INCENTIVE STOCK OPTION AGREEMENT under the SECOND AMENDED and RESTATED FIRST SECURITY GROUP, INC.
Exhibit
10.4
under
the
SECOND
AMENDED and RESTATED
1999
LONG-TERM INCENTIVE PLAN OF
FIRST
SECURITY GROUP, INC.
Optionee:
_______________________
Number
Shares Subject to Option: ________________
Exercise
Price per Share: $___________
Date of
Grant: __________________
1. Grant
of Option. First
Security Group, Inc. (the "Company") hereby grants to the Optionee named above
(the "Optionee"), under the Second Amended and Restated 1999 Long- Term
Incentive Plan of First Security Group, Inc. (the "Plan"), an Incentive Stock
Option to purchase, on the terms and conditions set forth in this agreement
(this "Option Agreement"), the number of shares indicated above of the Company's
$0.01 par value common stock (the "Stock"), at the exercise price per share set
forth above (the "Option"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned such terms in the Plan.
2. Vesting
of Option. Unless
the exercisability of the Option is accelerated in accordance with Sections 9.9,
9.10, 9.11 and/or 9.12 of the Plan, the Option shall vest (become exercisable)
in accordance with the following schedule:
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Years
of Service
After
Date of Grant |
Percent
of Option Shares Vested |
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3. Period
of Option and Limitations on Right to Exercise. The
Option will, to the extent not previously exercised, lapse under the earliest of
the following circumstances; provided, however, that the Committee may, prior to
the lapse of the Option under the circumstances described in paragraphs (b), (c)
and (d) below, provide in writing that the Option will extend until a later
date:
(a) The
Option shall lapse as of 5:00 p.m., Eastern Time, on the tenth anniversary of
the date of grant (the "Expiration Date").
(b) The
Option shall lapse three months after the Optionee's termination of employment
for any reason other than the Optionee's death or Disability; provided, however,
that if the Optionee's employment is terminated by the Company, a Parent, or a
Subsidiary for cause (as defined below) or by the Optionee without the consent
of the Company, a Parent, or a Subsidiary, the Option shall lapse
immediately.
(c) If the
Optionee's employment terminates by reason of Disability, the Option shall lapse
one year after the date of the Optionee's termination of
employment.
(d) If the
Optionee dies before the Option otherwise lapses and (i) while employed, (ii)
during the three-month period described in subsection (b) above, or (iii) during
the one-year period described in subsection (c) above, the Option shall lapse
one year after the date of the Optionee's death. Upon the Optionee's death, the
Option may be exercised by the Optionee's beneficiary.
If the
Optionee or his beneficiary exercises an Option after termination of employment,
the Option may be exercised only with respect to the shares that were otherwise
vested on the Optionee's termination of employment (including vesting by
acceleration in accordance with Sections 9.9, 9.10., 9.11 and/or 9.12 of the
Plan).
The term
"cause" as used herein shall mean gross neglect of duty, prolonged absence from
duty without the consent of the Company, the acceptance by Optionee of a
position with another employer without the consent of the Company, intentionally
engaging in any activity which is in conflict with or adverse to the business or
other interests of the Company, willful misconduct on the part of Optionee,
misfeasance or malfeasance of duty causing a violation of any law which is
reasonably determined by the Board to be detrimental to the Company, breach of a
fiduciary duty owed to the Company or any material breach of an employment
contract, which breach has not been corrected by Optionee within (30) days after
his receipt of notice of such breach from the Company.
4. Exercise
of Option. The
Option shall be exercised by written notice directed to the Secretary of the
Company at the principal executive offices of the Company, in substantially the
form attached hereto as Exhibit A, or such other form as the Committee may
hereafter approve and require. Unless the exercise is a broker-assisted
"cashless exercise" as described below, such written notice shall be accompanied
by full payment in cash, shares of Stock previously acquired by the Optionee, or
any combination thereof, for the number of shares specified in such written
notice; provided, however, that if shares of Stock are used to pay the exercise
price, such shares must have been held by the Optionee for at least six months.
The Fair Market Value of the surrendered Stock as of the last trading day
immediately prior to the exercise date shall be used in valuing Stock used in
payment of the exercise price. To the extent permitted under Regulation T of the
Federal Reserve Board, and subject to applicable securities laws, the Option may
be exercised through a broker in a so-called "cashless exercise" whereby the
broker sells the Option shares and delivers cash sales proceeds to the Company
in payment of the exercise price. In such case, the date of exercise shall be
deemed to be the date on which notice of exercise is received by the Company and
the exercise price shall be delivered to the Company on the settlement
date.
Subject
to the terms of this Option Agreement, the Option may be exercised at any time,
or from time to time in part, and without regard to any other option held by the
Optionee to purchase stock of the Company, as to any Option Shares then vested
under Paragraph 2. If this Option Agreement covers more than 1,000 shares of
Stock, Optionee may exercise this Option for the purchase of more than 1,000
shares of Stock, either in whole or from time to time in part during the course
of any calendar year, only if the Optionee designates the exercise of this
Option for the purchase of such number of shares of Stock as may exceed the
number 1,000, or such larger number as may then qualify under the Code for
Incentive Stock Option treatment (the "ISO Maximum") as the Optionee's exercise
of a Non-Qualified Stock Option as to the shares of Stock in excess of such ISO
Maximum so acquired by the Optionee pursuant to this Option.
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5. Limitation
of Rights. The
Option does not confer to the Optionee or the Optionee's personal representative
any rights of a shareholder of the Company unless and until shares of Stock are
in fact issued to such person in connection with the exercise of the Option.
Nothing in this Option Agreement shall interfere with or limit in any way the
right of the Company or any Parent or Subsidiary to terminate the Optionee's
employment at any time, nor confer upon the Optionee any right to continue in
the employ of the Company or any Parent or Subsidiary.
6. Stock
Reserve. The
Company shall at all times during the term of this Option Agreement reserve and
keep available such number of shares of Stock as will be sufficient to satisfy
the requirements of this Option Agreement.
7. Optionee's
Covenant. The
Optionee hereby agrees to use his best efforts to provide services to the
Company or a Parent or Subsidiary in a workmanlike manner and to promote the
Company's interests.
8. Restrictions
on Transfer and Pledge. The
Option may not be pledged, encumbered, or hypothecated to or in favor of any
party other than the Company or a Parent or Subsidiary, or be subject to any
lien, obligation, or liability of the Optionee to any other party other than the
Company or a Parent or Subsidiary. The Option is not assignable or transferable
by the Optionee other than by will or the laws of descent and distribution or
pursuant to a domestic relations order that would satisfy Section 414(p)(1)(A)
of the Code; provided, however, that the Committee may (but need not) permit
other transfers where the Committee concludes that such transferability (i) does
not result in accelerated taxation and (ii) is otherwise appropriate and
desirable, taking into account any factors deemed relevant, including without
limitation, state or federal tax or securities laws applicable to transferable
options. The Option may be exercised during the lifetime of the Optionee only by
the Optionee or any permitted transferee.
9. Restrictions
on Issuance of Shares. If at
any time the Board shall determine in its discretion, that listing, registration
or qualification of the shares of Stock covered by the Option upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition to the exercise of the Option, the Option may not be exercised in
whole or in part unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Board.
10. Plan
Controls. The
terms contained in the Plan are incorporated into and made a part of this Option
Agreement and this Option Agreement shall be governed by and construed in
accordance with the Plan. In the event of any actual or alleged conflict between
the provisions of the Plan and the provisions of this Option Agreement, the
provisions of the Plan shall be controlling and determinative.
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11. Successors. This
Option Agreement shall be binding upon any successor of the Company, in
accordance with the terms of this Option Agreement and the
Plan.
12. Severability. If any
one or more of the provisions contained in this Option Agreement are invalid,
illegal, or unenforceable, the other provisions of this Option Agreement will be
construed and enforced as if the invalid, illegal, or unenforceable provision
had never been included.
13. Notice. Notices
and communications under this Option Agreement must be in writing and either
personally delivered or sent by registered or certified United States mail,
return receipt requested, postage prepaid. Notices to the Company must be
addressed to:
First
Security Group, Inc.
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Attn:
Secretary
or any
other address designated by the Company in a written notice to the Optionee.
Notices to the Optionee will be directed to the address of the Optionee then
currently on file with the Company, or at any other address given by the
Optionee in a written notice to the Company.
14 Exercise
or Forfeiture as Required by Law. To the
extent required by law, in the event the capital of the Company or a financial
institution subsidiary of the Company falls below the minimum capital
requirements established from time to time by the applicable state or primary
federal regulator, such primary federal regulator may require that Options
issued under the Plan that are not exercised within a specific period of time be
cancelled and have no further force or effect,
IN
WITNESS WHEREOF, First Security Group, Inc., acting by and through its duly
authorized officers, has caused this Option Agreement to be executed, and the
Optionee has executed this Option Agreement, all as of the day and year first
above written.
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FIRST
SECURITY GROUP, INC. |
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By:
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Name: |
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Title: |
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OPTIONEE: |
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4
EXHIBIT
A
NOTICE OF
EXERCISE OF OPTION TO PURCHASE
COMMON
STOCK OF
FIRST
SECURITY GROUP, INC.
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Name:
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Address: |
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Date: |
First
Security Group, Inc.
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Attn:
Secretary
Re:
Exercise
of Incentive Stock Option
I elect
to purchase ____________ shares of Common Stock of First Security Group, Inc.
pursuant to the First Security Group, Inc. Incentive Stock Option Agreement
dated _____________________ and the Second Amended and Restated 1999 Long-Term
Incentive Plan of First Security Group, Inc. The purchase will take place on the
Exercise Date, which will be (i) as soon
as practicable following the date this notice and all other necessary forms and
payments are received by the Company, unless I specify a later date (not to
exceed 30 days following the date of this notice), or (ii) in the
case of a broker-assisted cashless exercise (as indicated below), the date of
this notice.
On or
before the Exercise Date (or, in the case of a broker-assisted cashless
exercise, on the settlement date following the Exercise Date), I will pay the
full exercise price in the form specified below (check one):
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[
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Cash
Only:
by delivering a check to First Security Group, Inc. for
$__________. |
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[
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Cash
and Shares:
by delivering a check to First Security Group, Inc. for $__________ for
the part of the exercise price. I will pay the balance of the exercise
price by delivering to the Company a stock certificate with my endorsement
for shares of Company common stock ("Stock") that I have owned for at
least six months. If the number of shares of Stock represented by such
stock certificate exceeds the number needed to pay the exercise price, the
Company will issue me a new stock certificate for the
excess. |
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[
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Shares
Only:
by delivering to the Company a stock certificate with my endorsement for
shares of Stock that I have owned for at least six months. If the number
of shares of Stock represented by such stock certificate exceeds the
number needed to pay the exercise price, the Company will issue me a new
stock certificate for the excess. |
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[
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Cash
From Broker:
by delivering the purchase price from __________________, a broker, dealer
or other "creditor" as defined by Regulation T issued by the Board of
Governors of the Federal Reserve System (the "Broker"). I authorize the
Company to issue a stock certificate in the number of shares indicated
above in the name of the Broker in accordance with instructions received
by the Company from the Broker and to deliver such stock certificate
directly to the Broker (or to any other party specified in the
instructions from the Broker) upon receiving the exercise price from the
Broker. |
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[
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Non-Qualified
Stock Option. I
hereby designate and agree that ____ shares of Stock being acquired
pursuant to this Notice of Exercise of Option to Purchase Common Stock of
First Security Group, Inc. (the "Notice") as having been acquired through
the exercise of a Non-Qualified Stock Option. All other shares of Stock,
if any, being acquired pursuant to this Notice shall be deemed to have
been acquired by me as an Incentive Stock Option.
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Please
deliver the stock certificate to me (unless I have chosen to pay the purchase
price through a Broker).
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Very
truly yours, |
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AGREED TO
AND ACCEPTED:
FIRST
SECURITY GROUP, INC.
By:
___________________________
Title:
__________________________
Number of
Option Shares
Exercised:
______________________
Number of
Option Shares
Remaining:
_____________________
Date:
__________________________