FORM OF FREEDOM BANCSHARES, INC. NON-QUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.3
FORM
OF
FREEDOM
BANCSHARES, INC.
THIS
AGREEMENT is made as of February
17, 2004 (the “Grant Date”), by and between FREEDOM BANCSHARES, INC (the
“Company”) and _______________ (the “Optionee”).
WITNESSETH
WHEREAS,
the Optionee performs services
as [a consultant][an organizer] for the
Company;
WHEREAS,
the Company desires to grant
to the Optionee a non-qualified 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 for
the Optionee’s services as [a consultant] [an organizer] for
the Company, 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
non-qualified stock option (the “Option”) to purchase all or any part of _____
shares (the “Option Shares”) of the Company’s $1.00 par value common stock (the
“Common Stock”). The exercise price for each share of Common Stock is $10.00 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 1.4 hereof).
(b) The
Option may be exercised with respect to all or any portion of the Option
Shares
at any time during the Option Period 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
(c) 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.
(d) Notwithstanding
any other provision of this Agreement, in the event that the capital of the
Company falls below the minimum requirements determined by the primary federal
regulator of the Company (the “Regulator”), the Regulator may direct the Company
to require the Optionee to exercise, or otherwise forfeit, the Option in
whole
or in part. If the Regulator gives such direction, the Company will
notify the Optionee within forty-five (45) days from the date the Regulator
notifies the Company 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 Company’s direction within twenty-one
(21) days of the Company’s notification to the Optionee, the Company may provide
for the cancellation of the Option.
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Exhibit
10.3
Upon
acceptance of such notice and receipt of payment in full of the Purchase
Price,
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.
1.4 Term
and Termination of Option. The term of the Option (the “Option Period”)
shall commence on the Grant Date and end on the tenth (10th) anniversary
of
the Grant Date. 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.
1.5 Vesting
Provisions. The Option
Shares
shall be fully vested as of the Grant Date.
1.6 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.
1.7 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.
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Exhibit
10.3
SECTION
2
RESTRICTIONS
ON TRANSFER OF OPTION SHARES
2.1 Restrictions
on Transfer. 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 his
Disability, by his personal representative) and after his death, only by
his
legatee or the executor of his estate.
2.2 Legend. 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 ARE SUBJECT TO CERTAIN RESTRICTIONS
ON
TRANSFER SET FORTH IN A NON-QUALIFIED STOCK OPTION AWARD DATED FEBRUARY
17,
2004. A COPY OF WHICH IS AVAILABLE FROM THE COMPANY.
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.
(b) If
the
Company shall be the surviving corporation in any merger, consolidation,
reorganization, extraordinary dividend, spin-off, or other change in capital
structure of the Company or its Common Stock, the Optionee shall be entitled
to
purchase 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 the transaction
would have been entitled to receive as a result of such transaction, and
a
corresponding adjustment, where appropriate, shall be made in the Exercise
Price. In the event of a Change in Control or other corporate
transaction pursuant to which the Company is not the surviving entity,
the
Company may provide for the assumption of the Option by the surviving entity
or
the substitution of a new option, adjusted in a manner similar to that
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 the
Change in Control in consideration of the payment to the Optionee of the
sum of
the difference between the then Fair Market Value of the Common Stock and
the
Exercise Price for each vested Option Share which has not been exercised
as of
the effective date of the Change in Control. 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.
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Exhibit
10.3
(c) The
existence of the Plan and 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 Georgia.
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 Headings. Section
headings used herein are for convenience of reference only and shall not
be
considered in construing this.
3.8 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.
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Exhibit
10.3
SECTION
4
DEFINITIONS
4.1 “Bank”
means Freedom Bancshares, Inc.
4.2 “Board
of Directors” means the board of directors of the Company.
4.3 “Change
in Control” means any one of the following events which may occur after the
Grant Date:
(a) the
acquisition by any individual, entity or “group”. within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as
amended,
(a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934) of voting securities
of
the Company or the Bank where such acquisition causes any such Person to
own
fifty percent (50%) or more of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors;
(b) within
any twelve-month period, the persons who were directors of the Company
or the
Bank immediately before the beginning of such twelve-month period (the
“Incumbent Directors”) shall cease to constitute at least a majority of the
Board of Directors; provided, that any director who was not a director
as of the
Grant Date shall be deemed to be an Incumbent Director if that director
was
elected to the Board of Directors by, or on the recommendation of or with
the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors; and provided further, that no director whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of directors of the Company shall be deemed
to
be an Incumbent Director;
(c) a
reorganization, merger or consolidation with respect to which the persons
who
were the stockholders of the Company or the Bank immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter,
own at
least fifty percent (50%) of the combined voting power entitled to vote
in the
election of directors of the reorganized, merged or consolidated company’s then
outstanding voting securities; or
(d) the
sale,
transfer or assignment of all or substantially all of the assets of the
Company
or the Bank to any third party.
4.4 “Disability”
has the same meaning as provided in the long-term disability plan or policy
maintained or, if applicable, most recently maintained, by the Company
or an
affiliate of the Company for the Optionee. If no long-term disability
plan or policy was ever maintained on behalf of the Optionee, Disability
shall
mean that condition described in Section 22(e)(3) of the Internal Revenue
Code
of 1986, as amended from time to time. In the event of a dispute, the
determination of Disability shall be made by the Board of Directors and
shall be
supported by advice of a physician competent in the area to which such
Disability relates.
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4.5
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“Fair
Market Value” with regard to a date
means:
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(a) the
price at which Common Stock shall have been sold on that date or the last
trading date immediately 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;
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Exhibit
10.3
(b) 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
(c) if
the 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 (12)
months
old, and (ii) the valuation methodology used in any such appraisal.
For
purposes of Paragraphs (a), (b) and (c) 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 method which the Company determines is reasonably
indicative of the fair market value.
IN
WITNESS WHEREOF, the parties have
executed this Agreement as of the date first above written.
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FREEDOM
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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Exhibit
10.3
EXHIBIT
1
NOTICE
OF EXERCISE OF
STOCK
OPTION TO PURCHASE
COMMON
STOCK OF
FREEDOM
BANCSHARES, INC.
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Name
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Address
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Date
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Freedom
Bancshares, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: Chief
Executive Officer
Re: Exercise
of Non-qualified Stock Option
Gentlemen:
Subject
to acceptance hereof by Freedom
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 Non-Qualified Stock Option Agreement
(the “Agreement”) dated as of February 17, 2004. 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
Freedom Bancshares, Inc.
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;
Exhibit
1 - Page 1 of 3
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;
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.
Exhibit
1 - Page 2 of 3
Exhibit
10.3
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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FREEDOM
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
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