NOTICE: THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE SOUTH CAROLINA
UNIFORM ARBITRATION ACT
STOCK OPTION AGREEMENT
This Stock Option Agreement is entered into as of this 14th day of
December, 1999, by and between J. Xxxxxx Xxxxxxx, ("Director") and Cornerstone
Bancorp, (the "Company").
1. For and in consideration of the Director's time and efforts in
organizing the Company and its subsidiary Bank and the Director's personal
guarantee of a portion of the organizational expense, the Company hereby grants
to Director the option to purchase 4,000 shares of the common stock of the
Company, subject to the terms and conditions hereof.
2. In the event of exercise of this option, unless the shares have been
registered under the Securities Act of 1933, as amended, the Director represents
and warrants to the Company that the shares subject to option will be acquired
for investment and not with a view to distribution thereof and the Director
acknowledges that the shares received will bear an appropriate restrictive
legend.
3. The exercise price of the options granted hereby shall be $10.00 per
share.
4. The options granted hereby may be exercised at any time after they
become exercisable and prior to their expiration by the tender of the exercise
price in cash for the shares to be purchased to the Chief Financial Officer of
the Company.
5. If the Director has continuously served as a director of the Company
until the first anniversary of this Agreement, then options for one-third of the
shares subject to option shall become exercisable after such anniversary. If the
Director has continuously served as a director of the Company until the second
anniversary of this Agreement, then options for two-thirds of the shares subject
to option shall be exercisable after such anniversary. If the Director has
continuously served as a director of the Company until the third anniversary of
this Agreement, then options for all of the shares subject to option shall be
exercisable after such anniversary.
6. Upon the removal, disqualification, resignation or other failure of
the Director to remain a director of the Company the options hereby shall expire
six months after the Director's departure from office. All options granted by
this Stock Option Agreement which have not previously expired or been exercised
shall expire on the tenth anniversary of the date first above written.
7. Nothing in this Stock Option Agreement shall give the Director any
rights of a shareholder of the Company prior to the exercise of the options
granted hereby.
8. This option is not transferrable, except that upon the death or
disability of the Director the option may be exercised by the Director's
personal representative or, in the case of disability, legal guardian.
9. The options granted hereby shall be treated as a number of options
to purchase one share of the common stock of the Company for the exercise price.
Options which are exercisable may be exercised in any combination designated by
the Director. Notwithstanding any other provision hereof, no option may be
exercised for a fractional share.
10. If the outstanding shares of common stock of the Company then
subject to this Agreement are increased or decreased, or are changed into or
exchanged for a different number or kind of shares or securities, as a result of
one or more organizations, recapitalizations, stock splits, reverse stock
splits, stock dividends or the like, appropriate adjustments shall be made in
the number and/or kind of shares or securities for which options may thereafter
be exercised. Any such adjustment in outstanding options shall be made without
changing the aggregate exercise price applicable to the unexercised portions of
such options. Any such adjustment made by the Company shall be binding.
11. Any dispute arising under this Stock Option Agreement shall be
settled by binding arbitration conducted pursuant to the rules of the American
Arbitration Association then in effect.
In witness whereof, the parties have caused this Stock Option Agreement
to be executed and delivered as of the date first above written.
Cornerstone Bancorp
By:---------------------------------
Director
---------------------------------
J. Xxxxxx Xxxxxxx
