U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE) FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
-----------
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
-----------
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition Period from _________to_________
Commission File No. 333-86371
COASTAL BANKING COMPANY, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-1076099
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
36 Sea Island Parkway
Beaufort, SC 29902
(Address of principal executive
offices, including zip code)
(843) 522-1228
(Registrant's telephone number, including area code)
------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the date of this filing.
948,281 shares of common stock, $.01 par value
Page 1 of 37
EXHIBIT INDEX ON PAGE 2
<PAGE>
COASTAL BANKING COMPANY, INC.
Index
<TABLE>
PART I. FINANCIAL INFORMATION Page No.
-----------------------------
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -- June 30, 2000 and December 31, 1999.....................................3
Condensed Consolidated Statements of Income -- For the period September 29, 1998 (inception)
to June 30, 2000, six months ended June 30, 2000 and three months ended June 30, 2000..........................4
Condensed Consolidated Statement of Changes in Shareholders' Equity and Comprehensive Income --
Six months ended June 30, 2000.................................................................................5
Condensed Consolidated Statement of Cash Flows -- Six months ended June 30, 2000.................................6
Notes to Condensed Consolidated Financial Statements.............................................................7-8
Review by Independent Certified Public Accountants........................................................................9
Report on Review by Independent Certified Public Accountants.............................................................10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................11-15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders..............................................................16
Item 6. Exhibits and Reports on Form 8-K.................................................................................16
(a) Exhibits....................................................................................................16
(b) Reports on Form 8-K.........................................................................................16
</TABLE>
<PAGE>
COASTAL BANKING COMPANY, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents:
Cash and due from banks $ 243,800 $ 989,172
Federal funds sold 3,770,000 -
------------ ------------
Total 4,013,800 989,172
------------ ------------
Securities available-for-sale 481,396 6,527,012
Loans receivable: 4,008,096 -
Less allowance for loan losses (38,700) -
------------ ------------
Loans, net 3,969,396 -
Accrued interest receivable 20,278 25,236
Premises and equipment, net 2,389,546 972,042
Other assets 469,096 14,121
------------ ------------
Total assets $ 11,343,512 $ 8,527,583
============ ============
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Noninterest-bearing transaction accounts $ 725,238 $ -
Interest-bearing transaction accounts 2,105,255 -
------------ ------------
Total deposits 2,830,493 -
Accrued interest payable 5,656 -
Other liabilities 5,235 100
------------ ------------
Total liabilities 2,841,384 100
------------ ------------
Shareholders' Equity
Preferred stock, $.01par value; 10,000,000 shares - -
authorized and unissued
Common stock, $.01 par value; 10,000,000 shares authorized, 9,483 9,483
948,281 shares issued and outstanding
Capital surplus 8,724,366 8,778,690
Retained earnings (deficit) (232,023) (233,280)
Accumulated other comprehensive income (loss) 302 (27,410)
------------ ------------
Total 8,502,128 8,527,483
------------ ------------
Total liabilities and shareholders' equity $ 11,343,512 $ 8,527,583
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
COASTAL BANKING COMPANY, INC.
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the Period Six Months Three Months
September 29, Ended Ended
1998 (Inception) to June 30, 2000 June 30, 2000 June 30, 200
--------------------------------- ------------- -------------
<S> <C> <C> <C>
Interest income
Loans, including fees $ 65,806 $ 65,806 $ 65,806
Securities, taxable 177,367 128,124 38,678
Federal funds sold 90,536 77,909 57,252
--------- --------- ---------
Total income 333,709 271,839 161,736
--------- --------- ---------
Interest expense
Deposit accounts 10,022 10,022 10,022
Other interest expense 14,186 3,497 3,395
--------- --------- ---------
Total 24,208 13,519 13,417
--------- --------- ---------
Net interest income 309,501 258,320 148,319
Provision for loan losses 38,700 38,700 38,700
--------- --------- ---------
Net interest income after provision for loan losses 270,801 219,620 109,619
--------- --------- ---------
Other income
Service charges on deposit accounts 1,251 1,251 1,251
Other charges, commissions and fees 1,868 1,868 1,868
--------- --------- ---------
Total 3,119 3,119 3,119
--------- --------- ---------
Other expense
Salaries and benefits 319,216 202,665 130,278
Occupancy expense 25,377 19,727 18,427
Furniture and fixture expense 3,056 3,056 3,056
Other operating expenses 281,668 119,408 86,169
--------- --------- ---------
Total 629,317 344,856 237,930
--------- --------- ---------
Net income (loss) before income taxes (355,397) (122,117) (125,192)
Income tax expense (benefit) (123,374) (123,374) (123,374)
--------- --------- ---------
Net income (loss) $(232,023) $ 1,257 $ (1,818)
========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
COASTAL BANKING COMPANY, INC.
<TABLE>
<CAPTION>
Condensed Consolidated Statement of Shareholders' Equity and Comprehensive Income
For the Six Months Ended June 30, 2000
(Unaudited)
Accumulated
Common Stock Retained Other
------------------------------------- Earnings Comprehensive
Shares Amount Surplus (Deficit) Income Total
------- ------- -------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1999 948,281 $ 9,483 $ 8,778,690 $(233,280) $ (27,410) $8,527,483
Costs associated with
the issuance of stock (54,324) (54,324)
Net income for
the period 1,257 1,257
Other comprehensive
income, net of tax 27,712 27,712
----------
Comprehensive income 28,969
-------- -------- ------------ ---------- ------ ----------
Balance,
June 30, 2000 948,281 $ 9,483 $ 8,724,366 $(232,023) $ 302 $8,502,128
======== ======== ============ ========== ====== ==========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
COASTAL BANKING COMPANY, INC.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 2000
-------------
<S> <C>
Cash flows from operating activities:
Net income $ 1,257
Adjustments to reconcile net income to net cash (used) provided by
operating activities:
Provision for loan loss 38,700
Amortization less accretion on investments (114,890)
Depreciation and amortization 8,273
(Increase) decrease in interest receivable 4,958
(Increase) decrease on other assets (385,429)
Increase (decrease) in interest payable 5,656
Increase (decrease) in other liabilities 5,135
------------
Net cash (used) provided by operating activities (436,340)
------------
Cash flows from investing activities:
Purchases of securities available-for-sale (13,891,328)
Maturities of securities available-for-sale 20,010,000
Net increase in loans to customers (4,008,096)
Purchases of premises and equipment (1,425,777)
------------
Net cash provided by investing activities 684,799
------------
Cash flows from financing activities:
Net increase in demand deposits, interest-bearing transaction accounts 2,030,961
and savings accounts
Net increase in certificates of deposit and other time deposits 799,532
Stock issuance costs (54,324)
------------
Net cash provided by financing activities 2,776,169
------------
Net increase in cash and cash equivalents 3,024,628
Cash and cash equivalents, beginning of period 989,172
------------
Cash and cash equivalents, end of period $ 4,013,800
============
Cash paid during the period for:
Income taxes $ -
Interest $ 7,863
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
COASTAL BANKING COMPANY, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
Coastal Banking Company, Inc. was organized in September 1998 to organize and
own all of the common stock of Lowcountry National Bank. The Company issued
stock through an initial public stock offering that closed on December 2, 1999.
The Bank opened for business on May 10, 2000.
On May 9, 2000, the close of the developmental stage period, the Company had the
following assets and liabilities:
<TABLE>
<CAPTION>
<S> <C>
Cash and cash equivalents $ 6,693,462
Premises and equipment 1,980,179
Borrowings (375,000)
Common stock subscription proceeds, net of $748,961 expenses of offering (8,733,849)
-----------
Net pre-operating expenses $ (435,208)
===========
</TABLE>
Accordingly, the accompanying condensed statements of income, cash flows, and
shareholders' equity reflect a portion of the development stage period (from
January 1, 2000 through May 9, 2000). The period of the development stage from
September 29, 1998 through December 31, 1999 was audited by our independent
auditors and that financial information is included on the 1999 Form 10K.
The accompanying financial statements have been prepared in accordance with the
requirements for interim financial statements and, accordingly, they are
condensed and omit disclosures which would substantially duplicate those
contained in the most recent annual report to shareholders on Form 10K. The
financial statements as of June 30, 2000 and for the interim period ended June
30, 2000 are unaudited and, in the opinion of management, include all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation. The financial information as of December 31, 1999 has been
derived from the audited financial statements as of that date. For further
information, refer to the financial statements and the notes included in Coastal
Banking Company, Inc.'s 1999 Form 10K.
Note 2 - Comprehensive Income
The following table sets forth the amounts of other comprehensive income
included in equity along with the related tax effect for the three and six month
periods ended June 30, 2000:
<TABLE>
<CAPTION>
Pre-tax Amount (Expense) Benefit Net-of-tax Amount
-------------- ----------------- -----------------
<S> <C> <C> <C>
For the six months ended June 30, 2000:
Unrealized gains (losses) on available-for-sale securities:
Net unrealized holding gains (losses) on securities $ 41,072 $ (13,964) $ 27,108
available-for-sale arising in 2000
Plus: reclassification adjustment for gains (losses) - - -
realized in net income
--------- ---------- --------
Net unrealized gains (losses) on securities 41,072 (13,964) 27,108
--------- ---------- --------
Other comprehensive income $ 41,072 $ (13,964) $ 27,108
========= ========== ========
</TABLE>
7
<PAGE>
COASTAL BANKING COMPANY, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2 - Comprehensive Income -- continued
<TABLE>
<CAPTION>
Pre-tax Amount (Expense) Benefit Net-of-tax Amount
-------------- ----------------- -----------------
<S> <C> <C> <C>
For the three months ended June 30, 2000:
Unrealized gains (losses) on available-for-sale securities:
Net unrealized holding gains (losses) on securities $ 35,992 $ (12,237) $ 23,755
available-for-sale arising in 2000
Plus: reclassification adjustment for gains (losses) - - -
realized in net income
--------- ---------- ---------
Net unrealized gains (losses) on securities 35,992 (12,237) 23,755
--------- ---------- ---------
Other comprehensive income $ 35,992 $ (12,237) $ 23,755
========= ========== ========
</TABLE>
Accumulated other comprehensive income consists solely of the unrealized gain
(loss) on securities available-for-sale, net of the deferred tax effects.
8
<PAGE>
COASTAL BANKING COMPANY, INC.
Review by Independent Certified Public Accountants
--------------------------------------------------
Tourville, Simpson and Caskey, L.L.P., the Company's independent certified
public accountants, have made a limited review of the financial data as of June
30, 2000, and for the three and six month periods ended June 30, 2000 and 1999
presented in this document, in accordance with standards established by the
American Institute of Certified Public Accountants.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
9
<PAGE>
COASTAL BANKING COMPANY, INC.
Report on Review by Independent Certified Public Accountants
------------------------------------------------------------
The Board of Directors
Coastal Banking Company, Inc.
Beaufort, South Carolina
We have reviewed the accompanying condensed consolidated balance sheet of
Coastal Banking Company, Inc. and subsidiary (the Company) as of June 30, 2000,
the related condensed consolidated statements of income for the three and six
month periods ended June 30, 2000, the related condensed consolidated statement
of changes in shareholders' equity and comprehensive income for the six month
period ended June 30, 2000, and the related condensed consolidated statements of
cash flows for the six month period ended June 30, 2000. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1999, and the
related consolidated statements of income, changes in shareholders' equity and
comprehensive income, and cash flows for the year then ended (not presented
herein); and, in our report dated March 9, 2000, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1999, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
TOURVILLE, SIMPSON AND CASKEY,
Columbia, South Carolina L.L.P.
August 8, 2000
10
<PAGE>
COASTAL BANKING COMPANY, INC.
Item 2. Management's Discussion and Analysis of Financial Condition
-------------------------------------------------------------------
The following is a discussion of the Company's financial condition as of June
30, 2000 compared to December 31, 1999, and the results of operations for the
three and six months ended June 30, 2000. It should be understood that the
discussion is based on the Bank's opening for business on May 10, 2000. These
comments should be read in conjunction with the Company's condensed financial
statements and accompanying footnotes appearing in this report. This report
contains "forward-looking statements" relating to, without limitation, future
economic performance, plans and objectives of management for future operations,
and projections of revenues and other financial items that are based on the
beliefs of the Company's management, as well as assumptions made by and
information currently available to the Company's management. The words "expect",
"estimate", "anticipate", and "believe", as well as similar expressions, are
intended to identify forward-looking statements. The Company's actual results
may differ materially from the results discussed in the forward-looking
statements, and the Company's operating performance each quarter is subject to
various risks and uncertainties that are discussed in detail in the Company's
filings with the Securities and Exchange Commission.
Results of Operations
---------------------
Net Interest Income
-------------------
Net interest income for the six months ended June 30, 2000 was $258,320.
Interest income for the period totaled $271,839. The majority of this interest
was derived from investment securities and federal funds sold. Funds from the
stock offering were invested in securities and federal funds until the Bank
opened for business on May 10, 2000. Interest income was offset slightly by
interest expense of $13,519 for the six months ended June 30, 2000.
Net interest income for the three months ended June 30, 2000 was $148,319.
Interest income for the period totaled $161,736. Of this amount, $95,930 was
derived from interest on securities and federal funds sold. Interest on loans,
including fees, totaled $65,806 for the three months ended June 30, 2000.
Interest income was partially offset by interest expense of $13,417 for the
three months ended June 30, 2000.
Provision and Allowance for Loan Losses
---------------------------------------
The provision for loan losses is the charge to operating earnings that
management believes is necessary to maintain the allowance for possible loan
losses at an adequate level. For the six and three months ended June 30, 2000,
the provision charged to expense was $38,700. The allowance for loan losses is
0.97% of total loans at June 30, 2000. There are risks inherent in making all
loans, including risks with respect to the period of time over which loans may
be repaid, risks resulting from changes in economic and industry conditions,
risks inherent in dealing with individual borrowers, and, in the case of a
collateralized loan, risks resulting from uncertainties about the future value
of the collateral. The Company is currently funding the allowances for loan
losses at approximately 1% of total loans. The Company anticipates maintaining
an allowance for loan losses based on, among other things, historical
experience, an evaluation of economic conditions, and regular reviews of
delinquencies and loan portfolio quality. Management's judgment about the
adequacy of the allowance is based upon a number of assumptions about future
events, which it believes to be reasonable, but which may not prove to be
accurate. Thus, there is a risk that charge-offs in future periods could exceed
the allowance for loan losses or that substantial additional increases in the
allowance for loan losses could be required. Additions to the allowance for loan
losses would result in a decrease of the Company's net income and, possibly, its
capital.
Noninterest Income
------------------
Noninterest income for the six months ended June 30, 2000 totaled $3,119. This
amount was comprised of $1,251 in income from service charges on deposit
accounts and $1,868 in other income.
Noninterest income for the three months ended June 30, 2000 was the same as that
for the six months ended June 30, 2000.
11
<PAGE>
COASTAL BANKING COMPANY, INC.
Item 2. Management's Discussion and Analysis of Financial Condition -- continued
-------------------------------------------------------------------
Noninterest Expense
-------------------
Noninterest expense for the six months ended June 30, 2000 was $344,856. This
amount was comprised primarily of salaries and benefits totaling $202,665. The
Company employed its three senior officers for the entire period and began
hiring additional employees to staff the Bank in April. Other operating expenses
were also a significant amount of other operating expenses, totaling $119,408
for the six months ended June 30, 2000. This amount includes expenses associated
with the organization and formation of the Bank, including professional fees.
Noninterest expense for the three months ended June 30, 2000 totaled $237,930.
This was primarily attributable to salaries and benefits, which totaled $130,278
for the period. The Company had employed a full staff by May 1, 2000 for the
Bank's opening on May 10, 2000. In addition, other operating expenses totaled
$86,169 for the three months ended June 30, 2000. This includes expenses
associated with the opening of the Bank, including advertising costs, which
totaled $26, 772.
Income Taxes
------------
An income tax benefit of $123,374 was recorded during the six months ended June
30, 2000. This benefit was recorded on June 30, 2000 after the Bank opened for
business on May 10, 2000. The benefit was based on the net loss before taxes for
the period September 29, 1998 (inception) to June 30, 2000, which totaled
$355,397. This represents an effective tax rate of 34.71%. This benefit will be
reversed as the Bank becomes profitable.
The income tax benefit recorded for the six months ended June 30, 2000 was the
same benefit recorded during the three months ended June 30, 2000.
Net Income (Loss)
-----------------
The combination of the above factors resulted in net income for the period of
$1,257. As discussed in income taxes, an income tax benefit of $123,374 was
recorded at June 30, 2000. This benefit was based on the cumulative loss since
the Company's inception on September 29, 1998. The net loss before taxes for the
cumulative period (through June 30, 2000) was $355,397. The net loss before
taxes for the six months ended June 30, 2000 was $122,117. The net loss is
primarily a result of expenses incurred during the organizational period,
including salaries and other operating expenses.
For the three months ended June 30, 2000, the Company incurred a net loss of
$1,818. As discussed above, an income tax benefit of $123,374 was recorded at
June 30, 2000. The net loss before income taxes for the three months ended June
30, 2000 was $125,192. This loss consisted of organizational expenses up through
the Bank's opening on May 10, 2000, as well as costs associated with opening the
Bank, such as advertising.
Assets and Liabilities
----------------------
As of June 30, 2000, total assets were $11,343,512. Loans comprised the largest
amount of total assets, which totaled $4,008,096 on June 30, 2000. Federal funds
sold totaled $3,770,000 at June 30, 2000. This amount represents a portion of
the proceeds from the stock offering which are being invested in federal funds
until funds are invested in loans. The remaining proceeds were invested in
securities. Total deposits at June 30, 2000 were $2,830,493.
Securities Available-for-Sale
-----------------------------
Securities available-for-sale totaled $481,396 at June 30, 2000. This consisted
of a U.S. Government Agency bond.
12
<PAGE>
COASTAL BANKING COMPANY, INC.
Item 2. Management's Discussion and Analysis of Financial Condition -- continued
-------------------------------------------------------------------
Premises and Equipment
----------------------
Premises and equipment, net of depreciation, totaled $2,389,546 at June 30,
2000. The increase of $1,417,504 from the December 31, 1999 amount of $972,042
relates to the renovation of the corporate headquarters and the purchase of
furniture and equipment for the headquarters.
Loans
-----
Gross loans totaled $4,008,096 at June 30, 2000. Loans were comprised primarily
of real estate mortgage loans, which totaled $2,036,677. Balance within the
major loans receivable categories as of June 30, 2000 is as follows:
June 30,
2000
---------
Real estate - construction $ -
Real estate - mortgage 2,036,677
Commercial and industrial 1,600,486
Consumer and other 370,933
-------------
$ 4,008,096
=============
Risk Elements in the Loan Portfolio
-----------------------------------
The Bank commenced operations on May 10, 2000. There were no loans considered to
be a risk element in the loan portfolio at June 30, 2000.
Activity in the Allowance for Loan Losses is as follows:
June 30,
2000
------------
Balance, January 1, $ -
Provision for loan losses for the period 38,700
Net loans (charged off) recovered for the period -
-------------
Balance, end of period $ 38,700
=============
Gross loans outstanding, end of period $ 4,008,096
Allowance for loan losses to loans outstanding 0.97%
13
<PAGE>
COASTAL BANKING COMPANY, INC.
Item 2. Management's Discussion and Analysis of Financial Condition - continued
-------------------------------------------------------------------
Deposits
--------
Total deposits at June 30, 2000 were $2,830,493. Savings deposits, which totaled
$965,511, comprised the largest amount of deposits.
Balances within the major deposit categories as of June 30, 2000 are as follows:
June 30,
2000
--------
Noninterest-bearing demand deposits $ 725,238
Interest-bearing demand deposits 340,212
Savings deposits 965,511
Certificates of deposit $100,000 and over 205,482
Other time deposits 594,050
-------
$ 2,830,493
=========
Liquidity
---------
Liquidity needs are met by the Company through scheduled maturities of loans and
investments on the asset side and through pricing policies on the liability side
for interest-bearing deposit accounts. The level of liquidity is measured by the
loan-to-total borrowed funds ratio, which was at 141.60% at June 30, 2000.
The Company also has obtained lines of credit available with correspondent banks
to purchase federal funds for periods from one to fourteen days. At June 30,
2000, unused lines of credit totaled $1,500,000.
Capital Resources
-----------------
Total shareholders' equity decreased from $8,527,483 at December 31, 1999 to
$8,502,128 at June 30, 2000. This decrease was primarily attributable to costs
relating to the issuance of stock totaling $54,324, which was charged against
capital surplus. This charge was partially offset by net income for the period
of $1,257 and the change in unrealized loss on securities available-for-sale of
$27,712.
Bank holding companies, such as the Company, and their banking subsidiaries are
required by banking regulators to meet certain minimum levels of capital
adequacy, which are expressed in the form of certain ratios. Capital is
separated into Tier 1 capital (essentially common shareholders' equity less
intangible assets) and Tier 2 capital (essentially the allowance for loan losses
limited to 1.25% of risk-weighted assets). The first two ratios, which are based
on the degree of credit risk in the Company's assets, provide the weighting of
assets based on assigned risk factors and include off-balance sheet items such
as loan commitments and stand-by letters of credit. The ratio of Tier 1 capital
to risk-weighted assets must be at least 4.0% and the ratio of total capital
(Tier 1 capital plus Tier 2 capital) to risk-weighted assets must be at least
8.0%. The capital leverage ratio supplements the risk-based capital guidelines.
14
<PAGE>
COASTAL BANKING COMPANY, INC.
Item 2. Management's Discussion and Analysis of Financial Condition -- continued
-------------------------------------------------------------------
Capital Resources -- continued
-----------------
Banks and bank holding companies are required to maintain a minimum ratio of
Tier 1 capital to adjusted quarterly average total assets of 3.0%.
The following table summarizes the Company's risk-based capital at June 30,
2000:
Shareholders' equity $ 8,501,826
Less: intangibles -
--------------
Tier 1 capital 8,501,826
Plus: allowance for loan losses (1) 38,700
--------------
Total capital $ 8,540,526
==============
Risk-weighted assets $ 6,915,249
==============
Risk based capital ratios
Tier 1 capital (to risk-weighted assets) 122.94%
Total capital (to risk-weighted assets) 123.50%
Tier 1 capital (to total average assets) 170.65%
(1) limited to 1.25% of risk-weighted assets
Regulatory Matters
------------------
From time to time, various bills are introduced in the United States Congress
with respect to the regulation of financial institutions. Certain of these
proposals, if adopted, could significantly change the regulation of banks and
the financial services industry. The Company cannot predict whether any of these
proposals will be adopted or, if adopted, how these proposals would affect the
Company.
15
<PAGE>
COASTAL BANKING COMPANY, INC.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------
On May 23, 2000, the Company held its Annual Meeting of Shareholders for the
purpose of:
a.) electing five individuals to serve as class I directors of the
Company until the Annual Meeting of Shareholders in 2003; and
b.) to approve the Company's 2000 Stock Incentive Plan.
Under the first proposal, the five nominees for director received the number
affirmative votes of shareholders required for such nominee's election in
accordance with the Bylaws of the Company. The following is a list of the five
nominees for directors:
Marjorie Trask Gray, DMD, Dennis O. Green, CPA, J. Phillip Hodges, Jr., Randolph
C. Kohn, and Ladson F. Howell.
Of the 948,281 outstanding shares of the Company, 925,761 shares were voted for
each director, 1,000 shares withheld authority regarding the election. There
were no votes against or broker nonvotes.
Under the second proposal, the 2000 Stock Incentive Plan received enough
affirmative votes for approval.
Of the 948,281 outstanding shares of the Company, 440,205 shares were voted for,
14,715 shares were voted against, and 3,900 shares were voted as abstentions.
There were no withheld votes or broker nonvotes.
Item 6. Exhibits and Reports on Form 8-K
----------------------------------------
(a) Exhibits
10.1 2000 Stock Incentive Plan
27.1 Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter ended June 30, 2000.
Items 1, 3, and 5 are not applicable.
16
<PAGE>
COASTAL BANKING COMPANY, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
By: /s/ RANDOLPH C. KOHN
--------------------
Randolph C. Kohn
President & Chief Executive Officer
Date: August 11, 2000 By: /s/ CHARLIE T. LOVERING, JR.
----------------------------
Charlie T. Lovering, Jr.
Chief Financial Officer
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EXHIBIT 10.1
COASTAL BANKING COMPANY, INC.
2000 STOCK INCENTIVE PLAN
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COASTAL BANKING COMPANY, INC.
2000 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS........................................................1
ARTICLE 2 THE PLAN...........................................................3
2.1 Name..................................................................3
2.2 Purpose...............................................................3
2.3 Effective Date........................................................3
ARTICLE 3 PARTICIPANTS.......................................................3
ARTICLE 4 ADMINISTRATION.....................................................4
4.1 Duties and Powers of the Committee....................................4
4.2 Interpretation; Rules.................................................4
4.3 No Liability..........................................................4
4.4 Majority Rule.........................................................4
4.5 Company Assistance....................................................4
ARTICLE 5 SHARES OF STOCK SUBJECT TO PLAN....................................4
5.1 Limitations...........................................................4
5.2 Antidilution..........................................................5
ARTICLE 6 OPTIONS............................................................6
6.1 Types of Options Granted..............................................6
6.2 Option Grant and Agreement............................................6
6.3 Optionee Limitations..................................................6
6.4 $100,000 Limitation...................................................6
6.5 Exercise Price........................................................7
6.6 Exercise Period.......................................................7
6.7 Option Exercise.......................................................7
6.8 Reload Options........................................................7
6.9 Nontransferability of Option..........................................8
6.10 Termination of Employment or Service..................................8
6.11 Employment Rights.....................................................8
6.12 Certain Successor Options.............................................8
6.13 Effect of a Corporate Transaction.....................................8
6.14 Forfeiture by Order of Regulatory Agency..............................8
ARTICLE 7 STOCK CERTIFICATES.................................................9
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ARTICLE 8 TERMINATION AND AMENDMENT..........................................9
8.1 Termination and Amendment.............................................9
8.2 Effect on Optionee's Rights...........................................9
ARTICLE 9 RELATIONSHIP TO OTHER COMPENSATION PLANS...........................9
ARTICLE 10 MISCELLANEOUS.....................................................10
10.1 Replacement or Amended Grants........................................10
10.2 Forfeiture for Competition...........................................10
10.3 Leave of Absence.....................................................10
10.4 Plan Binding on Successors...........................................10
10.5 Headings, etc., No Part of Plan......................................10
10.6 Section 16 Compliance................................................10
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COASTAL BANKING COMPANY, INC.
2000 STOCK INCENTIVE PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings unless
the context clearly indicates to the contrary:
"Board" shall mean the Board of Directors of the Company.
"Cause" (i) with respect to the Company or any subsidiary which employs
the recipient of an Option (the "recipient") or for which such recipient
primarily performs services, the commission by the recipient of an act of fraud,
embezzlement, theft or proven dishonesty, or any other illegal act or practice
(whether or not resulting in criminal prosecution or conviction), or any act or
practice which the Committee shall, in good faith, deem to have resulted in the
recipient's becoming unbondable under the Company's or the subsidiary's fidelity
bond; (ii) the willful engaging by the recipient in misconduct which is deemed
by the Committee, in good faith, to be materially injurious to the Company or
any subsidiary, monetarily or otherwise, including, but not limited, improperly
disclosing trade secrets or other confidential or sensitive business information
and data about the Company or any subsidiaries and competing with the Company or
its subsidiaries, or soliciting employees, consultants or customers of the
Company in violation of law or any employment or other agreement to which the
recipient is a party; or (iii) the willful and continued failure or habitual
neglect by the recipient to perform his or her duties with the Company or the
subsidiary substantially in accordance with the operating and personnel policies
and procedures of the Company or the subsidiary generally applicable to all
their employees. For purposes of this Plan, no act or failure to act by the
recipient shall be deemed be "willful" unless done or omitted to be done by
recipient not in good faith and without reasonable belief that the recipient's
action or omission was in the best interest of the Company and/or the
subsidiary. Notwithstanding the foregoing, if the recipient has entered into an
employment agreement that is binding as of the date of employment termination,
and if such employment agreement defines "Cause," then the definition of "Cause"
in such agreement shall apply to the recipient in this Plan. "Cause" under
either (i), (ii), or (iii) shall be determined by the Committee.
"Code" shall mean the United States Internal Revenue Code of 1986,
including effective date and transition rules (whether or not codified). Any
reference herein to a specific section of the Code shall be deemed to include a
reference to any corresponding provision of future law.
"Committee" shall mean a committee of at least two Directors appointed
from time to time by the Board, having the duties and authority set forth herein
in addition to any other authority granted by the Board. In selecting the
Committee, the Board shall consider (i) the benefits under Section 162(m) of the
Code of having a Committee composed of "outside directors" (as that term is
defined in the Code) for certain grants of Options to highly compensated
executives, and (ii) the benefits under Rule 16b-3 of having a Committee
composed of either the entire Board or a Committee of at least two Directors who
are Non-Employee Directors for Options granted to or held by any Section 16
Insider. At any time that the Board shall not have appointed a committee as
described above, any reference herein to the Committee shall mean the Board.
"Company" shall mean Coastal Banking Company, Inc., a South Carolina
corporation.
"Corporate Transaction" shall mean the occurrence of any of the
following events:
(i) a merger or consolidation in which securities possessing more
than 50% of the total combined voting power of the Company's
outstanding securities are transferred to a person or persons
different from the persons holding those securities
immediately prior to such transaction;
(ii) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete
liquidation or dissolution of the Company; or
(iii) the grant of any bank regulatory approval (or notice of no
disapproval) for permission to acquire control of the Company
or any of its banking subsidiaries.
"Director" shall mean a member of the Board and any person who is an
advisory or honorary director of the Company if such person is considered a
director for the purposes of Section 16 of the Exchange Act, as determined
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by reference to such Section 16 and to the rules, regulations, judicial
decisions, and interpretative or "no-action" positions with respect thereto of
the Securities and Exchange Commission, as the same may be in effect or set
forth from time to time.
"Employee" shall mean a person who constitutes an employee of the
Company as such term is defined in the instructions to the Form S-8 Registration
Statement under the Securities Act of 1933, and also includes non-employees to
whom an offer of employment has been extended.
"Exchange Act" shall mean the Securities Exchange Act of 1934. Any
reference herein to a specific section of the Exchange Act shall be deemed to
include a reference to any corresponding provision of future law.
"Exercise Price" shall mean the price at which an Optionee may purchase
a share of Stock under a Stock Option Agreement.
"Fair Market Value" on any date shall mean (i) the closing sales price
of the Stock, regular way, on such date on the national securities exchange
having the greatest volume of trading in the Stock during the thirty-day period
preceding the day the value is to be determined or, if such exchange was not
open for trading on such date, the next preceding date on which it was open;
(ii) if the Stock is not traded on any national securities exchange, the average
of the closing high bid and low asked prices of the Stock on the
over-the-counter market on the day such value is to be determined, or in the
absence of closing bids on such day, the closing bids on the next preceding day
on which there were bids; or (iii) if the Stock also is not traded on the
over-the-counter market, the fair market value as determined in good faith by
the Board or the Committee based on such relevant facts as may be available to
the Board, which may include opinions of independent experts, the price at which
recent sales have been made, the book value of the Stock, and the Company's
current and future earnings.
"Incentive Stock Option" shall mean an option to purchase any stock of
the Company, which complies with and is subject to the terms, limitations, and
conditions of Section 422 of the Code and any regulations promulgated with
respect thereto.
"Non-Employee Director" shall have the meaning set forth in Rule 16b-3
under the Exchange Act, as the same may be in effect from time to time, or in
any successor rule thereto, and shall be determined for all purposes under the
Plan according to interpretative or "no-action" positions with respect thereto
issued by the Securities and Exchange Commission.
"Officer" shall mean a person who constitutes an officer of the Company
for the purposes of Section 16 of the Exchange Act, as determined by reference
to such Section 16 and to the rules, regulations, judicial decisions, and
interpretative or "no-action" positions with respect thereto of the Securities
and Exchange Commission, as the same may be in effect or set forth from time to
time.
"Option" shall mean an option, whether or not an Incentive Stock
Option, to purchase Stock granted pursuant to the provisions of Article VI
hereof.
"Optionee" shall mean a person to whom an Option has been granted
hereunder.
"Parent" shall mean any corporation (other than the Company or a
Subsidiary) in an unbroken chain of corporations ending with the Company if, at
the time of the grant (or modification) of the Option, each of the corporations
other than the Company or a Subsidiary owns stock possessing 50% or more of the
total combined voting power of the classes of stock in one of the other
corporations in such chain.
"Permanent and Total Disability" shall have the same meaning as given
to that term by Code Section 22(e)(3) and any regulations or rulings promulgated
thereunder.
"Plan" shall mean the Coastal Banking Company, Inc. 2000 Stock
Incentive Plan, the terms of which are set forth herein.
"Purchasable" shall refer to Stock which may be purchased by an
Optionee under the terms of this Plan on or after a certain date specified in
the applicable Stock Option Agreement.
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"Qualified Domestic Relations Order" shall have the meaning set forth
in the Code or in the Employee Retirement Income Security Act of 1974, or the
rules and regulations promulgated under the Code or such Act.
"Reload Option" shall have the meaning set forth in Section 6.8 hereof.
"Section 16 Insider" shall mean any person who is subject to the
provisions of Section 16 of the Exchange Act, as provided in Rule 16a-2
promulgated pursuant to the Exchange Act.
"Stock" shall mean the Common Stock, par value $0.01 per share, of the
Company or, in the event that the outstanding shares of Stock are hereafter
changed into or exchanged for shares of a different stock or securities of the
Company or some other entity, such other stock or securities.
"Stock Option Agreement" shall mean an agreement between the Company
and an Optionee under which the Optionee may purchase Stock hereunder, a sample
form of which is attached hereto as Exhibit A (which form may be varied by the
Committee in granting an Option).
"Subsidiary" shall mean any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
grant (or modification) of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as "Coastal Banking Company, Inc.
2000 Stock Incentive Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, its Subsidiaries, and its shareholders by affording Employees and
Directors of the Company and its Subsidiaries an opportunity to acquire or
increase their proprietary interests in the Company. The objective of the
issuance of the Options is to promote the growth and profitability of the
Company and its Subsidiaries because the Optionees will be provided with an
additional incentive to achieve the Company's objectives through participation
in its success and growth and by encouraging their continued association with or
service to the Company.
2.3 Effective Date. The Plan shall become effective on _____________
provided, however, that if the shareholders of the Company have not approved the
Plan on or prior to the first anniversary of such effective date, then all
options granted under the Plan shall be non-Incentive Stock Options. If, at the
time of any amendment to the Plan, shareholder approval is required by the Code
for Incentive Stock Options and such shareholder approval has not been obtained
(or is not obtained within 12 months thereof), any Incentive Stock Options
issued under the Plan shall automatically become options which do not qualify as
Incentive Stock Options.
ARTICLE III
PARTICIPANTS
The class of persons eligible to participate in the Plan shall consist
of all Directors and Employees of the Company or any Subsidiary.
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ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. The Plan shall be administered
by the Committee. The Committee shall select one of its members as its Chairman
and shall hold its meetings at such times and places as it may determine. The
Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it may deem necessary. The
Committee shall have the power to act by unanimous written consent in lieu of a
meeting, and to meet telephonically. In administering the Plan, the Committee's
actions and determinations shall be binding on all interested parties. The
Committee shall have the power to grant Options in accordance with the
provisions of the Plan and may grant Options singly, in combination, or in
tandem. Subject to the provisions of the Plan, the Committee shall have the
discretion and authority to determine those individuals to whom Options will be
granted and whether such Options shall be accompanied by the right to receive
Reload Options, the number of shares of Stock subject to each Option, such other
matters as are specified herein, and any other terms and conditions of a Stock
Option Agreement. The Committee shall also have the discretion and authority to
delegate to any Officer its power to grant Options under the Plan to Employees,
but not to Employees who are Officers or Directors. To the extent not
inconsistent with the provisions of the Plan, the Committee may give a Optionee
an election to surrender an Option in exchange for the grant of a new Option,
and shall have the authority to amend or modify an outstanding Stock Option
Agreement, or to waive any provision thereof, provided that the Optionee
consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions of the
Plan, the Committee also shall have complete authority to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement, and to make all other
determinations necessary or advisable for the administration of the Plan,
including, without limitation, the amending or altering of the Plan and any
Options granted hereunder as may be required to comply with or to conform to any
federal, state, or local laws or regulations. If an option granted under the
Plan is intended to be an Incentive Stock Option but does not qualify as an
Incentive Stock Option for any reason, then the option granted shall remain
valid but shall be a non-Incentive Stock Option.
4.3 No Liability. Neither any member of the Board nor any member of the
Committee shall be liable to any person for any act or determination made in
good faith with respect to the Plan or any Option granted hereunder.
4.4 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present, or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of the
Committee.
4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability, or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment pursuant to the
provisions of Section 5.2 hereof, the maximum number of shares of Stock that may
be issued hereunder shall be 142,242 and thereafter shall automatically be
increased each time the Company issues additional shares of Stock so that the
total number of shares issuable hereunder shall at all times equal 15% of the
then outstanding shares of Stock, unless in any case the Board of Directors
adopts a resolution providing that the number of shares issuable under this Plan
shall not be so increased. Any or all shares of Stock subject to the Plan may be
issued in any combination of Incentive Stock Options or non-Incentive Stock
Options, and the amount of Stock subject to the Plan may be increased from time
to time in accordance with Article IX, provided that the total number of shares
of Stock issuable pursuant to Incentive Stock Options may not be increased to
more than 142,242 (other than pursuant to anti-dilution adjustments) without
shareholder approval. Shares subject to an Option may be either authorized and
unissued shares or shares issued and later acquired by the Company. The shares
covered by any unexercised portion of an Option that has terminated for any
reason (except as set forth in the following paragraph) may again be optioned
under the Plan, and such shares
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shall not be considered as having been optioned or issued in computing the
number of shares of Stock remaining available for option hereunder.
If Options are issued in respect of options to acquire stock of any
entity acquired, by merger or otherwise, by the Company (or any Subsidiary of
the Company), to the extent that such issuance shall not be inconsistent with
the terms, limitations and conditions of Code section 422 or Rule 16b-3 under
the Exchange Act, the aggregate number of shares of Stock for which Options may
be granted hereunder shall automatically be increased by the number of shares
subject to the Options so issued; provided, however, that the aggregate number
of shares of Stock for which Options may be granted hereunder shall
automatically be decreased by the number of shares covered by any unexercised
portion of an Option so issued that has terminated for any reason, and the
shares subject to any such unexercised portion may not be optioned to any other
person.
5.2 Antidilution.
(a) If (x) the outstanding shares of Stock are changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of merger, consolidation, reorganization, recapitalization,
reclassification, combination or exchange of shares, or stock split or stock
dividend, (y) any spin-off, spin-out or other distribution of assets materially
affects the price of the Company's stock, or (z) there is any assumption and
conversion to the Plan by the Company of an acquired company's outstanding
option grants, then:
(i) the aggregate number and kind of shares of Stock for which
Options may be granted hereunder shall be adjusted proportionately by
the Committee; and
(ii) the rights of Optionees (concerning the number of shares
subject to Options and the Exercise Price) under outstanding Options
shall be adjusted proportionately by the Committee.
(b) If the Company shall be a party to any reorganization in which it
does not survive, involving merger, consolidation, or acquisition of the stock
or substantially all the assets of the Company, the Committee, in its sole
discretion, may (but is not required to):
(i) notwithstanding other provisions hereof, declare that all
Options granted under the Plan shall become exercisable immediately
notwithstanding the provisions of the respective Stock Option
Agreements regarding exercisability, that all such Options shall
terminate 30 days after the Committee gives written notice of the
immediate right to exercise all such Options and of the decision to
terminate all Options not exercised within such 30-day period; and/or
(ii) notify all Optionees that all Options granted under the
Plan shall be assumed by the successor corporation or substituted on an
equitable basis with options issued by such successor corporation.
(c) If the Company is to be liquidated or dissolved in connection with
a reorganization described in Section 5.2(b), the provisions of such Section
shall apply. In all other instances, the adoption of a plan of dissolution or
liquidation of the Company shall, notwithstanding other provisions hereof, cause
every Option outstanding under the Plan to terminate to the extent not exercised
prior to the adoption of the plan of dissolution or liquidation by the
shareholders, provided that, notwithstanding other provisions hereof, the
Committee may declare all Options granted under the Plan to be exercisable at
any time on or before the fifth business day following such adoption
notwithstanding the provisions of the respective Stock Option Agreements
regarding exercisability.
(d) The adjustments described in paragraphs (a) through (c) of this
Section 5.2, and the manner of their application, shall be determined solely by
the Committee, and any such adjustment may provide for the elimination of
fractional share interests; provided, however, that any adjustment made by the
Board or the Committee shall be made in a manner that will not cause an
Incentive Stock Option to be other than an Incentive Stock Option under
applicable statutory and regulatory provisions. The adjustments required under
this Article V shall apply to any successors of the Company and shall be made
regardless of the number or type of successive events requiring such
adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. The Committee may, under this Plan, grant
either Incentive Stock Options or Options which do not qualify as Incentive
Stock Options. Within the limitations provided in this Plan, both types of
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Options may be granted to the same person at the same time, or at different
times, under different terms and conditions, as long as the terms and conditions
of each Option are consistent with the provisions of the Plan. Without
limitation of the foregoing, Options may be granted subject to conditions based
on the financial performance of the Company or any other factor the Committee
deems relevant.
6.2 Option Grant and Agreement. Each Option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of the Committee and by
a written Stock Option Agreement executed by the Company and the Optionee. The
terms of the Option, including the Option's duration, time or times of exercise,
exercise price, whether the Option is intended to be an Incentive Stock Option,
and whether the Option is to be accompanied by the right to receive a Reload
Option, shall be stated in the Stock Option Agreement. In structuring the terms
of each Option, the Committee shall follow the guidelines set forth in the FDIC
statement of policy relating to applications for deposit insurance, including
that the terms should encourage each Optionee to remain involved in the Company
and/or its Subsidiaries, such as by having a vesting period of equal percentages
each year over the initial three years following the grant of the Option and a
requirement that the Option be exercised or expire within a reasonable time
after termination as an active officer, employee, or director. No Incentive
Stock Option may be granted more than ten years after the earlier to occur of
the effective date of the Plan or the date the Plan is approved by the Company's
shareholders. Separate Stock Option Agreements may be used for Options intended
to be Incentive Stock Options and those not so intended, but any failure to use
such separate agreements shall not invalidate, or otherwise adversely affect the
Optionee's interest in, the Options evidenced thereby.
6.3 Optionee Limitations. The Committee shall not grant an Incentive
Stock Option to any person who, at the time the Incentive Stock Option is
granted:
(a) is not an employee of the Company or any of its Subsidiaries (as
the term 44 employee" is defined by the Code); or
(b) owns or is considered to own stock possessing at least 10% of the
total combined voting power of all classes of stock of the Company or any of its
Parent or Subsidiary corporations; provided, however, that this limitation shall
not apply if at the time an Incentive Stock Option is granted the Exercise Price
is at least I 10 % of the Fair Market Value of the Stock subject to such Option
and such Option by its terms would not be exercisable after five years from the
date on which the Option is granted. For the purpose of this subsection (b), a
person shall be considered to own: (i) the stock owned, directly or indirectly,
by or for his or her brothers and sisters (whether by whole or half blood),
spouse, ancestors and lineal descendants; (ii) the stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust in proportion
to such person's stock interest, partnership interest or beneficial interest
therein; and (iii) the stock which such person may purchase under any
outstanding options of the Company or of any Parent or Subsidiary.
6.4 $100,000 Limitation. Except as provided below, the Committee shall
not grant an Incentive Stock Option to, or modify the exercise provisions of
outstanding Incentive Stock Options held by, any person who, at the time the
Incentive Stock Option is granted (or modified), would thereby receive or hold
any Incentive Stock Options of the Company and any Parent or Subsidiary, such
that the aggregate Fair Market Value (determined as of the respective dates of
grant or modification of each option) of the stock with respect to which such
Incentive Stock Options are exercisable for the first time during any calendar
year is in excess of $100,000 (or such other limit as may be prescribed by the
Code from time to time); provided that the foregoing restriction on modification
of outstanding Incentive Stock Options shall not preclude the Committee from
modifying an outstanding Incentive Stock Option if, as a result of such
modification and with the consent of the Optionee, such Option no longer
constitutes an Incentive Stock Option; and provided that, if the $100,000
limitation (or such other limitation prescribed by the Code) described in this
Section 6.4 is exceeded, the Incentive Stock Option, the granting or
modification of which resulted in the exceeding of such limit, shall be treated
as an Incentive Stock Option up to the limitation and the excess shall be
treated as an Option not qualifying as an Incentive Stock Option.
6.5 Exercise Price. The Exercise Price of the Stock subject to each
Option shall be determined by the Committee. Subject to the provisions of
Section 6.3(b) hereof, the Exercise Price of an Option shall not be less than
the Fair Market Value of the Stock as of the date the Option is granted (or in
the case of an Incentive Stock Option that is subsequently modified, on the date
of such modification).
6.6 Exercise Period. The period for the exercise of each Option granted
hereunder shall be determined by the Committee, but the Stock Option Agreement
with respect to each Option shall provide that such Option shall not be
exercisable after ten years from the date of grant (or modification) of the
Option.
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6.7 Option Exercise.
(a) Unless otherwise provided in the Stock Option Agreement or Section
6.6 hereof, an Option may be exercised at any time or from time to time during
the term of the Option as to any or all full shares which have become
Purchasable under the provisions of the Option, but not at any time as to less
than 100 shares unless the remaining shares that have become so Purchasable are
less than 100 shares. The Committee shall have the authority to prescribe in any
Stock Option Agreement that the Option may be exercised only in accordance with
a vesting schedule during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the Company at its
principal office a written notice of exercise with respect to a specified number
of shares of Stock and (ii) payment to the Company at that office of the full
amount of the Exercise Price for such number of shares in accordance with
Section 6.7(c). If requested by an Optionee, an Option may be exercised with the
involvement of a stockbroker in accordance with the federal margin rules set
forth in Regulation T (in which case the certificates representing the
underlying shares will be delivered by the Company directly to the stockbroker).
(c) The Exercise Price is to be paid in full in cash upon the exercise
of the Option and the Company shall not be required to deliver certificates for
the shares purchased until such payment has been made; provided, however, that
in lieu of cash, in the Company's discretion all or any portion of the Exercise
Price may be paid by tendering to the Company shares of Stock duly endorsed for
transfer and owned by the Optionee, or by authorization to the Company to
withhold shares of Stock otherwise issuable upon exercise of the Option, in each
case to be credited against the Exercise Price at the Fair Market Value of such
shares on the date of exercise (however, no fractional shares may be so
transferred, and the Company shall not be obligated to make any cash payments in
consideration of any excess of the aggregate Fair Market Value of shares
transferred over the aggregate Exercise Price); provided further, that the Board
may provide in a Stock Option Agreement (or may otherwise determine in its sole
discretion at the time of exercise) that, in lieu of cash or shares, all or a
portion of the Exercise Price may be paid by the Optionee's execution of a
recourse note equal to the Exercise Price or relevant portion thereof, subject
to compliance with applicable state and federal laws, rules and regulations.
Notwithstanding the above, the Company shall not be obligated to accept tender
of shares of Stock as payment of the Exercise Price if doing so would result in
a charge to the Company's earnings for financial reporting purposes.
(d) In addition to and at the time of payment of the Exercise Price,
the Optionee shall pay to the Company in cash the full amount of any federal,
state, and local income, employment, or other withholding taxes applicable to
the taxable income of such Optionee resulting from such exercise; provided,
however, that in the discretion of the Committee any Stock Option Agreement may
provide that all or any portion of such tax obligations, together with
additional taxes not exceeding the actual additional taxes to be owed by the
Optionee as a result of such exercise, may, upon the irrevocable election of the
Optionee, be paid by tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in either case in that number of shares having a Fair Market Value on
the date of exercise equal to the amount of such taxes thereby being paid, and
subject to such restrictions as to the approval and timing of any such election
as the Committee may from time to time determine to be necessary or appropriate
to satisfy the conditions of the exemption set forth in Rule 16b-3 under the
Exchange Act, if such rule is applicable.
(e) The holder of an Option shall not have any of the rights of a
shareholder with respect to the shares of Stock subject to the Option until such
shares have been issued and transferred to the Optionee upon the exercise of the
Option.
6.8 Reload Options.
(a) The Committee may specify in a Stock Option Agreement (or may
otherwise determine in its sole discretion) that a Reload Option shall be
granted, without further action of the Committee, (i) to an Optionee who
exercises an Option (including a Reload Option) by surrendering shares of Stock
in payment of amounts specified in Sections 6.7(c) or 6.7(d) hereof, (ii) for
the same number of shares as are surrendered to pay such amounts, (iii) as of
the date of such payment and at an Exercise Price equal to the Fair Market Value
of the Stock on such date, and (iv) otherwise on the same terms and conditions
as the Option whose exercise has occasioned such payment, except as provided
below and subject to such other contingencies, conditions, or other terms as the
Committee shall specify at the time such exercised Option is granted; provided,
that the Committee may require that the shares surrendered in payment as
provided above must have been held by the Optionee for at least six months prior
to such surrender.
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(b) Unless provided otherwise in the Stock Option Agreement, a Reload
Option may not be exercised by an Optionee (i) prior to the end of a one-year
period from the date that the Reload Option is granted, and (ii) unless the
Optionee retains beneficial ownership of the shares of Stock issued to such
Optionee upon exercise of the Option referred to above in Section 6.8(a)(i) for
a period of one year from the date of such exercise.
6.9 Nontransferability of Option. Other than as provided below, no
Option shall be transferable by an Optionee other than by will or the laws of
descent and distribution or, in the case of non-Incentive Stock Options,
pursuant to a Qualified Domestic Relations Order, and, during the lifetime of an
Optionee, Options shall be exercisable only by such Optionee (or by such
Optionee's guardian or legal representative, should one be appointed). However,
a Non-Incentive Stock Option may, in connection with the Optionee's estate plan,
be assigned in whole or in part during Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established for the
exclusive benefit of one or more such family members. The assigned portion shall
be exercisable only by the person or persons who acquire a proprietary interest
in the Option pursuant to such assignment. The terms applicable to the assigned
portion shall be the same as those in effect for this Option immediately prior
to such assignment and shall be set forth in such documents issued to the
assignee as the Committee may deem appropriate.
6.10 Termination of Employment or Service. The Committee shall have the
power to specify the effect upon an Optionee's right to exercise an Option upon
termination of such Optionee's employment or service under various
circumstances, which effect may include immediate or deferred termination of
such Optionee's rights under an Option, or acceleration of the date at which an
Option may be exercised in full. Unless a Stock Option Agreement specifically
provides otherwise, in the event the recipient of an Option is terminated from
his or her employment or other service to the Company or its subsidiaries for
Cause, Options, whether vested or unvested, granted to such person shall
terminate immediately and shall not thereafter be exercisable.
6.11 Employment Rights. Nothing in the Plan or in any Stock Option
Agreement shall confer on any person any right to continue in the employ of the
Company or any of its Subsidiaries, or shall interfere in any way with the right
of the Company or any of its Subsidiaries to terminate such person's employment
at any time.
6.12 Certain Successor Options. To the extent not inconsistent with the
terms, limitations and conditions of Code section 422 and any regulations
promulgated with respect thereto, an Option issued in respect of an option held
by an employee to acquire stock of any entity acquired, by merger or otherwise,
by the Company (or any Subsidiary of the Company) may contain terms that differ
from those stated in this Article VI, but solely to the extent necessary to
preserve for any such employee the rights and benefits contained in such
predecessor option, or to satisfy the requirements of Code section 424(a).
6.13 Effect of a Corporate Transaction. All Options, to the extent
outstanding at the time of a Corporate Transaction but not otherwise fully
exercisable, shall automatically accelerate so that the Options shall,
immediately prior to the effective date of the Corporate Transaction, become
exercisable for all shares at the time subject to such Options and may be
exercised for any or all of those shares as fully vested shares of Stock.
6.14 Forfeiture by Order of Regulatory Agency. If the Company's or any
of its financial institution Subsidiaries' capital falls below the minimum
requirements contained in 12 CFR 3 or below a higher requirement as determined
by the Company's or such Subsidiary's primary bank regulatory agencies, such
agencies may direct the Company to require Optionees to exercise or forfeit some
or all of their Options. All options granted under this Plan are subject to the
terms of any such directive.
ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate
for shares of Stock purchased upon the exercise of any Option granted hereunder
or any portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which the Stock is then listed;
(b) The completion of any registration or other qualification of such
shares which the Committee shall deem necessary or advisable under any federal
or state law or under the rulings or regulations of the Securities and
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Exchange Commission or any other governmental regulatory body;
(c) The obtaining of any approval or other clearance from any federal
or state governmental agency or body which the Committee shall determine to be
necessary or advisable; and
(d) The lapse of such reasonable period of time following the exercise
of the Option as the Board from time to time may establish for reasons of
administrative convenience.
Stock certificates issued and delivered to Optionees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant to
applicable federal and state securities laws. The inability of the Company to
obtain approval from any regulatory body having authority deemed by the Company
to be necessary to the lawful issuance and sale of any Stock pursuant to Options
shall relieve the Company of any liability with respect to the non-issuance or
sale of the Stock as to which such approval shall not have been obtained.
However, the Company shall use its best efforts to obtain all such approvals.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination and Amendment. The Board may at any time terminate the
Plan; provided, however, that the Board (unless its actions are approved or
ratified by the shareholders of the Company within twelve months of the date
that the Board amends the Plan) may not amend the Plan to:
(a) Increase the total number of shares of Stock issuable pursuant to
Incentive Stock Options under the Plan, except as contemplated in Section 5.2
hereof; or
(b) Change the class of employees eligible to receive Incentive Stock
Options that may participate in the Plan.
8.2 Effect on Optionee's Rights. No termination, amendment, or
modification of the Plan shall affect adversely a Optionee's rights under a
Stock Option Agreement without the consent of the Optionee or his legal
representative.
ARTICLE IX
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option,
incentive, or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for employees or Directors of the Company or any of its
Subsidiaries.
ARTICLE X
MISCELLANEOUS
10.1 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of the Plan, the Committee may modify
outstanding Options or accept the surrender of outstanding Options and grant new
Options in substitution for them. However no modification of an Option shall
adversely affect a Optionee's rights under a Stock Option Agreement without the
consent of the Optionee or his legal representative.
10.2 Forfeiture for Competition. If a Optionee provides services to a
competitor of the Company or any of its Subsidiaries, whether as an employee,
officer, director, independent contractor, consultant, agent, or otherwise, such
services being of a nature that can reasonably be expected to involve the skills
and experience used or developed by the Optionee while an Employee, then that
Optionee's rights under any Options outstanding hereunder shall be forfeited and
terminated subject in each case to a determination to the contrary by the
Committee.
10.3 Leave of Absence. Unless provided otherwise in a particular Stock
Option Agreement, the following provisions shall apply upon an Optionee's
commencement of an authorized leave of absence:
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(a) The exercise schedule in effect for such Option shall be frozen as
of the first day of the authorized leave, and the Option shall not become
exercisable for any additional installments of shares of Stock during the period
Optionee remains on such leave.
(b) Should the Optionee resume active Employee status within 60 days
after the start date of the authorized leave, Optionee shall, for purposes of
the applicable exercise schedule, receive service credit for the entire period
of such leave. If the Optionee does not resume active Employee status within
such 60-day period, then no service credit shall be given for the entire period
of such leave.
(c) If the Option is an Incentive Stock Option, then the following
additional provision shall apply:
If the leave of absence continues for more than three months,
then the Option shall automatically convert to a Non-Incentive Stock
Option under the Federal tax laws upon the expiration of such
three-month period, unless the Optionee's reemployment rights are
guaranteed by statute or written agreement. Following any such
conversion of the Option, all subsequent exercises of the Option,
whether effected before or after Optionee's return to active Employee
status, shall result in an immediate taxable event, and the Company
shall be required to collect from Optionee the Federal, state and local
income and employment withholding taxes applicable to such exercise.
(d) In no event shall the Option become exercisable for any additional
shares or otherwise remain outstanding if Optionee does not resume Employee
status prior to the Expiration Date of the option term.
10.4 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.
10.5 Headings, etc., No Part of Plan. Headings of Articles and Sections
hereof are inserted for convenience and reference; they do not constitute part
of the Plan.
10.6 Section 16 Compliance. With respect to Section 16 Insiders,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed void to the extent permitted by law and deemed advisable by the
Committee. In addition, if necessary to comply with Rule 16b-3 with respect to
any grant of an Option hereunder, and in addition to any other vesting or
holding period specified hereunder or in an applicable Stock Option Agreement,
any Section 16 Insider acquiring an Option shall be required to hold either the
Option or the underlying shares of Stock obtained upon exercise of the Option
for a minimum of six months.
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EXHIBIT A
to
COASTAL BANKING COMPANY, INC.
2000 STOCK INCENTIVE PLAN -
Form of Employee of Stock Option Agreement
COASTAL BANKING COMPANY, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into as of
this ___ day of February, 2000, between COASTAL BANKING COMPANY, INC., a South
Carolina corporation (the "Company"), and ___________________ (the "Optionee").
WHEREAS, on February ___, 2000, the Board of Directors of the Company
adopted a Stock Incentive Plan known as the "COASTAL BANKING COMPANY, INC. 2000
STOCK INCENTIVE PLAN" (the "Stock Incentive Plan"), and recommended that the
Plan be approved by the Company's shareholders; and
WHEREAS, the Committee has granted the Optionee a stock option to
purchase the number of shares of the Company's common stock as set forth below,
and in consideration of the granting of that stock option the Optionee intends
to remain in the employ of the Company; and
WHEREAS, the Company considers it desirable and in its best interest
that the Optionee be provided an inducement to acquire an ownership interest in
the Company and an additional incentive to advance the interest of the Company
through the grant of an option to purchase shares of common stock of the Company
pursuant to the Stock Incentive Plan; and
WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to such option in accordance with the Stock Incentive
Plan.
NOW, THEREFORE, as an employment incentive and to encourage stock
ownership, and also in consideration of the mutual covenants contained herein,
the Company and the Optionee agree as follows.
1. Incorporation of Stock Incentive Plan. This option is granted
pursuant to the provisions of the Stock Incentive Plan and the terms and
definitions of the Stock Incentive Plan are incorporated herein by reference and
made a part hereof. A copy of the Stock Incentive Plan has been delivered to,
and receipt is hereby acknowledged by, the Optionee.
2. Grant of Option. Subject to the provisions stated in this Agreement,
the Company hereby evidences its grant to the Optionee, not in lieu of salary or
other compensation, of the right and option (the "Option") to purchase the
number of shares of the Company's Common Stock, par value $0.01 per share (the
"Stock"), set forth below, exercisable in the amounts and at the time specified
below. This Option is intended to be an Incentive Stock Option, as defined in
the Internal Revenue Code.
Number of Shares: *****
Exercise Price: $ *** per share
Option Vesting Schedule: Options are exercisable with respect the
shares of Stock as follows, subject in each
case to continued employment by the Company
or a subsidiary of the Company through such
date, and subject to the provisions of
Section 7 of this Agreement:
No. of Shares Vesting Date
***** ,2001
---------------------
***** ,2002
---------------------
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***** ,2003
---------------------
***** ,2004
---------------------
***** ,2005
---------------------
Option Exercise Period: All options expire and are void unless exercised on
or before
__________________, 2010.
3. Exercise Terms. The Optionee must exercise the Option for at least
the lesser of 100 shares or the number of shares of Purchasable Stock as to
which the Option remains unexercised. If this Option is not exercised with
respect to all or any part of the shares subject to this Option prior to its
expiration, the shares with respect to which this Option was not exercised shall
no longer be subject to this Option.
4. Restrictions on Transferability. No Option shall be transferable by
an Optionee other than by will or the laws of descent and distribution or
pursuant to a Qualified Domestic Relations Order. During the lifetime of an
Optionee, Options shall be exercisable only by such Optionee (or by such
Optionee's guardian or legal representative, should one be appointed). The
shares purchased pursuant to the exercise of an Incentive Stock Option shall not
be transferred by the Optionee except pursuant to the Optionee's will, or the
laws of descent and distribution, until such date which is the later of two
years after the grant of such Incentive Stock Option or one year after the
transfer of the shares to the Optionee pursuant to the exercise of such
Incentive Stock Option.
5. Notice of Exercise of Option. This Option may be exercised by the
Optionee, or by the Optionee's administrators, executors or personal
representatives, by a written notice (in substantially the form of the Notice of
Exercise attached hereto as Schedule A) signed by the Optionee, or by such
administrators, executors or personal representatives, and delivered or mailed
to the Company as specified in this Agreement to the attention of the President
or such other officer as the Company may designate. Any such notice shall (a)
specify the number of shares of Stock which the Optionee or the Optionee's
administrators, executors or personal representatives, as the case may be, then
elects to purchase hereunder, (b) contain such information as may be reasonably
required by the Company pursuant to this Agreement, and (c) be accompanied by
(i) a certified or cashier's check payable to the Company in payment of the
total Exercise Price applicable to such shares as provided herein, (ii) shares
of stock owned by the Optionee and duly endorsed or accompanied by stock
transfer powers having a Fair Market Value equal to the total Exercise Price
applicable to such Shares purchased hereunder, or (iii) a certified or cashier's
check accompanied by the number of shares of stock where Fair Market Value when
added to the amount of the check equal the total Exercise Price applicable to
such shares purchased hereunder. Upon receipt of any such notice and
accompanying payment, and subject to the terms hereof, the Company agrees to
issue to the Optionee or the Optionee's administrators, executors or personal
representatives, as the case may be, stock certificates for the number of shares
specified in such notice registered in the name of the person exercising this
Option.
6. Adjustment in Option. The number of Shares subject to this Option,
the Exercise Price, and other matters are subject to adjustment during the term
of this Option in accordance with Section 5.2 of the Stock Incentive Plan.
7. Termination of Employment.
(a) In the event of the termination of the Optionee's employment with
the Company or any of its Subsidiaries, other than a termination that is either
(i) for Cause, (ii) voluntary on the part of the Optionee and without written
consent of the Company, or (iii) for reasons of death or disability or
retirement, the Optionee may exercise this Option at any time within 30 days
after such termination to the extent of the number of shares which were
Purchasable hereunder at the date of such termination.
(b) In the event of a termination of the Optionee's employment that is
either (i) for Cause or (ii) voluntary on the part of the Optionee and without
the written consent of the Company, this Option, to the extent not previously
exercised, shall terminate immediately and shall not thereafter be or become
exercisable.
(c) In the event of the retirement of the Optionee at the normal
retirement date as prescribed from time to
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time by the Company or any Subsidiary, the Optionee shall continue to have the
right to exercise any Options for shares which were Purchasable at the date of
the Optionee's retirement provided that, on the date which is three months after
the date of retirement, the Options will become void and unexercisable unless on
the date of retirement the Optionee enters into a noncompete agreement with the
Company and continues to comply with such noncompete agreement. This Option does
not confer upon the Optionee any right with respect to continuance of employment
by the Company or by any of its Subsidiaries. This Option shall not be affected
by any change of employment so long as the Optionee continues to be an employee
of the Company or one of its Subsidiaries.
(d) In the event of termination of employment because of the Optionee's
Permanent and Total Disability, the Optionee (or his or her personal
representative) may exercise this Option, within a period ending on the earlier
of (a) the last day of the one year period following the Optionee's Permanent
and Total Disability or (b) the expiration date of this Option, to the extent of
the number of shares which were Purchasable hereunder at the date of such
termination.
(e) In the event of the Optionee's death while employed by the Company
or any of its Subsidiaries or within three months after a termination of such
employment (if such termination was neither (i) for Cause nor (ii) voluntary on
the part of the Optionee and without the written consent of the Company), the
appropriate persons described in Section 5 hereof or persons to whom all or a
portion of this Option is transferred in accordance with Section 4 hereof may
exercise this Option at any time within a period ending on the earlier of (a)
the last day of the one year period following the Optionee's death or (b) the
expiration date of this Option. If the Optionee was an employee of the Company
at the time of death, this Option may be so exercised to the extent of the
number of shares that were Purchasable hereunder at the date of death. If the
Optionee's employment terminated prior to his or her death, this Option may be
exercised only to the extent of the number of shares covered by this Option
which were Purchasable hereunder at the date of such termination.
8. Compliance with Regulatory Matters. The Optionee acknowledges that
the issuance of capital stock of the Company is subject to limitations imposed
by federal and state law and the Optionee hereby agrees that the Company shall
not be obligated to issue any shares of Stock upon exercise of this Option that
would cause the Company to violate law or any rule, regulation, order or consent
decree of any regulatory authority (including without limitation the Securities
and Exchange Commission) having jurisdiction over the affairs of the Company.
The Optionee agrees that he or she will provide the Company with such
information as is reasonably requested by the Company or its counsel to
determine whether the issuance of Stock complies with the provisions described
by this Section 8.
9. Forfeiture. The purpose of the Stock Incentive Plan is to attract,
retain, and reward employees, to increase stock ownership and identification
with the Company's interests, and to provide incentive for remaining with and
enhancing the value of the Company over the long-term. Therefore, the Company
and the Optionee agree as follows:
(a) If, at any time within the later of (i) one year after termination
of the Optionee's employment or (ii) one year after the Optionee's exercise of
any portion of this Option, the Optionee engages in any activity which
constitutes a violation of any confidentiality, noncompetition, nonsolicitation,
or similar provision of any employment or other agreement between the Company
and the Optionee (or, if no agreement is in place between the Company and the
Optionee, any Company policies pertaining to such matters), or if the Optionee
engages in any activity which is inimical, contrary, or harmful to the interests
of the Company (including conduct related to the Optionee's employment for which
either criminal or civil penalties against the Optionee may be sought or
violation of the Company's policies, including the Company's insider trading
policy), then (1) this Option shall terminate effective the date on which the
Optionee enters into such activity, unless terminating sooner by operation of
another term or condition of this Option or the Stock Incentive Plan, and (2)
any Option Gain realized by the Optionee from exercising all or a portion of
this Option shall be paid by the Optionee to the Company. "Option Gain" shall
mean the gain represented by the mean market price on the date of exercise over
the Exercise Price, multiplied by the number of shares purchased through
exercise of the Option, without regard to any subsequent market price decrease
or increase. The forfeiture provisions described in this Section shall apply
even if the Company does not elect otherwise to enforce the employment agreement
or take other action against the Optionee, but shall not apply if termination of
the Optionee's employment with the Company occurs in connection with or
following a Corporate Transaction involving the Company (as defined in the Stock
Incentive Plan).
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(b) By accepting this Agreement, the Optionee consents to a deduction
from any amounts the Company owes the Optionee from time to time (including
amounts owed as wages or other compensation, fringe benefits, or vacation pay),
to the extent of the amounts the Optionee owes the Company under this Section.
Whether or not the Company elects to make any set-off in whole or in part, if
the Company does not recover by means of set-off the full amount owed by the
Optionee to the Company, calculated as set forth above, the Optionee shall pay
immediately the unpaid balance to the Company. The Optionee hereby appoints the
Company as its attorney-in-fact to execute any documents or do any acts
necessary to exercise its rights under this Section.
(c) The Optionee may be released from its obligations under this
Section only if the Board of Directors (or its duly appointed agent) determines
in its sole discretion that such action is in the best interests of the Company.
10. Miscellaneous.
(a) This Agreement shall be binding upon the parties hereto and their
representatives, successors and assigns.
(b) Unless the context clearly indicates to the contrary, all
capitalized terms used herein shall have the meanings as set forth in this
Agreement, or in the event a capitalized term is not clearly described in this
Agreement, the meanings as set forth in the Coastal Banking Company, Inc. 2000
Stock Incentive Plan dated February ___, 2000.
(c) This Agreement is executed and delivered in, and shall be governed
by the laws of, the State of South Carolina.
(d) Any requests or notices to be given hereunder shall be deemed
given, and any elections or exercises to be made or accomplished shall be deemed
made or accomplished, upon actual delivery thereof to the designated recipient,
or three days after deposit thereof in the United States mail, registered,
return receipt requested and postage prepaid, addressed, if to the Optionee, at
the address set forth below and, if to the Company, to the executive offices of
the Company at 1001 Bay Street, Suite 202, Beaufort, South Carolina 29902.
(e) This Agreement may not be modified except in writing executed by
each of the parties hereto.
IN WITNESS WHEREOF, the Board of Directors of the Company has caused
this Stock Option Agreement to be executed on behalf of the Company and the
Company's seal to be affixed hereto and attested by the Secretary or an
Assistant Secretary of the Company, and the Optionee has executed this Stock
Option Agreement under seal, all as of the day and year first above written.
COASTAL BANKING COMPANY, INC.
By:
----------------------------
Name: Randolph C. Kohn
Title: President and Chief
Executive Officer
OPTIONEE
By:
----------------------------
Name: ********
Address:
-----------------------
-----------------------
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SCHEDULE A
NOTICE OF EXERCISE
To exercise Stock Options, the Optionee should
complete this Schedule, execute it, and return it to the Company
The undersigned hereby notifies Coastal Banking Company, Inc.(the
"Company") of this election to exercise the undersigned's stock option to
purchase ___________ shares of the Company's common stock, par value $0.01 per
share (the "Common Stock"), pursuant to the Stock Option Agreement (the
"Agreement") between the undersigned and the Company dated ____________________.
Accompanying this Notice is a check in the amount of $________________ payable
to the Company such amount being equal to the purchase price per share set forth
in the Agreement multiplied by the number of shares being purchased hereby.
IN WITNESS WHEREOF, the undersigned has set his hand and seal, this
____ day of ___________________, ____.
OPTIONEE [OR OPTIONEE'S
ADMINISTRATOR,
EXECUTOR OR PERSONAL
REPRESENTATIVE]
Name:
----------------------------
Print Name:
----------------------
