[Form of Stock Option Agreement]
SOUTHCOAST FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into between Southcoast Financial
Corporation, a South Carolina corporation (the "Company"), and the person named
in Appendix B hereto as the Holder (the "Holder"), as of the date set forth in
Appendix B hereto as the Date of Grant, in connection with the grant of options
pursuant to the Southcoast Financial Corporation 1999 Stock Option Plan (the
"Plan"). Appendix B hereto is incorporated by reference herein ("Appendix B").
W I T N E S S E T H:
WHEREAS, the Holder is employed by the Company or one of its
subsidiaries in a key position or is an officer or director of the Company and
the Company desires to retain the Holder in its services, to encourage the
Holder to own Common Stock (as defined in the Plan) of the Company and to give
the Holder added incentive to advance the interests of the Company through the
Plan and, therefore, desires to grant the Holder an option to purchase shares of
Common Stock of the Company under terms and conditions established by the Board
of Directors or a committee thereof (as set forth in the Plan).
NOW, THEREFORE, in consideration of these premises, the parties agree
that the following shall constitute the Agreement between the Company and the
Holder:
1. Grant of Option. Subject to the terms and conditions set forth
herein, the Company grants to the Holder incentive stock options qualified under
Section 422 of the Internal Revenue Code (the "Code") ("Incentive Stock
Options") and/or non-qualified stock options ("Non-qualified Stock Options") to
purchase from the Company the number of shares specified in Appendix B hereto,
at the price, for the period, and on the terms set forth in Appendix B.
2. Additional Terms of Option and Terms of Exercise. The term of the
options granted hereby may be reduced only on account of termination of
employment, disability or death of the Holder as provided in Paragraphs 4 and 5
hereof, or in the event of certain extraordinary corporate actions as set forth
in the Plan. At any time and from time to time when any option or portion
thereof is exercisable, the same may be exercised in whole or in part. Except as
provided in Paragraphs 4 and 5 hereof, no option shall be exercisable unless, at
the time of the exercise, the Holder is then, and has been continuously since
such option was granted, an employee of the Company. Leave of absence from
employment by the Company when granted by the Company because of sick leave,
military leave or any other reason approved by the Company, to the extent
permitted under the Code and applicable regulations, shall not be considered as
interruption or termination of employment for any purpose under the Plan.
The Holder shall also be subject to the following:
(a) With respect to an Incentive Stock Option granted under the Plan,
the aggregate fair market value of shares of Common Stock subject to such
Incentive Stock Option and the aggregate fair market value of shares of Common
Stock or stock of any affiliate (or a predecessor of the Company or an
affiliate) subject to any other incentive stock option (within the meaning of
Section 422 of the Code) of the Company and its affiliates (or a predecessor
corporation of any such corporation), to the extent such options become first
exercisable in any calendar year, may not (with respect to any holder) exceed
$100,000, determined as of the date the Incentive Stock Option is granted.
(b) Any options granted hereby which are in excess of the fair market
value limitations set forth in Paragraph (a) of this subsection shall be deemed
"non-statutory" or "non-qualified" and shall not be Incentive Stock Options
granted hereunder.
(c) The right to exercise any option granted hereunder shall be
forfeited in the event the Holder shall be dismissed or resign as the
consequence of the commission of a crime involving moral turpitude.
3. Exercise of Options
The options granted hereunder shall be exercisable only upon delivery
to the Company at its main office of a written notice: (a) stating the Holder's
election to exercise, (b) specifying the number of shares to be purchased, and
(c) enclosing payment for the shares purchased in full. Payment shall be made in
cash unless Appendix A specifies that cashless exercise is permitted. Any
cashless exercise shall comply with Section 9(e) of the Plan. As promptly as
practicable thereafter, a certificate or certificates for the number of shares
to which the notice refers shall be issued, provided, however, that the time of
such delivery may be postponed by the Company for such period as may be required
by the Company with reasonable diligence to comply with applicable listing
requirements of any securities exchange or to comply with applicable state or
federal law. In no case may a fraction of a share be purchased or issued under
the Plan.
The Holder shall not, by reason of the Plan and the granting to him of
any option hereunder, have or thereby acquire any rights of a shareholder of the
Company with respect to the shares covered by the option unless and until his
ownership shall have been recorded on the stock record books of the Company and
a certificate for such shares shall have been issued and delivered to him.
4. Effect of Termination of Employment, Disability or Death on
Incentive Stock Options.
(a) Termination of Employment. If the Holder's employment by the
Company or any of its subsidiaries is terminated because of the Holder's
retirement, or for disability with the approval of the Company or any of its
subsidiaries, or for any other reason except death or termination pursuant to
paragraph 2(c) hereof, the Holder shall have the right at any time within three
months thereafter (but in any event no later than the date of the expiration of
the option period) to exercise the Holder's Incentive Stock Options with respect
to the number of shares which were immediately purchasable by the Holder at the
time of termination of employment, and the Holder's right to purchase any
remaining shares shall terminate forthwith. Notwithstanding the foregoing, in
the event employment is terminated due to disability as defined under Section
22(e)(3) of the Code, the Holder shall have the right at any time within one
year thereafter (but in any event no later than the date of the expiration of
the option period) to exercise such Incentive Stock Options.
This Agreement shall not in any event confer on the Holder any right to
continue in the employment of the Company or any of its subsidiaries, or affect
their right to terminate the Holder's service at any time, and nothing contained
herein shall be deemed a waiver or modification of any provision contained in
any agreement between the Holder and the Company or any parent or subsidiary
thereof.
(b) Death of Holder of Option. In the event of the death of the Holder
while the Holder is in the employ of the Company or any of its subsidiaries, any
Incentive Stock Option or unexercised portion thereof granted to the Holder
shall be exercisable at any time prior to the expiration of one year after the
date of such death (but in any event no later than the date of the expiration of
the option period), but only by the estate of the Holder or by the person or
persons to whom the Holder's rights under the Incentive Stock Option shall pass
by the Holder's will or by the laws of descent and distribution of the state of
the Holder's domicile at the time of the Holder's death, and then only if and to
the extent that the Holder was entitled to exercise the Incentive Stock Option
at the date of his death. The estate of the Holder or the person or persons so
exercising such Incentive Stock Option after the Holder's death shall,
simultaneously with the delivery of notice to exercise and the payment for the
shares purchased, deliver to the Company such proof of the right of such estate
or such person or persons to exercise the Incentive Stock Option as may
reasonably be required by the Board of Directors and counsel.
5. Effect of Termination of Employment, Disability or Death on
Non-qualified Stock Options.
The terms and conditions of Non-qualified Stock Options relating to the
effect of the termination of the Holder's employment, or the Holder's death or
disability shall be such terms and conditions as the Board or the Committee
shall, in its sole discretion, determine at the time of termination, unless
otherwise specifically provided for in Appendix B hereto.
6. Options not Transferable
Options granted hereby shall not be transferable otherwise than by will
or by the laws of descent and distribution, and shall be exercisable during the
Holder's lifetime only by the Holder.
7. Adjustment of Shares
In the event of stock dividends, stock splits, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization, or any
other increase or decrease in the number of Shares of Common Stock effected
without the receipt of consideration by the Company (other than Shares held by
dissenting stockholders), the number of shares subject to the Plan, and the
number of shares, the option price, and the exercise date thereof subject to
this Agreement, shall be appropriately adjusted by the Board of Directors, whose
determination shall be conclusive with respect to such adjustment. Certain other
adjustments may (or shall) also be made with respect to the options in
connection with the foregoing events or a change in control or imminent change
in control as provided in the Plan.
8. Investment Letter. The Holder agrees, and any other party that
purchases any shares of the Common Stock pursuant to any options granted hereby
must as a condition precedent to such purchase likewise agree, that the shares
of Common Stock acquired upon exercise of any options shall be acquired for his
own account for investment only and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act of 1933, as amended (the "Act"), or other applicable
securities laws. If the Board of Directors so determines, any Common Stock
certificates issued upon exercise of any option shall bear a legend to the
effect that the shares have been so acquired. The Company may, but in no event
shall be required to, bear any expense of complying with the Act, other
applicable securities laws or the rules and regulations of any national
securities exchange or other regulatory authority in connection with the
registration, qualification, or transfer, as the case may be, of any option or
any shares of Common Stock acquired upon the exercise hereof. The foregoing
restrictions on the transfer of the shares of Common Stock shall be inoperative
if (a) the Company previously shall have been furnished with an opinion of
counsel, satisfactory to it, to the effect that such transfer will not involve
any violation of the Act or other applicable securities laws, or (b) the shares
of Common Stock shall have been duly registered in compliance with the Act and
other applicable securities laws. If any option, or the shares of Common Stock
subject to any option, are so registered under the Act and listed on any
securities exchange, the Holder agrees, and any other party that purchases any
shares of Common Stock pursuant to any option must as a condition precedent to
such purchase likewise agree, that he will not make a public offering of the
said shares except on a national securities exchange on which the Common Stock
of the Company is then registered and listed.
9. No Effect on Capital Structure. This grant of options shall not
affect the right of the Company or any affiliate thereof to reclassify,
recapitalize or otherwise change its capital or debt structure or to merge,
consolidate, convey any or all of its assets, dissolve, liquidate, windup, or
otherwise reorganize.
10. Amendment, Suspension and Termination
The Board may at any time alter, suspend or discontinue the Plan,
provided, however, that the Board shall not, without the approval of the
shareholders of the Company, amend the Plan to: (a) increase the maximum number
of shares as to which options may be granted (other than as provided in
Paragraph 13 of the Plan), (b) materially increase the benefits accruing to
participants under the Plan, or (c) materially modify the requirements for
eligibility for participation in the Plan.
The options granted hereby will terminate automatically at the close of
business on the date which is ten years from the date of grant as set forth in
Appendix B unless terminated prior thereto as hereinabove provided or unless
otherwise provided in Appendix B.
11. Board Authority. Any question concerning the interpretation of this
Agreement, any adjustments required to be made under Paragraph 7 of this
Agreement, and any controversy which may arise under this Agreement shall be
determined by the Board of Directors of the Company in its sole discretion.
12. Plan Governs. The terms of this Agreement are governed by the terms
of the Plan, a copy of which is attached hereto as Appendix A and made a part
hereof as if fully set forth herein, and in the case of any inconsistency
between the terms of this Agreement and the terms of the Plan, the terms of the
Plan shall govern. Initially capitalized terms used in this agreement shall have
the same meaning as provided in the Plan, unless otherwise specifically provided
herein.
13. Notice. Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered, or sent by mail. Any
notice required or permitted to be delivered hereunder shall be deemed to be
delivered, whether actually received or not, on the third business day after it
is deposited in the United States mail, certified or registered, postage
prepaid, addressed to the person who is to receive it at the address which such
person has theretofore specified by written notice delivered in accordance
herewith. The Company or Holder may change, at any time and from time to time,
by written notice to the other, the address previously specified for receiving
notices. Until changed in accordance herewith, the Company specifies its address
as set forth below:
Southcoast Financial Corporation
000 Xxxxxxx Xxxxx Xxxxxxxxx
Xx. Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Until changed in accordance herewith, the Holder specifies his address
is as set forth on Appendix B hereto.
14. Unenforceability of Portion of Agreement. In the event any
provision of this Agreement shall be held to be illegal, invalid, or
unenforceable for any reason, the illegality, invalidity, or unenforceability of
such provision shall not affect the remaining provisions of this Agreement, but
shall be fully severable and this Agreement shall be construed and enforced as
if the illegal, invalid, or unenforceable provision had never been included
herein.
IN WITNESS HEREOF, the Company has caused this Agreement to be executed
and the Holder has signed this Agreement on Appendix B.
APPENDIX A
SOUTHCOAST FINANCIAL CORPORATION
1999 STOCK OPTION PLAN
[Text Omitted. See Exhibit 10.1 for Text]
Appendix B
SOUTHCOAST FINANCIAL CORPORATION
STOCK OPTION AGREEMENT PURSUANT TO THE
SOUTHCOAST FINANCIAL CORPORATION
1999 STOCK OPTION PLAN (THE "PLAN")
1. HOLDER:
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(Name)
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(Street Address or PO Box Number)
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(City, State, ZIP)
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(Social Security Number)
2. TYPE OF OPTION:
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(Incentive pursuant to Section 422A of the Internal
Revenue Code or non-qualified)
3. NUMBER OF SHARES SUBJECT TO OPTION:
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4. EXERCISE PRICE PER SHARE: $
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5. DATE OF GRANT:
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6. EXERCISE TERMS:
(a) DATE FIRST EXERCISABLE NUMBER OF SHARES
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(b) CASHLESS EXERCISE PERMITTED (May only be permitted for
non-qualified stock options): YES ___ NO ___
(c) RIGHT OF REPURCHASE PERMITTED PURSUANT TO SECTION 12 OF THE PLAN:
YES ___ NO ___
IF RIGHT OF REPURCHASE IS PERMITTED, THE TERMS ARE AS FOLLOW:
(d) OTHER TERMS:
7. TERMINATION DATE:
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(Ten years from date of grant, unless otherwise specified here)
Signed this ___ day of ____________, ________.
HOLDER SOUTHCOAST FINANCIAL CORPORATION
By
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Title:
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