STOCK OPTION AGREEMENT
Exhibit
10.32
STOCK OPTION AGREEMENT dated December 15, 2006 between MACKINAC FINANCIAL CORPORATION (the
“Company”) and XXXXX X. XXXXXXX (the “Optionee”).
RECITALS:
A. Optionee is a currently serving as an officer/employee of the Company and the
Company has determined that Optionee’s continued service as an officer/employee of the
Company can have a significant effect on the future success of the Company.
B. The Company hereby grants to Optionee the option to purchase from the
Company ten thousand (10,000) shares of the Company’s Common Stock (the “Option Shares”)
at a purchase price per share equal to equal to 100% of the Fair Market Value (as defined in the
Plan) of each such share, which the parties agree to be ten and 65/100 dollars ($10.65) (the
“Exercise Price”). Such options are to be issued under and in accordance with the terms and
conditions of the Company’s 2000 Stock Incentive Plan (the “Plan”) and this Agreement.
C. The Directors of the Company have approved the grant to Optionee of the option
to purchase the Option Shares in accordance with the Plan and this Agreement.
IT IS HEREBY AGREED AS FOLLOWS:
1. Grant of Option: Effectiveness. Subject to the terms of the Plan and this
Agreement, the Company hereby grants and awards to Optionee the right and option to purchase
all or any of the Option Shares upon payment to the Company of the Exercise Price per share as
hereinafter provided.
2. Vesting. (a) The right and option to purchase 20% of the Option Shares shall
vest and be exercisable beginning on the day following the Closing under the Stock Purchase
Agreement and continuing through the balance of the Option Term (as hereinafter defined). The
options for the remaining 80% of the Option Shares shall vest and be exercisable in increments
as provided below as and when the Ten Day Trading Price (as hereinafter defined) for the
Company’s Common Stock shall equal or exceed one or more of the Target Prices during the
Pricing Periods specified below:
Exercise Price x 1.15 |
After the first year of the Option Term | 20 | % | |||||
Exercise Price x 1.30 |
After the second year of the Option Term | 20 | % | |||||
Exercise Price x 1.45 |
After the third year of the Option Term | 20 | % | |||||
Exercise Price x 1.45 |
After the fourth year of the Option Term | 20 | % | |||||
For purposes of this Agreement, the “Ten Day Trading Price” shall mean the closing price for
the Company’s Common Stock on the Nasdaq Small Cap market for any 10 consecutive days on which the
Nasdaq market system is open and available for trading. For purposes of making the foregoing
determination, if for any reason no shares of the Company’s Common Stock are traded on any day
that the Nasdaq market is open and available for trading, the closing price for such date shall be
the closing price on the first preceding day on which shares of the Company’s Common Stock were
traded.
(b) Notwithstanding the foregoing vesting schedule, but subject to the terms of Section 3, all
unvested options for Option Shares shall vest and become immediately exercisable upon: (i)
termination of the Employment Agreement by the Company for any reason other than Cause (as defined
in the Employment Agreement); (ii) Optionee’s Retirement (as defined in the Plan), or early
retirement or resignation with the consent of the Company as contemplated by Section 10(a) and (b)
of the Plan; (iii) the death or disability of the Optionee; or (iv) a Change of Control (as
defined in the Plan) of the Company.
3. Option Period. Subject to the terms of this Agreement (including Section 2), the
options may be exercised and Option Shares may be purchased at any time and from time to time
beginning on the first day after the date hereof and ending on and prior to the tenth anniversary
of the date hereof (the “Option Term”), subject to the following:
(a) Except as otherwise provided in this Section 3, in the event Optionee
ceases to remain in Service while this option is outstanding, the options then vested shall remain
exercisable until the earlier of (i) the last day of the 36th month after the month Service is
terminated, or (ii) the expiration of the Option Period; and
(b) Any vested and unexercised options shall expire at the time the Optionee’s
Service is terminated for Misconduct.
(c) Except for early retirement or resignation with the consent of the
Company as contemplated by Section 10(a) and (b) of the Plan, any unexercised options shall
expire at the time Optionee’s Service is voluntarily terminated by the Optionee.
(d) For purposes of this Section 3 and for all other purposes under this
Agreement:
(1) The Optionee shall be deemed to remain in “Service” for so long as
he continues to render periodic service to the Company or any parent or subsidiary of the
Company, whether as an employee or a non-employee member of the Board of Directors.
(2) “Misconduct” means the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure by the
Optionee of confidential information or trade secrets of the Company or any parent or
subsidiary of the Company, or any other intentional misconduct by such person adversely
affecting the business or affairs of the Company or any parent or subsidiary of the
Company in a material manner. The foregoing definition shall not be deemed to be
inclusive of all the acts or omissions which the Company or any parent or subsidiary of
the Company may consider as grounds for the removal or discharge of Optionee from
Service.
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4. Procedure for Exercise. Subject to conditions of this Agreement, the options
may
be exercised at any time and from time to time during the Option Period by delivering written
notice to the Company, signed by Optionee, an Authorized Transferee, or
post-death
representative, specifying the number of Option Shares to be purchased.
5. Payment of Option Price. The purchase price for the Option Shares shall be paid
in full in cash.
6. Transferability of Options. Except as otherwise provided in this Section, the
options shall not be sold, pledged, assigned, or transferred in any way, nor be assignable by
operation of law or be subject to execution, levy, attachment or similar process. Except as
provided in this Section, any attempted sale, pledge, assignment or other transfer contrary to
the
terms hereof, and any execution, levy, attachment or similar process, shall be null and void
and
without any effect. Notwithstanding the foregoing, the options shall, subject to the
conditions set
forth in this Section, be transferable by the Optionee by gift or other transfer that involves
no
payment of consideration to the Optionee to the Optionee’s spouse and/or the descendents or to
a
trust created primarily for the benefit of the Optionee, the Optionee’s spouse and/or the
Optionee’s descendents (“Authorized Transferee”). An Authorized Transferee shall have no
right to transfer the options. An Authorized Transferee shall succeed to all rights and
benefits
(except the right to further transfer the options) and be subject to all obligations,
conditions and
limitations of the Optionee. However, such rights and benefits (except the rights to further
transfer the options) and obligations, conditions and limitations shall be determined as if
the
Optionee continued to hold the options, and the provisions of this Option Agreement dealing
with termination of Service, Retirement, disability and death of an Optionee continue to refer
to
the Optionee regardless of whether the options are or are not transferred to an Authorized
Transferee. In order to transfer options, the Optionee must first give prior written notice
to the
Company stating the name, address and tax identification or social security number of the
proposed transferee and the relationship of the proposed transferee to the Optionee. The
option
may not be transferred if the transfer would constitute a violation of any applicable federal
or
state securities or other law or regulation.
7. Conformity with Plan. Except as otherwise provided herein, the options are
subject to all applicable provisions of the Plan which is incorporated herein by reference.
Any
matters not addressed herein shall be governed by the terms of the Plan.
8. Adjustments. The Company shall make appropriate and proportionate
adjustments to the number of Option Shares and the Exercise Price to reflect any stock
dividend,
stock split, or combination of shares, merger, consolidation, or other change in the
capitalization
of the Company, as provided in Section 13 of the Plan. In the event of any such adjustment,
all
new, substituted, or additional securities or other property to which Optionee is entitled
under the
options shall be included in the term “Option Shares.”
9. Postponement of Delivery of Shares. The Company, in its discretion, may
postpone the issuance or delivery of Option Shares upon any exercise of the options until
completion of any then pending registration of such shares under the Securities Act of 1933,
as
amended (“Securities Act”), covering the resale of such securities by Optionee.
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10. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with
respect to any Option Shares until the Optionee becomes the holder of record of such shares.
11. Further Actions. The parties agree to execute such further instruments and to take
such further actions as may be reasonably be required to carry out the intent of this
Agreement.
12. Notice. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the United States
Post Office, by registered or certified mail with postage and fees prepaid, addressed to the
other
party hereto at the address as such party may designate by written notice to the other party.
13. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company and, subject to the restrictions on
transfer
set forth herein, be binding upon and inure to the benefit of Optionee’s personal
representatives,
successors and permitted assigns.
14. Governing Law. This Agreement and all documents contemplated hereby, and all
remedies in connection therewith and all questions or transactions relating thereto, shall be
construed in accordance with and governed by the laws of the State of Michigan.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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| MACKINAC FINANCIAL CORPORATION: |
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| By: | 
|
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| Xxxx X. Xxxxxx | ||||
| Its: Chairman and Chief Executive Officer | ||||
| OPTIONEE: |
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|
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| Xxxxx X. Xxxxxxx | ||||
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