Document:

Exhibit 10.1

 

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

THIS SECOND AMENDMENT TO FORBEARANCE AGREEMENT (this “Amendment”) is dated March 9, 2016, and amends that certain Forbearance Agreement dated November 24, 2015 (as previously amended, the “Forbearance Agreement”) by and among (i) Brushy Resources, Inc. (f/k/a Starboard Resources, Inc.), a Delaware corporation (“Borrower”), (ii) ImPetro Resources, LLC, a Delaware limited liability company (“ImPetro Resources”), (iii) ImPetro Operating, LLC, a Delaware limited liability company (collectively with ImPetro Resources, the “Guarantors” and each a “Guarantor”), and (iv) Independent Bank, a Texas state bank (“Lender”).  Capitalized terms used but not defined herein have the meaning given such terms in the Forbearance Agreement, if defined therein, and if not defined in the Forbearance Agreement, then have the meaning given such terms in the Credit Agreement (as defined below).

R E C I T A L S:

WHEREAS, the Borrower, the Guarantors and the Lender entered into the Forbearance Agreement to set forth certain terms and conditions upon which the Lender would agree to forbear from exercising certain remedies available to it with respect to various Forbearance Defaults described in the Forbearance Agreement, which had occurred in connection with that certain Credit Agreement dated June 27, 2013 between the Borrower and the Lender (as previously amended, the “Credit Agreement”);

WHEREAS, pursuant to the First Amendment to Forbearance Agreement, the Forbearance Expiration Date was extended to February 26, 2016 (or such earlier date on which a Critical Default occurred);

WHEREAS, the Lender is entitled to exercise its remedies with respect to various Events of Default that have occurred; and

WHEREAS, the Borrower and Lilis Energy, Inc. (“Lilis”) have advised the Lender that Lilis desires to purchase the Note and the Lender’s Liens on the Borrower’s property which secure the Note (the “Lilis Sale”), and have requested that the Lender continue to forbear from exercising its remedies until March 30, 2016 to provide additional time for Lilis to facilitate such purchase and related corporate transactions among Lilis and the Borrower;

NOW, THEREFORE, in consideration of the premises and the mutual covenants made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Guarantors, the Lender and, as applicable, Lilis agree as follows:

1.           The following definition is hereby added to Section 4.1.1 of the Forbearance Agreement, and thereby, also to Section 1.1 of the Credit Agreement, in the proper alphabetical order:

“Second Amendment to Forbearance Agreement” means the Second Amendment to Forbearance Agreement dated March 9, 2016 by and among the Borrower, the Guarantors and the Lender, and acknowledged and agreed by Lilis Energy, Inc., amending the Forbearance Agreement.

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2.           The following definitions located in Section 4.1.1 of the Forbearance Agreement and Section 1.1 of the Credit Agreement are hereby amended and restated in their respective entireties as follows:

“Critical Default” means any of the following:

(a)           the occurrence of an Event of Default under Section 8.1.4 or Section 8.1.5 of the Credit Agreement;

(b)           the Borrower shall fail to observe or perform any covenant or agreement contained in Section 2.6.2 of the Forbearance Agreement;

(c)           the Borrower shall fail to observe or perform any covenant or agreement contained in Section 7.7 of the Credit Agreement;

(d)           any action, suit or proceeding shall be instituted which (i) relates to the Credit Agreement and names the Lender as a party, or (ii) prohibits or restricts the consummation of the Lilis Sale; or

(e)           any of the conditions to forbearance set forth in paragraph 4 of the Second Amendment to Forbearance Agreement shall not be satisfied by the applicable due date therefor.

“Scheduled Maturity Date” means March 30, 2016.

3.           Section 5.6 of the Forbearance Agreement is hereby amended and restated in its entirety to read as follows:

“5.6           Expiration of Forbearance Period.  The Forbearance Period will expire and terminate automatically and without notice upon the earlier to occur of the Scheduled Maturity Date or the occurrence of any Critical Default (such earlier date being the “Forbearance Expiration Date”).”

4.           Conditions to Forbearance.  The effectiveness of the agreements of the Lender set forth in Section 5.1 of the Forbearance Agreement is subject to the prior satisfaction of each of the following conditions:

(a)           The Lender shall have received a counterpart of this Amendment duly executed by the Borrower, the Guarantors and Lilis not later than March 9, 2016.

(b)           The Lender shall have received, not later than March 9, 2016, an estimated budget from the Borrower for the month of March 2016.

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(c)           The Borrower shall have made a payment to the Lender in immediately available funds in the amount of $86,538.78 as a prepayment of the non-default and default interest accrued and to be accrued under the Note through March 29, 2016.  The foregoing payment shall be made in full not later than March 9, 2016, notwithstanding the amendment of the definition of “Forbearance Expiration Date” and the use of such defined term as the deadline for interest payments that would otherwise apply under Section 2.3 of the Forbearance Agreement.  If the Lilis Sale is consummated prior to March 29, 2016, Lilis will receive a credit on the purchase price for the Note and related Liens with respect to such prepaid interest for the number of days prior to such date that the Lilis Sale was consummated.

(d)           No later than March 9, 2016, the Lender shall have received a payment from the Borrower equal to the total amount of all payments made by the Lender between March 3, 2016 and March 7, 2016 and on March 9, 2016 to honor checks written on, or wires originating from, the accounts of the Borrower or either Guarantor that are maintained with the Lender, which total equals $121,100.77.  Upon the Lender’s receipt of such payment, the Lender will apply it, together with $45,691.73 from the Borrower’s deposit account maintained at the Lender, to the Obligations.  The Borrower consents and agrees to the Lender’s application of all such amounts toward the Obligations.

(e)           No later than March 9, 2016, the Lender shall have received reimbursement from the Borrower of the estimated legal fees and expenses of counsel to the Lender incurred in connection with this Amendment and the transactions contemplated hereby, which total $17,562.11.

(f)           The Borrower shall liquidate all of its outstanding Hedging Transactions with Cargill, Incorporated and shall take such actions as may be necessary to cause Cargill, Incorporated to pay directly over to the Lender all proceeds of such liquidation for application to the Obligations not later than March 9, 2016.  The Borrower consents and agrees to the Lender’s application of all such proceeds toward the Obligations.

(g)           The representations and warranties of the Borrower, the Guarantors and Lilis contained in this Amendment are true and correct in all material respects on and as of the date of this Amendment.

(h)           The consummation of this Amendment does not contravene, violate, or conflict with any Requirements of Law.

(i)           All matters incident to the consummation of this Amendment are satisfactory to the Lender.

5.           Lilis Actions.  As a material inducement to the Lender’s willingness to enter into this Amendment and extend the Forbearance Period under the terms and conditions set forth herein, by its execution hereof, Lilis agrees to (i) use commercially reasonable efforts to consummate the Lilis Sale on or prior to March 30, 2016 and (ii) fund the reasonable and necessary operating expenses of the Borrower pending the closing of the Lilis Sale in an amount to be agreed upon between Lilis and the Borrower.  The amounts contemplated by clause (ii) preceding and clauses (c) and (e) of paragraph 4 of this Amendment shall be in addition to the principal amount of the Note and the amount of the Lender’s legal fees and expenses incurred in connection herewith which will be included in the total purchase price for the Note and related Liens.  Lilis acknowledges and agrees that the Lender would not be willing to enter into this Amendment but for Lilis’s agreements set forth in this paragraph 5, and that Lilis will derive material benefit from the extended forbearance period provided herein in conjunction with the proposed Lilis Sale and related corporate transactions among Lilis and the Borrower.  Furthermore, Lilis represents and warrants that it is not aware of the basis for any claims by Lilis against any of the Released Parties (defined below).

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6.           No Waiver.  No Forbearance Defaults or other Events of Default are being waived hereby, and all such Forbearance Defaults and other Events of Default which exist on the date of this Amendment shall continue to exist unless waived in writing by the Lender after the date of execution of this Amendment.

7.           Representation and Warranties.

(a)           Each of the Borrower and the Guarantors hereby represents and warrants to the Lender, with the intention that the Lender shall rely thereon without any investigation or verification by the Lender or its counsel, that this Amendment has been duly executed and delivered on behalf of the Borrower and the Guarantors, and that the execution, delivery and performance of this Amendment has been duly authorized by all necessary action on the part of the Borrower and the Guarantors.

(b)           Lilis hereby represents and warrants to the Lender, with the intention that the Lender shall rely thereon without any investigation or verification by the Lender or its counsel, that this Amendment has been duly executed and delivered on behalf Lilis, and that the execution, delivery and performance of this Amendment has been duly authorized by all necessary action on the part of Lilis.

8.           Further Assurances.  The Borrower and the Guarantors hereby agree to execute and deliver any and all documents, instruments and agreements, and to take such other actions, as the Lender may reasonably require to effect the transactions and arrangements contemplated by this Amendment.

9.           Amendments and Waivers.  Any provision of this Amendment may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) by a written instrument signed by each party hereto.  Delivery of an executed counterpart of such written instrument by telecopy, e-mail, facsimile or other electronic means shall be effective delivery of a manually executed counterpart of such written instrument.

10.           Highest Lawful Interest Rate.  Nothing in the Forbearance Agreement, as amended hereby, shall be construed or interpreted to be in violation of Section 9.2 of the Credit Agreement.

11.           Expenses.  The Borrower agrees to pay the expenses of the Lender incurred in connection with the preparation and negotiation of this Amendment in accordance with Section 9.4 of the Credit Agreement.

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12.           Conditions Precedent for the Benefit of Lender.  All of the conditions precedent to the obligations of the Lender set forth in this Amendment are solely for the benefit of the Lender, and no Person other than the Lender may rely thereon or insist on compliance therewith.

13.           GOVERNING LAW.  This Amendment has been negotiated, is being executed and delivered, and will be performed in whole or in part, in the State of Texas.  This Amendment and any litigation between the parties (whether grounded in contract, tort, statute, law or equity) shall be governed by, construed in accordance with, and interpreted and enforced pursuant to the Laws of the State of Texas (and the applicable federal Laws of the United States of America) without giving effect to its choice of law principles.

14.           NO DEFENSES OF BORROWER OR GUARANTORS.  The Borrower and the Guarantors each stipulate, warrant, represent and agree that, as of the date of this Amendment, it has no defenses against its obligations to pay any of the Obligations or to pay its Guaranty, as applicable, or to pay any other amount due and owing to the Lender pursuant to the Loan Documents.  The Borrower and the Guarantors each acknowledge, warrant and agree that the Lender has acted in good faith in all respects as to the Loan Documents and this Amendment, and has conducted in a commercially reasonable manner its relationship with the Borrower and the Guarantors in connection with the Loan Documents and this Amendment, and the Borrower and the Guarantors hereby waive and release any claims to the contrary.

15.           RELEASE OF CLAIMS.  The Borrower and the Guarantors, each for itself, its successors and assigns, and all those at interest therewith (collectively, the “Releasing Parties”), jointly and severally, hereby voluntarily and forever, RELEASE, DISCHARGE AND ACQUIT the Lender and its officers, directors, shareholders, employees, agents, counsel, successors, assigns, representatives, affiliates and insurers (sometimes referred to below collectively as the “Released Parties”) and all those at interest therewith of and from any and all claims, causes of action, liabilities, damages, costs (including, without limitation, attorneys’ fees and all costs of court or other proceedings), and losses of every kind or nature at this time known or unknown, direct or indirect, fixed or contingent, which the Releasing Parties have or hereafter may have arising out of any act, occurrence, transaction or omission occurring from the beginning of time to the date of this Amendment if related to the Note, the Credit Agreement or the other Loan Documents or any actions taken by any of the Released Parties in connection therewith (the “Released Claims”), except the future duties and obligations of the Lender under the Loan Documents and the future rights of the Borrower and the Guarantors to their respective funds on deposit with the Lender shall not be included in the term Released Claims.  IT IS THE EXPRESS INTENT OF THE RELEASING PARTIES THAT THE RELEASED CLAIMS SHALL INCLUDE ANY CLAIMS OR CAUSES OF ACTION ARISING FROM OR ATTRIBUTABLE TO THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THE RELEASED PARTIES.

16.           Access to Counsel; Understanding of Terms; No Commitment to Renew.  By execution of this Amendment, each of the Borrower, the Guarantors and Lilis severally (but not jointly) warrants and represents to the Lender that (i) it was represented by (or had the opportunity to be represented by) counsel of its own selection; (ii) it understands the terms of this Amendment; and (iii) there is no commitment of the Lender or any other party for a renewal, extension, or modification of the Credit Agreement, the Note or the Forbearance Agreement in the future on any terms whatsoever.  This Amendment has been reviewed and negotiated by sophisticated parties with access to legal counsel, and no rule of construction shall apply hereto or thereto which would require or allow this Amendment to be construed against any party because of its role in drafting this Amendment.

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17.           Conditions to Effectiveness.  This Amendment shall be effective upon its execution by the Borrower, the Guarantors, the Lender and Lilis and the receipt thereof by the Lender.

18.           Counterparts.  This Amendment may be executed in a number of counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page of this Amendment by telecopy, e-mail, facsimile or other electronic means shall be effective as a delivery of a manually executed counterpart of this Amendment.

19.           Effect.  This Amendment is one of the Loan Documents.  Except as expressly provided hereby, the Credit Agreement, the Forbearance Agreement and the other Loan Documents shall remain unchanged and in full force and effect.

[Signature page follows]

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ENTIRE AGREEMENT.  THE FORBEARANCE AGREEMENT, AS AMENDED BY THIS AMENDMENT, CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT HEREOF.  FURTHERMORE, IN THIS REGARD, THIS FORBEARANCE AGREEMENT, AS AMENDED BY THIS AMENDMENT,  REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first set forth above.

	 	
BORROWER:

	 	
BRUSHY RESOURCES, INC.

	 	 	 
	 	
By:

	
/s/ Michael J. Pawelek

	 	
Name:

	
Michael J. Pawelek

	 	
Title:

	
Chief Executive Officer

	 	 	 
	 	
GUARANTORS:

	 	
IMPETRO RESOURCES, LLC

	 	 	 
	 	
By:

	
/s/ Michael J. Pawelek

	 	
Name:

	
Michael J. Pawelek

	 	
Title:

	
President and Chief Executive Officer

	 	 	 
	 	
IMPETRO OPERATING, LLC

	 	 	 
	 	
By

	
/s/ Michael J. Pawelek

	 	
Name:

	
Michael J. Pawelek

	 	
Title:

	
Chief Executive Officer

[Signature pages continue]

Signature Page to Brushy Resources, Inc.

Second Amendment to Forbearance Agreement

(Independent Bank)

	 	
LENDER:

	 	
INDEPENDENT BANK

	 	 	 
	 	
By:

	
/s/ John E. Davis

	 	
Name:

	
John E. Davis

	 	
Title:

	
Executive Vice President

[Signature pages continue]

Signature Page to Brushy Resources, Inc.

Second Amendment to Forbearance Agreement

(Independent Bank)

Executed and agreed for purposes of being bound by the provisions of the foregoing Amendment, including without limitation paragraph 5 thereof:

	 	
LILIS ENERGY, INC.

	 	 	 
	 	
By:

	 
	 	 	
/s/ Abraham Mirman

	 	
Name:

	
Abraham Mirman

	 	
Title:

	
Chief Executive Officer

  

Signature Page to Brushy Resources, Inc.

Second Amendment to Forbearance Agreement

(Independent Bank)ex10-4C.htm

Exhibit 10.4C

 

NATIONAL COMMERCE CORPORATION 2011 EQUITY INCENTIVE PLAN

PERFORMANCE SHARE AWARD NOTICE

(PERFORMANCE CRITERIA)

 

This Performance Share Award Notice (this “Notice”) evidences an Award of Performance Shares under the National Commerce Corporation 2011 Equity Incentive Plan (the “Plan”), subject to the terms of the attached Performance Share Award Agreement and the Plan. Your Award has been set at a target Award amount (the “Target Award”) of Performance Shares, as specified below. This Notice constitutes part of and is subject to the terms and provisions of the Agreement and the Plan, which are incorporated by reference herein. References to defined terms in the Plan and the Agreement are capitalized in this Notice. You must return an executed copy of this Notice to the Company within 30 days of the date hereof. If you fail to do so, the Administrator may declare your Award to be null and void.

 

Grant Date: As of January 1, 2015

 

Grantee: [NAME OF GRANTEE]

 

Target Award: [NUMBER OF PERFORMANCE SHARES] 

 

Award Period: 4-year period beginning on January 1, 2015 and ending on December 21, 2018, with no Interim Periods.

 

Conditions for Payment:  Payout of your Award (if any) will occur after the completion of the Award Period. The amount of the payout can be 0% of the Target Award if certain minimum thresholds are not achieved based upon criteria that have been established by the Administrator. Such criteria are incorporated in this Notice by reference as if set out in their entirety. The specific details of the criteria will be provided to you upon request. In general, the earned percentage of the Target Award is based on the average of the Company’s after-tax earnings relative to the corresponding budgets for each of the 4 years of the Award Period. However, in order to receive any payout of your Award, the Company must have maintained net charge-offs averaging less than 0.60% of average loans and non-performing assets averaging less than 1.25% of average loans plus other real estate owned over the 4 years of the Award Period, subject to certain adjustments in the discretion of the Administrator.

 

Deferral of Payment of Award: Payment of your Award, if earned, may be deferred under the Company’s Deferral of Compensation Plan for Key Employees and Non-Employee Directors. For deferral purposes, your Award is “performance based” under Section 409A of the Internal Revenue Code.

 

	
 
	
National Commerce Corporation  

	
 
	
 
	
 
	
 

	
 
	
By: 
	
 
	
 

	
 
	
Printed Name:  
	
 

	 	Title:	 	 
	
 
	
Date:
	
 
	
 

 

I acknowledge that I have carefully read the attached Agreement and the Plan and agree to be bound by all of the provisions set forth in these documents.

 
	
 
	 	
GRANTEE:

	
 
	 	
 

	Enclosures:    Performance Share Award Agreement	 	 
	                         National Commerce Corporation 2011 Equity Incentive Plan	 	Signed: 	 
	 	 	 	[Grantee]
	
 
	 	
Date:
	
 

 

 

 

 

 

PERFORMANCE SHARE AWARD AGREEMENT

UNDER THE

NATIONAL COMMERCE CORPORATION 2011 EQUITY INCENTIVE PLAN

 

1.     Terminology. Capitalized terms used in this Performance Share Award Agreement (this “Agreement”) are defined in the body of this Agreement, the correlating Performance Share Award Notice, and the Glossary at the end of this Agreement.

 

2.     Payment of Performance Share Awards.

 

(a)     The Administrator will determine after the close of the Award Period whether the conditions for payment of the Award have been satisfied and the amount of any Award payable. If, at the close of the Award Period, the Administrator determines that a percentage of the Target Award is payable, then, unless otherwise directed by the Administrator, such percentage of the Target Award will be paid to you in shares of Common Stock. 

 

(b)     For payment of your Award, the number of shares of Common Stock to be distributed to you shall equal the Fair Market Value of the total Performance Shares determined by the Administrator to have been earned by you, divided by the Fair Market Value of a Performance Share, subject to the withholding described in Section 3 below. To the extent that shares of Common Stock are available in the treasury of the Company on the date on which payment is to be made, such shares may be issued in payment of your Award.  Shares of Common Stock issued in connection with your Award shall be deemed to be issued in consideration for future services to be rendered or past services actually rendered to the Company or for its benefit, by you, that the Administrator deems to have a value at least equal to the aggregate par value thereof.

 

(c)     Except as otherwise set forth herein, and only if and after the Administrator has determined that the conditions for payment of your Award set by the Administrator have been satisfied, payment of your Award shall be made as soon as practical, but in no event later than seventy (70) days after the end of the Award Period (or Interim Period, as applicable).

 

(d)     If you are in a key management position, or if you are otherwise a highly compensated employee, and you are determined by the Board to be eligible to participate in the National Commerce Corporation Deferral of Compensation Plan for Key Employees and Non-Employee Directors, as such plan may be amended from time to time, you may elect to defer payment of any Award amounts in accordance with said plan. In the event that the Company desires for any Award to be considered “performance based” as defined in Section 409A of the Code and the Regulations thereunder, all performance criteria shall be established no later than ninety (90) days into the beginning of the Award Period and such other conditions as the Treas. Reg. 1.409A-1(e) imposes shall be met.

 

(e)     If the Administrator has determined that there shall be one or more Interim Periods for your Award and that you have satisfied the conditions for partial payment of your Award, then, except as otherwise set forth herein, you shall be entitled to partial payment on account thereof within seventy (70) days of the end applicable Interim Period. Performance Shares paid to you for an Interim Period may be retained by you and shall not be repaid to the Company, notwithstanding that, based on the conditions set for payment at the end of the Award Period, you would not have been entitled to payment of some or any of your Award. Any Performance Shares paid to you for an Interim Period during an Award Period shall be deducted from the Performance Shares to which you are entitled at the end of the Award Period.

 

(f)     In connection with its determination as to the payment of Performance Shares, the Administrator has full discretion to adjust criteria or other established measures to recognize special or nonrecurring situations or circumstances for the Company, or any other corporation, for any year. The Administrator also shall have the discretion to modify established measures or criteria prior to the end of an Award Period to recognize special or non-recurring situations or circumstances. 

 

 

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3.      Withholding of Taxes. You hereby authorize withholding from payroll or any other payment of any kind due to you and otherwise agree to make adequate provision for foreign, federal, state and local taxes required by law to be withheld, if any, which arise in connection with your Award. The Company may require you to make a cash payment to cover any withholding tax obligation as a condition to payment of the Award. The Administrator may, in its sole discretion, permit you to satisfy, in whole or in part, any withholding tax obligation that may arise in connection with your Award, either by electing to have the Company withhold from the shares of Common Stock to be issued in payment of the Award, or by electing to deliver to the Company already-owned shares of Common Stock, in either case having a Fair Market Value equal to the amount necessary to satisfy the statutory minimum withholding amount due.

 

4.     Adjustments. The Administrator may make various adjustments to your Award and/or the shares of Common Stock to be delivered in payment for your Award. Refer to the Plan for detailed information. 

 

5.     Issuance of Shares. The shares of Common Stock issued in payment for your Award shall be uncertificated. As soon as reasonably practicable after the conditions for payment of your Award have been satisfied, as determined by the Administrator, the Company or its transfer agent will deliver a notice to you (or to your designated broker on your behalf) containing the information required by law with respect to such shares of Common Stock. Such information will, unless the shares of Common Stock are registered or an exemption from registration is available under applicable federal and state law, bear a legend restricting transferability.

 

6.     Termination of Employment. Except as otherwise set forth herein, you must be employed on the last day of the Award Period (or Interim Period, as applicable) in order to receive payment (or partial payment, as applicable) of an Award.

 

(a)     Death or Disability. If, prior to the close of the Award Period, the Company terminates your employment due to your Total and Permanent Disability or you decease, then payment of your outstanding Award shall be made as promptly as possible after your death or the date of such termination of employment due to your Total and Permanent Disability, as applicable, but in no event later than March 15 of the calendar year following your death or date of termination, as applicable. The number of Performance Shares to be paid shall be computed as follows: first, determine (based on the conditions set by the Administrator for payment of your Award) the number of Performance Shares that would have been paid if the Award Period had ended on the December 31st immediately preceding the date of death or the date of your Total and Permanent Disability; then, multiply the above-determined number by a fraction, the numerator of which is the number of months during the subject Award Period that you were an active Employee, and the denominator of which is the number of months in the Award Period. This product shall be reduced by any Performance Shares for which payment has been made with respect to any Interim Period during the Award Period. In this instance, the Fair Market Value of the Common Stock shall be based on the twenty (20) days immediately preceding the date of death or the date of your Total and Permanent Disability.

 

(b)     Other Termination or Discharge. If, prior to the close of the Award Period, your status as an Employee terminates, and there is no payment due under the terms of Section 6(a) above or Section 17 below, then all of your outstanding Performance Shares shall forthwith and automatically be canceled, and all of your rights as the former holder of such canceled Performance Shares with respect to such canceled Performance Shares shall forthwith terminate.

 

7.     No Assignment of Interest. Your Award is not transferable by you and shall not be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance or charge (other than by or to the Company), except (a) by will or the laws of descent and distribution (with all references herein to your rights or duties to be deemed to include your beneficiaries or legal representatives, unless the context otherwise expressly requires); or (b) subject to the prior approval of the Administrator, for transfers to members of your “immediate family” (as defined below), charitable institutions or such other persons or entities approved by the Administrator (subject to such limitations as the Administrator in its discretion may impose, if necessary, to comply with applicable securities laws), in each case subject to the condition that the Administrator be satisfied that such transfer is being made by you for estate planning, tax planning or donative purposes, and no consideration (other than nominal consideration or interests in a family partnership, family corporation or other family-related entity) is received by you therefor. Except as provided above, during your lifetime, your Award is payable only to you. For purposes of this Section 7, the term “immediate family” shall include your spouse, parents, stepparents, children, stepchildren, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law and any person sharing your household (other than a tenant or employee).

 

 

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8.     Designation of Beneficiary. You may designate a beneficiary or beneficiaries (which beneficiary may be an entity other than a natural person) to receive any payments that may be made following your death. Such designation may be changed or canceled at any time without the consent of any such beneficiary. Any such designation, change or cancellation must be made in a form approved by the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been named, or the designated beneficiary or beneficiaries shall have predeceased you, the beneficiary shall be your spouse or, if no spouse survives you, your estate. If you designate more than one beneficiary, the rights of such beneficiaries shall be payable in equal shares, unless you have designated otherwise.

 

9.     Other Agreements. You agree to execute, as a condition of your Award and at any time thereafter as may reasonably be requested by the Administrator, any agreements requested by the Administrator pursuant to Section 7(f) of the Plan.

 

10.     Market Stand-Off Agreement. You agree that, following the effective date of a registration statement of the Company filed under the Securities Act of 1933, as amended, you, for the duration specified by and to the extent requested by the Company and an underwriter of Common Stock or other securities of the Company, shall not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such securities, whether any such aforementioned transaction is to be settled by delivery of such securities or other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, in each case during the seven days prior to and the 180 days after the effectiveness of any underwritten offering of the Company’s equity securities (or such longer or shorter period as may be requested in writing by the managing underwriter and agreed to in writing by the Company) (“Market Stand-Off Period”), except as part of such underwritten registration if otherwise permitted. In addition, you agree to execute any further letters, agreements and/or other documents requested by the Company or its underwriters that are consistent with the terms of this Section 10. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Stand-Off Period.

 

11.     Investment Intent. You represent and warrant that (a) you will be receiving the shares of Common Stock in payment for the Award for your own account and not with a view to distribution within the meaning of the Securities Act of 1933, as amended, other than as may be effected in compliance with the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder; (b) no one else will have any beneficial interest in such shares; and (c) you have no present intention of disposing of such shares at any particular time once received.

 

12.     Restrictions on Resale. You agree not to sell any shares of Common Stock issued in payment for the Award at a time when applicable laws (including federal and state securities laws) or Company policies prohibit such a sale. Further, you acknowledge that resales of stock by persons considered “affiliates” of the Company under Rule 144 of the Securities Act of 1933, as amended, which include executive officers of the Company, may be made only in compliance with the applicable provisions of Rule 144 or pursuant to a separate registration or exemption for the sale of such shares.

 

13.     Non-Guarantee of Employment or Service Relationship. Nothing in the Plan or this Agreement will alter your at-will or other service relationship with the Company, nor be construed as a contract of employment or service relationship between you and the Company, or as a contractual right for you to continue in the employ of, or in a service relationship with, the Company for any period of time, or as a limitation of the right of the Company to discharge you at any time with or without cause or notice and whether or not such discharge results in any adverse effect on your interests under the Plan or this Agreement.

 

14.     No Shareholder Rights. You shall not have any of the rights of a shareholder with respect to shares of Common Stock issued in payment for the Award unless and until such shares have been issued to you upon the satisfaction of the conditions of your Award. No adjustment will be made for dividends or distributions or other rights for which the record date is prior to the date such shares of Common Stock are issued. You are not entitled to receive any dividends or dividend equivalents on Performance Shares and have no voting or any other rights of a Company stockholder with respect to any Performance Shares. You have no interest in or right to receive any shares of Common Stock prior to the time when the Administrator determines the form of payment of Performance Shares pursuant to this Agreement.

 

 

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15.     Company’s Rights. The existence of your Award shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or other stocks with preference ahead of or convertible into, or otherwise affecting, the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company’s assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

16.     Nature of the Plan. The Company is under no obligation (a) to transfer amounts credited to your Award account to any trust or escrow account, or (b) to secure any amount credited to your Award account by any specific assets of the Company or its Affiliates or any other asset in which the Company or its Affiliates has an interest. This Agreement shall not be construed to require the Company or its Affiliates to fund any of the benefits provided hereunder, or to establish a trust for such purpose. The Company or its Affiliates may make such arrangements as it desires to provide for the payment of benefits, including, but not limited to, the establishment of a rabbi trust or such other equivalent arrangement as the Company may decide. No such arrangement shall change the nature of the obligation of the Company or its Affiliates or your rights as provided herein. Neither you nor your beneficiary, estate or personal representative shall have any rights against the Company or its Affiliates with respect to any portion of an account or any trust, escrow account or other arrangement established in connection with this Agreement, except as a general unsecured creditor.

 

17.     Change in Control. In the event of a Change in Control (as defined in the Plan), you shall be deemed to have earned Performance Shares with respect to your Award to the extent outstanding at the date of such Change in Control. The number of Performance Shares so earned shall be computed by determining (based on the conditions set by the Administrator for payment of your Award) the number of Performance Shares that would have been paid if the Award Period had ended on the December 31st immediately preceding the Change in Control; provided, however, that in no event shall the number of Performance Shares earned be less than the Target Award. Thus, in the event of a Change in Control, the minimum Performance Shares to be awarded shall be equal to the aggregate number of Performance Shares that would have been awarded at the end of the Award Period if the conditions for the Target Award had been met. Performance Share Awards granted in the year of the Change in Control shall be earned at the same percentage as Awards granted in the year preceding the year of the Change in Control. Each Performance Share so earned shall, within thirty (30) days following the Change in Control, be canceled in exchange for either, as determined by the Administrator, (a) shares of Common Stock in an amount to be calculated in accordance with the procedures set forth in Section 2(b) above, or (b) a payment in cash of an amount equal to the Change in Control Price. For purposes of this Section 17, “Change in Control Price” means the greater of (i) the Fair Market Value of a share of Common Stock immediately preceding any transaction resulting in a Change in Control, or (ii) the highest price per share of Common Stock offered in conjunction with any transaction resulting in a Change in Control (as determined in good faith by the Administrator if any part of the offered price is payable other than in cash). 

 

18.     Entire Agreement. This Agreement, together with the correlating Performance Share Award Notice and the Plan, contain the entire agreement between you and the Company with respect to your Award. Any oral or written agreements, representations, warranties, written inducements or other communications made prior to the execution of this Agreement with respect to your Award shall be void and ineffective for all purposes.

 

19.     Amendment. This Agreement may be amended from time to time by the Administrator in its discretion; provided, however, that this Agreement may not be modified in a manner that would have a material adverse effect on your Award as determined in the discretion of the Administrator, except as provided in the Plan or in a written document signed by you and the Company.

 

20.     Conformity with Plan. This Agreement is intended to conform in all respects with, and is subject to all applicable provisions of, the Plan. In the event of any ambiguity in this Agreement or any matters as to which this Agreement is silent, the Plan shall govern. A copy of the Plan is provided to you with this Agreement.

 

 

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21.     Code Section 409A. The Award granted herein is intended to be exempt from Code Section 409A (to the extent not deferred under Section 2(d)). Notwithstanding any provision of this Agreement to the contrary, the Company reserves the right to amend any Award as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Code Section 409A. In any case, you shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on you in connection with the Award (including any taxes and penalties under Code Section 409A), and neither the Company nor any of its Affiliates shall be liable for any such taxes or penalties or have any obligation to indemnify or otherwise hold you harmless from any or all such taxes or penalties.

 

 

{Glossary begins on next page}

 

 

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GLOSSARY

 

(a)     “Administrator” means the Board of Directors of the Company or the Administrator(s) or officer(s) appointed by the Board that have authority to administer the Plan as provided in Section 3 thereof.

 

(b)     “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, the Company. For this purpose, “control” means ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity.

 

(c)     “Award” means the award of Performance Shares pursuant to the terms of the Plan.

 

(d)     “Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

 

(e)     “Common Stock” means voting common stock, par value $0.01 per share of the Company.

 

(f)     “Company” means National Commerce Corporation, a Delaware corporation, and includes its Affiliates, except where the context otherwise requires.

 

(g)     “Employee” means any full-time salaried person (including any officer) employed by the Company or any Affiliate of the Company.

 

(h)     “Fair Market Value” of a share of Common Stock generally means either the closing price or the average of the high and low sale price per share of Common Stock on the relevant date, as determined in the Administrator’s discretion, as reported by the principal market or exchange upon which the Common Stock is listed or admitted for trade. Refer to the Plan for a detailed definition of Fair Market Value, including how Fair Market Value is determined in the event that no sale of Common Stock is reported on the relevant date.

 

(i)     “Grant Date” means as of January 1 of the year in which an Award is made, or such other date as the Administrator shall otherwise determine.

 

(j)     “Interim Period” means a period of at least one calendar year chosen by the Administrator commencing with any Grant Date, which period is less than the Award Period commencing on the Grant Date.

 

(k)     “Performance Share” means the equivalent of one share of Common Stock. 

 

(l)     “Total and Permanent Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months. The Administrator may require such proof of Total and Permanent Disability as the Administrator in its sole discretion deems appropriate and the Administrator’s good faith determination as to whether you are totally and permanently disabled will be final and binding on all parties concerned.

 

(m)     “You”; “Your” means the recipient of an Award as reflected on the Performance Share Award Notice. Whenever the Agreement refers to “you” under circumstances where the provision should logically be construed, as determined by the Administrator, to apply to your estate, personal representative or beneficiary to whom your Award may be transferred by will or by the laws of descent and distribution, the word “you” shall be deemed to include such person.

 

 

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