As filed with the Securities and Exchange Commission on June 6, 1997
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
PROVIDIAN FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
-------------------
Delaware 94-2933952
(State of incorporation) (I.R.S. Employer Identification No.)
-------------------
201 Mission Street
San Francisco, California 94105
(415) 543-0404
(Address and telephone number of Principal Executive Offices)
1997 Stock Option Plan
Stock Ownership Plan
(Full title of the plans)
--------------
Shailesh J. Mehta
Chief Executive Officer
Providian Financial Corporation
201 Mission Street
San Francisco, California 94105
(415) 543-0404
(Name, address, including zip code and telephone number,
including area code of agent for service)
--------------------
Copies to:
Mary Ellen Richey, Esq.
Providian Financial Corporation
201 Mission Street
San Francisco, California 94105
CALCULATION OF REGISTRATION FEE
================================================================================
Title of Amount Proposed maximum Proposed Amount of
securities to be to be offering price maximum registration
registered registered per share(1) aggregate fee
offering
price(1)
- --------------------------------------------------------------------------------
1997 Stock Option Plan
Common Stock
(par value $0.01) 12,400,000 $5.05 $62,620,000 $18,976
shares (2)
- --------------------------------------------------------------------------------
Options to purchase
Common Stock 12,400,000 N/A N/A N/A
shares
- --------------------------------------------------------------------------------
Stock Ownership Plan
Common Stock
(par value $0.01) 4,000,000 $5.05 $20,200,000 $6,122
shares
================================================================================
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(f)(2) and (h)(1) of the Securities
Act of 1933, as amended. The price per share and aggregate offering price
are calculated on the basis of the book value of the Registrant's common
stock. Such book value is determined by dividing the Registrant's equity
(determined as of April 30, 1997) by the Registrant's estimate of the
number of shares of Registrant's common stock to be received by the
Providian Corporation stockholders in the distribution (spin-off)
transaction (determined based on the number of Providian Corporation common
stock outstanding as of April 30, 1997).
(2) Such number represents an estimate of the number of shares to be reserved
for issuance under the 1997 Stock Option Plan, such number being comprised
of (i) ten million shares plus (ii) that number of shares equal to the
number of options to be issued by Registrant in substitution of options
exercisable for Providian Corporation common stock pursuant to the
Distribution Agreement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
--------------------------------------------------
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "SEC") are incorporated by reference into this
Registration Statement:
1. The Registrant's effective registration statement on Form 10 filed
April 18, 1997 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), containing audited financial statements for the Registrant's
latest fiscal year.
2. The description of the Registrant's common stock which is contained
in a registration statement on Form 10 filed under the Exchange Act, including
any amendment or report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be a part of this
registration statement from the date of the filing of such reports and
documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") permits a
corporation to indemnify its directors, officers, employees and other agents in
terms sufficiently broad to permit indemnification (including reimbursement for
expenses) under certain circumstances for liabilities arising under the
Securities Act. The Registrant's Bylaws contain provisions covering
indemnification of directors, officers and other agents against certain
liabilities and expenses incurred as a result of proceedings involving such
persons in their capacities as directors, officers, employees or agents,
including proceedings under the Securities Act or the Exchange Act.
The Registrant's Certificate of Incorporation provides for the
indemnification of directors to the fullest extent not prohibited by the DGCL
and authorizes the indemnification by the Registrant of officers, employees and
other agents as set forth in the DGCL.
In addition, the Registrant expects to purchase directors' and officers'
liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
Exhibit
5.1 Opinion of General Counsel, Providian Financial Corporation
23.1 Consent of Ernst & Young LLP
23.2 Consent of General Counsel, Providian Financial Corporation.
Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to the signature pages.
99.1 1997 Stock Option Plan.
99.2 Form of Stock Option Agreement under 1997 Stock Option Plan.
99.3 Stock Ownership Plan.
ITEM 9. UNDERTAKINGS
1. The undersigned Registrant hereby undertakes:
a. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
i. To include any prospectus required by section 10(a)(3) of the
Securities Act;
ii. To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
iii. To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the issuer pursuant to section 13
or section 15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement.
b. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
c. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
2. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Francisco, State of California, on June 6,
1997.
PROVIDIAN FINANCIAL CORPORATION
By /s/ Shailesh J. Mehta
---------------------------
Shailesh J. Mehta
Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Mary Ellen Richey, Clifford Shapiro and
Ronald Claveloux, and each or any one of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Shailesh J. Mehta
- ---------------------- Chief Executive Officer and Director June 6, 1997
Shailesh J. Mehta (Principal Executive Officer)
/s/ David J. Petrini
- ----------------------- Senior Vice President and Chief June 6, 1997
David J. Petrini Financial Officer
(Principal Financial Officer)
/s/ Daniel Sanford
- ----------------------- Vice President and Controller June 6, 1997
Daniel Sanford (Principal Accounting Officer)
/s/ Irving W. Bailey II
- ----------------------- Director June 6, 1997
Irving W. Bailey II
/s/ James V. Elliott
- ----------------------- Director June 6, 1997
James V. Elliott
/s/ John M. Cranor III
- ----------------------- Director June 6, 1997
John M. Cranor III
/s/ Lyle Everingham
- ----------------------- Director June 6, 1997
Lyle Everingham
/s/ J. David Grissom
- ----------------------- Director June 6, 1997
J. David Grissom
/s/ Larry D. Thompson
- ----------------------- Director June 6, 1997
Larry D. Thompson
EXHIBIT INDEX
Exhibit
5.1 Opinion of General Counsel, Providian Financial Corporation
23.1 Consent of Ernst & Young LLP
23.2 Consent of General Counsel, Providian Financial Corporation.
Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to the signature pages.
99.1 1997 Stock Option Plan.
99.2 Form of Stock Option Agreement under 1997 Stock Option Plan.
99.3 Stock Ownership Plan.
EXHIBIT 5.1
June 6, 1997
Securities and Exchange Commission
Division of Corporate Finance
Washington, D.C. 20549
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
I am General Counsel of Providian Financial Corporation, a Delaware
corporation (the "Company"). This opinion is being delivered to you in
connection with the registration under the Securities Act of 1933, as amended
(the "Act"), of the shares of the Company's Common Stock, par value $0.01 per
share (the "Common Stock"), issuable under the Providian Financial Corporation
1997 Stock Option Plan and Stock Ownership Plan (collectively, the "Plans"). I
am a member of the Bar of the State of California.
I am generally familiar with the properties and affairs of the Company
(including the Plans). I have also examined those records of the Company I
deemed necessary for the purpose of this opinion. On that basis, I am of the
opinion that the 16,400,000 shares of Common Stock of the Company, when issued
pursuant to the terms of the Plans, will be validly issued, fully paid and
nonassessable shares of the Company's Common Stock.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8 relating to the Plans.
Very truly yours,
/s/ Mary Ellen Richey
Mary Ellen Richey
General Counsel
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the 1997 Stock Option Plan and Stock Ownership Plan of
Providian Financial Corporation of our report dated January 29, 1997 (except for
Note P, as to which the date is February 4, 1997), with respect to the
consolidated financial statements of Providian Bancorp, Inc. (the predecessor to
the Registrant) and Subsidiaries for the year ended December 31, 1996 included
in the Registration Statement on Form 10, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young
San Francisco, California
June 6, 1997
EXHIBIT 99.1
PROVIDIAN FINANCIAL CORPORATION
1997 STOCK OPTION PLAN
As Amended and Restated June 5, 1997
ARTICLE 1. HISTORY AND PURPOSE
1.1 This 1997 Stock Option Plan ("Plan") was originally adopted by
Providian Corporation, a Delaware corporation ("Parent") in 1995, and on March
27, 1997, it was adopted by Providian Financial Corporation (formerly Providian
Bancorp, Inc.) ("Company"), a wholly owned subsidiary of Parent. This amendment
and restatement of the Plan was adopted by the Board on June 4, 1997.
1.2 The shareholders of Parent approved this Plan, as originally adopted,
at the 1995 annual meeting of the shareholders of Parent. On April 2, 1997,
Parent, as sole shareholder of the Company, approved the Plan as adopted by the
Company.
1.3 The purpose of this Plan is to advance the interest of the Company by
enabling it and its operating companies to attract and retain the best available
personnel for positions of substantial responsibility, and to provide key
Employees of the Company and its operating companies and non-employee directors
with an opportunity for investment in the Company Common Stock; thereby giving
them an additional incentive to increase their efforts on behalf of the long
term success of the Company and its operating companies.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. As used in the Plan, terms defined parenthetically
immediately after their use shall have the respective meanings provided by such
definitions, and the terms set forth below shall have the following meanings (in
either case, such meanings shall apply equally to both the singular and plural
forms of the terms defined);
(a) "Award" shall mean an Option or stock appreciation right granted under
the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Cause" shall mean a felony conviction of a Participant or the failure
of a Participant to contest prosecution for a felony, or a Participant's willful
misconduct or dishonesty (as such terms are defined by the Committee in its sole
discretion), any of which is determined by the Committee to be directly and
materially harmful to the business or reputation of the Company or its
Subsidiaries.
(d) "Change of Control" shall mean:
i. When any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) becomes a beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20
percent or more of either (a) the Outstanding Common Stock or (B) the
Outstanding Voting Securities; provided, however, that beneficial ownership
by any of the following shall not constitute a Change of Control: (1) the
Company; (2) any employee benefit plan (or related trust) sponsored or
maintained by the Company; or (3) any corporation with respect to which,
following such acquisition, more than 60 percent of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Common Stock and Outstanding Voting Securities,
immediately prior to such acquisition in substantially the same proportions
as their ownership, immediately prior to such acquisition, of the
Outstanding Common Stock and Outstanding Voting Securities, as the case may
be; or
ii. When individuals who, as of the date hereof, constitute the Board
cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director of the Company
subsequent to the date hereof whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a majority
of the directors of the Company then comprising the Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such term is used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act); or
iii. A reorganization, merger or consolidation, with respect to which,
in each case, all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Common Stock
and Outstanding Voting Securities immediately prior to such reorganization,
merger or consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than 60
percent of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Common Stock and Outstanding Voting Securities, as the case may
be; or
iv. (A) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company or (B) the sale or other
disposition of all or substantially all of the assets of the Company, other
than to a corporation, with respect to which following such sale or other
disposition, more than 60 percent of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Common
Stock and Outstanding Voting Securities immediately prior to such sale or
other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Common Stock and Outstanding Voting Securities, as the case may be.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto, together with any regulations
promulgated thereunder.
(f) "Committee" shall mean the committee described in Section 3.1.
(g) "Common Stock" shall mean the Company's common stock, $0.01 par value
per Share.
(h) "Disability" shall mean when a Participant is considered permanently
disabled under a disability insurance policy carried by the Company, or, if no
such policy is carried by the Company, when a Participant is permanently and
totally disabled within the meaning of Section 22(e) of the Code.
(i) "Effective Date" shall mean the date described in Section 7.1.
(j) "Employee" shall mean an individual who is a full-time or part-time
employee of the Company or a Subsidiary, including an employee who is also a
member of the Board.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(l) "Fair Market Value" of the Shares shall mean, as of any applicable
date, the mean between the highest and lowest daily sale price of the Shares as
reported on the New York Stock Exchange Composite Tape on such date or during
such other relevant period of trading days as determined by the Committee, or,
if no such reported sale of the Shares shall have occurred on such date or
during such period, on the next preceding date on which there was such a
reported sale. If there shall be any material alteration in the present system
of reporting sale prices of the Shares, or if the Shares are not then listed on
the New York Stock Exchange, the fair market value of the Shares as of a
particular date shall be determined by such method as shall be determined by the
Committee.
(m) "Incumbent Board" shall mean the individuals who on the date of
adoption of this Plan by the Board of Directors constitute the Board of
Directors.
(n) "ISOs" shall have the meaning given such term in Section 6.1.
(o) "NQSOs" shall have the meaning given such term in Section 6.1.
(p) "Option" shall mean an option to purchase Shares pursuant to Article
6 (and, if applicable, related stock appreciation rights).
(q) "Option Agreement" shall mean an agreement evidencing the grant of an
Option, as described in Section 6.2.
(r) "Option Exercise Price" shall mean the purchase price per Share subject
to an Option, which shall not be less than the Fair Market Value of the Share on
the day on which the Option is granted.
(s) "Outstanding Common Stock" shall mean the then outstanding Shares of
Common Stock.
(t) "Outstanding Voting Securities" shall mean the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors of the Company.
(u) "Participant" shall mean any individual who is (i) either a key
salaried Employee of the Company or its Subsidiaries or a member of the Board
who is not an Employee, and (ii) selected by the Committee to receive an Award
under the Plan.
(v) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
(w) "Plan" shall mean this Providian Financial Corporation 1997 Stock
Option Plan as the same may be amended from time to time.
(x) "Retirement" shall mean retirement by a Participant in accordance with
the terms of the Company's retirement or pension plans or pursuant to a written
agreement.
(y) "Shares" shall mean the shares of Common Stock.
(z) "Subsidiary" shall mean, with respect to the Company, any corporation
or other Person of which a majority of its voting power, equity securities, or
equity interest is owned directly or indirectly by the Company.
2.2 Gender. Except where otherwise indicated by the context, reference to
the masculine gender shall include the feminine gender.
2.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Human Resources
Committee of the Board, or by any other committee (the "Committee") appointed by
the Board which shall include two or more directors of the Company who are
"non-employee directors" within the meaning of Rule 16b-3 (or any successor
provision) promulgated under the Exchange Act and all of whom shall be "outside
directors" within the meaning of Treasury Regulation Section 1.162-27 (or any
successor provision) promulgated under the Code. The members of the Committee
shall be appointed from time to time by, and shall serve at the of, the Board.
Notwithstanding the foregoing, the Board shall have full power and authority to
take any action that may be taken by the Committee hereunder.
3.2 Authority of the Committee. Subject to the provisions of the Plan,the
Committee shall have full authority to administer the Plan, including without
limitation, the authority to:
(a) approve Participants to whom Options are granted;
(b) determine the size, types and frequency of Options granted under the
Plan;
(c) determine the terms and conditions of Options, including any
restrictions or conditions to the Option, which need not be identical for all
Participants;
(d) accelerate the exercisability of, and accelerate or waive any or all
the restrictions and conditions applicable to, any Option, for any reason;
(e) modify the duration of an Option exercise period or term of an Award;
(f) construe and interpret the Plan and any agreement or instrument entered
into under the Plan;
(g) establish, amend and rescind rules and regulations for the Plan's
administration; and
(h) amend the terms and conditions of any outstanding Option to the extent
such terms and conditions are within the discretion of the Committee as provided
in the Plan.
The Committee shall have sole discretion to make all other determinations which
may be necessary or advisable for the administration of the Plan. To the extent
permitted by law and Rule 16b-3 promulgated under the Exchange Act, the
Committee may delegate its authority as identified hereunder.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan, and all related orders or
resolutions of the Board, shall be final, conclusive and binding on all Persons,
including the Company, its stockholders, Employees, Participants and their
estates and beneficiaries.
3.4 Section 16 Compliance; Bifurcation of Plan. It is the intention of the
Company that the Plan and the administration of the Plan comply in all respects
with Section 16(b) of the Exchange Act and the rules and regulations promulgated
thereunder. If any Plan provision, or any aspect of the administration of the
Plan, is found not to be in compliance with Section 16(b) of the Exchange Act,
the provision or administration shall be deemed null and void, and in all events
the Plan shall be construed in favor of its meeting the requirements of Rule
16b-3 promulgated under the Exchange Act. Notwithstanding anything in the Plan
to the contrary, the Board or the Committee, in its discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan to Participants who are subject to Section 16 of the Exchange Act without
so restricting, limiting or conditioning the Plan with respect to other
Participants.
ARTICLE 4. SHARES AVAILABLE UNDER THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.2, the
aggregate number of Shares reserved for issuance upon the exercise of Options is
10 Million Shares plus the number of Shares subject to Options issued to replace
options to acquire shares of common stock of Parent pursuant to the Employee
Benefits Agreement executed in connection with the distribution of Company
Common Stock by Parent in June 1997 (the "Benefits Agreement"). Any Shares
issued under the Plan may consist, in whole or in part, of authorized and
unissued Shares or treasury Shares. If and to the extent an Option shall expire
or terminate for any reason without having been exercised in full (including a
cancellation and regrant of an Option), or shall be forfeited (pursuant to the
exercise of a tandem stock appreciation right or otherwise), the Shares
associated with such Options shall again become available for Options under the
Plan.
4.2 Adjustments in Authorized Shares and Outstanding Awards. In the event
of any change in corporate capitalization, such as a stock split or a corporate
transaction, such as any merger, consolidation, separation, including a
spin-off, or other distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code) or any partial or complete liquidation
of the Company or other transaction not involving the receipt of consideration
by the Company, the Committee or the Board may make such substitution or
adjustments in the aggregate number and kind of stock or other securities or
property reserved for issuance under the Plan, in the number of Options which
may be awarded during any calendar year, in the number and kind and Option
Exercise Price of stock or other securities or property subject to outstanding
Options and stock appreciation rights, in the number and kind of stock or other
securities or property subject to other outstanding Awards granted under the
Plan and/or such other equitable substitution or adjustments as it may determine
to be appropriate in its sole discretion; provided, however, that the number of
Shares subject to any Award shall always be a whole number. Such adjusted
exercise price shall also be used to determine the amount payable by the Company
upon the exercise of any stock appreciation right associated with any Option.
The conversion of any convertible securities of the Company shall not be treated
as a "transaction not involving the receipt of consideration by the Company."
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
Persons eligible to receive Awards under this Plan shall be those Employees
who are key salaried Employees of the Company or its Subsidiaries and all
members of the Board who are not Employees. A Participant shall be any such
eligible person who is designated by the Committee in its sole discretion to
receive an Option under the Plan.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options.
(a) Subject to the terms and provisions of the Plan, the Committee may
grant Options to Participants at any time and from time to time in the form of
options which are intended to qualify as incentive stock options within the
meaning of Section 422 of the Code ("ISOs"), Options which are not intended to
so qualify ("NQSOs") or a combination thereof; provided, that ISOs may be
granted only to Employees. No Participant may be granted Options during any
calendar year to purchase a number of shares exceeding 500,000 multiplied by the
"Ratio" as that term is defined in the Benefits Agreement. Options may be
granted to any Participant during any calendar year. The Committee may issue
stock appreciation rights in tandem with any Option granted to a Participant;
provided, however, that the Committee may not issue stock appreciation rights in
tandem with Option with respect to more than 50 percent, in the aggregate, of
the Shares under Options granted to any one Participant. If stock appreciation
rights are issued in tandem with an Option, the exercise of such Option shall
cause a pro tanto cancellation of the related stock appreciation rights issued
in tandem with such Option. The exercise of a stock appreciation right issued in
tandem with an Option shall cause a pro tanto cancellation of such Shares under
Option.
(b) No person shall be eligible for the grant of an ISO if such person owns
(or is deemed to own pursuant to Section 424(d) of the Code) stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary (as such terms are defined in Sections
424(e) and (f), respectively) unless the Option Exercise Price is at least one
hundred ten percent (110%) of the Fair Market Value of such stock at the date of
grant and the ISO is not exercisable after the expiration of five (5) years from
the date of grant.
6.2 Option Agreement. Each Option shall be evidenced by an Option Agreement
that shall specify the Option Exercise Price, the duration of the Option, the
number of Shares to which the Option relates (and if any stock appreciation
rights are to be issued in tandem with such Option) and such other provisions as
the Committee may determine or which are required by the Plan. The Option
Agreement shall also specify whether the Option is intended to be an ISO or a
NQSO and shall include such provisions applicable to the particular type of
Option granted. In no event shall the Option Exercise Price be less than the
Fair Market Value of the Shares on the date the Option is granted.
Notwithstanding the foregoing, an Option may be granted with an Option Exercise
Price lower than the Fair Market Value if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
6.3 Duration of Options. Subject to Section 3.2(e), each Option shall
expire at such time as is determined by the Committee at the time of grant;
provided, however, that no Option shall be exercised later than the tenth (10th)
anniversary of its grant.
6.4 Exercise of Options. Options shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall approve at
the time of grant, which need not be the same for each grant or for each
Participant. Options shall be exercised by delivery to the Company of a written
notice of exercise, setting forth the number of Shares with respect to which the
Option is to be exercised and accompanied by an arrangement acceptable to the
Company to provide full payment of the Option Exercise Price on or prior to the
settlement date and all applicable withholding taxes.
6.5 Stock Appreciation Rights. If the Committee issues stock appreciation
rights in tandem with an Option granted under this Plan, such rights shall be
subject to the same terms and conditions as the related Option and shall be
exercisable only to the extent that such Option is exercisable. A grant of stock
appreciation rights shall require, as a condition to its exercise, that the
grantee surrender to the Committee, unexercised, the related Option. Upon
exercise of a stock appreciation right, the grantee shall be entitled to receive
an aggregate value equal to the product of (a) the excess of the fair market
value of one Share on the date of exercise over the Option Exercise Price
multiplied by (b) the number of the stock appreciation rights being exercised.
The Committee shall have the right to determine whether such aggregate value
shall be paid to such grantee in Shares, cash, or part in cash and part in
Shares. No fractional Shares will be issued, but instead cash will be paid in
lieu of the fractional Share to which the grantee would otherwise be entitled.
6.6 Payment of Option Exercise Price. The Option Exercise Price for Shares
as to which an Option is exercised shall be paid to the Company in full at the
time of exercise, at the discretion of the Committee, either (a) in cash in the
form of currency or other cash equivalent acceptable to the Company, (b) by
tendering Shares having a Fair Market Value at the time of exercise equal to the
Option Exercise Price (provided that such Shares are held for the requisite
period to avoid a charge to the Company's earnings), (c) any other reasonable
consideration that the Committee may deem appropriate or (d) by a combination of
the forms of consideration described in (a), (b) and (c) of this Section 6.6.
The Committee may permit the cashless exercise of Options as described in
Regulation T promulgated by the Federal Reserve Board, subject to applicable
securities law restrictions, or by any other means which the Committee
determines to be consistent with the Plan's purpose and applicable law. In the
case of a deferred payment arrangement, (i) interest shall be charged at the
minimum rate to avoid the imputation of interest and (ii) the "par value" of the
Common Stock shall be paid by the Participant in cash.
6.7 Sale, Merger or Change in Control.
(a) Upon a Change of Control, any then outstanding Options held by a
Participant shall become fully vested and immediately exercisable.
(b) If the Company agrees to sell all or substantially all of its assets
for cash or property or for a combination of cash and property or agrees to any
merger, consolidation, reorganization, division or other corporate transaction
in which Shares are converted into another security or into the right to receive
securities or property and such agreement does not provide for the assumption or
substitution of the Options granted under the Plan on a basis that is fair and
equitable to holders of such Options as determined by the Board, each Option
granted to a Participant at the direction and discretion of the Board (1) may
(subject to such conditions, if any, as the Board deems appropriate) be canceled
unilaterally by the Company in exchange for (A) whole Shares of Common Stock
(and cash for any fractional Share) the number of which, if any, shall be
determined by the Committee on a date set by the Committee for this purpose by
dividing (i) the excess of the then Fair Market Value of the Common Stock then
subject to exercise under such Option (as determined without regard to any
vesting schedule for such Option) over the Option Exercise Price of such Shares
by (ii) the then Fair Market Value of a Share of such Common Stock, or (B) the
right to exercise his or her outstanding Option in full on any date before the
date as of which the Board unilaterally cancels such Option in full or (2) may
be canceled unilaterally by the Company if the Option Exercise Price equals or
exceeds the Fair Market Value of a Share of Common Stock on a date set by the
Board. If the exchange described in this Section 6.7(b)(1) would result in a
violation of Section 16 of the Exchange Act for a Participant, each such Option
may be canceled unilaterally by the Company after advance written notice to such
Participant.
6.8 Termination of Employment or Board Membership. If the employment or
Board membership of a Participant is terminated for Cause, all then outstanding
Options of such Participant, whether or not exercisable, shall terminate
immediately. If the employment or Board membership of a Participant is
terminated for any reason other than for Cause, death, Disability or Retirement,
to the extent then outstanding Options of such Participant are exercisable, such
Options may be exercised by such Participant or his personal representative at
any time prior to the earlier of the expiration date of the Options or the date
which is ninety (90) days after the date of such termination. In the event of
the Retirement of a Participant, to the extent then outstanding Options of such
Participant are exercisable, such Options may be exercised by the Participant
(a) in the case of NQSOs, within five years after the date of Retirement and (b)
in the case of ISOs, within ninety (90) days after Retirement as ISOs or four
years nine months thereafter as NQSOs; provided, however, that no such Options
may be exercised on a date subsequent to their expiration. In the event of the
death or Disability of a Participant while employed by the Company or a
Subsidiary or serving as a member of the Board, all then outstanding Options of
such Participant shall become fully vested and immediately exercisable, and may
be exercised at any time (q) in the case of NQSOs, within five years after the
date of death or determination of Disability, (r) in the case of ISOs, within
one year after the date of determination of Disability as ISOs, or four years
thereafter as NQSOs, and (s) in the case of ISOs within five years after the
date of death; provided however, that no such Options may be exercised on a date
subsequent to their expiration. Options may be exercised as provided in this
Section 6.8 (x) in the event of the death of a Participant, by the person or
persons to whom rights pass by will or by the laws of descent and distribution,
or if appropriate, the legal representative of his estate and (y) in the event
of the Disability of a Participant, by the Participant, or if such Participant
is incapacitated, by his legal representative.
6.9 ISO Limitation. To the extent that the aggregate Fair Market Value
(determined at the time of grant) of Shares with respect to which ISOs are
exercisable for the first time by any optionee during any calendar year under
all plans of the Company or any parent or subsidiary (as such terms are defined
in Sections 424(e) and (f), respectively) exceeds one hundred thousand dollars
($100,000), the ISOs or portions thereof which exceed such limit (according to
the order in which they were granted) shall be treated as NQSOs.
ARTICLE 7. EFFECTIVE DATE, AMENDMENT, MODIFICATION, TERMINATION
7.1 Effective Date. The Plan shall become effective upon approval by Parent
as the Company's sole stockholder. The Committee may, in its discretion,
authorize the grant of Options, the issuance or exercise of which shall be
expressly subject to the conditions that (a) approval by the Company's
stockholders shall have been obtained, (b) the Shares reserved for issuance
under the Plan shall have been duly listed, upon official notice of issuance,
upon the New York Stock Exchange and (c) a registration statement under the
Securities Act of 1933, as amended, with respect to such Shares shall have
become effective.
7.2 Termination Date. The Plan shall terminate on the earliest to occur of
(a) the tenth (10th) anniversary of the Effective Date, (b) the date when all
Shares available under the Plan shall have been acquired pursuant to the
exercise of Awards or (c) such other date as the Board may determine in
accordance with Section 7.3.
7.3 Amendment, Modification and Termination. The Board may, at any time,
amend, modify or terminate the Plan. The Committee may amend the terms of any
Award, prospectively or retroactively, but no such amendment shall impair the
rights of any Participant without such Participant's consent.
7.4 Awards Previously Granted. No amendment, modification or termination of
the Plan shall in any manner adversely affect any outstanding Award without the
written consent of the Participant holding such Award.
ARTICLE 8. NO GRANTING OF RIGHTS
Neither the Plan, nor any action taken under the Plan, shall be construed
as giving any Employee or Board member the right to become a Participant, nor
shall an Option under the Plan be construed as giving a Participant any right
with respect to continuance of employment by the Company or a Subsidiary or
Board membership. The Company expressly reserves the right to terminate, whether
by dismissal, discharge or otherwise, a Participant's employment at any time,
with or without Cause, except as may otherwise be provided by any written
agreement between the Company and the Participant. This Plan is not intended to
alter, amend or modify the terms of any written employment agreement between the
Company and any Participant. In the event of a conflict between the terms of
this Plan and such agreement, the rights of the Participant shall be determined
in accordance with the terms of the employment agreement.
ARTICLE 9. WITHHOLDING
9.1 Tax Withholding. A Participant shall remit to the Company an amount
sufficient to satisfy Federal and state taxes (including the Participant's FICA
obligation) required by law to be withheld with respect to any grant, exercise
or payment made under or as a result of the Plan.
9.2 Share Withholding. With respect to withholding required upon the
exercise of Options, a Participant may, subject to the discretion of the
Committee, make an election (a "Tax Election") to satisfy the withholding
requirement with respect to such Shares, in whole or in part, by having the
Company withhold Shares having a Fair Market Value on the date the withholding
tax is to be determined equal to the amount required to be withheld under
applicable law.
ARTICLE 10. INDEMNIFICATION
No member of the Board or the Committee, nor any officer or Employee acting
on behalf of the Board or the Committee, shall be personally liable for any
action, determination or interpretation taken or made with respect to the Plan,
and all members of the Board, the Committee 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 with respect to any such action,
determination or interpretation.
ARTICLE 11. SUCCESSORS
All obligations of the Company with respect to Awards granted under the
Plan shall be binding on any successor to the Company, whether the existence of
such successor is a result of a direct or indirect purchase, merger,
consolidation or otherwise, of all or substantially all of the business and/or
assets of the Company.
ARTICLE 12. GOVERNING LAW
To the extent not preempted by Federal law, the Plan and all agreements
under the Plan shall be governed by, and construed in accordance with, the laws
of the State of Delaware without regard to its conflict of laws rules.
ARTICLE 13. TRANSFERABILITY
An ISO shall not be transferable except by will or by the laws of descent
and distribution, and shall be exercisable during the lifetime of the person to
whom the Option is granted only by such person. A NQSO may be transferable to
the extent provided in the Option Agreement; provided, however, that if the
Option Agreement does not specifically provide for transferability, then such
NQSO shall not be transferable except by will or by the laws of descent and
distribution or pursuant to a domestic relations order. Notwithstanding the
foregoing, the person to whom the Option is granted may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the optionee, shall thereafter be
entitled to exercise the Option.
ARTICLE 14. USE OF PROCEEDS
Proceeds from the sale of Shares pursuant to Options shall constitute
general funds of the Company.
EXHIBIT 99.2
Number Options Granted: _______
Exercise Price: $_______
Grant Date: _____________
Name
Address
Address
Congratulations on your _____ Stock Option Award. At the _______ meeting, the
Human Resources Committee of our Board of Directors approved the ______ Awards.
As a result you have been granted an award of _____ options. This award provides
you with incentive compensation directly tied to measured shareholder value.
It's our hope that the individuals who have played a role in our company's past
success continue to share in its future as owners.
1997 Stock Option Plan
Non-Qualified Stock Option ("NQSO") Acknowledgment
I. Pursuant to the provisions of the "Providian Financial Corporation 1997
Stock Option Plan" (hereinafter called the "Plan"), Providian Financial
Corporation (hereinafter called the "Corporation") has on ______________,
granted to ______________ (hereinafter called the "Grantee") subject to the
terms and conditions of the Plan and subject to the further terms and
conditions herein set forth, the right and option to purchase all or any
part of _______ shares of Common Stock, par value $0.01, of the Corporation
as such Common Stock is presently constituted, at the exercise price of
$______ per share, such option to be exercisable from time to time as
hereinafter provided. The Plan is incorporated herein by reference and made
a part hereof with the same effect as if herein repeated in full.
II. Without limiting the generality of Section I above, it is understood and
agreed that the option evidenced hereby is subject to the following
conditions:
A. That the option shall expire ten years from the Grant Date hereof;
B. That, except as provided in Sections 6.7 and 6.8 of the Plan, the
option may be exercised only to the extent of one-third of the total
number of optioned shares after the expiration of one year of service
following the date the option is granted, and may be exercised only to
the extent of two-thirds of the total number of optioned shares after
the expiration of two years of service following the date the option
is granted, and in full only after the expiration of three years of
service after the date the option is granted;
C. That the option shall not be transferable by the Grantee otherwise
than by the Grantee's will or by the laws of descent and distribution,
and that the option shall be exercised during the Grantee's lifetime
only by the Grantee or the Grantee's guardian or legal representative;
and
D. That until the person electing to exercise the option has given notice
of the exercise of the option and paid the exercise price of the
optioned shares to be purchased, the person so electing shall possess
no rights as a stockholder with respect to any such shares.
III. Neither the execution and delivery hereof nor the granting of the option
evidenced hereby shall constitute or be evidence of any agreement or
understanding, express or implied, on the part of the Corporation or any
affiliate of the Corporation to employ the Grantee for any specific period.
IV. In the event that, prior to the delivery by the Corporation of all the
shares of Common Stock subject to the option evidenced hereby, the number
of outstanding shares of Common Stock of the Corporation shall be changed
by reason of any transaction described in Section 4.2 of the Plan, the
number of shares of Common Stock of the Corporation then remaining subject
to the option evidenced hereby and the price per share thereafter payable
upon exercise of the option will be appropriately adjusted so as to reflect
such change.
V. Any notice required to be given hereunder to the Corporation shall be to
First Chicago Trust Company, P.O. Box 2585, Mail Suite 4171, Jersey City,
NJ 07303, and any notice required to be given hereunder to the Grantee
shall be addressed to him/her at the address noted above or such other
address supplied by the Grantee, subject to the right of either party
hereafter to designate in writing to the other some other address. Any such
notice shall be deemed to have been duly given if and when enclosed in a
properly sealed envelope addressed as aforesaid, deposited, postage
prepaid, in a Post Office regularly maintained by the United States
Government.
Please note:
First Chicago Trust Company of New York ("FCT") will maintain official
records of stock option grants and exercises.
This Grant Acknowledgment form summarizes your grant information. You will
not receive a Stock Option Certificate.
FCT will hold the original copy of your Grant Acknowledgment and can
provide any necessary information to you if you misplace or lose your copy.
WHAT YOU NEED TO DO
1. Sign and date the original form.
2. Keep the copy for your records.
3. Return the original form in the envelope provided to ________________.
Acknowledged by:
- ------------------------ ---------------
Grantee's Signature Date
EXHIBIT 99.3
PROVIDIAN FINANCIAL CORPORATION
STOCK OWNERSHIP PLAN
As Amended and Restated June 4, 1997
1. History and Purpose of Plan. (a) This plan was originally adopted by
Providian Corporation, a Delaware corporation ("Parent"). On March 27, 1997, it
was adopted by Providian Financial Corporation ("Providian"), formerly known as
Providian Bancorp, Inc., a wholly owned subsidiary of Parent, with such
amendments as were necessary to reflect the change in the identity of the
sponsor of the Plan. This amendment and restatement of the Plan was adopted by
the Board of Directors of Providian on June 4, 1997.
(b) The shareholders of Parent approved this Plan, as originally adopted,
at the 1992 annual meeting of the shareholders of Parent, and as thereafter
amended, at the 1995 annual meeting. On April 2, 1997, Parent, as sole
shareholder of Providian, approved the Plan as adopted by Providian.
(c) The purpose of this Stock Ownership Plan is to promote the growth and
profitability of Providian and its subsidiaries (Providian and its subsidiaries
are hereinafter collectively referred to as the "Company") by encouraging
selected key employees of the Company and non-employee directors of the Company
to acquire and retain a proprietary interest in the Company. Such proprietary
interest should increase the personal interest and special efforts of such
persons in providing for the continued success and progress of the business of
the Company and should enhance the Company's efforts to attract and retain
competent key employees and non-employee directors.
2. Definitions. The following terms when used herein shall have the meaning
set forth below, unless a different meaning is plainly required by the context:
a. "Board of Directors" shall mean the Board of Directors of Providian.
b. "Change in Control" shall mean:
i. When any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) who becomes a
beneficial owner (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (A) the
Outstanding Common Stock or (B) the Outstanding Voting
Securities; provided, however, that beneficial ownership by any
of the following shall not constitute a Change in Control: (1)
the Company; (2) any employee benefit plan (or related trust)
sponsored or maintained by the Company; or (3) any corporation
with respect to which, following such acquisition, more than 60%
of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Common Stock and Outstanding
Voting Securities immediately prior to such acquisition in
substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Outstanding Common
Stock and Outstanding Voting Securities, as the case may be; or
ii. When individuals who, as of the date hereof, constitute the
Incumbent Board cease for any reason to constitute at least a
majority ofthe Board of Directors; provided, however, that any
individual becoming a director of Providian subsequent to the
date hereof whose election, or nomination for election by
Providian's shareholders, was approved by a vote of a least a
majority of the directors of Providian 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 such individual whose initial assumption of office
occurs as a result of either an actual or threatened election
contest (as such term is used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act); or
iii. A reorganization, merger or consolidation, with respect to
which, in each case, all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Common Stock and Outstanding Voting Securities
immediately prior to such reorganization, merger or consolidation
do not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation of the Outstanding Common
Stock and Outstanding Voting Securities, as the case may be; or
iv. (A) approval by the shareholders of Providian of a complete
liquidation or dissolution of Providian or (B) the sale or other
disposition of all or substantially all of the assets of
Providian, other than to a corporation, with respect to which
following such sale or other disposition, more than 60% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Common Stock and Outstanding Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding
Common Stock and Outstanding Voting Securities, as the case may
be.
c. "Code" shall mean the Internal Revenue Code of 1986, as amended.
d. "Committee" shall mean the committee appointed by the Board of Directors
to administer this Plan which shall include two or more directors of the Company
who are "nonemployee directors" (within the meaning of Rule 16b-3 promulgated
under the Exchange Act) and shall include only directors who are "outside
directors" within the meaning of Proposed Treasury Regulation ss. 1.162-27 (or
any successor provision) promulgated under the Code.
e. "Common Stock" shall mean the shares of Providian's common stock, par
value $0.01 per share, and any other shares of common stock from time to time
authorized pursuant to Providian's Certification of Incorporation.
f. "Disability" shall mean when a Participant is considered permanently
disabled under a disability insurance policy carried by the Company, or, if no
such policy is carried by the Company, when a Participant is permanently and
totally disabled within the meaning of Section 22(e)(3) of the Code.
g. "Employee" shall mean an individual who is a key salaried employee of
the Company.
h. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
i. "Incumbent Board" shall mean those individuals who, on the date of the
adoption of this Plan by the Board of Directors, constitute the Board of
Directors.
j. "Non-Employee Director" shall mean a member of the Board of Directors
who is not also an Employee.
k. "Nonrestricted Stock" shall mean shares of Common Stock granted to a
Participant pursuant to this Plan which are not Restricted Stock.
l. "Outstanding Common Stock" shall mean the then outstanding shares of
Common Stock.
m. "Outstanding Voting Securities" shall mean the then outstanding voting
securities of Providian entitled to vote generally in the election of directors
of Providian.
n. "Participants" shall mean (i) Employees who are selected by the
Committee to participate in the Plan and (ii) all Non-Employee Directors.
o. "Plan" shall mean this Stock Ownership Plan as the same may be amended
from time to time.
p. "Restricted Period" shall have the meaning given such term in Section
10.
q. "Restricted Stock" shall mean Common Stock which is subject to the
restrictions provided for in Section 9.
r. "Retirement" shall mean retirement by a Participant in accordance with
the terms of the Company's retirement plans.
s. "Value" shall be the mean between the highest and lowest sale price of
the Common Stock as reflected on the consolidated tape of the New York Stock
Exchange issues on the date of a grant hereunder; provided, however, that if no
shares of Common Stock were sold on such date, the determination shall be made
as of the last immediately preceding date on which the shares of the Common
Stock were sold.
3. Eligibility and Participation. Persons eligible to receive Nonrestricted
Stock and Restricted Stock under this Plan shall be (a) those Employees who are
selected by the Board of Directors or the Committee to participate in the Plan
and (b) those persons who are Non-Employee Directors. In determining the
Employees who shall become Participants, the Board of Directors or the Committee
shall take into account the duties of the Employees, their present and potential
contribution to the success of the Company, such other factors as it deems
relevant in connection with accomplishing the purposes of this Plan. An Employee
who has previously been granted Nonrestricted Stock and Restricted Stock
pursuant to the terms of this Plan may be granted additional Nonrestricted Stock
and Restricted Stock as the Board of Directors or the Committee shall determine
in its sole discretion. The Board of Directors or the Committee, from time to
time, may designate a defined class of Employees or Non-Employee Directors who
shall be eligible to participate in the Plan and specify the terms under which
such Participants may receive shares of Common Stock hereunder by adopting an
appendix to the Plan or adopting modifications or amendments to any existing
appendix, provided that the adoption of appendices shall not be the exclusive
means of determining participation. Any appendices so adopted shall be and
hereby are incorporated by this reference as part of this Plan.
4. Shares Subject to the Plan. Subject to the adjustments provided for in
Section 11, the aggregate number of shares of Common Stock which may be granted
under this Plan shall not exceed 4 million shares. Restricted Stock issued under
this Plan which is later forfeited pursuant to Section 9 may again be granted
under this Plan. The Common Stock to be offered under this Plan may be shares
held by the Company in its treasury, shares previously forfeited under the terms
of this Plan or newly issued shares.
5. Administration. This Plan shall be administered by the Committee.
Subject to the provisions of this Plan and the requirements of Section 162(m) of
the Code and such orders or resolutions not inconsistent with the provisions of
this Plan as made from time to time by the Board of Directors, the Committee
shall have sole and complete authority with respect to the following:
a. Selection of Participants;
b. Determining the number of shares, times, Restricted Periods and other
terms and conditions of grants hereunder;
c. Adopting, amending and rescinding such rules and regulations as, in its
opinion, may be advisable for the administration of this Plan;
d. Construing and interpreting this Plan and any related documents; and
e. Making all other determinations deemed advisable and necessary for the
administration of this Plan such that this Plan operates in the best interest of
the Company for the purposes set forth herein.
All decisions and determinations made by the Committee shall be final and
binding upon all Participants. Notwithstanding the foregoing provisions of this
Section 5, the Board of Directors shall have full power and authority to take
any action that may be taken by the Committee hereunder.
6. Discretionary Nonrestricted Stock Grants. From time to time, the
Committee shall determine those Participants to whom Nonrestricted Stock shall
be granted and the amount of the Nonrestricted Stock to be granted to each. In
no event, however, shall the aggregate Value of the Nonrestricted Stock granted
to any Employee Participant under this Plan in any year exceed 25% of the
Employee Participants' total incentive by the Participant under the
Corporation's Management Incentive Compensation Plan. In determining the amount
of the Nonrestricted Stock to be granted to Employee Participants, the Committee
shall take into account the past performance of such Employee Participant and
such additional items as it shall deem appropriate, including, but not limited
to, the salary of the Employee, the other benefits being received by the
Employee from the Company (including amounts received or to be received under
any incentive or bonus plans of the Company), the position of the Employee and
the Employee's potential for ongoing contribution to the success of the Company.
7. Restricted Stock Grants.
a. All Participants who receive Nonrestricted Stock grants in any year also
shall receive a matching Restricted Stock grant at the same time. The amount of
the matching Restricted Stock grant shall be determined by the Committee and
shall be a percentage (which shall be the same for all Employee Participants) of
the corresponding number of shares of Nonrestricted Stock, but in no event may
the number of shares of matching Restricted Stock granted to an Employee
Participant exceed 200% of the corresponding number of shares of Nonrestricted
Stock granted to the Employee Participant.
b. The Committee, in its discretion, also may make discretionary Restricted
Stock grants to Employee Participants under this Section 7.b. Such discretionary
grants may be made only (i) for use as a hiring bonus, (ii) as a reward for
extraordinary performance or (iii) to provide additional incentives for future
performance. Any grant of additional Restricted Stock to Employee Participants
pursuant to this Section 7.b will depend on achievement by the Company and/or
the Employee Participant of performance objectives established by the Committee.
Such performance objectives shall be established within 90 days after the
commencement of the period to which the performance objectives relate. The
performance objectives with respect to any performance periods shall be based
upon the Company's earnings, earnings per share, revenue, expenses, margin or
return on equity, as well as any individual performance objectives which the
Committee may establish, and shall be calculated in accordance with the formula
established for such performance period. An Employee Participant shall only be
entitled to receive a grant of additional Restricted Stock pursuant to this
Section 7.b upon attainment by the Company and/or the Employee Participant of
the pre-established performance objectives. The Committee shall certify in
writing before any additional shares of Restricted Stock are issued with respect
to a performance period that the performance objectives for such period have
been satisfied. In no event shall the Committee grant to any Employee
Participant in any year under this Section 7.b a number of shares of Restricted
Stock exceeding 100,000 multiplied by the "Ratio," as that term is defined in
that certain Employee Benefits Agreement entered into in connection with the
distribution by Parent to its shareholders of the Common Stock of Providian
pursuant to the Agreement and Plan of Distribution dated December 28, 1996 (the
"Distribution"). All shares of Restricted Stock granted pursuant to the
provisions of this Section 7.b shall be subject to all of the provisions of this
Plan applicable to Restricted Stock.
c. The Board of Directors or the Committee may make discretionary
Restricted Stock grants to Employee Participants under this Section 7.c. Such
discretionary grants may be made based on such criteria as the Board of
Directors determines to be appropriate, which may include (i) for use as a
hiring bonus, (ii) as a reward for extraordinary performance or (iii) to provide
additional incentives for future performance; provided that no grants of
Restricted Stock may be made under this Section 7.c based directly or indirectly
on the attainment of, or failure to attain, any performance objectives
established with respect to Restricted Stock grants pursuant to Section 7.b; and
provided further that Restricted Stock grants under this Section 7.c may not be
made to any Participant within one year after the close of any performance
period with respect to which the Participant has received a grant pursuant to
Section 7.b. In no event shall the Board of Directors grant in excess of 150,000
shares of Restricted Stock to any Employee Participant in any year under this
Section 7.c. Restricted Stock granted to Employee Participants pursuant to this
Section 7.c shall be subject to all of the provisions of this Plan applicable to
Restricted Stock, provided that the Board of Directors shall establish the terms
of the Restricted Period applicable to such Restricted Stock for purposes of
Section 10.
8. Provisions Applicable to Nonrestricted Stock.
a. At the time Nonrestricted Stock is granted to a Participant,
certificates representing the appropriate number of shares of Nonrestricted
Stock shall be registered in the name of such Participant, but such certificates
shall be held by the Company for the account of such Participant.
b. Notwithstanding the fact that the Company shall retain physical
possession of the certificates representing the Nonrestricted Stock granted to
Participants, the Participants shall have all of the rights of a holder of
Common Stock, including, but not limited to, the right to vote such shares and
to receive all distributions with respect to such shares.
c. Upon the request of a Participant, the Company will deliver the
certificates representing the shares of Nonrestricted Stock granted to such
Participant as soon as reasonably practicable following receipt of such request;
provided, however, that the delivery of such certificates shall result in the
forfeiture of such Participant's corresponding shares of Restricted Stock to the
extent provided in Section 9. Upon the termination of employment of an Employee
Participant, the certificates representing all of the shares of Nonrestricted
Stock granted to such Employee Participant shall be delivered to such Employee
Participant as soon as reasonably practicable.
9. Provisions Applicable to Restricted Stock.
a. At the time Restricted Stock is granted to a Participant, certificates
representing the appropriate number of shares of Restricted Stock shall be
registered in the name of such Participant, but during the Restricted Period the
certificates representing such shares of Restricted Stock shall be held by the
Company for the account of such Participant. As a condition to the receipt of a
Restricted Stock grant, the Participant shall deliver to the Company stock
powers duly endorsed in blank by the Participant. The certificates representing
the Restricted Stock held by the Company shall bear the following legend: "The
sale or other transfer of the shares represented by this certificate is subject
to certain restrictions on transfer set forth in the Providian Financial
Corporation Stock Ownership Plan and the rules of administration adopted
pursuant thereto. A copy of such Stock Ownership Plan and the rules adopted
pursuant thereto may be obtained from the secretary of Providian Financial
Corporation."
b. During the Restricted Period, until such time as the Participant has
forfeited the Participant's rights to the Restricted Stock, notwithstanding the
fact that the Company shall retain physical possession of the certificates
representing the shares of Restricted Stock granted to Participants, the
Participants shall have all of the rights of a holder of Common Stock,
including, but not limited to the right to vote such shares and to receive all
distributions with respect to such shares.
c. The Restricted Stock shall be subject to the following restrictions
during the Restricted Period:
i. None of the Restricted Stock may be sold, exchanged,
transferred, assigned, pledged or otherwise encumbered or
disposed of by the Participant during the Restricted Period.
ii. If an Employee Participant ceases to be an Employee prior to
the expiration or other termination of the Restricted Period,
other than by reason of death, Disability or Retirement, or if a
Non-Employee Director is removed from the Board of Directors for
cause (as determined by the disinterested members of the Board of
Directors), any shares of Restricted Stock granted to such
Participant which are still subject to restrictions shall be
forfeited and all rights of the Participant to such Restricted
Stock shall terminate without further obligation on the part of
the Company.
iii. If any Nonrestricted Stock certificates are requested and
delivered to a Participant, all or a portion of any corresponding
shares of matching Restricted Stock shall be forfeited, and all
rights of such Participant to such matching Restricted Stock
shall terminate without further obligation on the part of the
Company. The number of shares of matching Restricted Stock to be
forfeited shall be designated by the Committee at the time of the
grant.
10. Restricted Period.
a. The term "Restricted Period" shall mean the period established by the
Committee at the time the Restricted Stock is granted to the Participant. Such
"Restricted Period" may be defined by the passage of time, the achievement of
performance goals or any other criteria deemed appropriate by the Committee.
b. Notwithstanding any other provisions of this Plan to the contrary, the
following shall apply:
i. Following the occurrence of a Change in Control, all
restrictions applicable to any Restricted Stock shall terminate
as to any shares of Restricted Stock which are still subject to
restriction and all certificates representing such shares shall
be immediately distributed.
ii. If an Employee Participant ceases to be an Employee by reason
of death, Disability or Retirement, or a Non-Employee Director
ceases to be a director for any reason other than for cause (as
determined by the disinterested members of the Board of
Directors), then with respect to each grant of Restricted Stock,
the Restricted Period shall terminate only as to those shares of
Restricted Stock with the shortest remaining Restricted Period
and any remaining shares of Restricted Stock with respect to such
grant be forfeited.
c. At the end of the applicable Restricted Period with respect to any
shares of Restricted Stock, or at such earlier time as otherwise provided for
herein, all restrictions with respect to such Restricted Stock shall terminate,
the Participant shall become vested with respect to such shares and certificates
for the appropriate number of shares of Common Stock, free of restriction and
without the legend provided for hereunder, shall be delivered as soon as
practicable to the Participant or the Participant's beneficiary or estate, as
the case may be.
11. Changes in Capitalization.
a. In the event of any change in corporate capitalization, such as a stock
split or a corporate transaction, such as any merger, consolidation, he
definition of such term in Section 368 of the Code) or any partial or complete
liquidation of the Company, the Committee or the Board of Directors may make
such substitution or adjustments in the aggregate number and kind of stock or
other securities or property reserved for issuance under the Plan, in the number
and kind of stock or other securities or property subject to outstanding awards
granted under the Plan and/or such other equitable substitution or adjustments
as it may determine to be appropriate in its sole discretion; provided, however,
that the number of shares subject to any award shall always be a whole number.
b. If any shares of Common Stock are received by a Participant by reason of
the Common Stock owned by such Participant pursuant to the terms of this Plan,
and (i) if the certificates representing the shares of Nonrestricted Stock with
respect to which additional Common Stock was received is then held by the
Company, the certificates representing such additional shares of Common Stock
shall likewise be held by the Company and shall, for all purposes of this Plan,
be considered Nonrestricted Stock, or (ii) if such additional shares of Common
Stock are received with respect to Restricted Stock, such additional shares of
Common Stock shall, for all purposes of this Plan, be considered Restricted
Stock, subject to the same restrictions as the Restricted Stock with respect to
which they were received.
12. Designation of Beneficiary. A Participant may designate a person or
persons to receive, in the event of the Participant's death, any rights to which
the Participant would be entitled under this Plan. Such a designation shall be
made in writing and filed with the Committee. A beneficiary designation may be
changed or revoked by a Participant at any time by filing a written statement of
such change or revocation with the Committee. If a Participant dies without
having filed a beneficiary designation, or if a Participant's beneficiary does
not survive the Participant, then the Participant's estate shall be deemed to be
the Participant's beneficiary.
13. Amendment and Discontinuance. The Board of Directors may discontinue,
amend, alter or suspend this Plan. Any amendment or termination of this Plan
shall not apply with respect to shares of Nonrestricted Stock or Restricted
Stock previously granted, which shares shall continue to be subject to the terms
and conditions of this Plan in effect on the date of the grant of the
Nonrestricted Stock or Restricted Stock, unless the affected Participant
consents.
14. No Granting of Rights. Neither this Plan, nor any action taken
hereunder, shall be deemed as giving any Employee or Board member the right to
become a Participant, nor shall a Nonrestricted Stock grant or Restricted Stock
employment by the Company or Board membership. The Company expressly reserves
the right to terminate, whether by dismissal, discharge or otherwise, an
Employee's employment at any time, with or without cause, except as may
otherwise be provided by any written agreement between the Company and the
Employee.
15. Nontransferability. A Participant's rights under this Plan may not be
assigned, pledged or otherwise transferred, except that upon a Participant's
death, a Participant's rights may be transferred to the Participant's designated
beneficiary, or in the absence of such designation, by will or the laws of
descent and distribution.
16. Withholding. The Company shall have the right to deduct or withhold
from any payment owed to a Participant by the Company any amount which is
necessary in order to satisfy any withholding requirement which the Company
believes is imposed upon it with respect to any Federal, state or local taxes as
the result of the issuance of, or lapse of restriction on, Nonrestricted Stock
or Restricted Stock, or otherwise require a Participant to make provision for
payment of any such withholding amount. Subject to such conditions as the
Committee may establish from time to time, a Participant may elect to have
Restricted Stock otherwise issuable upon a grant hereunder withheld, or tender
back to the Company Restricted Stock granted hereunder, in order to satisfy all
or a portion of the taxes required to be withheld or otherwise deducted and paid
by the Company.
17. Securities Compliance. This Plan and its administration is intended to
comply with Rule 16b-3 promulgated under the Exchange Act. In the event any
provision or administration of this Plan is deemed not to comply with Rule
16b-3, such provision or administration shall be deemed to be void ab initio and
of no force and effect. All Common Stock granted under this Plan shall be issued
only in compliance with all applicable securities laws, rules and regulations of
the Securities and Exchange Commission, state Blue Sky laws and applicable
listing requirements of any national securities exchange on which the Common
Stock is listed. The Committee may impose such conditions, restrictions and
limitations as it may deem necessary and appropriate to assure compliance with
the foregoing.
18. Governing Law. This Plan shall be governed by, and construed in
accordance with, the laws of the state of Delaware without regard to its
conflict of laws rules.
19. Effective Date. This Plan shall become effective on the date of the
Distribution.
APPENDIX A
Providian Financial Corporation Stock Ownership Plan
Adopted June 4, 1997
Terms for Participation by Non-Employee Directors
1. Eligibility. Each Non-Employee Director shall be granted Nonrestricted
Stockand Restricted Stock in accordance with the terms and conditions contained
in this Appendix. Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Plan.
2. Participation Elections. Each Non-Employee Director may elect to receive
shares of Nonrestricted Stock under the Plan in lieu of payment of a portion or
all of his or her annual retainer. Such an election may be for any dollar or
percentage amount equal to at least 25% of the Non-Employee Director's annual
retainer. The election must be made prior to the beginning of the annual June 1
to May 31 Board cycle (the "Board Cycle"), provided that, for the 1997-1998
Board Cycle, the election shall be made on or before June 6, 1997.
3. Grants of Nonrestricted Stock. Each Non-Employee Director shall be
granted a number of shares of Nonrestricted Stock having a fair market value,
determined by averaging the high and low per share trading prices of the Common
Stock on the New York Stock Exchange ("NYSE") on the date of grant ("Fair Market
Value"), equal to the amount of the annual retainer for the full Board Cycle
elected to be received in Nonrestricted Stock, rounded down to the nearest full
share. The date of grant shall be the first day of the Board Cycle on which the
Common Stock is traded on the NYSE, provided that for the 1997-1998 Board Cycle
the date of grant shall be the date of the Distribution described in Section 7.b
of the Plan or the first day thereafter on which the Common Stock is traded on
the NYSE if not traded on the date of Distribution.
4. Grants of Matching Restricted Stock. Each Non-Employee Director
receiving a grant of Nonrestricted Stock hereunder shall also be granted, on the
date of grant of the Nonrestricted Stock, a number of shares of Restricted Stock
having a Fair Market Value equal to 25% of the Non-Employee Director's annual
retainer for the full Board Cycle with respect to which the Nonrestricted Stock
is granted, rounded down to the nearest full share.
5. Corresponding Shares. For purposes of the Plan, a number of shares of
Nonrestricted Stock granted under paragraph 3 equal to the number of Restricted
Shares granted on the same date under paragraph 4 shall be deemed to be
"corresponding shares" as referred to in Sections 7.a, 8.c and 9.c of the Plan.
Any additional shares of Nonrestricted Stock granted at such time shall not be
corresponding shares.
6. Restrictions. Shares of Restricted Stock and corresponding shares of
Nonrestricted Stock granted hereunder shall be subject to the restrictions and
other applicable limitations set forth in the Plan. For such purposes, the
Restricted Period applicable to fifty percent (50%) of the shares under each
grant of Restricted Stock shall be three (3) years from the date of grant. The
Restricted Period for the remaining fifty percent (50%) of the shares under each
grant of Restricted Stock shall be six (6) years from the date of grant.
7. Other Terms. Shares of Nonrestricted Stock and Restricted Stock granted
hereunder to Non-Employee Directors shall otherwise be subject to the terms of
the Plan applicable to Non-Employee Directors or to Participants generally
(other than provisions specifically applying to Employee Participants).
