STATE BANCORP, INC. Restricted Stock Award Agreement

 

a.

During the period commencing as of the Award Date and until such time as the Restricted Stock shall have fully vested in accordance with Section 3d (the “Restricted Period”), the Restricted Stock shall remain subject to forfeiture and other restrictions set forth below.

 

b.

During the Restricted Period and during the additional period (if any) commencing at the expiration of the Restricted Period and ending on the later of the first anniversary of the date on which the Restricted Stock fully vests or the first anniversary of the Grantee’s termination of employment with the Company and its Subsidiaries and affiliates for any reason (the “Supplemental Period”), the Restricted Stock shall remain subject to the provisions of Section 17 hereof.  If the Grantee violates the restrictions of Section 17 hereof during the Restricted Period or the Supplemental Period, the Company shall have the right, but not the obligation, to declare the Restricted Stock forfeited; in such event, the Company shall repurchase the Restricted Stock from the Grantee in consideration for a cash payment equal to the monetary payment (if any) made by the Grantee to the Company to acquire t he Restricted Stock or $.01 per share.  Such right shall be exercised no later than thirty days after the expiration of the Restricted Period and the Supplemental Period.

 

c.

None of the shares of Restricted Stock may be sold, exchanged, transferred, pledged, hypothecated, assigned or otherwise encumbered or disposed of until they shall have fully vested in accordance with Section 3d.

 

d.

Subject to the Grantee’s continued employment with the Company (or a Subsidiary thereof), and except as provided below, the Restricted Stock shall vest one third after the expiration of the third year after the Award Date, one third after the expiration of the fourth year after the Award Date and the remainder to vest after the expiration of the fifth year after the Award Date (each a “Vesting Date”).

 

e.

In the event of the Grantee’s death or Disability while the Grantee remains employed by the Company (or a Subsidiary thereof), the Restricted Stock shall become vested on a pro rated basis based upon the number of months of the Grantee’s employment since the Award Date. In the event the Grantee’s employment with the Company (or a Subsidiary thereof) terminates for any reason other than by death or Disability prior to the Vesting Date, the Restricted Stock shall be forfeited immediately.

 

f.

Notwithstanding anything to the contrary herein, if the Company is not the surviving corporation following a Change in Control, and the Acquiror does not assume the Restricted Stock or does not substitute equivalent equity awards relating to the securities of such Acquiror or its affiliates for the Restricted Stock, then the Restricted Stock shall become fully vested and all restrictions will immediately lapse.  For all purposes of this Agreement, “Change in Control” shall mean (a) on or prior to the second anniversary of the Award Date an event described in 26 C.F.R. section 1.280G-1 (Q/A 27 through 29) or 26 C.F.R. section 1.409A-3(i)(5)(i) and (b) a transaction meeting the definition of Change in Control contained in the Plan.

 

g.

Notwithstanding anything to the contrary herein, if the Company is the surviving corporation following a Change in Control, or the Acquiror assumes the Restricted Stock or substitutes equivalent equity awards relating to the securities of such Acquiror or its affiliates for the Restricted Stock, then the Restricted Stock or such substitute therefore shall remain outstanding and be governed by their respective terms and the provisions of the Plan, except, however, if the Grantee’s employment with the Company (and its Subsidiaries) is terminated for any reason other than “cause” within eighteen (18) months following a Change in Control, then the Restricted Stock shall immediately become fully vested and all restrictions will immediately lapse.  For this purpose, “cause” shall have the meaning assigned to such term under an employment agreement or change in control agreement bet ween the Company and the Grantee in effect on the date of this Award Agreement and, in the absence of such an employment agreement or change in control agreement, shall mean:

 

(i)   fraud, misappropriation or intentional material damage to the property or business of the Company or any Subsidiary, or

 

(ii)  commission of a felony whose determination is final and non-appealable, or entry of a plea of guilty or no contest to the commission of a felony, or

 

(iii) material violation of any material law, rule or regulation applicable to the Company or any Subsidiary or its respective business.

 

For purposes of this provision, no act or failure to act, on the part of the Grantee, shall be considered “intentional” unless it is done, or omitted to be done, by the Grantee in bad faith or without reasonable belief that the grantee’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Grantee in good faith and in the best interests of the Company.

 

h.

Intentionally omitted

 

i.

During the Restricted Period and the Supplemental Period, the Restricted Stock shall be recorded in a book entry account in the name of the Grantee.

 

a.

No Restricted Stock Award may be exercised or shares of Stock issued pursuant to a Restricted Stock Award unless (1) a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), shall at the time of exercise or issuance be in effect with respect to the shares issuable pursuant to such award or (2) in the opinion of legal counsel to the Company, the shares issuable pursuant to such award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.

 

b.

The Company may place upon any stock certificate for shares of Stock issued pursuant to a Restricted Stock Award the following legend or such other legend as the Board may prescribe to prevent disposition of the shares in violation of the Securities Act or other applicable law:

 

c.

The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability with respect to the failure to issue or sell such shares as to which the requisite authority shall not have been obtained. As a condition to the issuance of any Stock, the Company may require the Grantee to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation or to make any representation or warranty with respect thereto as may be requested by the Company.

Confidential Information.  Unless he obtains the prior written consent of the Company, the Grantee shall keep confidential and shall refrain from using for the benefit of himself, or any person or entity other than the Company and its Subsidiaries (the Company and such Subsidiaries collectively, the “Company’s Affiliated Group”), any material document or information obtained from a member of the Company’s Affiliated Group in the course of his employment with any of them concerning their current or planned future properties, operations or business, including but not limited to information concerning the Company’s customers (the “Confidential Information”) unless and until such document or information is readily ascertainable from public or publi shed information or trade sources or has otherwise been made available to the public through no fault of his own; provided, however, that nothing in this Section 17(a)(i) shall prevent the Grantee, with or without the Company’s consent, from participating in or disclosing documents or information in connection with any judicial or administrative investigation, inquiry or proceeding to the extent that such participation or disclosure is compelled under applicable law; in such event, the Grantee shall, to the extent practicable under the circumstances, notify the Company in advance of and afford the Company an opportunity, at its own expense, to take action to prevent or limit the scope of such participation or disclosure.

Proprietary Information.  The Grantee acknowledges that, during the course of his employment, he will, alone or jointly with others, develop or have access to information (whether in written, oral, electronic or other form) concerning the Company’s Affiliated Group’s business plans, marketing plans, methods and surveys, product and service design, development and pricing plans and methods, customer lists, prospect lists, customer relationship information and need assessments, profitability assessments, technology, service marks, trademarks and other intellectual property, trade secrets, know-how and other proprietary information concerning the Company’s Affiliated Group (the “Proprietary Information”). The Grantee acknowledges that all such Proprietary Inf ormation is, as between the Grantee and the Company’s Affiliated Group, the sole property of the Company’s Affiliated Group and that the Grantee has no right, title or interest therein.  During his employment with the Company and at all times thereafter, the Grantee shall refrain from using any Proprietary Information for the benefit of any person or entity other than the Company’s Affiliated Group.  At any time upon the Company’s request, and in any event upon his termination of employment with the Company, the Grantee shall promptly return to the Company all Proprietary Information in his possession in any form or media and all laptop computers, cell phones and other property of the Company’s Affiliated Group in his possession and shall, if requested to do so by the Company, certify in writing that any Proprietary Information not so returned has been destroyed.

Non-derogation.  While employed by the Company or any Subsidiary and at all times thereafter, the Grantee shall refrain from making any statement (whether or not in writing) concerning the Company’s Affiliated Group or its business, operations, customers, directors, officers, employees or owners that he intends, or that a reasonable person acting in like circumstances would expect, to impair in any respect the Company’s Affiliated Group’s business, operations or reputation.

Solicitation.  The Grantee, for a period of one (1) year following his termination of employment with the Company or any Subsidiary, shall not, without the written consent of the Company, either directly or indirectly:

(a)  

solicit, offer employment to, or take any other action intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any officer or employee of the Company’s Affiliated Group to terminate his or her employment and accept employment or become affiliated with, or provide services with or without compensation in any capacity whatsoever to, any person or entity engaged in a business or line of business or providing a product or service in direct or indirect competition with the Company’s Business in the Company’s Geographic Market;

(b)  

provide any information, advice or recommendation with respect to any such officer or employee to any person or entity that is intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing, encouraging or enabling any officer or employee of the Company’s Affiliated Group to terminate his employment and accept employment or become affiliated with, or provide services with or without compensation in any capacity whatsoever to, any person or entity engaged in a business or line of business or providing a product or service in direct or indirect competition with the Company’s Business in the Company’s Geographic Market; or

(c)  

directly or indirectly solicit, or facilitate in any manner any other person’s or entity’s solicitation of, business in competition with the Company’s Business in the Company’s Geographic market from (I) any of the Company’s customers with whom the Grantee served as a relationship manager, or whom the Grantee was assigned to solicit on behalf of the Company, at any time during the period of one (1) year ending on the date of his termination of employment; (II) any other person or entity which the Grantee knows to be one of the Company’s customers, or (III) any other person or entity which the Grantee knows is being actively solicited by the Company on, or had been identified for active solicitation by the Company at any time during the period of one (1) year ending on the date of his termination of employment with t he Company.

Reasonableness of Covenants.  The Grantee acknowledges that:  (i) the Company has a legitimate business interest in preserving its investment in its Confidential Information and Proprietary Information, and the Company’s customers; (ii) the restrictions set forth in this Section 17 constitute reasonable restrictions to protect the Company’s legitimate business interests; (iii) such restrictions are reasonable in duration, geographic scope and scope of business protected; (iv) observing such restrictions will not unreasonably impair the Employee’s ability to seek or secure employment following his termination of employment with the Company; and (v) his employment by the Company constitute adequate consideration for his adherence to such restrictions.  0;The Grantee hereby waives his right, in any action or proceeding relating to the enforcement or enforceability of the provisions of this Section 17, to make any argument or assertion to the contrary.

Reasonable of Damages.  The Grantee hereby acknowledges that the forfeiture of the Restricted Stock as provided herein constitutes reasonable but non-exclusive damages and waives his right, in any action or proceeding relating to the enforcement or enforceability of the provisions of this Section 17, to make any argument or assertion to the contrary.

Specific Performance.   The Grantee acknowledges that money damages will not be an adequate remedy for his failure to observe or perform any of the covenants set forth in Section 17(a).  Therefore, the Company shall have the right to apply to any court of competent jurisdiction for equitable relief, including but not limited to a temporary restraining order or injunction ordering specific performance.  The Grantee hereby waives his right, in any action or proceeding relating to any application for equitable relief, to make any argument or assertion to the contrary.

Notification to Subsequent Employers and Potential Employers.  Prior to accepting employment with any person or entity other than a member of the Company’s Affiliated Group, the Grantee shall disclose to such person or entity the existence of this Agreement and furnish such person or entity with a copy hereof.  The Company reserves the right, and the Grantee hereby authorizes the Company (i) to notify any person or entity making a pre-hire or post-hire inquiry of the Company concerning the Grantee of the existence of this Agreement and to furnish to such person or entity a copy hereof and (ii) to notify any person or entity engaged in a business or line of business or providing products or services in direct or indirect competition with the Company’s Business in th e Company’s Geographic Market by whom the Grantee is subsequently employed, or with whom the Grantee is subsequently affiliated as an owner, investor, financier, director, officer, employee, independent contractor, vendor or service provider, whether for or without compensation, of the existence of this Agreement and to furnish to such person or entity a copy hereof.

Reformation or Modification.  In the event that this Section 17 or any portion hereof shall be found by an arbitrator or court of competent jurisdiction to be unenforceable as written, such court or arbitrator shall, and is hereby authorized to, modify this Section 17 or any portion hereof in such manner as he or it determines to be necessary to render this Section 17 enforceable to the maximum possible extent and to enforce this Section 17 as so modified.