Exhibit 13
STOCK OPTION AGREEMENT
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THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement"),
dated as of January 21, 2000 (the "Date of Grant"), grant number PF001598, by
and between Prism Financial Corporation, a Delaware corporation (the "Company"),
and Xxxx X. Filler (the "Optionee"). Unless stated otherwise, any capitalized
terms not defined herein shall have their respective meanings set forth in the
Prism Financial Corporation 1999 Omnibus Stock Incentive Plan (the "Plan").
R E C I T A L S:
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WHEREAS, prior to the date hereof, the Board of Directors (the
"Board") of the Company adopted, and the stockholders of the Company approved,
the Plan;
WHEREAS, the success of the Company's business is dependent on the
continued loyalty of the Optionee.
NOW THEREFORE, in consideration of Optionee's agreement to be
bound by the Confidential Information, Non-Solicitation provisions contained
herein (the "Employee Covenants") and the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1 . Number of Shares. In consideration for Optionee's agreement
to be bound by the Employee Covenants, the Company hereby grants to the Optionee
the right and option (the "Option") to purchase, on the terms and conditions
hereinafter set forth, 100,000 shares of the Company's Common Stock (the "Option
Shares") at a price of $3.3750 per share (the "Option Exercise Price"), which is
equal to the last per-share trading price of the Company's Common Stock on the
Date of Grant. The Option in not intended to constitute an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the Code").
2. Option Term, The term of the Option and of this Option
Agreement (the "Option Term") shall commence on the Date of Grant and, unless
the Option is previously terminated pursuant to this Option Agreement, shall
terminate upon the expiration of ten (10) years from the Date of Grant. Upon
expiration of the Option Term, all rights of the Optionee hereunder shall
terminate.
3. Conditions of Exercise. (a) Subject to Section 7 below,
the Option shall vest and become exercisable as to one-third (33.3%) of the
Option
Shares on each of the first three anniversaries of the Date Of Grant; provided,
however, that if Optionee is employed by the Company (or any successor
corporation) upon a Change in Control (as defined below) one hundred percent
(100%) of the Option Shares shall vest and become exercisable in full as of such
date; provided further that if Optionee's employment is terminated by the
Company (or any successor corporation) without Cause (as defined below) the
Option shall become vested and fully exercisable as of the date of termination.
For purposes of this Option Agreement, a "Change in Control" of
the Company shall be deemed to occur as of such time of: (i) the acquisition by
any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (other than the Company
or a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company), of the "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the total voting power
represented by the Company's then outstanding voting securities (assuming for
purposes of this calculation that all consideration paid by such "person"
(together with its affiliates) in exchange for securities of the Company was
exchanged for Common Stock in the secondary market, regardless of whether such
consideration was actually exchanged for other securities of the Company), (ii)
the consummation of a merger or consolidation of the Company with or into any
other corporation, other than 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) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iii) consummation of a plan of complete liquidation of the
Company or of the sale or disposition by the Company of all or substantially all
of the Company's assets.
For purposes of this Option Agreement, "Cause" shall mean the
occurrence of any of the following events, (i) Optionee's conviction of or
guilty or nolo contenders plea to the commission of an act or acts constituting
a felony under the laws of the United States or any state thereof, (ii) an
action by Optionee involving material theft or fraud in connection with
Optionee's duties as an employee/officer of the Company, (iii) Optionee's
willful failure to abide by or follow any lawful direction of the Board of
Directors (after reasonable notice) or (iv) material, willful violation of the
Employee Covenants.
(b) Except as otherwise provided herein, the right of
the Optionee to purchase Option Shares with respect to which this Option has
become
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exercisable may be exercised in whole or in part at any time or from time to
time prior to expiration of the Option Term.
4. Adjustments.
(a) In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or similar change
affecting the Common Stock which does not constitute a Change in Control, a
substitution or proportionate adjustment shalt be made in the kind, number and
option price of shares of Common Stock subject to the unexercised portion of the
Option (after allowing Optionee the opportunity to exercise the Option to the
extent vested), as may be determined by the Board of Directors in its sole
discretion.
(b) In the event of a Change in Control, the Board of
Directors shall cause the unexercised portion of the Option (after allowing
Optionee the opportunity to exercise the Option to the extent vested) to convert
into the right to receive one of the following, at the discretion of the Board
of Directors: (i) an equivalent amount of stock that is registered under
applicable securities laws, unrestricted, actively tradable and listed on the
NYSE, AMSE or NASDAQ exchanges, (ii) if such Change in Control involves the
purchase of all Common Stock then held by the general public, the same form,
type and amount of consideration per share of Common Stock as is received by
such public shareholders in connection with such Change in Control, or (iii) the
right to receive an amount of cash equal to the product of (A) the number of
shares of Option Shares underlying the previously unexercised portion of the
Option multiplied b (B) the remainder of (x) the highest price paid (as part of
such Change in Control) per share of Common Stock sold to the public in
connection with the Company's initial public offering of Common Stock (the
"Public Price") (or, in the event such Change in Control does not involve a
purchase of such publicly traded Common Stock, the highest price paid per share
of Common Stock to any shareholder) minus (y) the Option Exercise Price.
(c) Nothing in this Section 4 shall be construed in
such a way as to prejudice the rights or treatment of Optionee as compared to
the rights or treatment afforded to other holders of options to acquire Common
Stock.
5. Nontransferability of Option and Option Shares. Except as
otherwise provided by the Administrator, the Option and this Option Agreement
shall not be transferable and, during the lifetime of Optionee, the Option may
be exercised only by Optionee. Without limiting the generality of the
foregoing, except as otherwise provided herein, the Option may not be assigned,
transferred, pledged or hypothecated in any way, shall not be assignable by
operation of law, and shall riot
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be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option shall be null and void and without effect.
6. Method of Exercise of Option. The Option may be
exercised by means of written notice of exercise to the Company specifying the
number of Option Shares to be purchased, accompanied by payment in full of the
aggregate Option Exercise Price and any applicable withholding taxes (i) in cash
or by check, (ii) by means of a cashless exercise procedure either through a
broker or, at the discretion of the Administrator, through withholding of shares
of Common Stock otherwise issuable upon exercise of the Option in an amount
sufficient to pay the exercise price and any applicable withholding taxes, (iii)
in the form of unrestricted Stock already owned by the Optionee which, (a) in
the case of unrestricted Stock acquired upon exercise of an option, has been
owned by the Optionee for more than six months on the date of surrender and (b)
has a Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Stock as to which such Stock Option shall be exercised, or (iv) by
any other means of exercise authorized from time to time in the Plan and/or by
the Board of Directors.
7. Effect of Termination of Employment. Subject to
Section 3(a), upon the termination of Optionee's employment or service with the
Company or any Subsidiary under any circumstances, the Option shall immediately
terminate as to any Option Shares that have not previously vested as of the date
of such termination (the "Termination Date"). Any portion of the Option that
has vested as of the Termination Date (including any portion which vests as a
result of such termination pursuant to section 3(a) above) shall be exercisable
in whole or in part for a period of two years following the Termination Date;
provided, further, that, in the event of Optionee's termination for Cause, the
Option shall immediately terminate as to all unvested Option Shares. Upon
expiration of such two-year period any unexercised portion of the Option shall
terminate in full.
8. Confidentiality, Non-Solicit
(a) Confidential Information. Optionee agrees
not to disclose the terms of this Agreement to any officer or employee of any
Company Entity, except the Board of Directors or their respective designees.
Optionee acknowledges and agrees that (i), during the course of his employment
with the Company, Optionee will have produced and/or have access to confidential
information, knowledge or data relating to the Company and its subsidiaries and
affiliates (each a "Company Entity" and collectively the "Company Entities") and
the business
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and investments of the Company Entities, including but not limited to such
information, knowledge or data with respect to agreements, records, notebooks,
formulae, products, marketing and training techniques, methods, future plans or
operating practices, trade secrets, programs, systems, specifications,
documentation, algorithms, flow charts, logic diagrams, source codes,
works-in-progress, discoveries, improvements, designs, drawings and other
information, including customer lists, pricing methods and personnel of the
Company Entities ("Confidential Information"), and (ii) the unauthorized use or
sale of any of such Confidential Information at any time would constitute unfair
competition with the Company. Optionee shall hold in a fiduciary capacity for
the benefit of the Company Entities and shall not at any time, without the prior
written consent of the Company or as may otherwise be required by law or legal
process, knowingly communicate or divulge any Confidential Information to anyone
other than the Company and Company Entity and those designated by the Company.
(b) Removal of Documents, Rights to Inventions. All
records, files, drawings, documents, models, programs, computer media, files and
lists (including all originals and all copies) and the like relating to the
business of the Company Entities, which the Optionee prepares, uses or comes
into contact with and which contain Confidential Information shall not be
removed by the Optionee from the premises of any Company Entity (without the
written consent of the Company) during or after Optionee's employment with the
Company unless such removal shall be required or appropriate in connection with
his carrying out his duties under his employment with the Company and, if so
removed by the Optionee, shall be returned to the Company immediately upon
termination of the Optionee's employment with the Company, All tangible items
obtained by Optionee during the course of employment, and related to the
business of the Company Entities, including, without limitation, phones, keys,
computers, credit cards, lists, manuals, office equipment, furniture, and the
like, shall be the sole and exclusive property of the Company, and Optionee
shall surrender them to the Company upon termination of Optionee's employment
with the Company or at any time upon the request of Prism. Optionee shall
assign to the Company all rights to inventions, trade secrets, other products
and related intellectual property developed by him alone or in conjunction. with
others at any time while employed by any Company Entity and will cooperate in
its efforts to pursue patents, copyrights, trade secrets, trademarks, or any
other intellectual property right, whether domestic or foreign, embodying
intellectual property assigned hereunder, or in protecting its rights thereto.
(c) Non-Solicitation. Optionee shall not engage in any
Prohibited Activity while he is employed by any Company Entity. In the event of
the termination of Optionee's employment for any reason, Optionee shall not
engage in
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any Prohibited Activity for a period of eighteen (18) months following the date
of Optionee's termination,
For purposes of this Option Agreement, "Prohibited Activity"
shall mean (i) soliciting, diverting or taking away or attempting to divert or
take away, directly or indirectly, the business or patronage of any customers,
referral sources or others doing business with any Company Entity (determined as
of the date of Optionee's termination) or (ii) directly or indirectly (whether
on Optionee's own behalf or on behalf of any other person or entity) soliciting,
enticing, advising or encouraging any officer, employee or consultant
(determined as of the date of Optionee's termination) of any Company Entity to
terminate such person's or entity's employment or consulting relationship or,
with respect to any officer or employee, hiring any such officer or employee.
If, at any time, the provisions of this Section 8(c) shall be determined to be
invalid or unenforceable, by reason of being vague or unreasonable as to area,
duration or scope of activity, this Section 8(c) shall be considered divisible
and shall become and be immediately amended to only such area, duration and
scope of activity as shall be determined to be reasonable and enforceable by the
court or other body having jurisdiction over the matter; and Optionee agrees
that this Section 8(c) as so amended shall be valid and binding as though any
invalid or unenforceable provision had not been included herein.
(d) In the event of a breach or threatened breach of
subsection (a), (b) or (c) of this Section 8, Optionee agrees that the Company
shall be entitled to injunctive relief in a court of appropriate jurisdiction to
remedy any such breach or threatened breach, Optionee acknowledging that damages
would be inadequate and insufficient.
(e) Any termination of Optionce's employment shall
have no effect on the continuing operation of this Section 8.
9. Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by facsimile or first-class
mail, certified or registered with return receipt requested, and shall be deemed
to have been duly given three days after mailing or 24 hours after transmission
by facsimile to the respective parties named below:
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If to Company: Prism Financial Corporation
Prism Center
000 Xxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Corporate Secretary
Facsimile: 000-000-0000
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxxxx
Facsimile: 000-000-0000
If to the Optionee: Xxxx X.Filler
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Name
Address:
000 Xxxxxxxx
Xxxxxxxx Xxxx, XX 00000
Either party hereto may change such party's address for notices by notice duly
given pursuant hereto.
10. Securities Laws Requirements. The Option shall not be
exercisable to any extent, and the Company shall not be obligated to transfer
any Option Shares to the Optionee upon exercise of such Option, if such
exercise, in the opinion of counsel for the Company, would violate the
Securities Act (or any other federal or state statutes having similar
requirements as may be in effect at that time). Further, the Company may require
as a condition of transfer of any Option Shares pursuant to any exercise of the
Option that the Optionee furnish a written representation that he or she is
purchasing or acquiring the Option Shares for investment and not with a view to
resale or distribution to the public.
11. Change of Control. Upon a Change of Control (as defined
in paragraph 3), a cash payment will be paid as determined and approved by the
Board of Directors.
12. Witholding, Requirements. The Company's obligations under
this Option Agreement shall be subject to all applicable tax and other
withholding
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requirements, and the Company shall, to the extent permitted by law, have the
right to deduct any withholding amounts from any payment or transfer of any kind
otherwise due to the Optionee.
13. Failure to Enforce Not a Waiver. The failure of the
Company to enforce at any time any provision of this Option Agreement shall in
no way be construed to be a waiver of such provision or of any other provision
hereof.
14. Governing Law, This Option Agreement shall be governed by
and construed according to the laws of the State of Delaware without regard to
its principles of conflict of laws.
15. Incorporation of Plan. The Plan is hereby incorporated by
reference and made a part hereof, and the Option and this Option Agreement shall
be subject to all terms and conditions of the Plan.
16. Amendments. This Option Agreement may be amended or
modified at any time only by an instrument in writing signed by each of the
parties hereto.
17. Rights as a Stockholder. Neither the Optionee nor any of
the Optionee's successors in interest shall have any rights as a stockholder of
the Company with respect to any shares of Common Stock subject to the Option
until the date of issuance of a stock certificate for such shares of Common
Stock.
18. Agreement Not a Contract of Employment. Neither the Plan,
the granting of the Option, this Option Agreement nor any other action taken
pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that the Optionee has a right to continue as
an employee of the Company or any Subsidiary or affiliate of the Company for any
period of time or at any specific rate of compensation.
19. Authority of the Board. The Board of Directors shall have
full authority to interpret and construe the terms of the Plan and this Option
Agreement. The determination of the Board of Directors as to any such matter of
interpretation or construction shall be final, binding and conclusive.
20. Dispute Resolution. The parties hereto will use their
reasonable best efforts to resolve any dispute hereunder through good-faith
negotiations. A party hereto must submit a written notice to any other party to
whom such dispute pertains, and any such dispute that cannot be resolved within
30 calendar days of receipt of such notice (or such other period to which the
parties may agree) will be
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submitted to an arbitrator selected by mutual agreement of the parties. In the
event that, within 50 days of the written notice referred to in the preceding
sentence, a single arbitrator has not been selected by mutual agreement of the
parties, a panel of arbitrators (with each party to The dispute being entitled
to select one arbitrator and, if necessary to prevent the possibility of
deadlock, one additional arbitrator being selected by such arbitrators selected
by the parties to the dispute) shall be selected by the parties. Except as
otherwise provided herein or as the parties to the dispute may otherwise agree,
such arbitration will be conducted in accordance with the then existing miles of
the American Arbitration Association. The decision of the arbitrator or
arbitrators, or of a majority thereof, as the case may be, made in Writing will
be final and binding upon the parties hereto as to the questions submitted, and
the parties will abide by and comply with such decision; provided, however, the
arbitrator or arbitrators, as the case may be, shall not be empowered to award
punitive damages. Unless the decision of the arbitrator or arbitrators, as the
case may be, provides for a different allocation of costs and expenses
determined by the arbitrators to be equitable under the circumstances, the
prevailing party or parties in any arbitration will be entitled to recover all
reasonable fees (including but not limited to attorneys' fees) and expenses
incurred by it or them in connection with such arbitration from the
nonprevailing party or parties.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Option Agreement on the day and year first above written.
PRISM FINANCIAL CORPORATION
By /s/ Xxxxxxx X. Welleck
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Name Xxxxxxx X. Xxxxxx
Title Chairman
The undersigned hereby accepts and agrees
to all the terms and provisions of the
foregoing Option Agreement and to all the
terms and provisions of the Plan, herein
incorporated by reference.
/s/ Xxxx X. Filler
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The Optionee
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