FIRST RELIANCE BANCSHARES, INC. NONQUALIFIED STOCK OPTION AGREEMENT
EXHIBIT
99.1
FIRST
RELIANCE BANCSHARES, INC.
THIS AGREEMENT is made as of
__________________ (the “Grant Date”), by and between FIRST RELIANCE BANCSHARES,
INC. (the “Company”) and _______________ (the “Optionee”).
WITNESSETH
WHEREAS, the Company desires to grant
to the Optionee a nonqualified stock option to purchase shares of the common
stock of the Company; and
WHEREAS, the Company and the Optionee
wish to confirm the terms and conditions of the option;
NOW, THEREFORE, in consideration of the
mutual covenants contained herein, it is hereby agreed between the parties
hereto as follows:
SECTION
I
GRANT
OF OPTION
1.1 Grant of
Option. Subject to the terms, restrictions, limitations and
conditions stated herein, the Company hereby grants to the Optionee a
nonqualified stock option (the “Option”) to purchase all or any part of
____________________ shares (the “Option Shares”) of the Company’s common stock,
$.01 par value per share (the “Common Stock”). The exercise price for each share
of Common Stock is $____________ per share (the “Exercise Price”), subject to
adjustment as provided in Section 3.1 hereof. The Exercise Price is
equal to the Fair Market Value of a share of Common Stock on the Grant
Date.
1.2 Exercise of
Option.
(a) The
Option shall be exercisable as to all or any portion of the Option Shares during
the Option Period (as defined in Section 1.5 hereof) by the delivery to the
Company, at its principal place of business, of a written notice of exercise in
substantially the form attached hereto as Exhibit 1, which
shall be actually delivered to the Company no earlier than thirty (30) days and
no later than ten (10) days prior to the date upon which Optionee desires to
exercise all or any portion of the Option; and
(b) payment
to the Company of the Exercise Price, multiplied by the number
of Option Shares being purchased (the “Purchase Price”), as
provided in Section 1.3.
Upon
acceptance of such notice and receipt of payment in full of the Purchase Price
and applicable tax withholding liability, the Company shall cause to be issued a
certificate representing the Option Shares purchased.
1.3 Purchase
Price. Payment of the Purchase Price for all or any part of
the Option Shares purchased pursuant to the exercise of an Option shall be made
in cash or certified check or, alternatively, as follows:
(a) by
delivery to the Company of a number of shares of Common Stock which have been
owned by the Optionee for at least six (6) months prior to the date of the
Option’s exercise having an aggregate Fair Market Value on the date of exercise
either equal to the Purchase Price or in combination with cash or a certified
check to equal the Purchase Price; or
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(b) by
receipt of the Purchase Price in cash from a broker, dealer or other “creditor”
as defined by Regulation T issued by the Board of Governors of the Federal
Reserve System following delivery by the Optionee to the Company of instructions
in a form acceptable to the Company regarding delivery to such broker, dealer or
other creditor of that number of Option Shares with respect to which the Option
is exercised (as permitted under section 13(k) of the Securities Exchange Act of
1934 (section 402 of the Xxxxxxxx-Xxxxx Act of 2002)).
1.4 Withholding. The
Optionee must satisfy any federal, state and local, if any, withholding taxes
imposed by reason of the exercise of the Option either by paying to the Company
the full amount of the withholding obligation in cash; by tendering shares of
Common Stock which have been owned by the Optionee for at least six (6) months
prior to the date of exercise having a Fair Market Value equal to the
withholding obligation; by electing, irrevocably and in writing in substantially
the form attached hereto as Exhibit 2 (a
“Withholding Election”), to have the actual number of shares of Common Stock
issuable upon exercise reduced by the smallest number of whole shares of Common
Stock which, when multiplied by the Fair Market Value of the Common Stock as of
the date the Option is exercised, is sufficient to satisfy the amount of the
withholding tax; or by any combination of the above. The Optionee may
make a Withholding Election only if the following conditions are
met:
(a) the
Withholding Election is made on or prior to the date on which the amount of tax
required to be withheld is determined by executing and delivering to the Company
a properly completed Withholding Election; and
(b) any
Withholding Election made will be irrevocable; however, the Company may, in its
sole discretion, disapprove and give no effect to any Withholding
Election.
1.5 Term and Termination of
Option. The term of the Option (the “Option Period”) shall
commence on the Grant Date and end, generally, on the earliest of (a) the tenth
(10th)
anniversary of the Grant Date; (b) three (3) months following the date the
Optionee ceases to be an employee of the Company or an affiliate for any reason
other than death, disability, or a termination by the Company for Cause; (c)
twelve (12) months following the date the Optionee ceases to be an employee of
the Company or an affiliate due to death or disability; or (d) the date the
Optionee ceases to be an employee of the Company or an affiliate due to his
termination for Cause. Upon the expiration of the Option Period, the
Option and all unexercised rights granted to Optionee hereunder shall terminate,
and thereafter be null and void.
1.6 Vesting
Provisions. The Option Shares shall become vested in the
manner provided in the Vesting Schedule attached hereto as Schedule
I.
1.7 Rights as
Shareholder. Until the stock certificates reflecting the
Option Shares accruing to the Optionee upon exercise of the Option are issued to
the Optionee, the Optionee shall have no rights as a shareholder with respect to
such Option Shares. The Company shall make no adjustment for any
dividends or distributions or other rights on or with respect to Option Shares
for which the record date is prior to the issuance of that stock
certificate.
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6
1.8 Special Limitation on
Exercise. No purported exercise of the Option shall be
effective without the approval of the Company, which may be withheld to the
extent that the exercise, either individually or in the aggregate together with
the exercise of other previously exercised stock options and/or offers and sales
pursuant to any prior or contemplated offering of securities, would, in the sole
and absolute judgment of the Company, require the filing of a registration
statement with the United States Securities and Exchange Commission or with the
securities commission of any state. If a registration statement is
not in effect under the Securities Act of 1933 or any applicable state
securities law with respect to shares of Common Stock purchasable or otherwise
deliverable under the Option, the Optionee (a) shall deliver to the Company,
prior to the exercise of the Option or as a condition to the delivery of Common
Stock pursuant to the exercise of an Option, such information, representations
and warranties as the Company may reasonably request in order for the Company to
be able to satisfy itself that the Option Shares are being acquired in
accordance with the terms of an applicable exemption from the securities
registration requirements of applicable federal and state securities laws and
(b) shall agree that the shares of Common Stock so acquired will not be disposed
of except pursuant to an effective registration statement, unless the Company
shall have received an opinion of counsel that such disposition is exempt from
such requirement under the Securities Act of 1933 and any applicable state
securities law.
SECTION
2
RESTRICTIONS
ON TRANSFER OF OPTION SHARES
2.1 Restriction on Transfer of
Option and of Option Shares. The Option evidenced hereby is
nontransferable other than by will or the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionee only by the Optionee
(or in the event of her disability, by her personal representative) and after
her death, only by her legatee or the executor of her estate.
2.2 Legend on Stock
Certificates. Certificates evidencing the Option Shares, to the
extent appropriate at the time, shall have noted conspicuously on the
certificates a legend intended to give all persons full notice of the existence
of the conditions, restrictions, rights and obligations set forth herein, such
as those below:
Transfer
is Restricted
the
securities evidenced by this certificate have not been registered under the
securities act of 1933, as amended, and may not be sold, transferred, assigned
or hypothecated unless (1) there is an effective registration under such act
covering such securities, (2) the transfer is made in compliance with rule 144
promulgated under such act, or (3) the issuer receives an opinion of counsel,
reasonably satisfactory to the company, stating that such sale, transfer,
assignment or hypothecation is exempt from the registration requirements of such
act.
SECTION
3
GENERAL
PROVISIONS
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3.1
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Changes
in
Capitalization.
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(a) If
the number of shares of Common Stock shall be increased or decreased by reason
of a subdivision or combination of shares of Common Stock, the payment of a
stock dividend in 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, an appropriate adjustment shall be made by the
Company, in a manner determined in its sole discretion, in the number and kind
of Option Shares and in the Exercise Price.
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6
(b) If
the Company shall be the surviving corporation in any merger, consolidation,
reorganization, extraordinary dividend, spin-off or other change in the
corporate structure of the Company or the Common Stock or tender offer for
shares of Common Stock, the Optionee shall be entitled to purchase or receive
the number and class of securities to which a holder of the number of shares of
Common Stock subject to the Option at the time of such transaction would have
been entitled to receive as a result of such transaction, and a corresponding
adjustment shall be made in the Exercise Price. In the event of a
sale of substantially all of the Common Stock or property of the Company or the
merger or consolidation or other reorganization in which the Company is not the
surviving entity, the Company shall provide for the assumption of the Option or
the substitution of a new option; in either instance, the assumed Option or the
substituted option shall be adjusted in the manner contemplated by the
immediately preceding sentence; however, if the surviving entity does not agree
to the assumption or substitution of the Option, the Company may elect to
terminate the Option Period as of the effective date of such transaction in
consideration of the payment to the Optionee of the sum of the difference
between the then aggregate Fair Market Value and the aggregate Exercise Price
for each vested Option Share which has not been exercised as of the effective
date of such transaction. A dissolution or liquidation of the Company
shall cause the Option to terminate as to any portion thereof not exercised as
of the effective date of the dissolution or liquidation.
(c) The
existence of the Option granted pursuant to this Agreement shall not affect in
any way 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 any part of its business or assets, or any other corporate
act or proceeding. Any adjustment pursuant to this Section may provide, in
the Company’s discretion, for the elimination without payment therefor of any
fractional shares that might otherwise become subject to any
Option.
3.2 Governing
Laws. This Agreement shall be construed, administered and
enforced according to the laws of the State of South Carolina.
3.3 Successors. This
Agreement shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors and permitted assigns of the Optionee and the
Company.
3.4 Notice. Except
as otherwise specified herein, all notices and other communications under this
Agreement 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.
3.5 Severability. In
the event that any one or more of the provisions or portion thereof contained in
this Agreement 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 Agreement, and this Agreement shall be construed as
if the invalid, illegal or unenforceable provision or portion thereof had never
been contained herein.
3.6 Entire
Agreement. This Agreement expresses the entire understanding
of the parties with respect to the Option.
3.7 Violation. Any
transfer, pledge, sale, assignment, or hypothecation of the Option or any
portion thereof shall be a violation of the terms of this Agreement and shall be
void and without effect.
3.8 Headings and Capitalized
Terms. Section headings used herein are for convenience of
reference only and shall not be considered in construing this.
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3.9 Specific
Performance. In the event of any actual or threatened default
in, or breach of, any of the terms, conditions and provisions of this Agreement,
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.
3.10 No Right to Continued
Retention. The award of Option Shares hereunder shall not be
construed as giving the Optionee the right to continue as an employee of the
Company or any affiliate.
SECTION
4
DEFINITIONS
4.1 “Change in Control”
has the same meaning as provided in the employment agreement between the
Optionee and the Company or an affiliate, or if no such definition or employment
agreement exists, Change in Control shall mean a merger, consolidation,
exchange, acquisition, any change in control as defined by the Change in Bank
Control Act, or change in beneficial ownership as evidenced by an individual or
entity holding fifty percent (50%) or more of the combined voting power of the
Company.
4.2 “Fair Market Value”
with regard to a date means:
(1) the
price at which Common Stock shall have been sold on that date or the last
trading date prior to that date as reported by the national securities exchange
selected by the Company on which the shares of Common Stock are then actively
traded or, if applicable, as reported by the NASDAQ Stock Market;
(2) if
such market information is not published on a regular basis, the price of Common
Stock in the over-the-counter market on that date or the last business day prior
to that date as reported by the NASDAQ Stock Market or, if not so reported, by a
generally accepted reporting service; or
(3) if
Common Stock is not publicly traded, as determined in good faith by the Company
with due consideration being given to (i) the most recent independent appraisal
of the Company, if such appraisal is not more than twelve months old and (ii)
the valuation methodology used in any such appraisal.
For
purposes of Paragraphs (1), (2), or (3) above, the Company may use the closing
price as of the applicable date, the average of the high and low prices as of
the applicable date or for a period certain ending on such date, the price
determined at the time the transaction is processed, the tender offer price for
shares of Common Stock, or any other method which the Company determines is
reasonably indicative of the fair market value.
[Remainder
of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date first above written.
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FIRST
RELIANCE BANCSHARES, INC.
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By:
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Title:
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ATTEST:
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Title:
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OPTIONEE:
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[INSERT
OPTIONEE’S
NAME]
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EXHIBIT
1
NOTICE
OF EXERCISE OF
STOCK
OPTION TO PURCHASE
COMMON
STOCK OF
FIRST
RELIANCE BANCSHARES, INC.
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Name
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Address
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Date
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First
Reliance Bancshares, Inc.
0000 X.
Xxxxxxxx Xx.
Xxxxxxxx,
XX 00000
Attention: President
Re: Exercise
of Nonqualified Stock Option
Gentlemen:
Subject to acceptance hereof by First
Reliance Bancshares, Inc. (the “Company”), I hereby give notice of my election
to exercise options granted to me to purchase ______________ shares of common
stock of the Company (“Common Stock”) under the Nonqualified Stock Option
Agreement (the “Agreement”) dated as of _________________. The
purchase shall take place as of ______________________, 200_ (the “Exercise
Date”).
On or before the Exercise Date, I will
pay the applicable purchase price as follows:
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¨
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by
delivery of cash or a certified check for $___________ for the full
purchase price payable to the order of First Reliance Bancshares,
Inc.
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¨
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by
delivery of cash or a certified check for $___________ representing a
portion of the purchase price with the balance to consist of shares of
Common Stock that I have owned for at least six months and that are
represented by a stock certificate I will surrender to the Company with my
endorsement. If the number of shares of Common Stock
represented by such stock certificate exceed the number to be applied
against the purchase price, I understand that a new stock certificate will
be issued to me reflecting the excess number of
shares.
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¨
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by
delivery of a stock certificate representing shares of Common Stock that I
have owned for at least six months which I will surrender to the Company
with my endorsement as payment of the purchase price. If the
number of shares of Common Stock represented by such certificate exceed
the number to be applied against the purchase price, I understand that a
new certificate will be issued to me reflecting the excess number of
shares.
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Exhibit 1
– Page 1 of 3
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¨
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by
delivery of the purchase price by _________________________, a broker,
dealer or other “creditor” as defined by Regulation T issued by the
Board of Governors of the Federal Reserve System. I hereby
authorize the Company to issue a stock certificate for the number of
shares indicated above in the name of said broker, dealer or other
creditor or its nominee pursuant to instructions received by the Company
and to deliver said stock certificate directly to that broker, dealer or
other creditor (or to such other party specified in the instructions
received by the Company from the broker, dealer or other creditor) upon
receipt of the purchase price.
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The required federal, state and local
income tax withholding obligations, if any, on the exercise of the Option shall
also be paid on or before the Exercise Date in cash or with previously owned
shares of Common Stock, as provided in the Agreement, or in the manner provided
in the Withholding Election previously tendered or to be tendered to the Company
no later than the Exercise Date.
As soon as the stock certificate is
registered in my name, please deliver it to me at the above
address.
If the Common Stock being acquired is
not registered for issuance to and resale by the Optionee pursuant to an
effective registration statement on Form S-8 (or successor form) filed under the
Securities Act of 1933, as amended (the “1933 Act”), I hereby represent,
warrant, covenant, and agree with the Company as follows:
The
shares of the Common Stock being acquired by me will be acquired for my own
account without the participation of any other person, with the intent of
holding the Common Stock for investment and without the intent of participating,
directly or indirectly, in a distribution of the Common Stock and not with a
view to, or for resale in connection with, any distribution of the Common Stock,
nor am I aware of the existence of any distribution of the Common
Stock;
I am not
acquiring the Common Stock based upon any representation, oral or written, by
any person with respect to the future value of, or income from, the Common Stock
but rather upon an independent examination and judgment as to the prospects of
the Company;
The
Common Stock was not offered to me by means of publicly disseminated
advertisements or sales literature, nor am I aware of any offers made to other
persons by such means;
I am able
to bear the economic risks of the investment in the Common Stock, including the
risk of a complete loss of my investment therein;
I
understand and agree that the Common Stock will be issued and sold to me without
registration under any state law relating to the registration of securities for
sale, and will be issued and sold in reliance on the exemptions from
registration under the 1933 Act, provided by Sections 3(b) and/or 4(2) thereof
and the rules and regulations promulgated thereunder;
The
Common Stock cannot be offered for sale, sold or transferred by me other than
pursuant to: (A) an effective registration under the 1933 Act or in a
transaction otherwise in compliance with the 1933 Act; and (B) evidence
satisfactory to the Company of compliance with the applicable securities laws of
other jurisdictions. The Company shall be entitled to rely upon an
opinion of counsel satisfactory to it with respect to compliance with the above
laws;
The
Company will be under no obligation to register the Common Stock or to comply
with any exemption available for sale of the Common Stock without registration
or filing, and the information or conditions necessary to permit routine sales
of securities of the Company under Rule 144 under the 1933 Act are not now
available and no assurance has been given that it or they will become
available. The Company is under no obligation to act in any manner so
as to make Rule 144 available with respect to the Common
Stock;
I have
and have had complete access to and the opportunity to review and make copies of
all material documents related to the business of the Company, including, but
not limited to, contracts, financial statements, tax returns, leases, deeds and
other books and records. I have examined such of these documents as I
wished and am familiar with the business and affairs of the
Company. I realize that the purchase of the Common Stock is a
speculative investment and that any possible profit therefrom is
uncertain;
Exhibit 1
– Page 2 of 3
I have
had the opportunity to ask questions of and receive answers from the Company and
any person acting on its behalf and to obtain all material information
reasonably available with respect to the Company and its affairs. I
have received all information and data with respect to the Company which I have
requested and which I have deemed relevant in connection with the evaluation of
the merits and risks of my investment in the Company;
I have
such knowledge and experience in financial and business matters that I am
capable of evaluating the merits and risks of the purchase of the Common Stock
hereunder and I am able to bear the economic risk of such purchase;
and
The
agreements, representations, warranties and covenants made by me herein extend
to and apply to all of the Common Stock of the Company issued to me pursuant to
this Agreement. Acceptance by me of the certificate representing such
Common Stock shall constitute a confirmation by me that all such agreements,
representations, warranties and covenants made herein shall be true and correct
at that time.
I understand that the certificates
representing the shares being purchased by me in accordance with this notice
shall bear a legend referring to the foregoing covenants, representations and
warranties and restrictions on transfer, and I agree that a legend to that
effect may be placed on any certificate which may be issued to me as a
substitute for the certificates being acquired by me in accordance with this
notice. I further understand that capitalized terms used in this
Notice of Exercise without definition shall have the meanings given to them in
the Agreement.
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Very
truly yours,
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AGREED
TO AND ACCEPTED:
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FIRST
RELIANCE BANCSHARES, INC.
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By:
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Title:
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Number
of Shares Exercised:
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Number
of Shares Remaining:
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Date:
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Exhibit 1
– Page 3 of 3
EXHIBIT
2
NOTICE
OF WITHHOLDING ELECTION
FIRST
RELIANCE BANCSHARES, INC.
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TO:
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First
Reliance Bancshares, Inc.
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Attn:
Corporate Secretary
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FROM: ___________________________
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RE:
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Withholding
Election
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This election relates to the Option
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).
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¨
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the
original recipient of the Option.
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¨
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the
legal representative of the estate of the original recipient of the
Option.
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¨
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a
legatee of the original recipient of the
Option.
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¨
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the
legal guardian of the original recipient of the
Option.
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(3) The
Option pursuant to which this election relates was issued in the name of
___________________________ for the purchase of a total of _________________
shares of Common Stock. This election relates to _____________ shares
of Common Stock issuable upon exercise of the Option, provided that the numbers
set forth above shall be deemed changed as appropriate to reflect the applicable
provisions of the Agreement.
(4) In
connection with any exercise of the Option with respect to Common Stock, I
hereby elect to have certain shares issuable pursuant to the exercise withheld
by the Company for the purpose of having the value of the shares applied to pay
federal, state and local, if any, taxes arising from the
exercise. The shares to be withheld shall have, as of the date of
exercise applicable to the exercise, a fair market value equal to the minimum
statutory tax withholding requirement under federal, state and local law in
connection with the exercise.
(5) This
Withholding Election is made no later than the date of exercise and is otherwise
timely made pursuant to the Agreement.
(6) I
understand that this Withholding Election may not be revised, amended or revoked
by me.
(7) I
further understand that the Company shall withhold from the Common Stock a whole
number of shares of Common Stock having the value specified in Paragraph 4
above.
(8) I
have no reason to believe that any of the conditions therein to the making of
this Withholding Election have not been met.
Exhibit 2
– Page 1 of 2
(9) Capitalized
terms not otherwise defined in this Withholding Election shall have the meaning
ascribed to them in the Agreement.
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Dated:
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Signature
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Name
(printed)
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Street
Address
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City,
State, Zip Code
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Exhibit 2
– Page 2 of 2
SCHEDULE
I
TO
FIRST RELIANCE BANCSHARES, INC.
NONQUALIFIED
STOCK OPTION AWARD
Vesting
Schedule
A. “Vested
Shares” means only that percentage of the number of shares of Common Stock
subject to the Option as to which the Option becomes exercisable following
completion of the years of service indicated in the schedule below.
Percentage of
Shares Years
of Service
Which are Vested
Shares
after Grant
Date
[COMPLETE]
B. Notwithstanding
Part A, in the event of a Change in Control, the Option will be fully vested and
exercisable as of a date determined by the Company which is no less than thirty
(30) days prior to the effective date of the Change in Control; provided that
the Optionee is employed by the Company or any affiliate on the date of the
Change in Control.
C. For
purposes of the Vesting Schedule, Optionee shall be granted a year of service
for each consecutive twelve-consecutive-month period following the Grant Date
and during which Optionee continues, at all times, as an employee of the Company
or an affiliate.
D. The
right of Optionee to vest in Common Stock shall cease upon termination of the
Optionee’s employment with the Company or an affiliate, whether by reason of
death, disability or otherwise and, thereafter, no further Option Shares shall
become vested; and the Option shall be exercisable only during the Option
Period.
