STOCK AWARD AGREEMENT
THIS
STOCK AWARD AGREEMENT (this “Agreement”) is made and entered into as of the 30th
day of September, 2009, by and between First National Bancshares, Inc. (the
"Company”), a South Carolina corporation with a principal place of business at
000 X. Xxxx Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx, and J. Xxxxx Xxxxx (the
"Grantee"), an individual and resident of the state of South
Carolina.
RECITALS
WHEREAS, the Grantee is employed by the
Company as its President and Chief Executive Officer;
WHEREAS,
the Company currently has authorized 100,000,000 shares of common stock, of
which 6,963,321 shares are currently issued and outstanding;
WHEREAS,
pursuant to Section 3(c) of that certain employment agreement between the
Grantee and the Company dated August 24, 2009 (the "Employment Agreement"), the
Company has agreed to issue to the Grantee a number of shares of common stock of
the Company, subject to the restrictions contained herein (the "Restricted Stock
Grant");
WHEREAS, the Grantee is willing to
accept the Restricted Stock Grant provided for in this Agreement and is willing
to abide by the obligations imposed upon him under this Agreement;
WHEREAS,
pursuant to Section 3(c) of the Employment Agreement, the Company has further
agreed to issue to the Grantee an option to purchase 1,000,000 shares of common
stock of the Company at a specified exercise price as described below;
and
WHEREAS,
the Grantee is willing to accept the grant of an option to purchase 1,000,000
shares of common stock of the Company under the terms and conditions specified
below.
NOW, THEREFORE, as an employment
incentive and to encourage stock ownership, and also in consideration of the
premises and the mutual covenants contained herein, the parties agree as
follows:
1. Restricted Stock
Award.
(a) Award of
Shares. Subject to the restrictions set forth in this
Agreement, the Company hereby issues 250,000 shares of common stock of the
Company (the “Restricted Stock”) to the Grantee. Except as otherwise
provided in this Agreement, the Grantee’s interest in the Restricted Stock shall
vest and become nonforfeitable pro rata over five years, or 20% each year on
August 24th (with
the first 20% vesting on August 24, 2010), in each case so long as the Grantee
is an employee of the Company as of such date.
(b) Restrictions on
Transfer. In addition to the other restrictions contained in
this Agreement or the Articles of Incorporation or Bylaws of the Company, until
the occurrence of a Change in Control (as defined below) with respect to the
Company, no unvested shares of Restricted Stock shall be transferable or
assignable except by will or by the laws of descent and
distribution. Any attempt to dispose of the unvested shares of
Restricted Stock in a manner contrary to the restrictions set forth in this
Agreement shall be ineffective.
(c) Legend on
Certificates. The certificates for the Restricted Stock shall
be held in the custody of the Company. Each existing or replacement
certificate for shares issued hereunder to the Grantee shall be subject to such
stop-transfer orders and other restrictions as described herein and shall bear
the following legend upon its face:
THE SALE,
PLEDGE, HYPOTHECATION, ASSIGNMENT OR TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN STOCK AWARD
AGREEMENT BY AND BETWEEN THE SHAREHOLDER AND FIRST NATIONAL BANCSHARES, INC.
DATED SEPTEMBER 30, 2009.
(d) Rights as a
Shareholder. Subject to the restrictions set forth in this
Agreement, the Grantee shall have all rights and privileges of a shareholder as
to the shares of Restricted Stock, including the right to vote and receive
distribution and liquidation proceeds with respect to the shares of Restricted
Stock.
(e) Enforcement of Restrictions on
Transfer. The Company shall not register the transfer of any
certificate representing the Restricted Stock unless its Board of Directors
concludes, in its sole discretion, that the Grantee has complied with the
vesting and transfer provisions of this Agreement.
(f) Waiver of Restrictions on
Transfer. Notwithstanding any other provision herein, the
Company may, in its sole discretion, when it finds that a waiver would be in the
best interests of the Company, waive in whole or in part any or all remaining
restrictions with respect to the Restricted Stock.
2. Option
Award.
(a) Award of
Options. Subject to the terms and conditions set forth herein,
the Company hereby grants to the Grantee options to purchase 1,000,000 shares of
common stock of the Company (the "Options") for an exercise price of $1.00 per
share (the “Exercise Price”). The Exercise Price may be adjusted from
time to time as agreed to by the parties. The parties agree and
acknowledge that the Exercise Price constitutes the fair market value of the
Company's common stock as of the date hereof. The Options granted
herein are not Incentive Stock Options. For purposes of this
Agreement, "Incentive Stock Option" shall mean an option to purchase any stock
of the Company, which complies with and is subject to the terms, limitations and
conditions of Section 422 of the Code and any regulations promulgated with
respect thereto.
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(b) Vesting and Period
of Exercise. The Options are
exercisable with respect to the shares of common stock as follows, subject in
each case to continued employment by the Company or a subsidiary of the Company
through such date:
|
No.
of Shares
|
Vesting
Date
|
|
|
333,333
|
August
24, 2010
|
|
|
333,333
|
August
24, 2011
|
|
|
333,334
|
August
24, 2012
|
All
Options expire and are void unless exercised on or before August 24,
2019.
(c) Method of Exercising
Option. The Options may be exercised by the Grantee, or by the
Grantee's administrators, executors or personal representatives, by a written
notice (in substantially the form of the Notice of Exercise attached hereto as
Exhibit A)
signed by the Grantee, or by such administrators, executors or personal
representatives, and delivered or mailed to the Company as specified in this
Agreement to the attention of the Chief Financial Officer or such other officer
as the Company may designate. Any such notice shall (a) specify the
number of shares of common stock which the Grantee or the Grantee's
administrators, executors or personal representatives, as the case may be, then
elects to purchase hereunder, (b) contain such information as may be reasonably
required by the Company pursuant to this Agreement, and (c) be accompanied by
(i) a certified or cashier’s check payable to the Company in payment of the
total Exercise Price applicable to such shares as provided herein, (ii) shares
of common stock owned by the Grantee and duly endorsed or accompanied by stock
transfer powers having a fair market value equal to the total Exercise Price
applicable to such shares purchased hereunder, or (iii) a certified or cashier’s
check accompanied by the number of shares of common stock where fair market
value when added to the amount of the check equal the total Exercise Price
applicable to such shares purchased hereunder. Upon receipt of any
such notice and accompanying payment, and subject to the terms hereof, the
Company agrees to issue to the Grantee or the Grantee's administrators,
executors or personal representatives, as the case may be, stock certificates
for the number of shares specified in such notice registered in the name of the
person exercising the Options. In the event that the Company agrees to allow the
exercise of the Options by any person or persons other than the Grantee, such
notice shall be accompanied by proof acceptable to the Company of the right of
such person or persons to exercise the Options.
(d) Restrictions on
Transfer. No Option shall be transferable by a Grantee other
than by will or the laws of descent and distribution or pursuant to a Qualified
Domestic Relations Order. During the lifetime of the Grantee, the
Options shall be exercisable only by the Grantee (or by the Grantee's guardian
or legal representative, should one be appointed). For purposes of
this Agreement, "Qualified Domestic Relations Order" shall have the meaning set
forth in the Code or in the Employee Retirement Income Security Act of 1974, or
the rules and regulations promulgated under the Code or such Act.
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3. Effect of Termination of
Employment in Certain Circumstances. For purposes of this
Agreement, "terminate" and "termination" shall mean as defined in the Employment
Agreement.
(a) Restricted Stock. In the
event of the Grantee ceases employment with the Company, the Grantee’s rights to
all unvested shares of Restricted Stock shall be forfeited and the shares shall
be returned to the Company, and all rights of the Grantee to such forfeited
shares shall terminate without further obligation on the part of the
Company. Upon the forfeiture of the Grantee’s rights to any unvested
shares of Restricted Stock, the Grantee shall execute all documents and
surrender any stock certificates necessary to return such shares to the Company
for no consideration.
(b) Options.
(i) In
the event of the termination of the Grantee's employment with the Company or any
of its subsidiaries, other
than a termination that is either (i) for Cause, (ii) voluntary on the
part of the Grantee and without written consent of the Company, or (iii) for
reasons of death or disability or retirement, the Grantee may exercise the
Options at any time within 30 days after such termination to the extent of the
number of shares which were vested hereunder at the date of such termination.
For purposes of this Agreement, "Cause" shall mean as defined in that certain
Noncompete Agreement between the Company, First National Bank of the South, and
the Grantee dated September 18, 2009 (the "Noncompete
Agreement"). For purposes of this Agreement, "disability" shall mean
as defined in the Employment Agreement.
(ii) In
the event of a termination of the Grantee's employment that is either (x) for
Cause or (y) voluntary on the part of the Grantee and without the written
consent of the Company, the Options, to the extent not previously exercised,
shall terminate immediately and shall not thereafter be or become
exercisable.
(iii) In
the event of the retirement of the Grantee at the normal retirement date as
prescribed from time to time by the Company or any subsidiary, the Grantee may
exercise the Options at any time within 90 days after such termination of
employment by retirement to the extent of the number of shares which were vested
hereunder at the date of such termination.
(iv) In
the event of termination of employment because of the Grantee's disability, the
Grantee (or his guardian or personal representative) may exercise the Options,
within a period ending on the earlier of (a) the last day of the one year period
following the Grantee's disability or (b) the expiration date of the Options, to
the extent of the number of shares which were vested hereunder at the date of
such termination.
(v) In
the event of the Grantee's death while employed by the Company or any of its
subsidiaries or within three months after a termination of such employment (if
such termination was neither (i) for Cause nor (ii) voluntary on the part of the
Grantee and without the written consent of the Company), the Grantee's personal
representative may exercise the Options at any time within a period ending on
the earlier of (a) the last day of the one year period following the Grantee's
death or (b) the expiration date of the Options. If the Grantee was
an employee of the Company at the time of death, the Options may be so exercised
to the extent of the number of shares that were vested hereunder at the date of
death. If the Grantee's employment terminated prior to his death, the
Options may be exercised only to the extent of the number of shares covered by
the Options which were vested hereunder at the date of such
termination.
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4. Effect of a Change of
Control. Provided that neither the Company nor its subsidiary
bank, First National Bank of the South, are subject to any formal or informal
regulatory enforcement action currently in effect at the time of the execution
of the Employment Agreement, upon occurrence of a Change of Control with respect
to the Company, the Options and Restricted Stock shall become fully
vested. For purposes of this Agreement, the term “Change of Control”
shall mean as defined by Treasury regulation § 1.409A-3(i)(5).
5. Forfeiture of Options upon
Breach of Noncompete Agreement.
(a) Forfeiture of
Options. The forfeiture provisions described Section 5(b)
below will be triggered (i) if the Grantee breaches any noncompetition,
nonsolicitation, or similar provision of the Noncompete Agreement or any similar
agreement then in effect between the Grantee and the Company or any of its
subsidiaries or (ii) if the Grantee is not then subject to any such agreement,
then if at any time within the later of (x) one year after termination of the
Grantee’s employment or (y) one year after the Grantee’s exercise of any portion
of this Option, the Grantee engages in any of the Forfeiture
Activities. “Forfeiture Activity” for purposes of clause (ii) above
shall include (A) the provision of services to a competitor of the Company or
any of its subsidiaries within any county that the Company has an office or
operates a branch, whether as an employee, officer, director, independent
contractor, consultant, agent, or otherwise, such services being of a nature
that can reasonably be expected to involve the skills and experience used or
developed by the Grantee while an employee; (B) any activity which constitutes a
violation of any confidentiality or similar provision of any agreement between
the Company and the Grantee or violation by the Grantee of any Company policies
pertaining to such matters; or (c) any activity which is inimical, contrary, or
harmful to the interests of the Company (including conduct related to the
Grantee’s employment for which either criminal or civil penalties against the
Grantee may be sought or violation of the Company’s policies, including the
Company's xxxxxxx xxxxxxx policy).
(b) Duty to Repay Option
Gain. If the forfeiture provisions are triggered pursuant to
Section 5(a) above, then (i) the Options shall terminate effective the date on
which the Grantee breaches the Noncompete Agreement or engages in the Forfeiture
Activity, unless terminating sooner by operation of another term or condition of
the Agreement, and (ii) any Option Gain realized by the Grantee from exercising
all or a portion of this Option within the preceding year shall be paid by the
Grantee to the Company. “Option Gain” shall mean the gain represented
by the mean market price on the date of exercise over the Exercise Price,
multiplied by the number of shares purchased through exercise of the Option,
without regard to any subsequent market price decrease or increase, but net of
any taxes actually paid on the gain.
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(c) Form of Payment of Option
Gain. By accepting this Agreement, the Grantee consents to a
deduction from any amounts the Company owes the Grantee from time to time
(including amounts owed as wages or other compensation, fringe benefits, or
vacation pay), to the extent of the amounts the Grantee owes the Company under
this Section. Whether or not the Company elects to make any set-off
in whole or in part, if the Company does not recover by means of set-off the
full amount owed by the Grantee to the Company, calculated as set forth above,
the Grantee shall pay immediately the unpaid balance to the
Company. The Grantee hereby appoints the Company as its
attorney-in-fact to execute any documents or do any acts necessary to exercise
its rights under this Section.
(d) Waiver. The
Grantee may be released from its obligations under this Section 5 only if the
Board of Directors (or its duly appointed agent) determines in its sole
discretion that such action is in the best interests of the
Company.
6. Employee
Representations. For the purposes of this Section 6, the
Restricted Stock and Options are collectively referred to as the
"Securities."
(a) The
Grantee hereby represents, warrants and covenants that he: (i) understands that
the issuance of the Securities has not been registered under the Securities Act
of 1933, the Securities are offered pursuant to an exemption thereunder, and the
offering has not been approved or disapproved by the Securities and Exchange
Commission or by any other federal or state agency; (ii) is acquiring the
Securities for his own account for investment, not on behalf or for the benefit
of any other person, and he has no intention of distributing such Securities to
others in violation of the Securities Act; (iii) understands that the Securities
are subject to resale restrictions imposed by the Securities Act and the
securities laws of various states, and may not be sold without compliance with
such laws; and (iv) resides in the State of South Carolina.
(b) The
Grantee is the President and Chief Executive Officer of the Company and thus is
aware of the Company’s business affairs and financial condition and has acquired
sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the Securities. The Grantee has been granted
access to, and had the opportunity to review, financial and other information
relating to the Company and the terms and conditions of an investment in the
Securities, as well as such other information as the Grantee deems necessary or
appropriate as a prudent and knowledgeable investor in evaluating the merits and
risks of an investment in the Securities. The Grantee has had the
opportunity to ask questions of, and receive satisfactory answers from, the
Company concerning the terms and conditions of an investment in the Securities
and the information concerning the Company that the Grantee has
reviewed.
7. Rights as Shareholder or
Employee. The Grantee shall have no rights as a shareholder of
the Company with respect to any shares underlying the Options until the day of
the payment of the Exercise Price in accordance with the terms and provisions
hereof. No adjustment shall be made for dividends or distributions or other
rights for which the record date is prior to the date such payment is received
by the Company.
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This Agreement shall not, of itself,
confer upon Grantee any right with respect to continuance of employment by the
Company, nor shall it interfere in any way with the right of the Company to
terminate the Grantee's employment at any time.
8. Miscellaneous.
(a) Binding on Successors and
Representatives. The parties understand that this Agreement
shall be binding not only upon themselves, but also upon their heirs, executors,
administrators, representatives, successors and assigns; and the parties agree,
for themselves and their heirs, administrators, representatives, successors and
assigns, to execute any instrument that may be necessary or desirable legally to
effect such understanding.
(b) Entire
Agreement. This Agreement, the Employment Agreement, and the
Noncompete Agreement evidence the entire agreement of the parties with respect
to the Options and Restricted Stock and supersede any previous agreements,
whether written or oral, with respect thereto and any other document to which
the Company is a party related generally or specifically to option
rights.
(c) Amendment. Neither
this Agreement nor any of the terms and conditions herein set forth may be
altered or amended orally. Any such alteration or amendment shall be
effective only when reduced to writing and signed by each of the parties or
their respective successors and assigns.
(d) Construction of
Terms. Any reference herein to the singular or plural shall be
construed as plural or singular whenever the context requires.
(e) Severability. The
invalidity or unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions were
omitted.
(f) Governing
Law. This Agreement shall be governed by the laws of the State
of South Carolina and the parties hereby submit to the jurisdiction of the
federal and state courts of South Carolina.
(g) Notices. Except as
otherwise provided herein, any notice relating to this Agreement shall be in
writing and delivered in person or by first class mail postage prepaid, to the
address as hereinafter provided. Each notice shall be deemed to have
been given on the date it is received. Each notice to the Company shall be
addressed to it at its offices at: 000 X. Xxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxx Xxxxxxxx 00000 (Attention: Chairman). Each notice to the
Grantee shall be addressed to the Grantee at: The Xxxxxxx Law Firm, XX Xxx 0000,
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000.
[signatures appear on the following
page]
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
| COMPANY: | |||||
| FIRST NATIONAL BANCSHARES, INC., | |||||
| a South Carolina corporation | |||||
|
By:
/s/ C. Xxx Xxxxx
|
|
||||
|
Name: C.
Xxx Xxxxx
|
|
||||
|
Title: Chairman
of the Board of Directors
|
|
||||
| GRANTEE: | |||||
|
By:
/s/ J. Xxxxx Xxxxx
|
|
||||
|
J.
Xxxxx Xxxxx
|
|
||||
|
|
|
||||
-8-
EXHIBIT A
NOTICE
OF EXERCISE
To
exercise Stock Options, the Grantee should
complete
this Exhibit, execute it, and return it to the Company
The undersigned hereby notifies First
National Bancshares, Inc. (the "Company") of this election to exercise the
undersigned's stock option to purchase ________________ shares of the
Company's common stock, par value $0.01 per share (the "Common Stock"), pursuant
to the Stock Award Agreement (the "Agreement") between the undersigned and the
Company dated _______________________________. Accompanying this
Notice is a check in the amount of $___________________ payable to the Company
such amount being equal to the purchase price per share set forth in the
Agreement multiplied by the number of shares being purchased
hereby.
IN
WITNESS WHEREOF, the undersigned has set his hand and seal, this ________ day of
_________________, _________.
| GRANTEE [OR GRANTEE'S ADMINISTRATOR, EXECUTOR OR PERSONAL REPRESENTATIVE] | |||
|
|
Name:
|
||
| Print Name: | J. Xxxxx Xxxxx | ||
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