisable at such
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time or times and subject to such terms and conditions as shall be determined by
the Administrator at or after grant; provided, however, that, except as provided
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herein or unless otherwise determined by the Administrator at or after grant,
Stock Options shall be exercisable one year following the date of grant of the
option, but in no case, less than six (6) months following the date of the grant
of the option. To the extent not exercised, installments shall accumulate and
be exercisable in whole or in part at any time after becoming exercisable but
not later than the date the Stock Option expires. The Administrator may
provide, in its discretion, that any Stock Option shall be exercisable only in
installments, and the Administrator may waive such installment exercise
provisions at any time in whole or in part based on such factors as the
Administrator may determine in its sole discretion.
(iv) Method of Exercise. Subject to Section 5(c), Stock Options may
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be exercised in whole or in part at any time during the option period, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price in cash or its
equivalent, as determined by the Administrator. As determined by the
Administrator, in its sole discretion, payment in whole or in part may also be
made (i) in the form of unrestricted Stock already owned by the optionee, or, in
the case of the exercise of a Non-Qualified Stock Option, Restricted Stock
subject to an Award hereunder (based, in each case, on the Fair Market Value of
the Stock on the date the option is exercised), (ii) by cancellation of any
indebtedness owed by the Company to the optionee, (iii) by a full recourse
promissory note executed by the optionee, (iv) by requesting that the Company
withhold whole shares of Common Stock
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then issuable upon exercise of the Stock Option (based on the Fair Market Value
of the Stock on the date the option is exercised), (v) by arrangement with a
broker which is acceptable to the Administrator where payment of the option
price is made pursuant to an irrevocable direction to the broker to deliver all
or part of the proceeds from the sale of the shares underlying the option to the
Company, or (vi) by any combination of the foregoing; provided, however, that in
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the case of an Incentive Stock Option, the right to make payment in the form of
already owned shares may be authorized only at the time of grant. Any payment
in the form of stock already owned by the optionee may be effected by use of an
attestation form approved by the Administrator. If payment of the option
exercise price of a Non-Qualified Stock Option is made in whole or in part in
the form of Restricted Stock, the shares received upon the exercise of such
Stock Option (to the extent of the number of shares of Restricted Stock
surrendered upon exercise of such Stock Option) shall be restricted in
accordance with the original terms of the Restricted Stock award in question,
except that the Administrator may direct that such restrictions shall apply only
to that number of shares equal to the number of shares surrendered upon the
exercise of such option. An optionee shall generally have the rights to
dividends and other rights of a shareholder with respect to shares subject to
the option only after the optionee has given written notice of exercise, has
paid in full for such shares, and, if requested, has given the representation
described in paragraph (a) of Section 11.
(d) The Administrator may require the voluntary surrender of all or a
portion of any Stock Option granted under the Plan as a condition precedent to a
grant of a new Stock Option. Subject to the provisions of the Plan, such new
Stock Option shall be exercisable at the price, during such period and on such
other terms and conditions as are specified by the Administrator at the time the
new Stock Option is granted; provided, however, that should the Administrator so
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require, the number of shares subject to such new Stock Option shall not be
greater than the number of shares subject to the surrendered Stock Option. Upon
their surrender, the Stock Options shall be canceled and the shares previously
subject to such canceled Stock Options shall again be available for grants of
Stock Options and other Awards hereunder.
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(e) Loans. The Company may make loans available to Stock Option holders in
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connection with the exercise of outstanding options granted under the Plan, as
the Administrator, in its discretion, may determine. Such loans shall (i) be
evidenced by promissory notes entered into by the Stock Option holders in favor
of the Company, (ii) be subject to the terms and conditions set forth in this
Section 5(e) and such other terms and conditions, not inconsistent with the
Plan, as the Administrator shall determine, (iii) bear interest, if any, at such
rate as the Administrator shall determine and (iv) be subject to Board approval.
In no event may the principal amount of any such loan exceed the sum of (x) the
exercise price less the par value of the shares of Stock covered by the option,
or portion thereof, exercised by the holder and (y) any Federal, state, and
local income tax attributable to such exercise. The initial term of the loan,
the schedule of payments of principal and interest under the loan, the extent to
which the loan is to be with or without recourse against the holder with respect
to principal or interest and the conditions upon which the loan will become
payable in the event of the holder's termination of employment shall be
determined by the Administrator; provided, however, that the term of the loan,
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including extensions, shall not exceed seven years. Unless the Administrator
determines otherwise, when a loan is made, shares of Common Stock having a Fair
Market Value at least equal to the principal amount of the loan shall be pledged
by the holder to the Company as security for payment of the unpaid balance of
the loan, and such pledge shall be evidenced by a pledge agreement, the terms of
which shall be determined by the Administrator, in its discretion; provided,
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however, that each loan shall comply with all applicable laws, regulations and
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rules of the Board of Governors of the Federal Reserve System and any other
governmental agency having jurisdiction.
(f) Limits on Transferability of Options.
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(i) Subject to Section 5(f)(ii), no Stock Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution or, with respect to Non-Qualified Stock Options, pursuant to a
"qualified domestic relations order," as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Incentive Stock
Options shall be exercisable, during the optionee's lifetime, only by the
optionee or, with respect to Non-Qualified Stock Options, in accordance with the
terms of a qualified domestic relations order.
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(ii) The Administrator may, in its discretion, authorize all or a
portion of the options (other than Incentive Stock Options) to be granted to an
optionee to be on terms which permit transfer by such optionee to (A) the
spouse, qualified domestic partner, children or grandchildren of the optionee
and any other persons related to the optionee as may be approved by the
Administrator ("Immediate Family Members"), (B) a trust or trusts for the
exclusive benefit of such Immediate Family Members, (C) a partnership or
partnerships in which such Immediate Family Members are the only partners, or
(D) any other persons or entities as may be approved by the Administrator,
provided that (x) there may be no consideration for any transfer unless approved
by the Administrator, (y) the stock option agreement pursuant to which such
options are granted must be approved by the Administrator, and must expressly
provide for transferability in a manner consistent with this Section 5(f)(ii),
and (z) subsequent transfers of transferred options shall be prohibited except
those in accordance with Section 5(f)(i) or expressly approved by the
Administrator. Following transfer, any such options shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that, except for purposes of Sections 5(g), (h) and (i) and
11(c) hereof, the terms "optionee," Stock Option holder" and "Participant" shall
be deemed to refer to the transferee. The events of termination of employment
under Sections 5(g), (h) and (i) hereof shall continue to be applied with
respect to the original optionee, following which the options shall be
exercisable by the transferee only to the extent, and for the periods specified
under such sections unless the option agreement governing such options otherwise
provides. Notwithstanding the transfer, the original optionee will continue to
be subject to the provisions of Section 11(c) regarding payment of taxes,
including the provisions entitling the Company to deduct such taxes from amounts
otherwise due to such optionee. "Qualified domestic partner" for the purpose of
this Section 5(f)(ii) shall mean a domestic partner living in the same household
as the optionee and registered with, certified by or otherwise acknowledged by
the county or other applicable governmental body as a domestic partner or
otherwise establishing such status in any manner satisfactory to the
Administrator.
(g) Termination by Death. If an optionee's employment with the Company,
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any Subsidiary or Parent Corporation terminates by reason of death, the Stock
Option may thereafter be immediately
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exercised, to the extent then exercisable (or on such accelerated basis as the
Administrator shall determine at or after grant), by the legal representative of
the estate or by the legatee of the optionee under the will of the optionee, for
a period of twelve months (or such shorter period as the Administrator shall
specify at grant) from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is shorter.
(h) Termination by Reason of Disability. If an optionee's employment with
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the Company, any Subsidiary or Parent Corporation terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be exercised,
to the extent it was exercisable at the time of such termination (or on such
accelerated basis as the Administrator shall determine at the time of grant),
for a period of twelve months (or such shorter period as the Administrator shall
specify at grant) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is shorter;
provided, however, that, if the optionee dies within such twelve-month period
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(or such shorter period as the Administrator shall specify at grant) and prior
to the expiration of the stated term of such Stock Option, any unexercised Stock
Option held by such optionee shall thereafter be exercisable to the extent to
which it was exercisable at the time of termination for a period of twelve
months (or such shorter period as the Administrator shall specify at grant) from
the time of death or until the expiration of the stated term of such Stock
Option, whichever period is shorter. In the event of a termination of
employment by reason of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option shall thereafter be treated as a Non-
Qualified Stock Option.
(i) Other Termination. Except as otherwise provided in this paragraph or
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otherwise determined by the Administrator, if an optionee's employment with the
Company, any Subsidiary or Parent Corporation terminates for any reason other
than death or Disability, the Stock Option may be exercised until the earlier to
occur of (i) three months from the date of such termination or (ii) the
expiration of the stated term of such Stock Option.
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(j) Annual Limit on Incentive Stock Options. To the extent that the
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aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the shares of Stock with respect to which Incentive Stock
Options granted to an optionee under this Plan and all other option plans of the
Company, its Parent Corporation and any Subsidiary become exercisable for the
first time by the optionee during any calendar year exceeds $100,000, such Stock
Options shall be treated as Non-Qualified Stock Options.
Section 5. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights and Limited Stock
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Appreciation Rights may be granted either alone ("Free Standing Rights") or in
conjunction with all or part of any Stock Option granted under the Plan
("Related Rights"). In the case of a Non-Qualified Stock Option, Related Rights
may be granted either at or after the time of the grant of such Stock Option.
In the case of an Incentive Stock Option, Related Rights may be granted only at
the time of the grant of the Incentive Stock Option.
A Related Right or applicable portion thereof granted in conjunction with a
given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, unless
otherwise provided by the Administrator at the time of grant, a Related Right
granted with respect to less than the full number of shares covered by a related
Stock Option shall only be reduced if and to the extent that the number of
shares covered by the exercise or termination of the related Stock Option
exceeds the number of shares not covered by the Stock Appreciation Right.
A Related Right may be exercised by an optionee, in accordance with
paragraph (b) of this Section 6, by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in paragraph
(b) of this Section 6. Stock Options which have been so surrendered, in whole or
in part, shall no longer be exercisable to the extent the Related Rights have
been so exercised.
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(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
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such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Administrator, including the
following:
(i) Related Stock Appreciation Rights.
(A) Stock Appreciation Rights that are Related Rights ("Related
Stock Appreciation Rights") shall be exercisable only at such time or times
and to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of Section 5 and this Section
6; provided, however, that any Related Stock Appreciation Right shall not
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be exercisable during the first six months of its term, except that this
additional limitation shall not apply in the event of death or Disability
of the optionee prior to the expiration of such six-month period.
(B) Upon the exercise of a Related Stock Appreciation Right, an
optionee shall be entitled to receive up to, but not more than, an amount
in cash or that number of shares of Stock (or in some combination of cash
and shares of Stock) equal in value to the excess of the Fair Market Value
of one share of Stock as of the date of exercise over the option price per
share specified in the related Stock Option multiplied by the number of
shares of Stock in respect of which the Related Stock Appreciation Right is
being exercised, with the Administrator having the right to determine the
form of payment.
(C) Related Stock Appreciation Rights shall be transferable or
exercisable only when and to the extent that the underlying Stock Option
would be transferable or exercisable under paragraph (f) of Section 5 of
the Plan.
(D) Upon the exercise of a Related Stock Appreciation Right, the
Stock Option or part thereof to which such Related Stock Appreciation Right
is related shall be deemed to have been exercised for the purpose of the
limitation set forth in Section 3 of the Plan on the number of shares of
Stock to be issued under the Plan, but only to the extent of the number of
shares issued under the Related Stock Appreciation Right.
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(E) A Related Stock Appreciation Right granted in connection with
an Incentive Stock Option may be exercised only if and when the Fair Market
Value of the Stock subject to the Incentive Stock Option exceeds the
exercise price of such Stock Option.
(ii) Free Standing Stock Appreciation Rights.
(A) Stock Appreciation Rights that are Free Standing Rights
("Free Standing Stock Appreciation Rights") shall be exercisable at such
time or times and subject to such terms and conditions as shall be
determined by the Administrator at or after grant; provided, however, that
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Free Standing Stock Appreciation Rights shall not be exercisable during the
first six months of its term, except that this limitation shall not apply
in the event of death or Disability of the recipient of the Free Standing
Stock Appreciation Right prior to the expiration of such six-month period.
(B) The term of each Free Standing Stock Appreciation Right shall
be fixed by the Administrator, but no Free Standing Stock Appreciation
Right shall be exercisable more than ten years after the date such right is
granted.
(C) Upon the exercise of a Free Standing Stock Appreciation
Right, a recipient shall be entitled to receive up to, but not more than,
an amount in cash or that number of shares of Stock (or any combination of
cash or shares of Stock) equal in value to the excess of the Fair Market
Value of one share of Stock as of the date of exercise over the price per
share specified in the Free Standing Stock Appreciation Right (which price
shall be no less than 100% of the Fair Market Value of the Stock on the
date of grant) multiplied by the number of shares of Stock with respect to
which the right is being exercised, with the Administrator having the right
to determine the form of payment.
(D) Free Standing Stock Appreciation Rights shall be transferable
or exercisable subject to the provisions governing the transferability and
exercisability of Stock Options set forth in paragraphs (c) and (f) of
Section 5.
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(E) In the event of the termination of an employee who has
received Free Standing Stock Appreciation Rights, such rights shall be
exercisable to the same extent that a Stock Option would have been
exercisable in the event of the termination of the optionee.
(F) For the purpose of the limitation set forth in Section 3 on
the number of shares to be issued under the Plan, the grant or exercise of
Free Standing Stock Appreciation Rights shall be deemed to constitute the
grant or exercise, respectively, of Stock Options with respect to the
number of shares of Stock with respect to which such Free Standing Stock
Appreciation Rights were so granted or exercised.
(iii) Limited Stock Appreciation Rights.
(A) Limited Stock Appreciation Rights may only be exercised
within the 30-day period following a "Change of Control" (as defined in
Section 10 below), and, with respect to Limited Stock Appreciation Rights
that are Related Rights ("Related Limited Stock Appreciation Rights"), only
to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of Section 5 and this Section
6; provided, however, that no Related Limited Stock Appreciation Right
shall be exercisable during the first six months of its term, except that
this additional limitation shall not apply in the event of death or
Disability of the optionee prior to the expiration of such six-month
period.
(B) Upon the exercise of a Limited Stock Appreciation Right, the
recipient shall be entitled to receive an amount in cash equal in value to
the excess of the "Change of Control Price" (as defined in Section 10) of
one share of Stock as of the date of exercise over (1) the option price per
share specified in the related Stock Option, or (2) in the case of a
Limited Stock Appreciation Right which is a Free Standing Stock
Appreciation Right, the price per share specified in the Free Standing
Stock Appreciation Right, such excess to be multiplied by the number of
shares in respect of which the Limited Stock Appreciation Right shall have
been exercised.
16
Section 6. Deferred Stock and Restricted Stock.
(a) General. Deferred Stock and Restricted Stock awards may be issued to
-------
Eligible Employees either alone or in addition to other Awards granted under the
Plan. The Administrator shall determine the Eligible Employees, and the time or
times at which, grants of Deferred Stock or Restricted Stock awards shall be
made; the number of shares to be awarded; the price, if any, to be paid by the
recipient of Deferred Stock or Restricted Stock awards; the Restricted Period
(as defined in paragraph 7(c) hereof) applicable to Deferred Stock or Restricted
Stock awards; the performance objectives applicable to Deferred Stock or
Restricted Stock awards; the date or dates on which restrictions applicable to
such Deferred Stock or Restricted Stock awards shall lapse during such
Restricted Period; and all other conditions of the Deferred Stock or Restricted
Stock awards. The Administrator may also condition the grant of Deferred Stock
or Restricted Stock awards upon the exercise of Stock Options, or upon such
other criteria as the Administrator may determine, in its sole discretion. The
provisions of Deferred Stock or Restricted Stock awards need not be the same
with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of a Deferred
-----------------------
Stock or Restricted Stock award shall not have any rights with respect to such
Award, unless and until such recipient has executed an agreement evidencing the
Award (a "Deferred Stock Award Agreement" or Restricted Stock Award Agreement"
as appropriate) and has delivered a fully executed copy thereof to the Company,
within a period of sixty days (or such other period as the Administrator may
specify) after the Award date.
Except as provided below in this Section 7(b), (i) each Participant who is
awarded Restricted Stock shall be issued a stock certificate in respect of such
shares of Restricted Stock; and (ii) such certificate shall be registered in the
name of the Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award, substantially in
the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the BNC Mortgage, Inc., 1997 Stock Option, Deferred Stock
and Restricted
17
Stock Plan and a Restricted Stock Award Agreement entered into between the
registered owner and BNC Mortgage, Inc. Copies of such Plan and Agreement
are on file in the offices of BNC Mortgage, Inc."
The Company shall require that the stock certificates evidencing such
shares be held in the custody of the Company until the restrictions thereon
shall have lapsed, and that, as a condition of any Restricted Stock award, the
Participant shall have delivered a stock power, endorsed in blank, relating to
the Stock covered by such Award.
With respect to Deferred Stock awards, at the expiration of the Restricted
Period, stock certificates in respect of such shares of Deferred Stock shall be
delivered to the Participant, or his legal representative, in a number equal to
the shares of Stock covered by the Deferred Stock award.
(c) Restriction and Conditions. The Deferred Stock or Restricted Stock
--------------------------
awards granted pursuant to this Section 7 shall be subject to the following
restrictions and conditions:
(i) Subject to the provisions of the Plan and the Deferred Stock or
Restricted Stock Award Agreements, during such period as may be set by the
Administrator commencing on the grant date (the "Restricted Period"), the
Participant shall not be permitted to sell, transfer, pledge or assign shares of
Deferred Stock or Restricted Stock awarded under the Plan. Within these limits,
the Administrator may, in its sole discretion, provide for the lapse of such
restrictions in installments and may accelerate or waive such restrictions in
whole or in part based on such factors and such circumstances as the
Administrator may determine, in its sole discretion, including, but not limited
to, the attainment of certain performance related goals, the Participant's
termination, death or Disability or the occurrence of a "Change of Control" as
defined in Section 10 below.
(ii) Except as provided in paragraph (c)(i) of this Section 7, the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a shareholder of the Company, including the right to vote the
shares, and the right to receive any dividends thereon during the Restricted
Period. With respect to Deferred Stock awards, the Participant shall generally
18
not have the rights of a shareholder of the Company, including the right to vote
the shares during the Restricted Period; provided, however, that dividends
-------- -------
declared during the Restricted Period with respect to the number of shares
covered by a Deferred Stock award shall be paid to the Participant.
Certificates for shares of unrestricted Stock shall be delivered to the
Participant promptly after, and only after, the Restricted Period shall expire
without forfeiture in respect of such shares of Deferred Stock or Restricted
Stock, except as the Administrator, in its sole discretion, shall otherwise
determine.
(iii) Subject to the provisions of the Deferred Stock or Restricted
Stock Award Agreement and this Section 7, upon termination of employment for any
reason during the Restricted Period, all shares subject to any restriction as of
the date of such termination shall be forfeited by the Participant, and the
Participant shall only receive the amount, if any, paid by the Participant for
such Deferred Stock or Restricted Stock, plus simple interest on such amount at
the rate of 8% per year.
Section 7. Amendment and Termination.
(a) The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of the
Participant under any Award theretofore granted without such Participant's
consent, or that without the approval of the shareholders (as described below)
would:
(i) except as provided in Section 3, increase the total number of
shares of Stock reserved for the purpose of the Plan;
(ii) change the employees or class of employees eligible to
participate in the Plan;
(iii) extend the maximum option period under Section 5 of the Plan.
(b) Notwithstanding the foregoing, shareholder approval under this Section
8 shall only be required at such time and under such circumstances as
shareholder approval would be required under applicable laws, regulations and
exchange requirements.
19
(c) The Administrator may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Section 3, no such amendment
shall impair the rights of any holder without his or her consent.
Section 8. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant or
optionee by the Company, nothing contained herein shall give any such
Participant or optionee any rights that are greater than those of a general
creditor of the Company.
Section 9. Change of Control.
The following acceleration and valuation provisions shall apply in the
event of a "Change of Control", as defined in paragraph (b) of this Section 10:
(a) In the event of a "Change of Control," unless otherwise determined by
the Administrator or the Board in writing at or after grant (including under any
individual agreement), but prior to the occurrence of such Change of Control;
(i) any Stock Appreciation Rights outstanding for at least six
months and any Stock Options awarded under the Plan not previously exercisable
and vested shall become fully exercisable and vested;
(ii) the restrictions applicable to any Restricted Stock or Deferred
Stock awards under the Plan shall lapse, and such shares and Awards shall be
deemed fully vested;
(iii) any indebtedness incurred pursuant to Section 5(e) above shall
be forgiven and the collateral pledged in connection with any such loan shall be
released; and
(iv) the value of all outstanding Stock Options, Stock Appreciation
Rights, Limited Stock Appreciation Rights, Restricted Stock and Deferred Stock
awards shall, to the extent determined by the Administrator at or after grant,
be cashed out by a payment of cash or other property, as the Administrator may
determine, on the basis of the "Change of Control Price" (as defined in
paragraph (c)
20
of this Section 10) as of the date the Change of Control occurs or such other
date as the Administrator may determine prior to the Change of Control.
(b) For purposes of paragraph (a) of this Section 10, a "Change of Control"
shall be deemed to have occurred if:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act(other than the Company; any trustee or other fiduciary holding
securities under an employee benefit plan of the Company; or any company owned,
directly or indirectly, by the shareholders of the Company in substantially the
same proportions as their ownership of the Stock of the Company) is or becomes
after the Effective Date the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person or any securities
acquired directly from the Company or its affiliates) representing 30% or more
of the combined voting power of the Company's then outstanding securities; or
(ii) during any period of two consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of such
period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii) or (iv) of this Section
10(b)) whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof; or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities
21
of the Company or such surviving entity outstanding immediately after such
merger or consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
(c) For purposes of this Section 10, "Change of Control Price" means the
higher of (i) the highest price per share paid or offered in any transaction
related to a Change of Control of the Company or (ii) the highest price per
share paid in any transaction reported on the exchange or national market system
on which the Stock is listed, at any time during the preceding sixty day period
as determined by the Administrator, except that, in the case of Incentive Stock
Options and Stock Appreciation Rights or Limited Stock Appreciation Rights
relating to Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the Administrator decides to cash
out such options.
Section 10. General Provisions.
(a) The Administrator may require each person purchasing shares pursuant to
a Stock Option to represent to and agree with the Company in writing that such
person is acquiring the shares without a view to distribution thereof. The
certificates for such shares may include any legend which the Administrator
deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the Stock is then
listed, and any applicable Federal or state securities law, and the
Administrator may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.
22
(b) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) Each Participant shall, no later than the date as of which the value of
an Award first becomes includable in the gross income of the Participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to the
Award. The obligations of the Company under the Plan shall be conditional on
the making of such payments or arrangements, and the Company (and, where
applicable, its Subsidiaries) shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
Participant.
(d) No member of the Board or the Administrator, nor any officer or
employee of the Company acting on behalf of the Board or the Administrator,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of the
Board or the Administrator and each and any officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action,
determination or interpretation.
(e) No Enlargement of Employee Rights. This Plan is purely voluntary on
the part of the Company, and while the Company hopes to continue it
indefinitely, the continuance of the Plan shall not be deemed to constitute a
contract between the Company and any employee, or to be consideration for or a
condition of the employment of any employee. Nothing contained in the Plan
shall be deemed to give any employee the right to be retained in the employ of
the Company, its Subsidiaries, or its Parent Corporation to interfere with the
right of the Company, or it Subsidiaries to discharge or retire any employee
thereof at any time. No employee shall have any right to or interest in Stock
Options, Stock Appreciation Rights or Limited Stock Appreciation Rights,
Restricted Stock, or Deferred Stock, authorized hereunder prior to the grant of
such a Stock Option or other award described herein to such employee, and upon
such grant he or she shall have only such
23
rights and interests as are expressly provided herein, subject, however, to all
applicable provisions of the Company's Articles of Incorporation, as the same
may be amended from time to time.
Section 11. Specific Performance.
The Stock Options granted under this Plan and the Shares issued pursuant to
the exercise of such Stock Options cannot be readily purchased or sold in the
open market, and, for that reason among others, the Company and its shareholders
will be irreparably damaged in the event that this Plan is not specifically
enforced. In the event of any controversy concerning the right or obligation to
purchase or sell any such Option or Optioned Stock, such right or obligation
shall be enforceable in a court of equity by a decree of a specific performance.
Such remedy shall, however, be cumulative and not exclusive, and shall be in
addition to any other remedy which the parties may have.
Section 12. Invalid Provision.
In the event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid
unenforceable provision was not contained herein.
Section 13. Applicable Law.
This Plan shall be governed by and construed in accordance with the laws of
the State of California.
Section 14. Successors and Assigns.
This Plan shall be binding on and inure to the benefit of the Company and
the employees to whom an Option is granted hereunder, and such employees' heirs,
executors, administrators, legatees, personal representatives, assignees and
transferees.
24
Section 15. Effective Date of Plan.
The Plan became effective (the "Effective Date") on October 23, 1997.
Section 16. Term of Plan.
No Stock Option, Stock Appreciation Right, Limited Stock Appreciation
Right, Deferred Stock or Restricted Stock award shall
be granted pursuant to the Plan on or after the tenth anniversary of the
Effective Date, but Awards theretofore granted may extend beyond that date.
IN WITNESS WHEREOF, pursuant to the due authorization and adoption of this
plan by the Board on the day and year first above written, the Company has
caused this Plan to be duly executed by its duly authorized officers.
BNC MORTGAGE, INC.
By: /s/ KELLY W. MONAHAN
------------------------------
Name: Kelly W. Monahan
Title: Chief Financial Officer
25
BNC MORTGAGE, INC.
1997 STOCK OPTION, DEFERRED STOCK
AND RESTRICTED STOCK PLAN
DEFERRED STOCK OR
RESTRICTED STOCK AWARD AGREEMENT
Participant Name:___________________
This AGREEMENT dated as of the _____ day of _______________, ____, between
BNC MORTGAGE, INC., a ______________ corporation (the "Company") and
________________ (the "Participant").
RECITALS
WHEREAS, the Company has established the 1997 Stock Option, Deferred Stock
and Restricted Stock Plan (the "Plan") effective as of ________________, and
WHEREAS, pursuant to Section 2 of the Plan, the Administrator has granted
to the Participant by action duly taken on __________, ______,(the "Award Date")
a deferred stock award (the "Deferred Stock Award") and/or a restricted stock
award (the "Restricted Stock Award") based upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of services rendered and to be rendered by
the Participant and the mutual promises made herein, the mutual benefits to be
derived therefrom and other good and valuable consideration, the parties agree
as follows:
AGREEMENT
1. Grant. Subject to the terms of this Agreement, the Company grants to
-----
the Participant the following:
(a) Deferred Stock Award:
__________ shares of Common Stock of the Company (the
"Deferred Stock")
Price (optional): $_____________ per share
Restricted Period: ____________________ to __________________
-1-
Performance Objectives (optional):
Other Restrictions:
(b) Restricted Stock Award:
__________ shares of Common Stock of the Company (the
"Restricted Stock")
Price (optional): $_____________ per share
Restricted Period: ____________________ to __________________
Performance Objectives (optional):
Other Restrictions:
2. Deferred Stock.
--------------
(a) Restriction. Subject to the provisions of the Plan and this
Agreement, during the Restricted Period, Participant is not permitted to sell,
transfer, pledge or assign shares of Deferred Stock awarded hereunder.
(b) Voting Rights, Dividends and Certificates. Participant shall
generally not have the rights of a shareholder of the Company, including the
right to vote the shares during the Restricted Period; provided, however, that
-------- -------
dividends declared during the Restricted Period with respect to the number of
shares covered by the Deferred Stock Award shall be paid to Participant.
Certificates for shares of unrestricted Stock shall be delivered to Participant
promptly after, and only after, the Restricted Period expires without forfeiture
in respect of such shares of Deferred Stock, except as the Participant otherwise
determines.
(c) Termination. Subject to the provisions of Section 7 of the Plan
and this Agreement, upon termination of employment for any reason during the
Restricted Period, all shares still subject to restriction shall be forfeited by
Participant, and
-2-
Participant shall only receive the amount, if any, paid by Participant for such
Deferred Stock, plus simple interest at 8% per year.
(d) Expiration. At the expiration of the Restricted Period, stock
certificates in respect of such shares of Deferred Stock shall be delivered to
Participant, or his legal representative, in a number equal to the shares of
Stock covered by the Deferred Stock Award.
3. Restricted Stock.
----------------
(a) Restriction. Subject to the provisions of the Plan, Participant
is not permitted to sell, transfer, pledge or assign the shares of Restricted
Stock during the Restricted Period.
(b) Certificates and Legend. Participant shall be issued a stock
certificate in respect of such shares of Restricted Stock; and such certificate
shall be registered in the name of Participant, and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the BNC Mortgage, Inc., 1997 Stock Option, Deferred Stock
and Restricted Stock Plan and a Restricted Stock Award Agreement entered
into between the registered owner and BNC Mortgage, Inc. Copies of such
Plan and Agreement are on file in the offices of BNC Mortgage, Inc."
The stock certificates evidencing such shares shall be held in the
custody of the Company until the restrictions thereon shall have lapsed, and
that, as a condition of any Restricted Stock award, Participant shall have
delivered a stock power, endorsed in blank, relating to the Stock covered by
such Award, a form of which is attached here to as Exhibit A.
(c) Voting Rights. Except as provided herein, Participant shall have
all of the rights of a shareholder of the Company, including the right to vote
the shares, and the right to receive any dividends thereon during the Restricted
Period.
-3-
(d) Termination. Subject to the provisions of this Agreement and
Section 7 of the Plan, upon termination of employment for any reason during the
Restricted Period, all shares still subject to restriction shall be forfeited by
Participant, and Participant shall only receive the amount, if any, paid by the
Participant for such Restricted Stock, plus simple interest at 8% per year.
4. Governing Plan. This Agreement hereby incorporates by reference the
--------------
Plan and all of the terms and conditions of the Plan as heretofore amended and
as the same may be amended from time to time hereafter in accordance with the
terms thereof, but no such subsequent amendment shall adversely affect
Participant's rights under this Agreement and the Plan except as may be required
by applicable law. Participant expressly acknowledges and agrees that the
provisions of this Agreement are subject to the Plan; the terms of this
Agreement shall in no manner limit or modify the controlling provisions of the
Plan, and in case of any conflict between the provisions of the Plan and this
Agreement, the provisions of the Plan shall be controlling and binding upon the
parties hereto. Participant also hereby expressly acknowledges, represents and
agrees as follows:
(a) Acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto and by reference incorporated herein, and represents that he/she
is familiar with the terms and provisions of said Plan, and hereby accepts this
Agreement subject to all the terms and provisions of said Plan.
(b) Agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under the Plan.
(c) Acknowledges that he/she is familiar with Sections of the Plan
regarding the issuance of the [Deferred Stock and/or Restricted Stock].
5. Representations and Warranties. As a condition to the issuance of any
------------------------------
portion of shares of [Restricted Stock/Deferred Stock] the Company may require
Participant receiving such shares to make any representation and/or warranty to
the Company as may, in the judgment of counsel to the Company, be required under
any applicable law or regulation, including but not limited to a representation
and warranty that the shares are being acquired only for investment and without
any present intention to sell or
-4-
distribute such shares if, in the opinion of counsel for the Company, such a
representation is required under the Securities Act of 1933 or any other
applicable law, regulation or rule of any governmental agency. Participant
hereby represents to the Company that the shares issuable pursuant to this
Agreement are being acquired only for investment and without any present
intention to sell or distribute such securities.
6. No Enlargement of Employee Rights. Nothing in this Agreement shall be
---------------------------------
construed to confer upon Participant(if an employee) any right to continued
employment with the Company, any Parent or Subsidiary, or to restrict in any way
the right of the Company, a Subsidiary or Parent to terminate his/her
employment. Participant acknowledges that in the absence of an express written
employment agreement to the contrary, Participant's employment with the Company
may be terminated by the Company at any time, with or without cause.
7. Execution and Delivery. Participant acknowledges that Participant
----------------------
shall have no rights with respect to any Award granted by the Company unless and
until Participant executes an Award Agreement and delivers it to the Company
within sixty days of such award (or such other period as the Participant may
specify after the Award Date).
8. Withholding of Taxes. Participant authorizes the Company to withhold,
--------------------
in accordance with any applicable law, from any compensation payable to him any
taxes required to be withheld by federal, state or local law as a result of the
grant of Deferred Stock and/or Restricted Stock Award.
9. Laws Applicable to Construction. This Agreement shall be construed
-------------------------------
and enforced in accordance with the laws of the State of California.
10. Agreement Binding on Successors. The terms of this Agreement shall be
-------------------------------
binding upon the executors, administrators, heirs, successors, transferees and
assignees of the Participant.
11. Costs of Litigation. In any action at law or in equity to enforce any
-------------------
of the provisions or rights under this Agreement or the Plan, the unsuccessful
party to such litigation, as determined by the court in a final judgment or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
-5-
(including without limitation costs, expenses end fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
12. Necessary Acts. The Participant agrees to perform all acts and
--------------
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
13. Counterparts. For convenience this Agreement may be executed in any
------------
number of identical counterparts, each of which shall be deemed a complete
original in itself and may be introduced in evidence or used for any other
purpose without the production of any other counterparts.
14. Invalid Provisions. In the event that any provision of this Agreement
------------------
is found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid and unenforceable provision was not contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written. By Participant's execution of this Agreement, Participant
agrees to the terms and conditions hereof and of the Plan.
BNC MORTGAGE, INC. Participant
By: _________________________ _______________________
Name: (Signature)
Title:
_______________________
(Print Name)
_______________________
(Address)
_______________________
(City, State, Zip Code)
_______________________
(Social Security)
-6-
By his or her signature below, the spouse of the Participant, of such
Participant be legally married as of the date of his execution of this
Agreement, acknowledges that he or she has read this Agreement and the Plan and
is familiar with the terms and provisions thereof, and agrees to be bound by all
the terms and conditions of said Agreement and said Plan document.
___________________________________
Spouse
Dated: ____________________________
By his or her signature below the Participant represents that he or
she is not legally married as of the date of execution of this Agreement.
___________________________________
Participant
Dated: ____________________________
Instruction: Sign and complete two copies of this Agreement and return one in
the enclosed, addressed envelope to the Company.
-7-
EXHIBIT A
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the undersigned hereby sell, assign and transfer unto:
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------------------
- --------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________) Shares of the _________________
Stock of the _______________________________________________________ Corporation
standing in ___________________________ name(s) on the books of said Corporation
represented by certificate(s) No._______________________________________________
herewith and do hereby irrevocably constitute and appoint ______________________
_______________________________________________________________________ attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitute.
Dated _______________________________ _______________________________________
_______________________________________
THE SIGNATURE(S) ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) ON THE FACE
OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR
ANY CHANGE.
THE SIGNATURE(S) OF THE ASSIGNOR(S) MUST BE GUARANTEED HEREON.
BNC MORTGAGE, INC.
1997 STOCK OPTION, DEFERRED STOCK
AND RESTRICTED STOCK PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
Participant Name: ___________________
This AGREEMENT dated as of the _____ day of _______________, _____, between
BNC MORTGAGE, INC., a ___________________________ corporation (the "Company")
and ___________________________ (the "Participant").
RECITALS
WHEREAS, the Company has established the 1997 Stock Option, Deferred Stock
and Restricted Stock Plan (the "Plan") effective as of ____________________; and
WHEREAS, pursuant to Section 2 of the Plan, the Administrator of the Plan
by action duly taken on ___________, ______, granted to Participant Stock
Appreciation Rights ("SARs") on the terms and set forth in the Plan and the term
and conditions set forth herein.
NOW, THEREFORE, in consideration of services rendered and to be rendered by
the Participant and the mutual promises made herein, the mutual benefits to be
derived therefrom and other good and valuable consideration, the parties agree
as follows:
AGREEMENT
1. Grant. Subject to the terms of this Agreement, the Company grants to
-----
Participant SARS covering a total of _______________ shares of Common Stock of
the Company subject to the terms and conditions set forth in the Plan and the
terms and conditions set forth herein at a price of $____________ per share (the
"SAR Price").
2. Type of SAR and Exercise Dates. SARs that are granted in conjunction
------------------------------
with all or part of a Stock Option granted under the Plan shall be marked below
as such and designated as a "Related SAR." In the case of an Incentive Stock
Option, Related SARs may be granted only at the time of the grant of the
Incentive Stock
1
Option. SARs that are granted alone shall be marked below as such and
designated as a "Free Standing SAR." The SAR shall be exercisable as to the
specified number of shares on and after the "First" dates and on or before the
"Last" dates set forth below:
Exercise Dates
--------------
Type of SAR Number of Shares First Last
----------- ---------------- ----- ----
- ---------------- -------------------- --------- ---------
- ---------------- -------------------- --------- ---------
- ---------------- -------------------- --------- ---------
- ---------------- -------------------- --------- ---------
- ---------------- -------------------- --------- ---------
If Participant is granted a Related SAR, the Stock Option with which it was
granted is specified below.
Grant date of Stock Option: _____________
Shares Underlying Stock Option: _____________
Price per share of Stock Option: $____________
Participant acknowledges that he/she understands he/she has no right
whatsoever to exercise the SAR(s) granted hereunder with respect to any Shares
covered by any installment until such installment accrues as provided above.
3. Governing Plan. This Agreement hereby incorporates by reference the
--------------
Plan and all of the terms and conditions of the Plan as heretofore amended and
as the same may be amended from time to time hereafter in accordance with the
terms thereof, but no such subsequent amendment shall adversely affect
Participant's rights under this Agreement and the Plan except as may be required
by applicable law. Participant expressly acknowledges and agrees that the
provisions of this Agreement are subject to the Plan; the terms of this
Agreement shall in no manner limit or modify the controlling provisions of the
Plan, and in case of any conflict between the provisions of the Plan and this
Agreement, the provisions of the Plan shall be controlling and binding upon the
parties hereto. Participant also hereby expressly acknowledges, represents and
agrees as follows:
2
(a) Acknowledges receipt of a copy of the Plan, a copy of which is attached
hereto and by reference incorporated herein, and represents that he/she is
familiar with the terms and provisions of said Plan, and hereby accepts this
Agreement subject to all the terms and provisions of said Plan.
(b) Agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under the Plan.
(c) Acknowledges that he/she is familiar with Sections of the Plan
regarding the exercise of the SAR(s) and represents that he/she understands that
said SAR(s) must be exercised on or before the earliest of the following dates,
whichever is applicable: (i) the "Last" exercise date noted above in Section 2;
(ii) if a Related SAR, then upon the termination or exercise of the related
Stock Option;(iii) the effective date of a sale or other disposition of all or
substantially all of the stock or assets of the Company, as provided in Section
10 of the Plan; (iv) the date which is the earlier of (A) three months from the
date of termination or (B) the expiration of such SAR's term following the
Participant's termination of directorship or consulting or other arrangement
(unless extended) for any reason other than death or disability as provided
under Subsection 5(i) of the Plan; or (v) the date that is one year following
the Participant's termination of employment, directorship or consulting or other
arrangement by reason of his/her death, or the date that is one year following
his/her termination of employment, directorship or consulting or other
arrangement by reason of disability, whichever is applicable, as provided in
Subsections 5(g) and 5(h) of the Plan.
4. Representations and Warranties. As a condition to the exercise of any
------------------------------
portion of an SAR, the Company may require, if issuing shares of stock, the
person exercising such SAR to make any representation and/or warranty to the
Company as may, in the judgment of counsel to the Company, be required under any
applicable law or regulation, including but not limited to a representation and
warranty that the shares are being acquired only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required under the Securities
Act of 1933 or any other applicable law, regulation or rule of any governmental
agency. If Participant receives stock upon exercise of an SAR, Participant
hereby represents to the Company that each of the SARs evidenced hereby and the
shares issuable upon exercise
3
thereof is being acquired only for investment and without any present intention
to sell or distribute such securities.
5. No Enlargement of Employee Rights. Nothing in this Agreement shall be
---------------------------------
construed to confer upon Participant (if an employee) any right to continued
employment with the Company, any Parent or Subsidiary, or to restrict in any way
the right of the Company, a Subsidiary or Parent, to terminate his/her
employment. Participant acknowledges that in the absence of an express written
employment agreement to the contrary, Participant's employment with the Company
may be terminated by the Company at any time, with or without cause.
6. Related SARs.
------------
(a) Term. A Related SAR or applicable portion thereof granted with respect
to a given Stock Option will terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, unless
otherwise provided by the Administrator at the time of grant, a Related SAR
granted with respect to less than the full number of shares covered by a related
Stock Option will only be reduced if and to the extent that the number of shares
covered by the exercise or termination of the related Stock Option exceeds the
number of shares not covered by the SAR.
(b) Exercise. Related SARs are exercisable only at such time or times and
to the extent that the Stock Options to which they relate are exercisable;
provided, however, that any Related SAR is not exercisable during the first six
- -------- -------
(6) months of its term, except that this additional limitation shall not apply
in the event of death or Disability (as defined in the Plan) of the Participant
prior to the expiration of such six-month period.
Upon the exercise of a Related SAR, Participant is entitled to receive up
to, but not more than, an amount in cash or that number of shares of Stock (or
in some combination of cash and shares of Stock) equal in value to the excess of
the Fair Market Value (as defined in the Plan) of one share of Stock as of the
date of exercise over the option price per share specified in the related Stock
Option multiplied by the number of shares of Stock in respect of which the
Related SAR has been exercised, with the Administrator having the right to
determine the form of payment.
4
Upon the exercise of a Related SAR, the Stock Option or part thereof to
which such Related SAR is related is deemed to have been exercised for the
purpose of the limitation set forth in Section 3 of the Plan on the number of
shares of Stock to be issued under the Plan, but only to the extent of the
number of shares issued under the Related SAR.
A Related SAR granted in connection with an Incentive Stock Option may be
exercised only if and when the Fair Market Value of the Stock subject to the
Incentive Stock Option exceeds the exercise price of such Stock Option.
(c) Transferability. Related SARs are transferable only when and to the
extent that the underlying Stock Option would be transferable under Section 5(f)
of the Plan.
7. Free Standing SARs.
------------------
(a) Term. The term of a Free Standing SAR is fixed by the Administrator
and set forth herein, but no Free Standing SAR is exercisable more than ten
years after the date such right is granted.
(b) Exercise. Free Standing SARs are not be exercisable during the first
six (6) months of its term, except that this limitation does not apply in the
event of death or Disability (as defined in the Plan) of Participant prior to
the expiration of such six-month period.
Upon the exercise of a Free Standing SAR, Participant is entitled to
receive up to, but not more than, an amount in cash or that number of shares of
Stock (or any combination of cash or shares of Stock) equal in value to the
excess of the Fair Market Value (as defined in the Plan) of one share of Stock
as of the date of exercise over the price per share specified in the Free
Standing SAR (which price shall be no less than 100% of the Fair Market Value of
the Stock on the date of grant) multiplied by the number of shares of Stock in
respect to which the right is being exercised, with the Administrator having the
right to determine the form of payment.
(c) Transferability. No Free Standing SAR is transferable by Participant
otherwise than by will or by the laws of descent and distribution, or pursuant
to a "qualified domestic
5
relations order," as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended.
[Alternative; replace section (c) with the following to allow for transferable
SARs:]
SARs are transferable by Participant to (A) the spouse, qualified domestic
partner, children or grandchildren of the Participant and any other persons
related to Participant as may be approved by the Administrator ("Immediate
Family Members"), (B) a trust or trusts for the exclusive benefit of such
Immediate Family Members, (C) a partnership or partnerships in which such
Immediate Family Members are the only partners, or (D) any other persons or
entities as may be approved by the Administrator, provided that (x) there may be
no consideration for any transfer unless approved by the Administrator, (y) the
agreement pursuant to which such SARs are granted must be approved by the
Administrator, and must expressly provide for transferability in a manner
consistent with this paragraph, and (z) subsequent transfers of transferred
options shall be prohibited except those in accordance with Section 5(f)(i) of
the Plan or expressly approved by the Administrator. Following transfer, any
such SARs shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that, except for purposes of
Sections 5(g), (h) and (i) and 11(c) of the Plan, the terms "optionee," Stock
Option holder" and "Participant" shall be deemed to refer to the transferee. The
events of termination of employment under Sections 5(g), (h) and (i) of the Plan
shall continue to be applied with respect to Participant, following which the
SARs shall be exercisable by the transferee only to the extent, and for the
periods specified under such sections unless the agreement governing such SARs
otherwise provides. Notwithstanding the transfer, the Participant will continue
to be subject to the provisions of Section 11(c) of the Plan regarding payment
of taxes, including the provisions entitling the Company to deduct such taxes
from amounts otherwise due to Participant. "Qualified domestic partner" for the
purpose of this paragraph shall mean a domestic partner living in the same
household as the optionee and registered with, certified by or otherwise
acknowledged by the county or other applicable governmental body as a domestic
partner or otherwise establishing such status in any manner satisfactory to the
Administrator.
(d) Termination of Participant. In the event of the termination of
Participant, such rights shall be exercisable to the
6
same extent that a Stock Option would have been exercisable in the event of the
termination of the optionee.
8. Execution and Delivery. Participant acknowledges that Participant
----------------------
shall have no rights with respect to any Award granted by the Company unless and
until Participant executes an Award Agreement and delivers it to the Company
within sixty days of such award (or such other period as the Committee may
specify after the Award Date).
9. Withholding of Taxes. Participant authorizes the Company to withhold,
--------------------
in accordance with any applicable law, from any compensation payable to him any
taxes required to be withheld by federal, state or local law as a result of the
grant of the SARs.
10. Laws Applicable to Construction. This Agreement shall be construed
-------------------------------
and enforced in accordance with the laws of the State of California.
11. Agreement Binding on Successors. The terms of this Agreement shall be
-------------------------------
binding upon the executors, administrators, heirs, successors, transferees and
assignees of the Participant.
12. Costs of Litigation. In any action at law or in equity to enforce any
-------------------
of the provisions or rights under this Agreement or the Plan, the unsuccessful
party to such litigation, as determined by the court in a final judgment or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses end fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
13. Necessary Acts. The Participant agrees to perform all acts and
--------------
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
14. Counterparts. For convenience this Agreement may be executed in any
------------
number of identical counterparts, each of which shall be deemed a complete
original in itself and may be introduced in evidence or used for any other
purpose without the production of any other counterparts.
7
15. Invalid Provisions. In the event that any provision of this Agreement
------------------
is found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid and unenforceable provision was not contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written. By Participant's execution of this Agreement, Participant
agrees to the terms and conditions hereof and of the Plan.
BNC MORTGAGE, INC. Participant
By:
-------------------------- ----------------------------------------
Name: (Signature)
Title:
----------------------------------------
(Print Name)
----------------------------------------
(Address)
----------------------------------------
(City, State, Zip Code)
----------------------------------------
Social Security No.
8
By his or her signature below, the spouse of the Participant, of such
Participant be legally married as of the date of his execution of this
Agreement, acknowledges that he or she has read this Agreement and the Plan and
is familiar with the terms and provisions thereof, and agrees to be bound by all
the terms and conditions of said Agreement and said Plan document.
---------------------------------------
Spouse
Dated:
---------------------------------
By his or her signature below the Participant represents that he or she is
not legally married as of the date of execution of this Agreement.
---------------------------------------
Participant
Dated:
---------------------------------
Instruction: Sign and complete two copies of this Agreement and return one in
the enclosed, addressed envelope to the Company.
9
BNC MORTGAGE, INC.
1997 STOCK OPTION, DEFERRED STOCK
AND RESTRICTED STOCK PLAN
STOCK OPTION AGREEMENT
EMPLOYEE NAME:___________________
This AGREEMENT is made effective as of the ______ day of _______________,
_______ (the "Option Grant Date"), by and between BNC Mortgage, Inc., a
_______________ corporation (the "Company") and _________________ (the
"Optionee").
RECITALS
WHEREAS, the Board of Directors of the Company has established the 1997
Stock Option, Deferred Stock and Restricted Stock Plan (the "Plan") effective as
of ________________, and
WHEREAS, pursuant to the provisions of said Plan, the Board of Directors of
the Company, by action duly taken on ______________, _____, granted to the
Optionee an option or options (the "Option(s)") to purchase shares of the Common
Stock of the Company on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein and other good and valuable consideration, the
parties hereto agree as follows:
1. The Option(s). The Optionee may, at his/her option, purchase all or
-------------
any part of an aggregate of __________ shares of Common Stock (the "Optioned
Shares"), at the price of $_________ per share (the "Option Price"), on the
terms and conditions set forth herein.
2. Option Type; Exercise Dates and Exercise. Options intended to qualify
----------------------------------------
as Incentive Stock Options are designated by an "ISO" under the category "Type."
Options intended as separate Non-Qualified Stock Options are designated by a
"NQSO" under the category "Type." Stock Appreciation Rights ("SAR") that are
granted in conjunction with all or part of a Stock Option are designated under
the category "SAR" with the amount of shares the
1
SAR relates to set forth below and a Stock Appreciation Rights Agreement shall
be executed as well. The Option(s) shall be exercisable as to the specified
number of Optioned Shares on and after the "First" dates and on or before the
"Last" dates set forth below:
Number of Exercise Dates
--------- --------------
Type Shares First Last SAR
- ---- ------ ----- ---- ---
- ----------- ---------- --------------------- ----------------
- ----------- ---------- --------------------- ----------------
- ----------- ---------- --------------------- ----------------
- ----------- ---------- --------------------- ----------------
- ----------- ---------- --------------------- ----------------
Optionee acknowledges that he/she understands he/she has no right
whatsoever to exercise the Option(s) granted hereunder with respect to any
Optioned Shares covered by any installment until such installment accrues as
provided above. Optionee further understands that the Option(s) granted
hereunder shall expire and become unexercisable as provided in Section 3(c)
below.
3. Method of Exercise. This Option shall be deemed exercised as to the
------------------
shares to be purchased when written notice of such exercise has been given to
the Company at its principal business office by the Optionee with respect to the
Common Stock to be purchased. Such notice shall be accompanied by full payment
in cash or cash equivalents as determined by the Administrator. As determined
by the Administrator, in its sole discretion, payment in whole or part may also
be made (i) by cancellation of any indebtedness owed by the Company to the
Optionee,(ii) by a full recourse promissory note executed by the Optionee, (iii)
in the form of unrestricted Stock owned by the Optionee, or, in the case of the
exercise of a Non-Qualified Stock Option, Restricted Stock subject to an award
under the Plan (based, in each case, on the Fair Market Value of the Stock on
the date the option is exercised); provided, however, that in the case of an
Incentive Stock Option, the right to make payment in the form of already owned
shares may be authorized only at the time of grant, (iv) by requesting that the
Company withhold whole shares of Common Stock then issuable upon exercise of the
Stock Option (based on the Fair Market Value of the Common Stock on the date the
option is exercised), (v) by arrangement with a broker which is acceptable to
2
the Administrator where payment of the option price is made pursuant to an
irrevocable direction to the broker to deliver all or part of the proceeds from
the sale of the shares underlying the option to the Company, or (vi) by any
combination of the foregoing.
4. Governing Plan. This Agreement hereby incorporates by reference the
--------------
Plan and all of the terms and conditions of the Plan as heretofore amended and
as the same may be amended from time to time hereafter in accordance with the
terms thereof, but no such subsequent amendment shall adversely affect the
Optionee's rights under this Agreement and the Plan except as may be required by
applicable law. The Optionee expressly acknowledges and agrees that the
provisions of this Agreement are subject to the Plan; the terms of this
Agreement shall in no manner limit or modify the controlling provisions of the
Plan, and in case of any conflict between the provisions of the Plan and this
Agreement, the provisions of the Plan shall be controlling and binding upon the
parties hereto. The Optionee also hereby expressly acknowledges, represents and
agrees as follows:
(a) Acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto and by reference incorporated herein, and represents that he/she
is familiar with the terms and provisions of said Plan, and hereby accepts this
Agreement subject to all the terms and provisions of said Plan.
(b) Agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under the Plan.
(c) Acknowledges that he/she is familiar with Sections of the Plan
regarding the exercise of the Option(s) and represents that he/she understands
that said Option(s) must be exercised on or before the earliest of the following
dates, whichever is applicable: (i) the "Last" exercise date noted above in
Section 2; (ii) the day prior to the fifth anniversary, in certain
circumstances, of the Option(s) Grant Date with respect to Options granted as
Incentive Stock Options pursuant to Subsection (5)(b) and the day prior to the
tenth anniversary of the Option(s) Grant Date with respect to Options granted as
Non-Qualified Stock Options; (iii) the effective date of a sale or other
disposition of all or substantially all of the stock or assets of the Company,
as provided in Section 10 of the Plan; (iv) the date which is the earlier of (A)
three months from the date of termination or (B) the expiration of such Stock
Option's term following the Optionee's termination of directorship or consulting
or other arrangement
3
(unless extended) for any reason other than death or disability as provided
under Subsection 5(i) of the Plan; or (v) the date that is one year following
the Optionee's termination of employment, directorship or consulting or other
arrangement by reason of his/her death, or the date that is one year following
his/her termination of employment, directorship or consulting or other
arrangement by reason of disability, whichever is applicable, as provided in
Subsections 5(g) and 5(h) of the Plan.
(d) Acknowledges, understands and agrees that the existence of the Plan
and the execution of this Agreement are not sufficient by themselves to cause
any exercise of any Option(s) granted as an Incentive Stock Option to qualify
for favorable tax treatment through the application of Section 422(A) of the
Internal Revenue Code; that Optionee must, in order to so qualify, individually
meet by his own action all applicable requirements of Section 422A, including
without limitation the following holding period and employment requirements:
(1) holding period requirement: no disposition of an Optioned
--------------------------
Share may be made by Optionee within two (2) years from the date of the
granting of the Option(s) nor within one (1) year after the transfer of
such Optioned Share to him/her, and
(2) employment requirement: at all times during the period
----------------------
beginning on the date of the granting of the Option(s) and ending on the
day three (3) months before the date of exercise, the Optionee must have
been an employee of the Company, its Parent, or a Subsidiary of the
Company, or a corporation or a parent or subsidiary of such corporation
issuing or assuming the Option(s) in a transaction to which Section 425(a)
of the Internal Revenue Code applies, except where the termination of
employment is by means of the employee's disability, in which case said
three (3) month period may be extended to one (1) year, as provided under
Internal Revenue Code Section 422A.
5. Representations and Warranties. As a condition to the exercise
------------------------------
of any portion of an Option, the Company may require the person exercising such
Option to make any representation and/or warranty to the Company as may, in the
judgment of counsel to the Company, be required under any applicable law or
regulation, including but not limited to a representation and warranty that the
shares are being acquired only for investment and without any
4
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required under the Securities
Act of 1933 or any other applicable law, regulation or rule of any governmental
agency. Optionee hereby represents to the Company that each of the Option
evidenced hereby and the shares purchasable upon exercise thereof is being
acquired only for investment and without any present intention to sell or
distribute such securities.
6. Options Not Transferable. No Stock Option shall be transferable
------------------------
by the optionee otherwise than by will or by the laws of descent and
distribution or, with respect to Non-Qualified Stock Options, pursuant to a
"qualified domestic relations order," as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). [See Alternative
below which allows NQSOs to be transferable] Incentive Stock Options shall be
exercisable, during the optionee's lifetime, only by the optionee or, with
respect to Non-Qualified Stock Options, in accordance with the terms of a
qualified domestic relations order.
[Alternative to non-transferable NQSOs; replace first sentence of section 5 with
the following:]
Non-Qualified Stock options are transferable by optionee to (A) the
spouse, qualified domestic partner, children or grandchildren of the optionee
and any other persons related to the optionee as may be approved by the
Administrator ("Immediate Family Members"), (B) a trust or trusts for the
exclusive benefit of such Immediate Family Members, (C) a partnership or
partnerships in which such Immediate Family Members are the only partners, or
(D) any other persons or entities as may be approved by the Administrator,
provided that (x) there may be no consideration for any transfer unless approved
by the Administrator, (y) the stock option agreement pursuant to which such
options are granted must be approved by the Administrator, and must expressly
provide for transferability in a manner consistent with this paragraph , and (z)
subsequent transfers of transferred options shall be prohibited except those in
accordance with Section 5(f)(i) of the Plan or expressly approved by the
Administrator. Following transfer, any such options shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that, except for purposes of Sections 5(g), (h) and (i) and
11(c) of the Plan, the terms "optionee," Stock Option holder" and "Participant"
shall be deemed to refer to the transferee. The events of termination of
employment under Sections 5(g), (h) and (i) of the Plan shall continue to be
applied with respect to the
5
original optionee, following which the options shall be exercisable by the
transferee only to the extent, and for the periods specified under such sections
unless the option agreement governing such options otherwise provides.
Notwithstanding the transfer, the original optionee will continue to be subject
to the provisions of Section 11(c) of the Plan regarding payment of taxes,
including the provisions entitling the Company to deduct such taxes from amounts
otherwise due to such optionee. "Qualified domestic partner" for the purpose of
this paragraph shall mean a domestic partner living in the same household as the
optionee and registered with, certified by or otherwise acknowledged by the
county or other applicable governmental body as a domestic partner or otherwise
establishing such status in any manner satisfactory to the Administrator.
7. No Enlargement of Employee Rights. Nothing in this Agreement
---------------------------------
shall be construed to confer upon the Optionee (if an employee) any right to
continued employment with the Company, any Parent or Subsidiary, or to restrict
in any way the right of the Company, a Subsidiary or Parent, to terminate
his/her employment. Optionee acknowledges that in the absence of an express
written employment agreement to the contrary, Optionee's employment with the
Company may be terminated by the Company at any time, with or without cause.
8. Withholding of Taxes. Optionee authorizes the Company to
--------------------
withhold, in accordance with any applicable law, from any compensation payable
to him any taxes required to be withheld by federal, state or local law as a
result of the grant of the Option(s) or the issuance of stock pursuant to the
exercise of such Option(s).
9. Laws Applicable to Construction. This Agreement shall be
-------------------------------
construed and enforced in accordance with the laws of the State of California.
10. Agreement Binding on Successors. The terms of this Agreement
-------------------------------
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Optionee.
11. Costs of Litigation. In any action at law or in equity to
-------------------
enforce any of the provisions or rights under this Agreement or the Plan, the
unsuccessful party to such litigation, as determined by the court in a final
judgment or decree, shall pay the successful party or parties all costs,
expenses and reasonable attorneys' fees incurred by the successful party or
parties
6
(including without limitation costs, expenses end fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
12. Necessary Acts. The Optionee agrees to perform all acts and
--------------
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
13. Counterparts. For convenience this Agreement may be executed in
------------
any number of identical counterparts, each of which shall be deemed a complete
original in itself and may be introduced in evidence or used for any other
purpose without the production of any other counterparts.
14. Invalid Provisions. In the event that any provision of this
------------------
Agreement is found to be invalid or otherwise unenforceable under any applicable
law, such invalidity or unenforceability shall not be construed as rendering any
other provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid and unenforceable provision was not contained herein.
15. Limitation on Value of Optioned Shares. Optionee acknowledged
--------------------------------------
that the Plan provides that the aggregate fair market value (determined as of
the date hereof) of the shares of Common Stock to which Options granted as
Incentive Stock Options are exercisable for the first time by Optionee during
any calendar year under all incentive stock option plans of the Company and any
Subsidiary shall not exceed $100,000. It is understood and agreed that should
it be determined that an Option if granted as an Incentive Stock Option
hereunder would exceed such maximum, such Option shall be considered granted as
a Non-Qualified Stock Option to the extent, but only to the extent of such
excess. This limitation shall not apply to any option granted as a Non-
Qualified Stock Option.
7
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement effective as of the date first written hereinabove.
BNC MORTGAGE, INC. OPTIONEE
By:
------------------------ -----------------------------------
Name:
Title: -----------------------------------
Street Address
-----------------------------------
City and State
-----------------------------------
Social Security No.
By his or her signature below, the spouse of the Optionee, of such
Optionee be legally married as of the date of his execution of this Agreement,
acknowledges that he or she has read this Agreement and the Plan and is familiar
with the terms and provisions thereof, and agrees to be bound by all the terms
and conditions of said Agreement and said Plan document.
---------------------------------------
Spouse
Dated:
--------------------------------
By his or her signature below the Optionee represents that he or she
is not legally married as of the date of execution of this Agreement.
---------------------------------------------
Optionee
Dated:
---------------------------------------
8