Exhibit 10.3
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NON-QUALIFIED STOCK OPTION AWARD
PURSUANT TO THE SOUTHEASTERN BANK FINANCIAL CORPORATION
2006 LONG-TERM INCENTIVE PLAN
THIS NON-QUALIFIED STOCK OPTION AWARD (the "Award") is made as of the Grant
Date by and between SOUTHEASTERN BANK FINANCIAL CORPORATION (the "Bank"), a
Georgia corporation, and _______________ (the "Optionee").
Upon and subject to the Terms and Conditions attached hereto and
incorporated herein by reference, the Bank hereby awards as of the Grant Date to
Optionee a non-qualified stock option (the "Option"), as described below, to
purchase the Option Shares.
▇. ▇▇▇▇▇ Date: __________, 200__.
B. Type of Option: Non-Qualified Stock Option.
C. Plan under which granted: Southeastern Bank Financial Corporation
2006 Long-Term Incentive Plan.
D. Option Shares: All or any part of ________ shares of the Bank's
common stock (the "Common Stock"), subject to adjustment as provided
in the attached Terms and Conditions.
E. Exercise Price: $______ per share, subject to adjustment as provided
in the attached Terms and Conditions. The Exercise Price is, in the
judgment of the Committee, not less than 100% of the Fair Market Value
of a share of Common Stock on the Grant Date.
F. Option Period: The Option may be exercised only during the Option
Period which commences on the Grant Date and ends, generally, on the
earliest of (a) the tenth (10th) anniversary of the Grant Date; or (b)
the earlier of (i) three (3) months following the date the Optionee
ceases to be an employee of the Bank (including any Affiliate) for
reasons other than death or Disability; or (ii) one (1) year following
the date the Optionee ceases to be an employee of the Bank (including
any Affiliate) due to death or Disability; provided however, that the
Option may be exercised as to no more than the vested Option Shares
determined pursuant to the Vesting Schedule. Note that other
limitations to exercising the Option, as described in the attached
Terms and Conditions, may apply.
H. Vesting Schedule: The Option Shares shall become vested in accordance
with Schedule 1 hereto (the "Vesting Schedule").
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IN WITNESS WHEREOF, the parties have executed and sealed this Award as of
the Grant Date set forth above.
OPTIONEE SOUTHEASTERN BANK FINANCIAL CORPORATION
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By:
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Title:
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TERMS AND CONDITIONS
TO THE
NON-QUALIFIED STOCK OPTION AWARD
PURSUANT TO THE SOUTHEASTERN BANK FINANCIAL CORPORATION
2006 STOCK INCENTIVE PLAN
1. Exercise of Option. Subject to the provisions provided herein or in
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the Award made pursuant to the Southeastern Bank Financial Corporation 2006
Long-Term Incentive Plan the Option may be exercised with respect to all or any
portion of the vested Option Shares at any time during the Option Period by:
(a) the delivery to the Bank, 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 Bank no
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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;
(b) payment to the Bank of the Exercise Price multiplied by the
number of Option Shares being purchased (the "Purchase Price") as provided
in Section 3; and
(c) satisfaction of the withholding tax obligations under Section
2.
(d) Notwithstanding any other provision of this Award, in the
event that the capital of the Bank falls below the minimum requirements
determined by the primary federal regulator of the Bank (the "Regulator"),
the Regulator may direct the Bank to require the Optionee to exercise, or
otherwise forfeit, the Option in whole or in part. If the Regulator gives
such direction, the Bank will notify the Optionee within forty-five (45)
days from the date the Regulator notifies the Bank in writing that the
Optionee must exercise, or otherwise forfeit, the Option in whole or in
part. If the Optionee does not exercise the Option in accordance with the
Bank's direction within twenty-one (21) days of the Bank's notification to
the Optionee, the Committee may provide for the cancellation of the Option.
Upon acceptance of such notice and receipt of payment in full of the Purchase
Price and, if applicable, any withholding taxes, the Bank shall cause to be
issued a certificate representing the Option Shares purchased.
2. Withholding. The Optionee must satisfy his federal, state and
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local, if any, withholding taxes imposed by reason of the exercise of the Option
either by paying to the Bank the full amount of the withholding obligation (a)
in cash; (b) by electing, irrevocably and in writing in substantially the form
of Exhibit 2 (a "Withholding Election") to (i) tender 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;
or (ii) have the smallest number of whole shares of Common Stock withheld by the
Bank 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 minimum
required withholding tax obligations; or (c) by any combination of the above.
Optionee may make a Withholding Election only if the following conditions are
met:
(i) the Withholding Election is made on or prior to the date on
which the amount of tax required to be withheld is determined (the
"Tax Date") by executing and delivering to the Bank a properly completed
Notice of Withholding in substantially the form attached hereto as Exhibit
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2; and
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(ii) any Withholding Election will be irrevocable; however, the
Committee may, in its sole discretion, disapprove and give no effect to the
Withholding Election.
3. Purchase Price. Payment of the Purchase Price for all Option Shares
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purchased pursuant to the exercise of an Option shall be made:
(a) in cash or certified check;
(b) by tendering previously acquired shares of Common Stock held
for no less than six (6) months having a Fair Market Value equal to
the Purchase Price;
(c) any combination of (a) or (b); or
(d) 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 Committee of instructions in a form acceptable to the Committee
regarding delivery to such broker, dealer or other creditor of that number
of Option Shares with respect to which the Option is exercised.
4. Rights as Shareholder. Until the stock certificates reflecting the
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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 Bank 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, except as the
Plan or the attached Award otherwise provides.
5. Restriction on Transfer of Option and of Option Shares. The Option
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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 his Disability, by his personal
representative) and after his death, only by his legatee or the executor of his
estate.
6. Changes in Capitalization.
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(a) In the event of any change in corporate capitalization,
including, but not limited to, a stock dividend or stock split, or a
corporate transaction, such as any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property of the
Bank, any reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code) or any partial or
complete liquidation of the Bank, the Committee shall make an adjustment in
the number and class of Option Shares, with a corresponding adjustment to
the Exercise Price (where appropriate), as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to
prevent dilution or enlargement of rights. To the extent not previously
exercised or settled, the Option shall terminate immediately prior to the
dissolution or liquidation of the Bank.
(b) In the event that the Bank is a party to a merger or other
reorganization, the Option shall be subject to the agreement of merger or
reorganization. Such agreement shall provide for:
(i) The continuation of the Option by the Bank, if the Bank
is a surviving corporation;
(ii) The assumption of the Option by the surviving corporation
or its parent or subsidiary;
(iii) The substitution by the surviving corporation or its
parent or subsidiary of its own award for the Option; or
(iv) Settlement of the full value of the Option in cash or
cash equivalents followed by cancellation of the Option.
(c) The existence of the Plan and the Option granted pursuant to
this Award shall not affect in any way the right or power of the Bank to
make or authorize any adjustment, reclassification, reorganization or other
change in its capital or business structure, any merger or consolidation of
the Bank, 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 Bank, 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 Committee's
discretion, for the elimination without payment therefor of any fractional
shares that might otherwise become subject to any Option.
7. Special Limitation on Exercise. No purported exercise of the Option
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shall be effective without the approval of the Committee, 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 Committee, 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
Bank, 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 Bank may reasonably request in order for
the Bank 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 Bank 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.
8. Legend on Stock Certificates. Certificates evidencing the Option
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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 and in the Plan.
9. Governing Laws. This Award and the Terms and Conditions shall be
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construed, administered and enforced according to the laws of the State of
Georgia; provided, however, the Option may not be exercised except in compliance
with exemptions available under applicable state securities laws of the state in
which the Optionee resides and/or any other applicable securities laws.
10. Successors. This Award and the Terms and Conditions shall be
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binding upon and inure to the benefit of the heirs, legal representatives,
successors and permitted assigns of the Optionee and the Bank.
11. Notice. Except as otherwise specified herein, all notices and
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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.
12. Severability. In the event that any one or more of the provisions
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or portion thereof contained in the Award and these Terms and Conditions 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 the
Award and these Terms and Conditions, and the Award and these Terms and
Conditions shall be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.
13. Entire Agreement. Subject to the terms and conditions of the Plan,
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the Award and the Terms and Conditions express the entire understanding of the
parties with respect to the Option.
14. Violation. Except as provided in Section 5, any transfer, pledge,
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sale, assignment, or hypothecation of the Option or any portion thereof shall be
a violation of the terms of the Award or these Terms and Conditions and shall be
void and without effect.
15. Headings and Capitalized Terms. Section headings used herein are
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for convenience of reference only and shall not be considered in construing the
Award or these Terms and Conditions. Capitalized terms used, but not defined,
in either the Award or the Terms and Conditions shall be given the meaning
ascribed to them in the Plan.
16. Specific Performance. In the event of any actual or threatened
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default in, or breach of, any of the terms, conditions and provisions of the
Award and these Terms and Conditions, 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.
17. No Right to Continued Retention. Neither the establishment of the
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Plan nor the award of Option Shares hereunder shall be construed as giving the
Optionee the right to continued employment with the Bank or any Affiliate.
EXHIBIT 1
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NOTICE OF EXERCISE OF
STOCK OPTION TO PURCHASE
COMMON STOCK OF
SOUTHEASTERN BANK FINANCIAL CORPORATION
Name
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Address
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Date
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Southeastern Bank Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Re: Exercise of Non-Qualified Stock Option
Gentlemen:
Subject to acceptance hereof by Southeastern Bank Financial Corporation
(the "Bank") and pursuant to the provisions of the Southeastern Bank Financial
Corporation 2006 Long-Term Incentive Plan (the "Plan"), I hereby give notice of
my election to exercise options granted to me to purchase ______________ shares
of Common Stock of the Bank under the Non-Qualified Stock Option Award (the
"Award") 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:
[ ] by delivery of cash or a certified check for $___________ for the
full purchase price payable to the order of Southeastern Bank
Financial Corporation.
[ ] by delivery of previously owned shares of Common Stock held no
less than six (6) months having a Fair Market Value equal to the
purchase price.
[ ] 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 Bank 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 Bank 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 Bank
from the broker, dealer or other creditor) upon receipt of the
purchase price. Note: This choice is available only if and when
the Common Stock becomes traded by brokers.
The required federal, state, and local income tax withholding obligations,
if any, on the exercise of the Award shall be paid on or before the Exercise
Date in cash or with previously owned shares of Common Stock, as provided in the
Award, or in the manner provided in the Withholding Election previously tendered
or to be tendered to the Bank no later then 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 Bank 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 Bank;
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 Bank of compliance with the applicable
securities laws of other jurisdictions. The Bank shall be entitled to rely
upon an opinion of counsel satisfactory to it with respect to compliance
with the above laws;
The Bank 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 Bank 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 Bank 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
Bank, 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 Bank. I realize that the purchase of the Common Stock is a
speculative investment and that any possible profit therefrom is uncertain;
I have had the opportunity to ask questions of and receive answers
from the Bank and any person acting on its behalf and to obtain all
material information reasonably available with respect to the Bank and its
affairs. I have received all information and data with respect to the Bank
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 Bank;
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 Bank issued to me
pursuant to this Award. 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 Award or in the Plan, as applicable.
Very truly yours,
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AGREED TO AND ACCEPTED:
SOUTHEASTERN BANK FINANCIAL CORPORATION
By:
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Title:
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Number of Shares
Exercised:
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Number of Shares
Remaining: Date:
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EXHIBIT 2
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NOTICE OF WITHHOLDING ELECTION
SOUTHEASTERN BANK FINANCIAL CORPORATION
2006 STOCK INCENTIVE PLAN
TO:
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FROM:
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RE: Withholding Election
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).
[ ] the original recipient of the Option.
[ ] the legal representative of the estate of the original recipient of
the Option.
[ ] a legatee of the original recipient of the Option.
[ ] the legal guardian of the original recipient of the Option.
(3) The Option to which this election relates was issued under the Southeastern
Bank Financial Corporation 2006 Long-Term Incentive Plan (the "Plan") in
the name of _________________________ for the purchase of a total of
_______________ shares of Common Stock of the Bank. 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 Plan provisions.
(4) In connection with any exercise of the Option with respect to the Common
Stock, I hereby elect:
[ ] to have certain of the shares otherwise issuable pursuant to the
exercise withheld by the Bank for the purpose of having the value of
the shares applied to pay federal, state, and local, if any, taxes
arising from the exercise.
[ ] to tender shares of Common Stock held by me for a period of at least
six (6) months prior to the exercise of the Option for the purpose of
having the value of the shares applied to pay such taxes.
The shares to be withheld or tendered, as applicable, shall have, as
of the Tax Date 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 Tax Date and is
otherwise timely made pursuant to the Plan.
(6) I understand that this Withholding Election may not be revised, amended or
revoked by me.
(7) The Plan has been made available to me by the Bank. I have read and
understand the Plan and I have no reason to believe that any of the
conditions to the making of this Withholding Election have not been met.
(8) Capitalized terms used in this Notice of Withholding Election without
definition shall have the meanings given to them in the Option or in the
Plan, as applicable.
Dated:
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Signature
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Social Security Number Name (Printed)
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Street Address
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City, State, Zip Code
SCHEDULE 1
VESTING SCHEDULE
NON-QUALIFIED STOCK OPTION AWARD
ISSUED PURSUANT TO THE
SOUTHEASTERN BANK FINANCIAL CORPORATION
2006 STOCK INCENTIVE PLAN
A. The Option Shares shall become vested Option Shares following completion of
the years of service as an employee of the Bank or any Affiliate as
indicated in the schedule below.
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Percentage of Option Shares Years of Service After
Which are Vested Shares the Grant Date
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B. Upon the occurrence of a Change in Control, unless otherwise specifically
prohibited under Applicable Laws, the Option shall become immediately
exercisable, and shall remain exercisable throughout the Option Period.
C. For purposes of the Vesting Schedule, Optionee shall be granted a year of
service for each twelve-consecutive-month period following the Grant Date
during which Optionee continues, at all times, as an employee of the Bank
or any Affiliate. No credit will be given for completion of a partial year
of service and no period of time following the Optionee's termination of
employment with the Bank (including all Affiliates) shall count towards the
vesting of Option Shares.