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EXHIBIT 4.2
FORM OF
SOUTHFIRST BANCSHARES, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Option Agreement") is made and entered
into as of the ____ day of ________, ____, by and between SouthFirst Bancshares,
Inc. (the "Company") and __________________, an employee [a director] of [the
Company] [First Federal of the South, an Affiliate] [Pension & Benefit Financial
Services, Inc., an Affiliate] ("Participant").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has adopted that certain
SouthFirst Bancshares, Inc. 1998 Stock Option and Incentive Plan, as amended and
restated (the "Plan"), a copy of which is attached hereto as Exhibit "A" and
incorporated herein by reference. Pursuant to the terms of the Plan, the Board
of Directors has selected Participant to participate in the Plan and desires to
grant to Participant certain stock options to purchase shares of the Company's
authorized common stock ("Stock"), subject to the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises, agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. INCORPORATION OF PROVISIONS
This Option Agreement is subject to, and is to be construed in all
respects in a manner which is consistent with, the terms of the Plan, the
provisions of which are hereby incorporated by reference into this Option
Agreement. To the extent that any terms contained herein are contrary to, or
inconsistent with, the terms of the Plan, the terms of the Plan shall govern.
Unless specifically provided otherwise, all defined terms used in this Option
Agreement shall have the same meaning as in the Plan.
2. GRANT OF OPTION
Subject to the further terms and conditions of this Option Agreement,
Participant is hereby granted an incentive stock option to purchase _______
shares of Stock, effective as of the date first written above. This stock option
is intended to be [a Non-ISO] [an ISO].
3. MARKET VALUE OF STOCK
The Board of Directors has determined, in good faith and in its best
judgment, that the Market Value per share of Stock, as of the date the stock
option is granted pursuant to this Option Agreement, is $________.
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4. OPTION PRICE
The Board of Directors has determined that the price for each share of
Stock purchased under this Option Agreement shall be $________, the Market Value
per share of Stock.
5. EXPIRATION OF OPTIONS
The option to acquire Stock pursuant to this Option Agreement shall
expire (to the extent not previously fully exercised) upon the first to occur of
the following:
(a) __________ (the tenth anniversary of the Effective Date),
unless an ISO granted to a 10% holder, in which case __________ (the fifth
anniversary of the Effective Date);
(b) The date which is three months following the date upon which
Participant ceases Continuous Service with the Company, or any Affiliate,
otherwise than as a result of a Change in Control of the Company or
Participant's death, Permanent and Total Disability, Retirement, or termination
for Cause;
(c) The date upon which Participant ceases Continuous Service
with the Company, or any Affiliate, other than as a result of termination for
Cause, with respect to any portion of this option which is not then exercisable
on the date Participant ceases his employment with the Company;
(d) The date which is 60 days following the date upon which
Participant ceases to be employed by the Company, or any Affiliate, by reason of
a Change in Control of the Company;
(e) The date which is the second anniversary of the date upon
which Participant ceases to be employed by the Company, or any Affiliate, by
reason of Participant's death;
(f) The date which is the first anniversary of the date upon
which Participant ceases to be employed by the Company, or any Affiliate, by
reason of Participant's Permanent and Total Disability;
(g) The date which is six months following the date upon which
Participant ceases to be employed by the Company, or any Affiliate, by reason of
Participant's Retirement; or
(h) The date upon which Participant ceases to be employed by the
Company, or any Affiliate, by reason of Participant's termination for Cause.
6. EXERCISE OF OPTION
Unless options hereunder shall earlier lapse or expire pursuant to
Section 5 hereof, the option to acquire the aggregate number of ______ shares
under this option may be first exercised on the
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dates and with respect to the aggregate number of shares subject to this Option
Agreement as follows:
(a) One year from date of grant, _____ shares (20%);
(b) Two years from date of grant, an additional _____
shares (20%);
(c) Three years from date of grant, an additional _____
shares (20%);
(d) Four years from date of grant, an additional _____
shares (20%);
(e) Five years from date of grant, an additional _____
shares (20%).
To the extent such options become exercisable in accordance with the
foregoing, Participant may exercise the stock option granted hereunder, in whole
or in part, from time to time. The option exercise price may be paid by
Participant either in cash or by surrender of other shares of Stock of the
Company held by Participant. Participant, shall be given credit against the
option exercise price hereunder for such shares surrendered equal to the Market
Value on the day preceding exercise of the option.
7. MANNER OF EXERCISE
The stock option granted hereunder may be exercised by written notice
to the Company specifying the number of shares to be purchased and signed by
Participant or such other person who may be entitled to acquire stock under this
Option Agreement. If any such notice is signed by a person other than
Participant, such person shall also provide such other information and documenta
tion as the Committee may reasonably require to assure that such person is
entitled to acquire Stock under the terms of the Plan and this Option Agreement.
8. RESTRICTIONS ON TRANSFERABILITY
The stock option granted hereunder shall not be transferable by
Participant, otherwise than by will or by the laws of descent and distribution,
or pursuant to the terms of a "qualified domestic relations order" within the
meaning of Section 414(p) of the Code and the regulations and rulings thereunder
("QDRO"). Unless transferred pursuant to the terms of a QDRO, such stock option
shall be exercisable during Participant's lifetime only by Participant.
9. FURTHER RESTRICTIONS ON EXERCISE AND SALE OF STOCK
No portion of the stock option granted hereunder shall be exercisable
at any time during which there is not on file with the Securities and Exchange
Commission an effective registration statement covering the option shares on
Form S-8, or similar form promulgated by the Securities and Exchange Commission.
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Nothing contained in this section shall be construed to obligate the
Company to, or to grant any right to the holder of the stock option granted
hereunder to, cause the Company to file any registration statement; or, if any
such registration statement is filed, to prepare any additional prospectus, to
file any amendments to the registration statement, or to continue said
registration statement in effect.
If, at any time during which the stock option is otherwise exercisable
according to its terms, there is no effective Registration Statement on file
with the Securities and Exchange Commission covering the shares then acquirable
hereunder, the Committee may, in its sole discretion, permit the stock option to
be exercised by the holder, upon its satisfaction that the offer and sale of
such option shares to the option holder is exempt in fact from the registration
requirements of the Securities Act of 1933, as amended, and such state
securities laws as shall be applicable, and may condition such exercise upon its
receipt of such representations, factual assurances and legal opinions as it
shall deem necessary to determine and document the availability of any such
exemption and may further condition such exercise upon such undertakings by the
holder hereof or such restriction upon the transferability of the shares to be
acquired hereunder as it shall determine to be necessary to effectuate and
protect the claim to any such exemption.
10. REORGANIZATION AND RECAPITALIZATION
In the event that dividends are payable in Stock of the Company or in
the event there are splits, subdivisions or combinations of shares of Stock of
the Company, the number of shares available under the Plan shall be increased or
decreased proportionately, as the case may be, and the number of shares
deliverable upon the exercise thereafter of any option theretofore granted shall
be increased or decreased proportionately, as the case may be, without change in
the aggregate purchase price.
In case the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or in case the property or
stock of the Company is acquired by another corporation, or in case of a
separation, reorganization, recapitalization or liquidation of the Company, all
outstanding Awards shall be surrendered. With respect to each such surrendered
Award, the Committee shall determine, subject to the vesting requirements of
Sections 5 and 6 of this Option Agreement and Section 8(a) of the Plan, whether
the holder of the surrendered Award shall receive
(i) for each share then subject to an outstanding award, the number and
kind of Shares into which each outstanding Share (other than Shares
held by dissenting stockholders) is changed or exchanged, together with
an appropriate adjustment to the Exercise Price; or
(ii) a cash payment (from the Company or the successor corporation), in
an amount equal to the Market Value of the Shares subject to the Award
on the date of the Transaction, less the Exercise Price of the Award.
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Any adjustment made hereunder shall be made in such a manner as not to
constitute a modification, within the meaning of Section 424(h) of the Code.
11. AGREEMENT WITH RESPECT TO PRIOR OPTIONS
Participant hereby agrees to and approves the rescission and
cancellation of all stock options granted to Participant on __________ under the
Plan and the replacement of such stock options with a like number of stock
options granted under the Plan pursuant to this Option Agreement.
IN WITNESS WHEREOF, the Committee has caused this Option Agreement to
be executed by a duly authorized officer of the Company, and Participant has
executed this Option Agreement as of the date first above written.
SOUTHFIRST BANCSHARES, INC.
By:
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Title:
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ATTEST:
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Secretary or Assistant Secretary
"PARTICIPANT"
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