FORM OF PRIVATEBANCORP, INC. NONQUALIFIED INDUCEMENT TIME-VESTED STOCK OPTION AGREEMENT
EXHIBIT 10.21
FORM OF PRIVATEBANCORP, INC.
NONQUALIFIED INDUCEMENT TIME-VESTED STOCK OPTION AGREEMENT
As an inducement to the undersigned Optionee (“Optionee”) to accept an offer of
employment with the Company, this Nonqualified Inducement Stock Option Agreement (this
“Agreement”) is made as of the date set forth on the signature page hereof by and between
PrivateBancorp, Inc., a Delaware corporation (the “Company”), and the Optionee. Except as
otherwise indicated or defined in Section 1 hereof, all words with initial capitals shall have the
same meaning as ascribed to them in the PrivateBancorp, Inc. Strategic Long-Term Incentive
Compensation Plan (the “Plan”). Optionee acknowledges receipt of a copy of the Plan.
WHEREAS, the Company desires to grant to Optionee an option (“Option”) to buy shares
of the Company’s Common Stock, pursuant to the Plan and this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. For the purposes of this Agreement:
(a) “Change of Control” shall be deemed to have occurred upon the happening of any of
the following events:
(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (“Exchange Act”)), other than (A) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company or any of
its subsidiaries, or (B) a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of stock of the
Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 30% or more of the total
voting power of the then outstanding shares of capital stock of the Company entitled to vote
generally in the election of directors (the “Voting Stock”), provided, however, that
the following shall not constitute a change in control: (1) such person becomes a
beneficial owner of 30% or more of the Voting Stock as the result of an acquisition of such
Voting Stock directly from the Company, or (2) such person becomes a beneficial owner of 30%
or more of the Voting Stock as a result of the decrease in the number of outstanding shares
of Voting Stock caused by the repurchase of shares by the Company; provided, further, that
in the event a person described in clause (1) or (2) shall thereafter increase (other than
in circumstances described in clause (1) or (2)) beneficial ownership of stock representing
more than 1% of the Voting Stock, such person shall be deemed to become a beneficial owner
of 30% or more of the Voting Stock for purposes of this Section 1(a)(i), provided such
person continues to beneficially own 30% or more of the Voting Stock after such subsequent
increase in beneficial ownership, or
(ii) Individuals who, as of November 1, 2007, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board, provided
that any individual becoming a director, whose election or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding for this purpose,
any individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of the Company (as
such terms are used in Rule 14a-11 promulgated under the Exchange Act); or
(iii) Consummation of a reorganization, merger or consolidation or the sale or other
disposition of all or substantially all of the assets of the Company (a “Business
Combination”), in each case, unless (1) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Voting Stock immediately prior
to such Business Combination beneficially own, directly or indirectly, more than 50% of the
total voting power represented by the voting securities entitled to vote generally in the
election of directors of the corporation resulting from the Business Combination (including,
without limitation, a corporation which as a result of the Business Combination owns the
Company or all or substantially all of the Company’s assets either directly or through one
or more subsidiaries) in substantially the same proportions as their ownership immediately
prior to the Business Combination of the Voting Stock of the Company, and (2) at least a
majority of the members of the board of directors of the corporation resulting from the
Business Combination were members of the Incumbent Board at the time of the execution of the
initial agreement, or action of the Incumbent Board, providing for such Business
Combination; or
(iv) Approval by the stockholders of the Company of a plan of complete liquidation or
dissolution of the Company; or
(v) (1) a sale or other transfer of the voting securities of the Bank, whether by
stock, merger, joint venture, consolidation or otherwise, such that following said
transaction the Company does not directly, or indirectly through majority owned
subsidiaries, retain more than 50% of the total voting power of the Bank represented by the
voting securities of the Bank entitled to vote generally in the election of the Bank’s
directors; or (2) a sale of all or substantially all of the assets of the Bank other than to
the Company or any subsidiary of the Company.
(b) “Disability” means a termination of Optionee’s employment due to his permanent
disability (as determined by the Committee) in accordance with either Section 23(e)(3) of the Code,
after receipt of medical advice, or as entitles Optionee to payments of benefits under a long-term
disability benefit plan of the Company or a Subsidiary in which he participates.
(c) “Resignation” means Optionee’s voluntary relinquishment of employment with the
Company and all Subsidiaries.
(d) “Termination” means a termination of the employment of Optionee (i) by the Company
and all of its Subsidiaries for any reason, other than a Termination For Cause, or (ii) due to
Optionee’s death or Disability.
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(e) “Termination Date” means the date on which a Resignation, Termination, Termination
For Cause or Termination For Good Reason occurs.
(f) “Termination For Cause” means a termination of the employment of Optionee by the
Company or any Subsidiary for any of the following reasons:
(i) In the case in which Optionee has entered into an employment agreement (including,
but not limited to, a term sheet agreement) with the Company or a Subsidiary as in effect on
the date hereof, or Optionee otherwise is at any time participating in a severance plan for
executives of the Company or a Subsidiary, which provides for an involuntary termination of
Optionee’s employment for any reason set forth as constituting “Cause” under such of
Optionee’s employment agreement or severance plan for executives (as the case may be).
(ii) In the case in which there is no employment agreement in effect between Optionee
and the Company or any Subsidiary or severance plan for executives in which Optionee is at
any applicable time participating, any of the following reasons:
(1) The commission by Optionee, as reasonably determined by the Committee, of
any theft, embezzlement or felony against the Company or any Subsidiaries;
(2) The commission of an unlawful or criminal act by Optionee resulting in
material injury to the business or property of the Company or Subsidiaries or of an
act generally considered to involve moral turpitude, all as reasonably determined by
the Committee;
(3) The commission of an intentional act by Optionee in the performance of
Optionee’s duties as an employee of the Company or any Subsidiary amounting to gross
negligence or misconduct or resulting in material injury to the business or property
of the Company or Subsidiaries, all as reasonably determined by the Committee; or
(4) The habitual drunkenness or drug addiction of Optionee, as reasonably
determined by the Committee.
(g) “Termination For Good Reason” means, in the case in which Optionee has entered
into an employment agreement (including, but not limited to, a term sheet agreement) with the
Company or a Subsidiary as in effect on the date hereof, or Optionee otherwise is at any time
participating in a severance plan for executives of the Company or a Subsidiary, which provides for
a voluntary termination of Optionee’s employment for “Good Reason” (or comparable term) thereunder,
a Resignation of Optionee for any reason set forth as constituting “Good Reason” (or such
comparable term) under such of Optionee’s employment agreement or severance plan for executives (as
the case may be).
2. Grant and Designation of Option. Upon the execution and delivery of this Agreement
and the related Stock Option Certificate of even date herewith, and subject to the Plan (the terms
and provisions of which are incorporated herein and expressly made a part
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hereof, including, but not limited to, adjustments required pursuant to Section 11 thereof),
the Company hereby grants to Optionee the Option to purchase the aggregate number of shares of
Common Stock set forth on the Stock Option Certificate at the price per share (“Option
Price”) set forth on such Certificate.
3. Term of Option; Vesting and Exercisability. Subject to earlier termination,
acceleration or cancellation of the Option as provided herein, the term of the Option shall be for
the period set forth on the Stock Option Certificate. Subject to the provisions of this Agreement,
the Option shall be “vested” and exercisable at such times and as to such number of shares
of Common Stock as determined on the schedule set forth on the Stock Option Certificate. The
foregoing to the contrary notwithstanding, to the extent not previously terminated or canceled,
upon and after a Change in Control, the Option shall be 100% vested and Optionee shall be entitled
to exercise the Option in whole or in part with respect to all of the shares covered thereby,
provided Optionee has been continuously employed by the Company or a Subsidiary from the date
hereof until the occurrence of such Change of Control.
4. Method of Exercise.
(a) Subject to the terms and conditions of this Agreement, the Option may be exercised by
written notice to the Company (the “Exercise Notice”) at its offices at 00 Xxxx Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 (or such other offices of the Company which are
hereinafter designated by the Company) to the attention of the Secretary of the Company. The
Exercise Notice (i) shall state (A) the election to exercise the Option and (B) the total number of
full shares of Common Stock in respect to which it is being exercised, and (ii) shall be signed by
the person or persons exercising the Option.
(b) Optionee shall pay the total amount due resulting from such exercise in any of the
following forms: (i) by certified or cashier’s check for the full amount of the purchase price of
such shares; (ii) by delivery of certificates for shares of Previously-Acquired Shares (or deemed
delivery based on attestation to the ownership of Previously-Acquired Shares) having a Fair Market
Value equal to the total payment due from Optionee; (iii) through a simultaneous exercise of
Optionee’s Option and sale of the shares of Common Stock hereby acquired pursuant to a brokerage
arrangement approved in advance by the Committee to assure its conformity with the terms and
conditions of the Plan; or (iv) by a combination of the methods described in (i), (ii) and (iii)
above. To the extent applicable, Optionee shall also pay the amount, in cash, of any federal,
state and local income, Social Security and Medicare taxes required to be withheld as a result of
the exercise, unless Optionee delivers Previously-Acquired Shares or elects with the consent of the
Committee or is directed by the Committee to have the Company withhold from the shares purchased,
shares having a Fair Market Value equal to such required tax withholding amount. The value of any
shares withheld may not be in excess of the amount of taxes required to be withheld by the Company
determined by applying the applicable minimum statutory withholding tax rates. Upon receipt of the
foregoing, the Company shall issue the shares of Common Stock as to which the Option has been duly
exercised and shall return the Stock Option Certificate, duly endorsed to reflect such exercise, to
Optionee. In the discretion of the Committee, the shares of Common Stock to be issued upon the
exercise of all or a portion of the Option may be non-certificated and, accordingly, issuances and
transfers shall be reflected on the stock ledger books and records of the Company and no
certificate of shares of Common Stock in
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respect of Grantee’s shares will be issued to Grantee, to the extent not prohibited by
applicable law or the rules of any stock exchange.
5. Restriction on Exercise. This Option may not be exercised if the issuance of such
shares upon such exercise or the method of payment of consideration for such shares would
constitute a violation of any applicable federal or state securities or other law or regulation.
As a condition to the exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be required by any applicable law or regulation.
6. Effect of Termination of Employment. The Option, to the extent not theretofore
vested and exercised, shall become vested and shall terminate on the date of or following
Optionee’s termination of employment as set forth below:
(a) In the event a Termination Date occurs due to Optionee’s Resignation or Termination (other
than in circumstances described in Sections 6(b) or (e) below), Optionee may during the 90-day
period following such Resignation or Termination exercise the Option as to such portion or all of
the Option which had become vested and exercisable in accordance with the terms of the Stock Option
Certificate prior to Optionee’s Termination Date, and such portion of the Option which had not so
previously become vested and exercisable shall be immediately forfeited and canceled.
(b) In the event of a Termination of Optionee by the Company without Cause, Optionee’s
Resignation for Good Reason, or Optionee’s death or Disability, prior to the occurrence of a Change
of Control, Optionee shall become immediately 100% vested in the unvested portion of the Option.
The Option shall be exercisable until the first anniversary of Optionee’s Termination Date.
(c) If, upon an Optionee’s termination of employment for any reason other than Cause, the
Optionee has attained age 62 and has been credited with 10 or more years of service with the
Corporation and all Subsidiaries (including prior service with LaSalle Bank, N.A. and its
affiliates), the Optionee shall become vested in a pro rata portion of the Option then outstanding
equal to the number of completed months during the vesting period divided by the number of full
months necessary to achieve full vesting of such Option. Any vested Options upon such Optionee’s
retirement shall remain exercisable until the first anniversary of the Optionee’s retirement date.
(d) In the event of Optionee’s death during the 90-day period or one-year period described in
Sections 6(a), (b) and (c), Optionee’s personal representative may, during the unexpired portion of
such 90-day period or one-year period, as the case may be, following the date of Optionee’s death,
exercise the Option to the extent that the Option was so vested and exercisable at the time of
Optionee’s death.
(e) In the event of Optionee’s Termination for Cause, the unexercised portion of the Option,
whether vested or not vested, shall immediately terminate and be forfeited.
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(f) The foregoing provisions of this Section 6 to the contrary notwithstanding, in no event
shall any portion of the Option be exercised after the expiration of the term of the Option set
forth in Section 3.
7. Compliance with Certain Laws and Regulations. If the Committee shall determine, in
its discretion, that:
(a) the listing, registration or qualification of the shares of Common Stock subject to this
Option upon any securities exchange or under any law or regulation, or that the consent or approval
of any governmental regulatory body is necessary or desirable in connection with the granting of
the Option or the acquisition of shares thereunder, Optionee shall supply the Committee or Company,
as the case may be, with such certificates, representations and information as the Committee or
Company, as the case may be, may request and shall otherwise cooperate with the Company in
obtaining any such listing, registration, qualification, consent or approval, or
(b) despite the Committee’s commercially reasonable efforts, and in the absence of approval of
the Plan and this Option by stockholders holding shares representing a majority of the votes
entitled to vote thereunder prior to the date on which the Option (or any portion thereof) shall be
exercisable, such listing, registration or qualification of shares subject to the Option shall not
be obtainable, upon exercise by the Optionee this Option shall be repurchased from Optionee by the
Company and the Option shall be settled in cash in an amount equal to the excess (if any) of the
Fair Market Value of Common Stock on the date of exercise of such Option (or portion thereof) over
the Option Price hereunder therefor (and subject to applicable cash tax withholding therefrom in
accordance with Section 4(b) hereof).
8. Notices. Any notice provided for in this Agreement must be in writing and must be
either personally delivered, delivered by overnight courier, or mailed by first class mail, to
Optionee at the address set forth on the records of the Company, to the Company at the address set
forth or established pursuant to Section 4(a), or such other address or to the attention of such
other person as the recipient party shall have specified by prior written notice to the sending
party. Any notice under this Agreement shall be deemed to have been given when received.
9. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.
10. Complete Agreement. This Agreement and those documents expressly referred to
herein embody the complete agreement and understanding among the parties and supersede and preempt
any prior understandings, agreements or representations by or among the parties, written or oral,
which may have related to the subject matter hereof in any way.
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11. Counterparts. This Agreement may be executed in separate counterparts, each of
which is deemed to be an original and all of which taken together constitute one and the same
agreement.
12. Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Optionee, the Company and their respective permitted successors
and assigns (including personal representatives, heirs and legatees), and is intended to bind all
successors and assigns of the respective parties, except that Optionee may not assign any of
Optionee’s rights or obligations under this Agreement except to the extent and in the manner
expressly permitted hereby.
13. Remedies. Each of the parties to this Agreement shall be entitled to enforce its
rights under this Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or injunctive relief in order
to enforce or prevent any violations of the provisions of this Agreement.
14. Waiver or Modification. Any waiver or modification of any of the provisions of
this Agreement shall not be valid unless made in writing and signed by the parties hereto. Waiver
by either party of any breach of this Agreement shall not operate as a waiver of any subsequent
breach.
15. Rights of Employment and Future Awards. In no event shall the granting of this
Option or Optionee’s acceptance hereof give or be deemed to give Optionee any right to be retained
in the employ of the Company or to the receipt of any future Option or other awards under the Plan.
16. Remedy for Breach of Non-Competition Covenant. Optionee acknowledges and agrees
that, as a condition to the award of this Option to Optionee, Optionee is subject to a covenant
prohibiting Optionee’s competition, as particularly set forth in Optionee’s term sheet agreement
(“Term Sheet Agreement”), governing the terms of Optionee’s employment with The PrivateBank
and Trust Company (the “Bank”), a Subsidiary of the Company, the terms of which covenant
are incorporated by reference herein. Pursuant to the terms of such non-competition covenant, in
the Term Sheet Agreement Optionee agreed, and hereby reaffirms such agreement, that as the
Company’s and the Bank’s sole remedy for Optionee’s breach (or threatened breach) of the
non-competition covenant, respecting this Option:
(a) Optionee shall immediately forfeit the unexercised portion of the Option (whether then
vested or unvested) then held by Optionee (and thereupon this Option shall terminate and be
canceled) and all shares of Common Stock acquired upon the exercise of the vested portion of the
Option and then held by Optionee (and thereupon any certificate issued in respect of such shares
shall be canceled);
(b) Optionee shall immediately repay to the Company a cash sum in the principal amount equal
to all gross proceeds (before-tax) realized by Optionee upon the sale or
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other disposition of shares of Common Stock occurring at any time during the period commencing
on the date that is three years before the Termination Date and ending on the date that the
non-competition covenant under the Term Sheet Agreement lapses (“Refund Period”), together
with interest accrued thereon, from the date of such breach or threatened breach, at the prime rate
(compounded calendar monthly) as published from time to time in The Wall Street Journal, electronic
edition (“Interest”); and
(c) Optionee shall repay to the Company a cash sum equal to the fair market value of all
shares of Common Stock and all or any portion of the Option transferred by Optionee as a gift or
gifts at any time during the Refund Period, together with Interest, and for which purpose,
“fair market value” per share of Common Stock shall be the Fair Market Value of one share
of Common Stock on the date such gift occurs and per Option share shall be the positive difference,
if any, between the Fair Market Value of a share of Common Stock, above, and the Option Price set
forth in the Stock Option Certificate.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement effective on the ___day of
, 200 .
| PRIVATEBANCORP, INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| OPTIONEE | ||||
| Signature | ||||
| Name: | ||||
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| Grant Date: | Number of Shares: | |
| ___, 200_ |
STOCK OPTION CERTIFICATE
(TIME-VESTED)
(TIME-VESTED)
THIS
CERTIFIES THAT has been awarded a STOCK OPTION to purchase shares
of Common Stock, without par value, of PRIVATEBANCORP, INC. (the “Company”)
(“Option”) at a price per share of $ (“Option Price”) (which is the closing
price of the Company’s Common Stock on the date hereof and which shall for all purposes constitute
the “Fair Market Value,” as defined under the Plan), subject to the terms and conditions of
this Stock Option Certificate, the related Stock Option Agreement of even date herewith and the
PrivateBancorp, Inc. Strategic Long-Term Incentive Compensation Plan (“Plan”).
Subject to earlier termination as provided in the Stock Option Agreement or the Plan, this
Option shall expire, and cease to be exercisable to the extent then vested, ten (10) years from the
Grant Date under this Stock Option Certificate.
Except as may be otherwise provided in the Stock Option Agreement or Incentive Compensation
Plan, this Option shall vest and be exercisable as to all or a portion of the number of shares set
forth above on the date set forth below, provided that Optionee is continuously employed with the
Company or a Subsidiary through such date, as follows:
| On and After the Following Dates, | Maximum Percentage Taking | |||
| But Prior to Expiration | into Account Prior Exercises | |||
December 31, 2008
|
20 | % | ||
December 31, 2009
|
40 | % | ||
December 31, 2010
|
60 | % | ||
December 31, 2011
|
80 | % | ||
December 31, 2012
|
100 | % | ||
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IN WITNESS WHEREOF, PRIVATEBANCORP, INC. has caused this Stock Option Certificate to be signed
by its duly authorized officer as of the date set forth above.
| By: | ||||
| Name: | ||||
| Title: |
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