FIRST RELIANCE BANCSHARES, INC. RESTRICTED STOCK AWARD
EXHIBIT
99.3
FIRST
RELIANCE BANCSHARES, INC.
This RESTRICTED STOCK AWARD (this
“Award”) is made and entered into as of the ___ day of ______________, 2010, by
and between First Reliance Bancshares, Inc. (the “Company”), a South Carolina
corporation, and _______________ (the “Employee”).
WHEREAS, the Company is a
participant in the Department of the Treasury’s Capital Purchase Program
(“CPP”), a financial stability program implemented under the Troubled Asset
Relief Program;
WHEREAS, the Employee at the
time this Award is granted is the “most highly compensated” employee of the
Company as determined under Section 111 of the Emergency Economic Stabilization
Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009,
and the interim final rule promulgated pursuant to such statutes set forth at 31
C.F.R. Part 30 and any additional rules, regulations, or guidelines hereafter
issued (collectively, the “CPP Rules”); and
WHEREAS, the amount and terms
of the Award are subject to the limitations in the CPP Rules.
NOW, THEREFORE, and subject to
the Additional Terms and Conditions attached hereto and incorporated herein by
reference as part of this Award, the parties hereto agree as
follows:
X. Xxxxx of
Award. Subject to the terms and conditions set forth in the
First Reliance Bancshares, Inc. 2006 Equity Incentive Plan (the “Plan”) and this
Award, the Committee hereby grants to the Employee an award of ___ restricted
shares (the “Restricted Shares”) of the Company’s common stock, $.01 par value
per share. The date of this grant (the “Restricted Share Award Date”)
is ____________, 2010. The value of the Restricted Shares may not
exceed one-third of the Employee’s annual compensation (including the value of
the award) as determined in accordance with the CPP Rules for the year in which
the award is being made.
B.
Vesting. The
Employee’s rights in and to the Restricted Shares shall not be vested as of the
Restricted Share Award Date and shall be forfeitable unless and until otherwise
vested pursuant to the terms of this Award. The Employee’s rights in
and to the Restricted Shares shall be subject to both time and performance-based
vesting criteria. No Restricted Shares subject to this Award shall
become vested until the Employee has continued to perform substantial services
for the Company for at least three years from the Restricted Share Award
Date. Moreover, the Restricted Shares shall not be considered vested
unless the Company’s retained earnings at the end of the fiscal quarter
preceding the third anniversary of the Restricted Share Award Date are greater
than the Award Value of the Restricted Shares. The “Award Value”
means the closing price of the Company’s common stock on the Restricted Share
Award Date multiplied by the number of Restricted Shares awarded to the Employee
on the Restricted Share Award Date. Restricted Shares that have
become vested pursuant to Paragraph B of this Award are herein referred to as
the “Vested Shares.”
C. Non-Transferability. The
Employee shall not sell, transfer, assign, pledge, or otherwise encumber the
Restricted Shares subject to this Award until the Restricted Shares have both
(a) vested in accordance with Paragraph B of this Award; and (b) for as long as
the Company remains a participant in the CPP, upon the expiration in accordance
with the following schedule:
(i) 25%
of the Award may be transferred after the Company repays 25% of the aggregate
financial assistance received under the CPP;
(ii) an
additional 25% of the Award may be transferred after the Company repays 50% of
the aggregate financial assistance received under the CPP;
(iii) an
additional 25% of the Award may be transferred after the Company repays 75% of
the aggregate financial assistance received under the CPP; and
(iv) the
remainder of the Award may be transferred after the Company repays 100% of the
financial assistance received under the CPP; provided, however, the foregoing
schedule shall be subject to change to the extent hereafter required by the CPP
Rules.
Notwithstanding
the restrictions set forth in Paragraph C(i) – (iv) above, the Employee may, in
the case of Restricted Shares subject to this Award for which the Employee does
not make an election under Section 83(b) of the Internal Revenue Code, at any
time beginning with the date upon which the Restricted Shares become
substantially vested (as defined in 26 C.F.R. § 1.83–3(b)) and ending on
December 31 of the calendar year including that date, a portion of the
Restricted Shares subject to this Award may be made transferable as may
reasonably be required to pay the federal, state, local, or foreign taxes that
are anticipated to apply to the income recognized due to this vesting, and the
amounts made transferable for this purpose shall not count toward the
percentages set forth in Paragraph C(i) – (iv) above.
D. Effect of Termination of
Employment. (a) Death,
Disability, or Change in Control. All unvested shares subject
to this Award shall immediately satisfy the vesting requirements specified in
Paragraph B above, if any, upon such termination of employment due to the
Employee’s death, disability, or a change in control event (as defined in 26
C.F.R. §1.280G–1, Q&A–27 through Q&A–29, or as defined in 26 C.F.R.
§1.409A–3(i)(5)(i)) with respect to the Company.
(b) Cause. All
unvested shares subject to this Award shall be forfeited as of the date of
termination and any rights the Employee had to such shares shall become null and
void.
(c) Other
Reasons. Unless otherwise determined by the Committee, all
unvested shares subject to this Award shall be forfeited as of the date of
termination and any rights the Employee had to such shares shall become null and
void.
IN WITNESS WHEREOF, the
Company and Employee have signed this Award as of the Restricted Share Award
Date set forth above.
|
First
Reliance Bancshares, Inc.
|
|||
|
By:
|
|||
|
Employee
|
|||
|
Title:
|
|||
2
ADDITIONAL
TERMS AND CONDITIONS OF
FIRST
RELIANCE BANCSHARES, INC.
1. Condition to Delivery of
Restricted Shares.
(a)
Employee
must deliver to the Company, within two (2) business days after the earlier of
(i) the date (the “Vesting Date”) on which any Restricted Shares become Vested
Shares, or (ii) the date the Employee makes an election pursuant to Section
83(b) of the Internal Revenue Code as to all or any portion of the Restricted
Shares, either cash or a certified check payable to the Company in the amount of
all tax withholding obligations (whether federal, state, or local) imposed on
the Company by reason of the vesting of the Restricted Shares, or the making of
an election pursuant to Section 83(b) of the Internal Revenue Code, as
applicable, except as provided in Section 1(b).
(b) If
the Employee does not make an election pursuant to Section 83(b) of the Internal
Revenue Code, in lieu of paying the withholding tax obligations in cash or by
certified check as required by Section 1(a), Employee may elect (the
“Withholding Election”) to have the actual number of shares of Common Stock that
become Vested Shares reduced by the smallest number of whole shares of Common
Stock which, when multiplied by the Fair Market Value of the Common Stock
determined by the closing price for the Common Stock on the last business day
immediately preceding the applicable Vesting Date, is sufficient to satisfy the
amount of the tax withholding obligations imposed on the Company by reason of
the vesting of the Restricted Shares on the applicable Vesting
Date. Employee may make a Withholding Election only if all of the
following conditions are met:
(i) the
Withholding Election must be made on or prior to the Vesting Date by executing
and delivering to the Company a properly completed Notice of Withholding
Election, in substantially the form of Exhibit A attached
hereto; and
(ii) any
Withholding Election made will be irrevocable; however, the Compensation
Committee of the Board of Directors of the Company (the “Committee”) may, in its
sole discretion, disapprove and give no effect to any Withholding
Election.
(c) Unless
and until the Employee provides for the payment of the tax withholding
obligations in accordance with the provisions of this Section 1, the Company
shall have no obligation to deliver any of the Vested Shares and may take any
other actions necessary to satisfy such obligations, including withholding of
appropriate sums from other amounts payable to the Employee. Provided
that the Employee is not a “director” or “executive officer”, within the meaning
of Section 13(k) of the Securities Exchange Act of 1934 (Section 402 of the
Xxxxxxxx-Xxxxx Act of 2002), at the time tax withholding obligations become due,
at the request of the Employee, the Committee may make, or authorize the making
of, such arrangements with the Employee and a broker, dealer, or other
“creditor” (as defined by Regulation T issued by the Board of Governors of the
Federal Reserve System) acting on behalf of the Employee for the receipt from
such broker, dealer, or other “creditor” of cash by the Company in an amount
necessary to satisfy the Employee’s tax withholding obligations in exchange for
delivery of a number of Vested Shares directly to the broker, dealer, or other
“creditor” having a value equal to the cash delivered.
2. Issuance of Restricted
Shares.
(a) The
Company shall issue the Restricted Shares as of the Resticted Share Award Date
in either manner described below, as determined by the Committee in its sole
discretion:
(i) by
the issuance of share certificate(s) evidencing Restricted Shares to the
Secretary of the Company or such other agent of the Company as may be designated
by the Committee (the “Share Custodian”); or
3
(ii) by
documenting the issuance in uncertificated or book entry form on the Company’s
stock records.
Evidence
of the Restricted Shares either in the form of share certificate(s) or book
entry, as the case may be, shall be held by the Company or Share Custodian, as
applicable, until the Restricted Shares become Vested Shares in accordance with
the Vesting Schedule.
(b) If
the Employee is determined by the Committee to be an “affiliate” of the Company,
as such term is defined in Rule 144 (“Rule 144”) under the Securities Act of
1933, as amended (the “Securities Act”), the Restricted Shares (and the Vested
Shares resulting therefrom) shall be evidenced only by physical share
certificates.
(c) When
the Restricted Shares become Vested Shares, the Company or the Share Custodian,
as the case may be, shall deliver the Vested Shares to the Employee or, at the
Company’s election, to a broker designated by the Company (the “Designated
Broker”) by either physical delivery of the share certificate(s) or book entry
transfer, as applicable, for the benefit of an account established in the name
of the Employee, in either case, after, to the extent applicable, payment by the
Employee of the tax withholding obligations pursuant to Section 1(a) and/or
reduced by any Vested Shares withheld and returned to the Company pursuant to
Section 1(b) above or delivered to a broker, dealer or other “creditor” as
contemplated by Section 1(c) above (such reduced number of Vested Shares are
referred to in this Section 2(c) as the “Net Vested Shares”). If the
number of Vested Shares includes a fraction of a share, neither the Company nor
the Share Custodian shall be required to deliver the fractional share to the
Employee, and the Company shall pay the Employee the amount determined by the
Company to be the estimated fair market value therefor. At any time
after receipt by the Designated Broker, the Employee may require that the
Designated Broker deliver the Net Vested Shares to the Employee pursuant to such
arrangements or agreements as may exist between the Designated Broker and the
Employee.
(d) In
the event that the Employee forfeits any of the Restricted Shares, the Company
shall cancel the issuance on its stock records and, if applicable, the Share
Custodian shall promptly deliver the share certificate(s) representing the
forfeited shares to the Company.
(e) Employee
hereby irrevocably appoints the Share Custodian, and any successor thereto, as
the true and lawful attorney-in-fact of Employee with full power and authority
to execute any stock transfer power or other instrument necessary to transfer
any Restricted Shares to the Company in accordance with this Award, in the name,
place, and stead of the Employee. The term of such appointment shall commence on
the Restricted Share Award Date and shall continue until the last of the
Restricted Shares are delivered to the Employee as Vested Shares or are returned
to the Company as forfeited Restricted Shares or as Vested Shares withheld and
returned to the Company pursuant to Section 1(b), as provided by the applicable
terms of this Award.
(f)
Until the Restricted Shares become Vested Shares, the Employee shall be entitled
to all rights applicable to holders of shares of Common Stock including, without
limitation, the right to vote such shares and to receive dividends or other
distributions thereon as provided by Section 3, except as expressly provided in
this Award.
(g) In
the event the number of shares of Common Stock is increased or reduced as a
result of a subdivision or combination of shares of Common Stock or the payment
of a stock dividend or any other increase or decrease in the number of shares of
Common Stock or other transaction such as a merger, reorganization or other
change in the capital structure of the Company, the Employee agrees that any
certificate representing shares of Common Stock or other securities of the
Company issued as a result of any of the foregoing shall be delivered to the
Share Custodian or recorded in book entry form, as applicable, and shall be
subject to all of the provisions of this Award as if initially granted
hereunder.
4
3. Dividends. The
Employee shall be entitled to dividends or other distributions paid or made on
Restricted Shares but only as and when the Restricted Shares to which the
dividends or other distributions are attributable become Vested
Shares. Dividends paid on Restricted Shares will be held by the
Company and transferred to the Employee, without interest, on such date as the
Restricted Shares become Vested Shares. Dividends or other
distributions paid on Restricted Shares that are forfeited shall be retained by
the Company.
4. Restrictions on Transfer of
Restricted Shares.
(a) General Restrictions.
Except as provided by this Award, the Employee shall not have the right to make
or permit to exist any transfer or hypothecation, whether outright or as
security, with or without consideration, voluntary or involuntary, of all or any
part of any right, title or interest in or to any Restricted
Shares. Any such disposition not made in accordance with this Award
shall be deemed null and void. The Company will not recognize, or
have the duty to recognize, any disposition not made in accordance with the Plan
and this Award, and any Restricted Shares so transferred will continue to be
bound by the Plan and this Award. The Employee (and any subsequent
holder of Restricted Shares) may not sell, pledge or otherwise directly or
indirectly transfer (whether with or without consideration and whether
voluntarily or involuntarily or by operation of law) any interest in or any
beneficial interest in any Restricted Shares except pursuant to the provisions
of this Award. Any sale, pledge or other transfer (or any attempt to
effect the same) of any Restricted Shares in violation of any provision of the
Plan or this Award shall be void, and the Company shall not record such
transfer, assignment, pledge or other disposition on its books or treat any
purported transferee or pledgee of such Restricted Shares as the owner or
pledgee of such Restricted Shares for any purpose.
(b) Certain Permitted
Transfers. The restrictions contained in this Section 4 will not apply
with respect to transfers of the Restricted Shares pursuant to applicable laws
of descent and distribution; provided that the
restrictions contained in this Section 4 will continue to be applicable to the
Restricted Shares after any such transfer; and provided further that the
transferee(s) of such Restricted Shares must agree in writing to be bound by the
provisions of the Plan and this Award.
5. Additional Restrictions on
Transfer.
(a) In
addition to any legends required under applicable securities laws, the
certificates representing the Restricted Shares shall be endorsed with the
following legend and the Employee shall not make any transfer of the Restricted
Shares without first complying with the restrictions on transfer described in
such legend:
transfer
is restricted
The
securities evidenced by this certificate are subject to restrictions on transfer
and forfeiture provisions which also apply to the transferee as set forth in a
restricted stock Award, dated ___________, a copy of which is available from the
Company.
(b) Opinion of Counsel.
No holder of Restricted Shares may sell, transfer, assign, pledge or otherwise
dispose of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law) any interest in or any beneficial interest
in any Restricted Shares, except (i) pursuant to an effective registration
statement under the Securities Act or (ii) in a transaction that fully complies
with Rule 144, without first delivering to the Company an opinion of counsel
(reasonably acceptable in form and substance to the Company) that neither
registration nor qualification under the Securities Act and applicable state
securities laws is required in connection with such transfer.
5
6. Change in
Capitalization.
(a) The
number and kind of Restricted Shares shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a subdivision or combination of shares or the payment of a stock dividend
in shares of Common Stock to holders of outstanding shares of Common Stock or
any other increase or decrease in the number of shares of Common Stock
outstanding effected without receipt of consideration by the
Company. No fractional shares shall be issued in making such
adjustment. All adjustments made by the Committee under this Section
shall be final, binding, and conclusive.
(b)
In the
event of a merger, consolidation, extraordinary dividend (including a spin-off),
reorganization, recapitalization, sale of substantially all of the Company’s
assets, other change in the capital structure of the Company, tender offer for
shares of Common Stock or a Change in Control, an appropriate adjustment may be
made with respect to the Restricted Shares such that other securities, cash or
other property may be substituted for the Common Stock held by Share Custodian
or recorded in book entry form pursuant to this Award.
(c)
The
existence of the Plan and the Award shall not affect the right or power of the
Company to make or authorize any adjustment, reclassification, reorganization or
other change in its capital or business structure, any merger or consolidation
of the Company, any issue of debt or equity securities having preferences or
priorities as to the Common Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or part of its business
or assets, or any other corporate act or proceeding.
7. Governing Laws. This
Award shall be construed, administered and enforced according to the laws of the
State of South Carolina; provided, however, no Restricted Shares shall be issued
except, in the reasonable judgment of the Committee, in compliance with
exemptions under applicable state securities laws of the state in which the
Employee resides, and/or any other applicable securities laws.
8. Successors. This
Award shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors, and permitted assigns of the parties.
9. Notice. Except as
otherwise specified herein, all notices and other communications under this
Award shall be in writing and shall be deemed to have been given if personally
delivered or if sent by registered or certified United States mail, return
receipt requested, postage prepaid, addressed to the proposed recipient at the
last known address of the recipient. Any party may designate any
other address to which notices shall be sent by giving notice of the address to
the other parties in the same manner as provided herein. Notices sent
to the Company shall be addressed to the attention of the Secretary of the
Company.
10. Severability. In the
event that any one or more of the provisions or portion thereof contained in
this Award shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, the same shall not invalidate or otherwise affect any other
provisions of this Award, and this Award shall be construed as if the invalid,
illegal, or unenforceable provision or portion thereof had never been contained
herein.
11. Entire Agreement.
Subject to the terms and conditions of the Plan, this Award expresses the entire
understanding and agreement of the parties with respect to the subject
matter. This Award may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same instrument.
12. Headings and Capitalized
Terms. Paragraph headings used herein are for convenience of reference
only and shall not be considered in construing this
Award. Capitalized terms used, but not defined, in this Award shall
be given the meaning ascribed to them in the Plan
13
Specific Performance.
In the event of any actual or threatened default in, or breach of, any of the
terms, conditions and provisions of this Award, the party or parties who are
thereby aggrieved shall have the right to specific performance and injunction in
addition to any and all other rights and remedies at law or in equity, and all
such rights and remedies shall be cumulative.
6
14. No Right to Continued
Employment. Neither the establishment of the Plan nor the Award made
pursuant to this Award shall be construed as giving Employee the right to any
continued service relationship with the Company or any affiliate of the
Company.
15. CPP
Rules. The terms and conditions of this Award are subject to
the requirements of the CPP Rules. In the event that all or any
portion of this Award is found to be in conflict with the requirements of the
CPP Rules, then in such event this Award shall be automatically modified to
reflect the requirements of the law, regulation, and/or guidance, and this Award
shall be interpreted and administered accordingly. As a condition of
receiving this Award, the Employee acknowledges: (i) that this Award remains
subject to the requirements of the CPP Rules; (ii) that it is subject to
modification in order to comply with the CPP Rules; and (iii) the Employee
agrees to immediately repay all amounts that may have been paid to the Employee
that are later determined to be in conflict with the requirements of the CPP
Rules.
16. Clawback
Requirements. Notwithstanding any provision in this Award to
the contrary, if it is later determined that the grant (or payment with respect
thereto) of Restricted Shares under this Award (or dividends or earnings on such
stock) was based on materially inaccurate financial statements or any other
materially inaccurate performance metric criteria, then in such event: (i) the
unvested stock granted under this Award shall become immediately forfeited; and
(ii) the full amount of any and all payment(s) that have been made to the
Employee under this Award shall become immediately due and owing to the Company
and the Employee agrees to repay the full amount of such payment(s) to the
Company in accordance with and in a manner that complies with the CPP
Rules.
7
EXHIBIT
A
NOTICE
OF WITHHOLDING ELECTION
FIRST
RELIANCE BANCSHARES, INC.
TO: First
Reliance Bancshares, Inc.
FROM:
SSN:
RE: Withholding
Election
This
election relates to the Restricted Stock Award identified in Paragraph 3 below.
I hereby certify that:
(1)
My correct name and social security number and my current address are set forth
at the end of this document.
(2) I
am (check one, whichever is applicable).
|
¨
|
the
original recipient of the Restricted Stock
Award.
|
|
¨
|
the
legal representative of the estate of the original recipient of the
Restricted Stock Award.
|
|
¨
|
a
legatee of the original recipient of the Restricted Stock
Award.
|
|
¨
|
the
legal guardian of the original recipient of the Restricted Stock
Award.
|
(3)
The Restricted Stock Award pursuant to which this election relates was issued
under the First Reliance Bancshares, Inc. 2006 Equity Incentive Plan (the
“Plan”) in the name of _________________ for a total of ______________ shares of
Common Stock. This election relates to ______ shares of Common Stock
to be delivered upon the vesting of a portion of the Restricted Shares, provided
that the numbers set forth above shall be deemed changed as appropriate to
reflect stock splits and other adjustments contemplated by the applicable Plan
provisions.
(4)
I hereby elect to have certain of the Vested Shares withheld and returned
to the Company, rather than delivered to me, for the purpose of having the value
of such shares applied to pay minimum required federal, state and local, if any,
tax withholding obligations arising from the vesting event.
The fair market value of the Vested
Shares to be withheld and returned to the Company shall be equal to the minimum
statutory tax withholding requirements under federal, state and local law in
connection with the vesting event, reduced by the amount of any cash or
certified check payment tendered by me to the Company in partial payment of such
tax withholding obligations.
(5) I understand
that this Withholding Election is made prior to the Vesting Date and is
otherwise timely made pursuant to Section 1 of the Restricted Stock Award and
Section 5.1 of the Plan.
(6)
I further understand that, if this Withholding Election is not disapproved by
the Committee, the Company shall withhold from the Vested Shares a whole number
of shares of Common Stock having the value specified in Paragraph 4
above.
(7)
The Plan has been made available to me by the Company, I have read and
understand the Plan and the Restricted Stock Award and I have no reason to
believe that any of the conditions therein to the making of this Withholding
Election have not been met. Capitalized terms used in this Notice of Withholding
Election without definition shall have the meanings given to them in the
Plan.
Exhibit A
– Page 1 of 2
|
Dated:
|
|
|
Signature:
|
|
|
Name
(Printed)
|
|
|
Xxxxxx
Xxxxxxx
|
|
|
Xxxx,
Xxxxx, Xxx Code
|
|
|
Social
Security
Number
|
|
Exhibit A
– Page 2 of 2
