UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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August 18, 2015
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Date of Report (Date of earliest event reported)
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NOVATION COMPANIES, INC.
(Exact name of registrant as specified in its charter)
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Maryland
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001-13533
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74-2830661
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(State or other jurisdiction of
incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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2114 Central Street, Suite 600, Kansas City, MO 64108
(Address of principal executive offices) (Zip Code)
(816) 237-7000
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Explanatory Note
On August 18, 2015, Novation Companies, Inc. (the “Company”) filed a Current Report on Form 8-K (File No. 001-13533) regarding the resignation of the Company’s Chief Executive Officer W. Lance Anderson and the appointment of Rodney Schwatken as Chief Executive Officer of the Company and Matthew Lautz as Chief Executive Officer of Corvisa LLC (“Corvisa”), the Company’s wholly-owned subsidiary.
Pursuant to Instruction 2 to Item 5.02 on Form 8-K, this Amendment No. 1 on Form 8-K/A is filed for the purpose of disclosing the terms of the compensation packages for Mr. Schwatken and Mr. Lautz, which were subsequently approved by the Compensation Committee (the “Committee”).
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Salary Increases
On August 18, 2015, the Committee approved compensation packages for Mr. Schwatken and Mr. Lautz in light of their new positions with the Company and Corvisa, respectively. Mr. Schwatken and Mr. Lautz each received an increase of $75,000 to his base annual salary, as follows:
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Name
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Previous Salary
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Current Salary (as of August 18, 2015)
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Rodney Schwatken
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$225,000
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$300,000
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Matthew Lautz
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$275,000
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$350,000
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The Committee determined that the annual incentive bonuses put into place for Mr. Schwatken and Mr. Lautz for 2015 (as disclosed in the Company’s proxy statement filed on June 1, 2015) continue to align the interests of Mr. Schwatken and Mr. Lautz with those of shareholders and made no changes to such bonuses or the performance metrics.
Grant of Options
The Committee granted each of Mr. Schwatken and Mr. Lautz an option (each, an “Option”, or collectively the “Options”) to purchase 350,000 shares of common stock at a price of $0.51 per share. The closing price of the Company’s common stock on August 18, 2015, as quoted by OTCQB, was $0.26, but the Committee decided to incentivize stronger performance by using the higher, “out of the money” exercise price of $0.51. The use of this exercise price is consistent with recent option grants by the Company.
The Options vest and become exercisable in four equal installments on August 18 of 2016, 2017, 2018 and 2019, and terminate on August 18, 2025. The Options were granted under the Company’s 2015 Incentive Stock Plan (the “2015 Plan’) and may be exercised using the methods described in the 2015 Plan or adjusted in the event of certain changes in the outstanding stock of the Company (e.g., by reason of stock dividends, recapitalization, consolidations, etc.) in accordance with the 2015 Plan.
In the event of either Mr. Schwatken’s or Mr. Lautz’s death, the decedent’s Option will accelerate and the full number of then-unexercised shares will become exercisable in full for a period of 12 months following such death or until the expiration of the Option, whichever period is shorter.
In the event that either Mr. Schwatken’s or Mr. Lautz’s employment terminates due to “Disability”, the departing employee’s Option will accelerate and the full number of then-unexercised shares will become exercisable in full for a period of 12 months following such termination or until the expiration of the Option, whichever period is shorter,
provided
that the exercise period will be extended by an additional 12 months in the event of death during the original 12 month period. “Disability” is defined in Mr. Schwatken’s Option and in Mr. Lautz’s employment agreement with the Company.
If either Mr. Schwatken or Mr. Lautz is terminated from the Company for “Cause”, the terminated employee’s Option will immediately terminate and cease to be exercisable. “Cause” is defined in Mr. Schwatken’s and Mr. Lautz’s employment agreements.
If either Mr. Schwatken or Mr. Lautz terminates his employment for “Good Reason”, the departing employee’s Option will not accelerate but may be exercised to the extent exercisable at the time of such termination for a period of 3 years from the effective date of such termination or until the expiration of the Option, whichever period is shorter. “Good Reason” is defined in Mr. Schwatken’s and Mr. Lautz’s employment agreements.
If Mr. Schwatken or Mr. Lautz retire from the Company, the then-unvested portion of the retiring employee’s Option will continue to vest in accordance with its terms without giving effect to any such “Retirement”,
provided
that the vesting of the Option will cease immediately (and the unvested portion will be forfeited) if the Option holder breaches any ongoing obligations to the Company after
such “Retirement”, in the good faith determination of the Committee. Upon Retirement, the Option may be exercised for a period of 3 years from the date of Retirement or after the date of vesting (with respect to any portions that vest after Retirement). “Retirement” is defined in the Options.
The Options implement the modified double-trigger “Change of Control” provisions described in the 2015 Plan. The 2015 Plan provides that if and to the extent the Options are assumed, continued or replaced by awards that preserve the existing value of the Options at the time of the Change of Control (including vesting and exercisability periods that are the same or more favorable to participants), then no acceleration of the Options will occur and the Options (or such substitute awards) will remain outstanding and governed by their respective terms.
If the Company or its successor does assume, continue or replace the Options as described above but then terminates either Mr. Schwatken or Mr. Lautz without “Cause” within 18 months of the closing date of the Change of Control, the terminated employee’s Option shall immediately become fully vested and as applicable will become fully exercisable for a period of three years from the date of such termination. If, however, the Options are not assumed, continued or replaced as described above, the Options shall immediately become fully vested and as applicable will become fully exercisable for a period of three years from the closing date of the Change of Control. “Change of Control” is defined in the 2015 Plan,
provided
that the Options supplement such definition and deem the sale of a primary operating subsidiary of the Company to be a “Change of Control” for purposes of the Options.
If either Mr. Schwatken’s or Mr. Lautz’s service with the Company terminates for any other reason than as described above, the terminated employee’s Option may be exercised to the extent it has become exercisable at the time of such termination for a period of 3 months from the date of such termination or until the expiration of the Option, whichever period is shorter.
The above description of the Options does not purport to be complete, and is qualified in its entirety by reference to the full text of the Options, which are attached hereto as Exhibits 10.1 and 10.2 and are incorporated herein by this reference.
Item 9.01 Financial Statements and Exhibits.
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Exhibit No.
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Description
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10.1
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Employee Non-Qualified Stock Option Agreement, between the Company and Rodney Schwatken, dated August 18, 2015.
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10.2
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Employee Non-Qualified Stock Option Agreement, between the Company and Matthew Lautz, dated August 18, 2015.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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NOVATION COMPANIES, INC.
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DATE: August 20, 2015
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/s/ Rodney E. Schwatken
Rodney E. Schwatken
Chief Executive Officer
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EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT
THIS EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT
(this “Agreement”), dated as of the 18th day of August, 2015, is entered into by and between Novation Companies, Inc., a Maryland corporation (the “Company”) and Rodney Schwatken (the “Optionee”).
WHEREAS,
pursuant to the terms of the Company’s 2015 Incentive Stock Plan (the “Plan”), the Compensation Committee of the Board of Directors of the Company (the “Committee”) has determined that the Optionee is to be granted an option to purchase a specified number of shares of the Company’s common stock on the terms and conditions set forth herein;
WHEREAS,
the Optionee is now an employee of the Company or an “Employer”, as defined in the Plan (an “Employer”); and
WHEREAS,
the Company and the Optionee desire to enter into this Agreement for the purpose of memorializing the terms and conditions of the option.
NOW, THEREFORE,
the Company and the Optionee agree as follows:
1.
Grant Subject to Plan
. The Option (as defined below) is expressly subject to all terms and provisions of the Plan, and the terms and provisions of such Plan are incorporated herein by reference. Capitalized terms not defined herein shall have the meaning ascribed thereto in the Plan.
2.
Number of Shares and Option Price
.
Pursuant to the action of the Committee, which action was effective on August 18, 2015 (the “Date of Grant”), the Optionee is hereby granted a non-qualified stock option (the “Option”) to purchase THREE HUNDRED FIFTY THOUSAND (350,000) shares of the Company’s common stock (the “Option Shares”), at the purchase price of FIFTY-ONE CENTS ($0.51) per share (the “Option Price”). The Option Price is equal to or greater than the price at which the Company’s common stock was last sold as quoted on the OTCQB (or applicable exchange or quotation system) on the Date of Grant.
3.
Period of Option
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The term of the Option and of this Agreement shall commence on the Date of Grant and terminate upon the expiration of ten (10) years from the Date of Grant. Upon termination of the Option, all rights of the Optionee hereunder shall cease.
4.
Conditions of Exercise
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This Option may be exercised, in whole or in part at any time, or from time to time, up to ten (10) years from the Date of Grant, but only (i) with respect to Option Shares which have vested, and (ii) during the period in which such Option remains exercisable as herein provided. One-quarter of the Option Shares shall vest on each anniversary of the Date of Grant.
5.
Nontransferability of Option
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Other than a transfer as described in Section 13 of the Plan or otherwise in the discretion of the Committee pursuant to Section 13 of the Plan, the Option and this Agreement shall not be transferable.
6.
Exercise of Option
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The Option may be exercised using the methods described in Section 6.C. of the Plan and the Option Shares purchased shall thereupon be promptly delivered. The Optionee will not be deemed to be a holder of any Option Shares pursuant to exercise of the Option until the Option Shares are paid in full and issued to him or her upon the exercise of the Option.
7.
Adjustment for Changes in Capitalization
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As described in Section 15 of the Plan, in the event of changes in the outstanding stock of the Company by reason of stock dividends, recapitalization, mergers, consolidations, split-ups, combinations or exchanges of shares and the like, occurring after the date hereof, the number of shares covered by this Agreement and the price thereof shall be adjusted to the same proportionate number of shares and price as set forth in Section 2 of this Agreement.
8.
Termination by Death
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In accordance with Sections 6.G. and 11.B. of the Plan, if the Optionee’s service with the Company (and/or any Employer, as the case may be, such that Optionee is no longer employed by either the Company or any Employer) terminates by reason of the Optionee’s death, then the vesting of the Option shall be accelerated and the full number of then-unexercised Option Shares shall become exercisable in full 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 (12) months following the date of death or until the expiration of the stated term of such Option, whichever period is shorter. If the Option is not exercised within the foregoing time period, the Option shall terminate.
9.
Termination by Reason of Disability
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In accordance with Sections 6.F. and 11.B. of the Plan, if the Optionee’s service with the Company (and/or any Employer, as the case may be, such that Optionee is no longer employed by either the Company or any Employer) terminates by reason of the Optionee’s Disability, then the vesting of the Option shall be accelerated and the full number of then-unexercised Option Shares shall become exercisable in full by the Optionee for a period of twelve (12) months following the date of termination or until the expiration of the stated term of such Option, whichever period is shorter;
provided, however,
that if the Optionee dies within such twelve (12) month period and prior to the expiration of the stated term of such Option, such Option may thereafter be exercised for a period of twelve (12) months from the date of death or until the expiration of the stated term of such Option, whichever period is shorter. If the Option is not exercised within the foregoing time periods, the Option shall terminate. “Disability” shall mean the Optionee is disabled for purposes of any long-term disability plan maintained by the Company in which the Optionee participates.
10.
Termination for Cause
. In accordance with Section 6.E. of the Plan, if the Optionee’s employment with the Company (and/or any Employer, as the case may be, such that Optionee is no longer employed by either the Company or any Employer) is terminated by the Company for “Cause” as defined in Section 4.1 of that certain Employment Agreement entered into between the
Company and Optionee on January 7, 2008 (the “Employment Agreement”), then the Option shall immediately terminate and cease to be exercisable by the Optionee.
11.
Termination for Good Reason
. In accordance with Section 6.E. of the Plan, if the Optionee’s employment with the Company (and/or any Employer, as the case may be, such that Optionee is no longer employed by either the Company or any Employer) is terminated by him for “Good Reason” as defined in Section 5.1 of the Employment Agreement, the Option may be exercised to the extent it has become exercisable by the Optionee at the time of such termination, for a period of three (3) years from the effective date of such termination of employment or until the expiration of the stated term of such Option, whichever period is shorter. If the Option is not exercised within the foregoing time period, the Option shall terminate. Notwithstanding the foregoing, a termination of employment by Optionee for Good Reason shall not be considered as having occurred for purposes of this Agreement unless the Optionee provides written notice to the Company of the events or conditions constituting Good Reason, specifying that the Optionee believes such events or conditions constitute Good Reason, and (if such events or conditions can be remedied) the Company has been afforded a period of at least fifteen (15) days following delivery of such notice to remedy the events or conditions constituting Good Reason and has not done so to the reasonable satisfaction of the Optionee.
12.
Termination Without Cause
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In accordance with Section 6.E. of the Plan, if the Optionee’s service with the Company (and/or any Employer, as the case may be, such that the Optionee is no longer employed by either the Company or any Employer) is terminated by the Company without Cause, the Option may be exercised to the extent it has become exercisable at the time of such termination, for a period of three (3) years from the effective date of such termination of employment or until the expiration of the stated term of such Option, whichever period is shorter. If the Option is not exercised within the foregoing time period, the Option shall terminate.
13.
Retirement
. In accordance with Section 6.E. of the Plan, if the Optionee resigns from the Company (and/or any Employer, as the case may be, such that the Optionee is no longer employed by either the Company or any Employer) after reaching (i) the age of 65 following a term of employment with the Company or any Employer for a continuous period of 10 years or more or (ii) the age of 55 following a term of employment with the Company or any Employer for a continuous period of 20 years or more (“Retirement”), the then-unvested portion of the Option, if any, shall continue to vest in accordance with its terms without giving any effect to such Retirement. Notwithstanding the foregoing, vesting of the Option after Retirement shall immediately cease (and the unvested portion of the Option shall be forfeited) if, after such Retirement, the Committee determines in good faith that the Optionee has breached any of his or her obligations to the Company or any Employer or otherwise taken any willful action that has had a significant adverse effect upon the Company or any Employer. Upon Retirement, the Option may be exercised for a period of three (3) years (x) after the date of such Retirement, with respect to the amount of the Option vested upon such date or (y) after the date of vesting, with respect to the amount of the Option which is unvested at the time of Retirement but which becomes vested after Retirement, subject in both cases to the expiration of the stated term of such Option. If the Option is not exercised within the foregoing time period, the Option shall terminate.
14.
Change of Control
.
The rights of the Optionee in the event of a Change of Control of the Company shall be determined in accordance with Section 15 of the Plan.
“Change of Control”
shall have the meaning set forth in
Section 2.G. of the Plan,
provided
,
however
, that for purposes of this Agreement, the sale by the Company of a primary operating subsidiary shall be deemed a “Change of Control”.
15.
Other Termination
.
In accordance with Section 6.E. of the Plan, if the Optionee’s service with the Company (and/or any Employer, as the case may be, such that Optionee is no longer employed by either the Company or any Employer) terminates for any reason other than those described in Sections 8 through 14 above, the Option may be exercised to the extent it has become exercisable at the time of such termination, for a period of three (3) months from the date of such termination or until the expiration of the stated term of the Option, whichever period is shorter;
provided, however,
that if the Optionee dies within such three (3) month period and prior to the expiration of the stated term of such Option, such Option may thereafter be exercised to the extent it has become exercisable for a period of three (3) months from the date of death or until the expiration of the stated term of the Option, whichever period is shorter. If the Option is not exercised within the foregoing time period, the Option shall terminate.
16.
Option Not an Incentive Stock Option
. It is intended that the Option shall not be treated as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended.
17.
No Contract of Employment
. Nothing contained in this Agreement shall be considered or construed as creating a contract of employment for any specified period of time.
18.
Failure to Enforce Not a Waiver
. The failure of the Company to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.
19.
Entire Agreement; Amendments
. No modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically referred hereto, and signed by the parties hereto. This Agreement supersedes all prior agreements and understandings between the Optionee and the Company to the extent that any such agreements or understandings conflict with the terms hereof.
20.
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Missouri without regard to the principles of conflicts of law, which might otherwise apply.
[signature page follows]
IN WITNESS WHEREOF
, this Agreement is executed as of the day and year first above written.
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NOVATION COMPANIES, INC.
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/s/ Brett Monger
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Name: Brett Monger
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Title: Chief Accounting Officer
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OPTIONEE
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/s/ Rodney Schwatken
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Rodney Schwatken
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[SIGNATURE PAGE TO SCHWATKEN STOCK OPTION AGREEMENT]
EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT
THIS EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT
(this “Agreement”), dated as of the 18th day of August, 2015, is entered into by and between Novation Companies, Inc., a Maryland corporation (the “Company”) and Matthew Lautz (the “Optionee”).
WHEREAS,
pursuant to the terms of the Company’s 2015 Incentive Stock Plan (the “Plan”), the Compensation Committee of the Board of Directors of the Company (the “Committee”) has determined that the Optionee is to be granted an option to purchase a specified number of shares of the Company’s common stock on the terms and conditions set forth herein;
WHEREAS,
the Optionee is now an employee of the Company or an “Employer”, as defined in the Plan (an “Employer”); and
WHEREAS,
the Company and the Optionee desire to enter into this Agreement for the purpose of memorializing the terms and conditions of the option.
NOW, THEREFORE,
the Company and the Optionee agree as follows:
1.
Grant Subject to Plan
. The Option (as defined below) is expressly subject to all terms and provisions of the Plan, and the terms and provisions of such Plan are incorporated herein by reference. Capitalized terms not defined herein shall have the meaning ascribed thereto in the Plan.
2.
Number of Shares and Option Price
.
Pursuant to the action of the Committee, which action was effective on August 18, 2015 (the “Date of Grant”), the Optionee is hereby granted a non-qualified stock option (the “Option”) to purchase THREE HUNDRED FIFTY THOUSAND (350,000) shares of the Company’s common stock (the “Option Shares”), at the purchase price of FIFTY-ONE CENTS ($0.51) per share (the “Option Price”). The Option Price is equal to or greater than the price at which the Company’s common stock was last sold as quoted on the OTCQB (or applicable exchange or quotation system) on the Date of Grant.
3.
Period of Option
.
The term of the Option and of this Agreement shall commence on the Date of Grant and terminate upon the expiration of ten (10) years from the Date of Grant. Upon termination of the Option, all rights of the Optionee hereunder shall cease.
4.
Conditions of Exercise
.
This Option may be exercised, in whole or in part at any time, or from time to time, up to ten (10) years from the Date of Grant, but only (i) with respect to Option Shares which have vested, and (ii) during the period in which such Option remains exercisable as herein provided. One-quarter of the Option Shares shall vest on each anniversary of the Date of Grant.
5.
Nontransferability of Option
.
Other than a transfer as described in Section 13 of the Plan or otherwise in the discretion of the Committee pursuant to Section 13 of the Plan, the Option and this Agreement shall not be transferable.
6.
Exercise of Option
.
The Option may be exercised using the methods described in Section 6.C. of the Plan and the Option Shares purchased shall thereupon be promptly delivered. The Optionee will not be deemed to be a holder of any Option Shares pursuant to exercise of the Option until the Option Shares are paid in full and issued to him or her upon the exercise of the Option.
7.
Adjustment for Changes in Capitalization
.
As described in Section 15 of the Plan, in the event of changes in the outstanding stock of the Company by reason of stock dividends, recapitalization, mergers, consolidations, split-ups, combinations or exchanges of shares and the like, occurring after the date hereof, the number of shares covered by this Agreement and the price thereof shall be adjusted to the same proportionate number of shares and price as set forth in Section 2 of this Agreement.
8.
Termination by Death
.
In accordance with Sections 6.G. and 11.B. of the Plan, if the Optionee’s service with the Company (and/or any Employer, as the case may be, such that Optionee is no longer employed by either the Company or any Employer) terminates by reason of the Optionee’s death, then the vesting of the Option shall be accelerated and the full number of then-unexercised Option Shares shall become exercisable in full 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 (12) months following the date of death or until the expiration of the stated term of such Option, whichever period is shorter. If the Option is not exercised within the foregoing time period, the Option shall terminate.
9.
Termination by Reason of Disability
.
In accordance with Sections 6.F. and 11.B. of the Plan, if the Optionee’s service with the Company (and/or any Employer, as the case may be, such that Optionee is no longer employed by either the Company or any Employer) terminates by reason of the Optionee’s “Disability” as defined in Section 3.5 of that certain Employment Agreement entered into between the Company and Optionee on March 2, 2012 (the “Employment Agreement”), then the vesting of the Option shall be accelerated and the full number of then-unexercised Option Shares shall become exercisable in full by the Optionee for a period of twelve (12) months following the date of termination or until the expiration of the stated term of such Option, whichever period is shorter;
provided, however,
that if the Optionee dies within such twelve (12) month period and prior to the expiration of the stated term of such Option, such Option may thereafter be exercised for a period of twelve (12) months from the date of death or until the expiration of the stated term of such Option, whichever period is shorter. If the Option is not exercised within the foregoing time periods, the Option shall terminate.
10.
Termination for Cause
. In accordance with Section 6.E. of the Plan, if the Optionee’s employment with the Company (and/or any Employer, as the case may be, such that Optionee is no longer employed by either the Company or any Employer) is terminated by the Company for “Cause” as defined in Section 3.1 of the Employment Agreement, then the Option shall immediately terminate and cease to be exercisable by the Optionee.
11.
Termination for Good Reason
. In accordance with Section 6.E. of the Plan, if the Optionee’s employment with the Company (and/or any Employer, as the case may be, such that Optionee is no longer employed by either the Company or any Employer) is terminated by him for “Good Reason” as defined in Section 3.6 of the Employment Agreement, the Option may be exercised to the extent it has become exercisable by the Optionee at the time of such termination, for a period of three (3) years from the effective date of such termination of employment or until the expiration of the stated term of such Option, whichever period is shorter. If the Option is not exercised within the foregoing time period, the Option shall terminate. Notwithstanding the foregoing, a termination of employment by Optionee for Good Reason shall not be considered as having occurred for purposes of this Agreement unless the Optionee provides written notice to the Company of the events or conditions constituting Good Reason, specifying that the Optionee believes such events or conditions constitute Good Reason, and (if such events or conditions can be remedied) the Company has been afforded a period of at least fifteen (15) days following delivery of such notice to remedy the events or conditions constituting Good Reason and has not done so to the reasonable satisfaction of the Optionee.
12.
Termination Without Cause
.
In accordance with Section 6.E. of the Plan, if the Optionee’s service with the Company (and/or any Employer, as the case may be, such that the Optionee is no longer employed by either the Company or any Employer) is terminated by the Company without Cause, the Option may be exercised to the extent it has become exercisable at the time of such termination, for a period of three (3) years from the effective date of such termination of employment or until the expiration of the stated term of such Option, whichever period is shorter. If the Option is not exercised within the foregoing time period, the Option shall terminate.
13.
Retirement
. In accordance with Section 6.E. of the Plan, if the Optionee resigns from the Company (and/or any Employer, as the case may be, such that the Optionee is no longer employed by either the Company or any Employer) after reaching (i) the age of 65 following a term of employment with the Company or any Employer for a continuous period of 10 years or more or (ii) the age of 55 following a term of employment with the Company or any Employer for a continuous period of 20 years or more (“Retirement”), the then-unvested portion of the Option, if any, shall continue to vest in accordance with its terms without giving any effect to such Retirement. Notwithstanding the foregoing, vesting of the Option after Retirement shall immediately cease (and the unvested portion of the Option shall be forfeited) if, after such Retirement, the Committee determines in good faith that the Optionee has breached any of his or her obligations to the Company or any Employer or otherwise taken any willful action that has had a significant adverse effect upon the Company or any Employer. Upon Retirement, the Option may be exercised for a period of three (3) years (x) after the date of such Retirement, with respect to the amount of the Option vested upon such date or (y) after the date of vesting, with respect to the amount of the Option which is unvested at the time of Retirement but which becomes vested after Retirement, subject in both cases to the expiration of the stated term of such Option. If the Option is not exercised within the foregoing time period, the Option shall terminate.
14.
Change of Control
.
The rights of the Optionee in the event of a Change of Control of the Company shall be determined in accordance with Section 15 of the Plan.
“Change of Control” shall have the meaning set forth in
Section 2.G. of the Plan,
provided
,
however
, that for purposes
of this Agreement, the sale by the Company of a primary operating subsidiary shall be deemed a “Change of Control”.
15.
Other Termination
.
In accordance with Section 6.E. of the Plan, if the Optionee’s service with the Company (and/or any Employer, as the case may be, such that Optionee is no longer employed by either the Company or any Employer) terminates for any reason other than those described in Sections 8 through 14 above, the Option may be exercised to the extent it has become exercisable at the time of such termination, for a period of three (3) months from the date of such termination or until the expiration of the stated term of the Option, whichever period is shorter;
provided, however,
that if the Optionee dies within such three (3) month period and prior to the expiration of the stated term of such Option, such Option may thereafter be exercised to the extent it has become exercisable for a period of three (3) months from the date of death or until the expiration of the stated term of the Option, whichever period is shorter. If the Option is not exercised within the foregoing time period, the Option shall terminate.
16.
Option Not an Incentive Stock Option
. It is intended that the Option shall not be treated as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended.
17.
No Contract of Employment
. Nothing contained in this Agreement shall be considered or construed as creating a contract of employment for any specified period of time.
18.
Failure to Enforce Not a Waiver
. The failure of the Company to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.
19.
Entire Agreement; Amendments
. No modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically referred hereto, and signed by the parties hereto. This Agreement supersedes all prior agreements and understandings between the Optionee and the Company to the extent that any such agreements or understandings conflict with the terms hereof.
20.
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Missouri without regard to the principles of conflicts of law, which might otherwise apply.
[signature page follows]
IN WITNESS WHEREOF
, this Agreement is executed as of the day and year first above written.
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NOVATION COMPANIES, INC.
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/s/ Rodney Schwatken
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Name: Rodney Schwatken
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Title: Chief Executive Officer
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OPTIONEE
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/s/ Matthew Lautz
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Matthew Lautz
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[SIGNATURE PAGE TO LAUTZ STOCK OPTION AGREEMENT]