EXHIBIT 4.1
GILMER FINANCIAL SERVICES, INC.
1995 Stock Option and Incentive Plan
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, officers and employees of the Corporation
and its Affiliates. It is intended that designated Options granted pursuant to
the provisions of this Plan to persons employed by the Corporation or its
Affiliates will qualify as Incentive Stock Options. Options granted to persons
who are not employees will be Non-Qualified Stock Options.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" - means any "parent corporation" or "subsidiary
corporation" of the Corporation, as such terms are defined in Section 424(e) and
(f), respectively, of the Code.
"Bank" - means Gilmer Savings Bank FSB, and any successor entity.
"Award" - means the grant of an Incentive Stock Option, a
Non-Qualified Stock Option, a Stock Appreciation Right, a Limited Stock
Appreciation Right, or any combination thereof, as provided in the Plan.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 3 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, advisory director, officer or employee of
the Corporation or an Affiliate, except that when used with respect to persons
granted an Incentive Option means the absence of any interruption or termination
of service as an employee of the Corporation or an Affiliate. Service shall not
be con sidered interrupted in the case of sick leave, military leave or any
other leave of absence approved by the Corporation or in the case of transfers
between payroll locations of the Corporation or between the Corporation, its
parent, its subsidiaries or its successor. With respect to any advisory
director, continuous service shall mean availability to perform such functions
as may be required of the Bank's advisory directors.
"Corporation" - means Gilmer Financial Services, Inc., a Delaware
corporation.
"Employee" - means any person, including an officer or director, who
is employed by the Corporation or any Affiliate.
"ERISA" - means the Employee Retirement Income Security Act of 1974,
as amended.
"Exercise Price" - means (i) in the case of an Option, the price per
Share at which the Shares subject to such Option may be purchased upon exercise
of such Option and (ii) in the case of a Right, the price per Share (other than
the Market Value per Share on the date of exercise and the Offer Price per Share
as defined in Section 10 hereof) which, upon grant, the Committee determines
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shall be utilized in calculating the aggregate value which a Participant shall
be entitled to receive pursuant to Sections 9, 10 or 12 hereof upon exercise of
such Right.
"Incentive Stock Option" - means an option to purchase Shares
granted by the Committee pursuant to Section 6 hereof which is subject to the
limitations and restrictions of Section 8 hereof and is intended to qualify
under Section 422 of the Code.
"Limited Stock Appreciation Right" - means a stock appreciation
right with respect to Shares granted by the Committee pursuant to Sections 6 and
10 hereof.
"Market Value" - means the average of the high and low quoted sales
price on the date in question (or, if there is no reported sale on such date, on
the last preceding date on which any reported sale occurred) of a Share on the
Composite Tape for the New York Stock Exchange-Listed Stocks, or, if on such
date the Shares are not quoted on the Composite Tape, on the New York Stock
Exchange, or, if the Shares are not listed or admitted to trading on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which the Shares are listed or admitted
to trading, or, if the Shares are not listed or admitted to trading on any such
exchange, the mean between the closing high bid and low asked quotations with
respect to a Share on such date on the National Association of Securities
Dealers, Inc., Automated Quotations System, or any similar system then in use,
or, if no such quotations are available, the fair market value on such date of a
Share as the Committee shall reasonably determine.
"Non-Employee Director" - means a director who (i) is not currently
an Employee; (ii) does not receive compensation from the Corporation or any
Affiliate in any capacity other than as a director (except for an amount that
does not exceed the dollar amount for which disclosure would be required
pursuant to Item 404(a) of Regulation S-K); and (iii) does not possess an
interest in any other transactions and is not engaged in a business relationship
for which disclosure would be required pursuant to Item 404(a) or (b) of
Regulation S-K.
"Non-Qualified Stock Option" - means an option to purchase Shares
granted by the Committee pursuant to Section 6 hereof, which option is not
intended to qualify under Section 422(b) of the Code.
"Option" - means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" - means any director, officer or employee of the
Corporation or any Affiliate who is selected by the Committee to receive an
Award and any director or advisory director of the Corporation who is granted an
Award pursuant to Section 19 hereof.
"Plan" - means the 1995 Stock Option and Incentive Plan of the
Corporation.
"Related" - means (i) in the case of a Right, a Right which is
granted in connection with, and to the extent exercisable, in whole or in part,
in lieu of, an Option or another Right and (ii) in the case of an Option, an
Option with respect to which and to the extent a Right is exercisable, in whole
or in part, in lieu thereof has been granted.
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"Right" - means a Limited Stock Appreciation Right or a Stock
Appreciation Right.
"Shares" - means the shares of common stock of the Corporation.
"Stock Appreciation Right" - means a stock appreciation right with
respect to Shares granted by the Committee pursuant to Sections 6 and 9 hereof.
"Ten Percent Beneficial Owner" - means the beneficial owner of more
than ten percent of any class of the Corporation's equity securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be (i) a Non-Employee
Director and (ii) an "outside director" as set forth in Section 162(m) of the
Code and defined in the regulations promulgated thereunder. The members of the
Committee shall be appointed by the Board of Directors of the Corporation.
Except as limited by the express provisions of the Plan, the Committee shall
have sole and complete authority and discretion, subject to Office of Thrift
Supervision Regulations, to (i) select Participants and grant Awards; (ii)
determine the number of Shares to be subject to types of Awards generally, as
well as to individual Awards granted under the Plan; (iii) determine the terms
and conditions upon which Awards shall be granted under the Plan; (iv) prescribe
the form and terms of instruments evidencing such grants; and (v) establish from
time to time regulations for the administration of the Plan, interpret the Plan,
and make all determinations deemed necessary or advisable for the administration
of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a ma jority of the Committee without a meeting,
shall be acts of the Committee.
4. Participation in Committee Awards. The Committee may select from time
to time Participants in the Plan from those directors (including advisory
directors), officers and employees of the Corporation or its Affiliates who, in
the opinion of the Committee, have the capacity for contributing to the
successful performance of the Corporation or its Affiliates.
5. Shares Subject to Plan. Subject to adjustment by the operation of
Section 11 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 10% of the total Shares issued in the Bank's
conversion to the capital stock form. The Shares with respect to which Awards
may be made under the Plan may be either authorized and unissued shares or
issued shares heretofore or hereafter reacquired and held as treasury shares.
Shares which are subject to Related Rights and Related Options shall be counted
only once in determining whether the maximum number of Shares with respect to
which Awards may be granted under the Plan has been exceeded. An Award shall not
be considered to have been made under the Plan with respect to any Option or
Right which terminates, and new Awards may be granted under the Plan with
respect to the number of Shares as to which such termination has occurred.
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6. General Terms and Conditions of Options and Rights. The Committee shall
have full and complete authority and discretion, subject to Office of Thrift
Supervision Regulations and except as expressly limited by the Plan, to grant
Options and/or Rights and to provide the terms and conditions (which need not be
identical among Participants) thereof. In particular, the Committee shall
prescribe the following terms and conditions: (i) the Exercise Price of any
Option or Right, which shall not be less than the Market Value per Share at the
date of grant of such Option or Right, (ii) the number of Shares subject to, and
the expiration date of, any Option or Right, which expiration date shall not
exceed ten years from the date of grant, (iii) the manner, time and rate
(cumulative or otherwise) of exercise of such Option or Right, and (iv) the
restrictions, if any, to be placed upon such Option or Right or upon Shares
which may be issued upon exercise of such Option or Right. Notwithstanding the
foregoing and subject to compliance with applicable Office of Thrift Supervision
Regulations, no individual shall be granted Awards with respect to more than 25%
of the total Shares subject to the Plan, and no director who is not an employee
of the Corporation shall be granted Awards with respect to more than 5% of the
total Shares subject to the Plan. All non-employee directors of the Corporation,
in the aggregate, may not be granted Awards with respect to more than 30% of the
total Shares subject to the Plan. No Awards shall begin vesting earlier than one
year from the date the Plan is approved by stockholders of the Corporation and
no Awards shall vest at a rate in excess of 20% per year from the date of grant.
In the event Office of Thrift Supervision Regulations are amended (the
"Amended Regulations") to permit shorter vesting periods, any Award made
pursuant to this Plan, which Award is subject to the requirements of such
Amended Regulations, may vest, at the sole discretion of the Committee, in
accordance with such Amended Regulations.
Furthermore, at the time of any Award, the Participant shall enter into an
agreement with the Corporation in a form specified by the Committee, agreeing to
the terms and conditions of the Award and such other matters as the Committee,
in its sole discretion, shall determine (the "Option Agreement").
7. Exercise of Options or Rights.
(a)Except as provided herein, an Option or Right granted under the
Plan shall be exercisable during the lifetime of the Participant to whom such
Option or Right was granted only by such Participant and, except as provided in
paragraphs (c) and (d) of this Section 7, no such Option or Right may be
exercised unless at the time such Participant exercises such Option or Right,
such Participant has maintained Continuous Service since the date of grant of
such Option or Right.
(b)To exercise an Option or Right under the Plan, the Participant to
whom such Option or Right was granted shall give written notice to the
Corporation in form satisfactory to the Committee (and, if partial exercises
have been permitted by the Committee, by specifying the number of Shares with
respect to which such Participant elects to exercise such Option or Right)
together with full payment of the Exercise Price, if any and to the extent
required. The date of exercise shall be the date on which such notice is
received by the Corporation. Payment, if any is required, shall be made either
(i) in cash (including check, bank draft or money order) or (ii) by delivering
(A) Shares already owned by the Participant and having a fair market value equal
to the applicable exercise price,
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such fair market value to be determined in such appropriate manner as may be
provided by the Committee or as may be required in order to comply with or to
conform to requirements of any applicable laws or regulations, or (B) a
combination of cash and such Shares.
(c)If a Participant to whom an Option or Right was granted shall
cease to maintain Continuous Service for any reason excluding death or
disability and termination of employment by the Corporation or any Affiliate for
cause, such Participant may, but only within the period of three months
immediately succeeding such cessation of Continuous Service and in no event
after the expira tion date of such Option or Right, exercise such Option or
Right to the extent that such Participant was entitled to exercise such Option
or Right at the date of such cessation, provided, however, that such right of
exercise after cessation of Continuous Service shall not be available to a
Participant if the Committee otherwise determines and so provides in the
applicable instrument or instruments evidencing the grant of such Option or
Right. If a Participant to whom an Option or Right was granted shall cease to
maintain Continuous Service by reason of death or disability then, unless the
Committee shall have otherwise provided in the instrument evidencing the grant
of an Option or Stock Appreciation Right, all Options and Rights granted and not
fully exercisable shall become exercisable in full upon the happening of such
event and shall remain so exercisable (i) in the event of death for the period
described in paragraph (d) of this Section 7 and (ii) in the event of disability
for a period of three months following such date. If the Continuous Service of a
Participant to whom an Option or Right was granted by the Corporation is
terminated for cause, all rights under any Option or Right of such Participant
shall expire immediately upon the giving to the Participant of notice of such
termination.
(d)In the event of the death of a Participant while in the
Continuous Service of the Corporation or an Affiliate or within the three month
period referred to in paragraph (c) of this Section 7, the person to whom any
Option or Right held by the Participant at the time of his death is transferred
by will or the laws of descent and distribution, or in the case of an Award
other than an Incentive Stock Option, pursuant to a qualified domestic relations
order, as defined in the Code or Title 1 of ERISA or the rules thereunder may,
but only to the extent such Participant was entitled to exercise such Option or
Right as set forth in paragraph (c) of this Section 7 at any time within a
period of one year succeeding the date of death of such Participant, but in no
event later than ten years from the date of grant of such Option or Right.
Following the death of any Participant to whom an Option was granted under the
Plan, irrespective of whether any Related Right shall have been granted to the
Participant or whether the person entitled to exercise such Related Right
desires to do so, the Committee may, as an alternative means of settlement of
such Option, elect to pay to the person to whom such Option is transferred by
will or by the laws of descent and distribution, or in the case of an Option
other than an Incentive Stock Option, pursuant to a qualified domestic relations
order, as defined in the Code or Title I of ERISA or the rules thereunder, the
amount by which the Market Value per Share on the date of exercise of such
Option shall exceed the Exercise Price of such Option, multiplied by the number
of Shares with respect to which such Option is properly exercised. Any such
settlement of an Option shall be considered an exercise of such Option for all
purposes of the Plan.
8. Incentive Stock Options. Incentive Stock Options may be granted only to
Participants who are Employees. Any provision of the Plan to the contrary
notwithstanding, (i) no Incentive
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Stock Option shall be granted more than ten years from the date the Plan is
adopted by the Board of Directors of the Corporation and no Incentive Stock
Option shall be exercisable more than ten years from the date such Incentive
Stock Option is granted, (ii) the Exercise Price of any Incentive Stock Option
shall not be less than the Market Value per Share on the date such Incentive
Stock Option is granted, (iii) any Incentive Stock Option shall not be
transferable by the Participant to whom such Incentive Stock Option is granted
other than by will or the laws of descent and distribution, and shall be
exercisable during such Participant's lifetime only by such Participant, (iv) no
Incentive Stock Option shall be granted to any individual who, at the time such
Incentive Stock Option is granted, owns stock possessing more than ten percent
of the total combined voting power of all classes of stock of the Corporation or
any Affiliate unless the Exercise Price of such Incentive Stock Option is at
least 110 percent of the Market Value per Share at the date of grant and such
Incentive Stock Option is not exercisable after the expiration of five years
from the date such Incentive Stock Option is granted, and (v) the aggregate
Market Value (determined as of the time any Incentive Stock Option is granted)
of the Shares with respect to which Incentive Stock Options are exercisable for
the first time by a Participant in any calendar year shall not exceed $100,000.
9. Stock Appreciation Rights. A Stock Appreciation Right shall, upon its
exercise, entitle the Participant to whom such Stock Appreciation Right was
granted to receive a number of Shares or cash or combination thereof, as the
Committee in its discretion shall determine, the aggregate value of which (i.e.,
the sum of the amount of cash and/or Market Value of such Shares on date of
exercise) shall equal (as nearly as possible, it being understood that the
Corporation shall not issue any fractional shares) the amount by which the
Market Value per Share on the date of such exercise shall exceed the Exercise
Price of such Stock Appreciation Right, multiplied by the number of Shares with
respect of which such Stock Appreciation Right shall have been exercised. A
Stock Appreciation Right may be Related to an Option or may be granted
independently of any Option as the Committee shall from time to time in each
case determine. At the time of grant of an Option the Committee shall determine
whether and to what extent a Related Stock Appreciation Right shall be granted
with respect thereto; provided, however, and notwithstanding any other provision
of the Plan, that if the Related Option is an Incentive Stock Option, the
Related Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Stock Appreciation Right were
an Incentive Stock Option and as if other rights which are Related to Incentive
Stock Options were Incentive Stock Options. In the case of a Related Option,
such Related Option shall cease to be exer cisable to the extent of the Shares
with respect to which the Related Stock Appreciation Right was exercised. Upon
the exercise or termination of a Related Option, any Related Stock Appreciation
Right shall terminate to the extent of the Shares with respect to which the
Related Option was exercised or terminated.
10. Limited Stock Appreciation Rights. At the time of grant of an Option
or Stock Appreciation Right to any Participant, the Committee shall have full
and complete authority and discretion to also grant to such Participant a
Limited Stock Appreciation Right which is Related to such Option or Stock
Appreciation Right; provided, however and notwithstanding any other provision of
the Plan, that if the Related Option is an Incentive Stock Option, the Related
Limited Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Limited Stock Appreciation
Right were an Incentive Stock Option and as if all other Rights which are
Related to Incentive Stock Options were Incentive Stock Options. Subject to
vesting
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requirements contained in 12 C.F.R. ss.563.b3(g)(4) or any successor regulation,
a Limited Stock Ap preciation Right shall be exercisable only during the period
beginning on the first day following the date of expiration of any "offer" (as
such term is hereinafter defined) and ending on the forty-fifth day following
such date.
A Limited Stock Appreciation Right shall, upon its exercise, entitle the
Participant to whom such Limited Stock Appreciation Right was granted to receive
an amount of cash equal to the amount by which the "Offer Price per Share" (as
such term is hereinafter defined) or the Market Value on the date of such
exercise, as shall have been provided by the Committee in its discretion at the
time of grant, shall exceed the Exercise Price of such Limited Stock
Appreciation Right, multiplied by the number of Shares with respect to which
such Limited Stock Appreciation Right shall have been exercised. Upon the
exercise of a Limited Stock Appreciation Right, any Related Option and/or
Related Stock Appreciation Right shall cease to be exercisable to the extent of
the Shares with respect to which such Limited Stock Appreciation Right was
exercised. Upon the exercise or termination of a Related Option or Related Stock
Appreciation Right, any Related Limited Stock Appreciation Right shall terminate
to the extent of the Shares with respect to which such Related Option or Related
Stock Appreciation Right was exercised or terminated.
For the purposes of this Section 10, the term "Offer" shall mean any
tender offer or exchange offer for Shares other than one made by the
Corporation, provided that the corporation, person or other entity making the
offer acquires pursuant to such offer either (i) 25% of the Shares outstanding
immediately prior to the commencement of such offer or (ii) a number of Shares
which, together with all other Shares acquired in any tender offer or exchange
offer (other than one made by the Corporation) which expired within sixty days
of the expiration date of the offer in question, equals 25% of the Shares
outstanding immediately prior to the commencement of the offer in question. The
term "Offer Price per Share" as used in this Section 10 shall mean the highest
price per Share paid in any Offer which Offer is in effect any time during the
period beginning on the sixtieth day prior to the date on which a Limited Stock
Appreciation Right is exercised and ending on the date on which such Limited
Stock Appreciation Right is exercised. Any securities or property which are part
or all of the consideration paid for Shares in the Offer shall be valued in
determining the Offer Price per Share at the higher of (A) the valuation placed
on such securities or property by the corporation, person or other entity making
such Offer or (B) the valuation placed on such securities or property by the
Committee.
11. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, re capitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
number, class and exercise price of shares with respect to which Awards have
been granted under the Plan shall be appropriately adjusted by the Committee,
whose determination shall be conclusive.
12. Effect of Merger. In the event of any merger, consolidation or
combination of the Corporation (other than a merger, consolidation or
combination in which the Corporation is the continuing entity and which does not
result in the outstanding Shares being converted into or
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exchanged for different securities, cash or other property, or any combination
thereof) pursuant to a plan or agreement the terms of which are binding upon all
stockholders of the Corporation (except to the extent that dissenting
stockholders may be entitled, under statutory provisions or provisions contained
in the articles of incorporation, to receive the appraised or fair value of
their holdings), any Participant to whom an Option or Right has been granted
shall have the right (subject to the pro visions of the Plan and any limitation
or vesting period applicable to such Option or Right), thereafter and during the
term of each such Option or Right, to receive upon exercise of any such Option
or Right an amount equal to the excess of the fair market value on the date of
such exercise of the securities, cash or other property, or combination thereof,
receivable upon such merger, consolidation or combination in respect of a Share
over the Exercise Price of such Right or Option, multiplied by the number of
Shares with respect to which such Option or Right shall have been exercised.
Such amount may be payable fully in cash, fully in one or more of the kind or
kinds of property payable in such merger, consolidation or combination, or
partly in cash and partly in one or more of such kind or kinds of property, all
in the discretion of the Committee. Unless the Committee shall have provided
otherwise in the agreement referred to in paragraph (d) of Section 11 hereof, in
the event of any such merger, consolidation or combination any Restricted Period
shall lapse with respect to Shares of Restricted Stock awarded at least six
months prior to such event, all such Shares shall be fully vested in the
Participants to whom such Shares were awarded, and the holders of such Shares
shall be eligible to receive in respect thereof the full amount receivable per
Share in such merger, consolidation or combination.
13. Assignments and Transfers. No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the Plan
may be assigned, encumbered or transferred except, in the event of the death of
a Participant, by will or the laws of descent and distribution or in the case of
Awards other than Incentive Stock Options pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the rules
thereunder.
14. Employee Rights Under the Plan. No director, officer or employee shall
have a right to be selected as a Participant nor, having been so selected, to be
selected again as a Participant and no director, officer, employee or other
person shall have any claim or right to be granted an Award under the Plan or
under any other incentive or similar plan of the Corporation or any Affiliate.
Neither the Plan nor any action taken thereunder shall be construed as giving
any employee any right to be retained in the employ of the Corporation or any
Affiliate.
15. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other Federal, state or local
securities legislation or regulation. It may be provided that any representation
requirement shall become inoperative upon a registration of the Shares or other
action eliminating the necessity of such representation under such Securities
Act or other securities legislation. The Corporation shall not be required to
deliver any Shares under the Plan prior to (i) the admission of such shares to
listing on any stock exchange on which Shares may then be listed, and (ii) the
completion of such registration or other qualification
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of such Shares under any state or Federal law, rule or regulation, as the
Committee shall determine to be necessary or advisable.
16. Withholding Tax. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the exercise of a right under the Plan
any taxes required by law to be withheld with respect to such cash payments.
Where a Participant or other person is entitled to receive Shares pursuant to
the exercise of an Option or Right pursuant to the Plan, the Corporation shall
have the right to require the Participant or such other person to pay the
Corporation the amount of any taxes which the Corporation is required to
withhold with respect to such Shares, may withhold sufficient Shares to cover
the amount of taxes which the Corporation is required to withhold.
17. Amendment or Termination. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time,
subject to the Office of Thrift Supervision Regulations, but (except as provided
in Section 11 hereof) no amendment shall be made without approval of the
stockholders of the Corporation which shall (i) increase the aggregate number of
Shares with respect to which Awards may be made under the Plan (except pursuant
to Section 11), (ii) materially increase the benefits accruing to Participants,
(iii) materially change the requirements as to eligibility for participation in
the Plan or (iv) change the class of persons eligible to participate in the Plan
provided, however, that no such amendment, suspension or termination shall
impair the rights of any Participant, without his consent, in any Award made
pursuant to the Plan.
18. Effective Date and Term of Plan. The Plan shall become effective upon
its approval by the stockholders of the Corporation. It shall continue in effect
for a term of ten years unless sooner terminated under Section 17 hereof.
19. Initial Grant. By, and simultaneously with, the approval of the Plan
by the stockholders of the Corporation, each member of the Board of Directors of
the Corporation at the time of the Bank's conversion to stock form who is not an
Employee, is hereby granted a ten year, Non-Qualified Stock Option to purchase a
number of shares equal to 0.5% of the shares issued in the conversion at an
Exercise Price per share equal to the Market Value on the date of the grant,
which shall be the date of stockholder approval of the Plan. All options shall
vest ratably over a five year period, the first installment vesting on the first
anniversary of the date of grant from the date of stockholder approval of the
Plan. Each such Option shall be evidenced by a Non-Qualified Stock Option
Agreement in a form approved by the Board of Directors and shall be subject in
all respects to the terms and conditions of this Plan, which are controlling.
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EXHIBIT 4.2
GILMER FINANCIAL SERVICES, INC.
1995 STOCK OPTION AND INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
NQSO NO. _______
This option is granted on October 12, 1995 by Gilmer Financial Services,
Inc. (the "Corporation") to____________________ (the "Optionee"), in accordance
with the following terms and conditions:
1. Option Grant and Exercise Period. The Corporation has granted to the
Optionee an Option (the "Option") to purchase, pursuant to the Plan and this
Agreement, an aggregate of _______ shares (the "Option Shares") of the Common
Stock, par value $.01 per share ("Common Stock"), of the Corporation at the
price of $__________ per share (the "Exercise Price"). A copy of the Plan, as
currently in effect, is incorporated herein by reference and is attached to this
Agreement.
This Option shall be exercisable only during the period (the "Exercise
Period") commencing from October 12, 1995 (the "Commencement Date") and ending
at 5:00 p.m., Washington, Iowa time, on the date ten years after the
Commencement Date, such later time and date being hereinafter referred to as the
"Expiration Date." This option shall vest and become exercisable according to
the following schedule:
20% on October 12, 1996
20% on October 12, 1997
20% on October 12, 1998
20% on October 12, 1999
20% on October 12, 2000
During the Exercise Period, only the vested portion of this Option shall be
exercisable in whole at any time or in part from time to time, subject to the
provisions of this Agreement. In the event of the death or disability (total or
partial) of the Optionee, the Committee shall, with the consent of the Optionee,
accelerate the vesting of this Option.
2. Method of Exercise of this Option. This Option may be exercised during
the Exercise Period by giving written notice to the Corporation specifying the
number of Option Shares to be purchased. The notice must be in the form
prescribed by the committee referred to in Section 3 of the Plan or its
successor (the "Committee") and directed to the address set forth in Section 11
below. The date of exercise is the date on which such notice is received by the
Corporation. Such notice must be accompanied by payment in full for the Option
Shares to be purchased upon such exercise. Payment shall be made either (i) in
cash, which may be in the form of a check, bank draft, or money order payable to
the Corporation, or (ii) if the Committee shall have previously approved such
form
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of payment, by delivering shares of Common Stock already owned by the Optionee
having a "Market Value" (as defined in the Plan as in effect on the date of the
grant of this Option) equal to the applicable exercise price, or (iii) if the
Committee shall have previously approved such form of payment, a combination of
cash and such shares. Promptly after such payment, subject to Section 3 below,
the Corporation shall issue and deliver to the Optionee or other person
exercising this Option a certificate or certificates representing the shares of
Common Stock so purchased, registered in the name of the Optionee (or such other
person), or, upon request, in the name of the Optionee (or such other person)
and in the name of another jointly with right of survivorship.
3. Delivery and Registration of Shares of Common Stock. The Corporation's
obligation to deliver shares of Common Stock hereunder shall, if the Committee
so requests, be conditioned upon the receipt of a representation as to the
investment intention of the Optionee or any other person to whom such shares are
to be delivered, in such form as the Committee shall determine to be necessary
or advisable to comply with the provisions of the Securities Act of 1933, as
amended, or any other federal, state or local securities law or regulation. In
requesting any such representation, it may be provided that such representation
requirement shall become inoperative upon a registration of such shares or other
action eliminating the necessity of such representation under such Securities
Act or other securities law or regulation. The Corporation shall not be required
to deliver any shares upon exercise of this Option prior to (i) the admission of
such shares to listing on any stock exchange or system on which the shares of
Common Stock may then be listed, and (ii) the completion of such registration or
other qualification of such shares under any state or federal law, rule or
regulation, as the Committee shall determine to be necessary or advisable.
4. Non-Transferability of this Option. This Option may not be assigned,
encumbered, or transferred except, in the event of the death of the Optionee, by
will or the laws of descent and distribution or pursuant to a qualified domestic
relations order, as described in the Plan, to the extent provided in Section 5
below. Except as provided herein, this Option is exercisable during the
Optionee's lifetime only by the Optionee. The provisions of this Option shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto,
the successors and assigns of the Corporation and any person to whom this Option
is transferred by will or by the laws of descent and distribution or pursuant to
a qualified domestic relations order, as described in the Plan.
5. Termination of Service or Death of the Optionee. Except as provided in
the second or third paragraphs of this Section 5 and notwithstanding any other
provision of this Option to the contrary, this Option shall not be exercisable
unless the Optionee, at the time he exercises this Option, has maintained
"Continuous Service" (as defined in the Plan as in effect on the date of the
grant of this Option) since the date of the grant of this Option.
If the Optionee shall cease to maintain Continuous Service for any reason
(excluding death or disability and termination of employment by the Corporation
or any Affiliate for cause), the Optionee may, but only within the period of
three months immediately succeeding such cessation of Continuous Service and in
no event after the Expiration Date, exercise this Option to the extent the
Optionee was entitled to exercise this Option at the date of cessation. If the
Optionee shall cease to maintain Continuous Service by reason of death or
disability then, this Option shall become fully exercisable upon the happening
of such event and shall remain so exercisable in the event of death
2
for a period of one year and in the event of disability for a period of three
months following such date. If the Optionee is terminated for cause, all rights
under this Option shall expire immediately upon the giving to the Optionee of
notice of such termination.
In the event of the death of the Optionee while in Continuous Service of
the Corporation or an Affiliate (as defined in the Plan) or within the three
month period referred to in the immediately preceding paragraph, the person to
whom the Option has been transferred by will or by the laws of descent and
distribution, or pursuant to a qualified domestic relations order, as described
in the Plan, may, but only to the extent the Optionee was entitled to exercise
this Option immediately prior to his death, exercise this Option at any time
within one year following the death of the Optionee, but in no event later than
ten years from the date of the grant of this Option. Following the death of the
Optionee, the Committee may, as an alternative means of settlement of this
Option, elect to pay to the person to whom this Option is transferred by will or
by the laws of descent and distribution or pursuant to a qualified domestic
relations order, as described in the Plan, the amount by which the Market Value
(as defined in the Plan) per share of Common Stock on the date of exercise of
this Option shall exceed the Exercise Price per Option Share, multiplied by the
number of Option Shares with respect to which this Option is properly exercised.
Any such settlement of this Option shall be considered an exercise of this
Option for all purposes of this Option and of the Plan.
6. Adjustments for Changes in Capitalization of the Corporation. In the
event of any change in the outstanding shares of Common Stock by reason of any
reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation, or any change in the corporate
structure of the Corporation or in the shares of Common Stock, the number and
class of shares covered by this Option and the Exercise Price shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive.
7. Effect of Merger. In the event of any merger, consolidation or
combination of the Corporation (other than a merger, consolidation, or
combination in which the Corporation is the continuing entity and which does not
result in the outstanding shares of Common Stock being converted into or
exchanged for different securities, cash or other property, or any combination
thereof), pursuant to a plan or agreement the terms of which are binding upon
all stockholders of the Corporation (except to the extent that dissenting
stockholders may be entitled, under statutory provisions or provisions contained
in the certificate of incorporation, to receive the appraised or fair value of
their holdings), the Optionee shall, provided the Option has been granted at
least six months prior to such event, have the right (subject to the provisions
of the Plan and the limitations contained herein), thereafter and during the
Exercise Period, to receive upon exercise of this Option an amount equal to the
excess of the fair market value on the date of such exercise of the securities,
cash or other property, or combination thereof, receivable upon such merger,
consolidation or combination in respect of a share of Common Stock over the
Exercise Price, multiplied by the number of Option Shares with respect to which
this Option shall have been exercised. Such amount may be payable fully in cash,
fully in one or more of the kind or kinds of property payable in such merger,
consolidation or combination, or partly in cash and partly in one or more of
such kind or kinds of property, all in the discretion of the Committee.
3
8. Stockholder Rights not Granted by this Option. The Optionee is not
entitled by virtue hereof to any rights of a stockholder of the Corporation or
to notice of meetings of stockholders or to notice of any other proceedings of
the Corporation.
9. Withholding Tax. Upon exercise of this Option, the Corporation shall
have the right to require the Optionee or such other person as is entitled to
exercise this Option to pay to the Corporation the amount of any taxes which the
Corporation or any of its Affiliates is required to withhold with respect to
such Option Shares, or, in lieu thereof, to retain, or sell without notice, a
sufficient number of such shares to cover the amount required to be withheld or
in lieu of any of the foregoing, to withhold a sufficient sum from the
Optionee's compensation payable by the Corporation to satisfy the Corporation's
tax withholding requirements. The Corporation's method of satisfying its
withholding obligations shall be solely in the discretion of the Corporation,
subject to applicable federal, state and local law.
10. Notices. All notices hereunder to the Corporation shall be delivered
or mailed to it addressed to the Secretary of Gilmer Financial Services, Inc.,
218 West Cass Street, Gilmer, Texas 75644. Any notices hereunder to the Optionee
shall be delivered personally or mailed to the Optionee's address noted below.
Such addresses for the service of notices may be changed at any time provided
written notice of the change is furnished in advance to the Corporation or the
Optionee, as the case may be.
11. Plan and Plan Interpretations as Controlling. This Option and the
terms and conditions herein set forth are subject in all respects to the terms
and conditions of the Plan, which are controlling. All determinations and
interpretations of the Committee shall be binding and conclusive upon the
Optionee or his legal representatives with regard to any question arising
hereunder or under the Plan.
12. Optionee Service. Nothing in this Option shall limit the rights of the
Corporation or any of its Affiliates to terminate the Optionee's service as a
director or otherwise impose upon the Corporation or any of its Affiliates any
obligation to employ or accept the services of the Optionee.
13. Optionee Acceptance. The Optionee shall signify his acceptance of the
terms and conditions of this Option by signing in the space provided below and
returning a signed copy hereof to the Corporation at the address set forth in
Section 10 above. In signing this Agreement, the Grantee acknowledges that
shares acquired pursuant to the exercise of this Option may not be sold or
otherwise transferred by the Grantee for at least six months from the date
stockholder approval of the Plan is received, without creating an obligation
under Section 16 of the Securities Exchange Act of 1934 to pay to the
Corporation the profit on any such transaction.
4
IN WITNESS WHEREOF, the parties hereto have caused this OPTION AGREEMENT
to be executed as of the date first above written.
GILMER FINANCIAL SERVICES, INC.
By: ________________________________
ACCEPTED:
--------------------------------
--------------------
--------------------------------
(Street Address)
--------------------------------
(City, State and Zip Code)
5
GILMER FINANCIAL SERVICES, INC.
1995 STOCK OPTION AND INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
ISO NO. ______
This option was granted on October 12, 1995 by Gilmer Financial Services,
Inc. (the "Corporation") to______________ (the "Optionee"), in accordance with
the following terms and conditions:
1. Option Grant and Exercise Period. The Corporation has granted to the
Optionee an Option (the "Option") to purchase, pursuant to the Plan and this
Agreement, an aggregate of ________ shares (the "Option Shares") of the common
stock of the Corporation, par value $.01 per share ("Common Stock"), at the
price of $_________ per share (the "Exercise Price"). A copy of the Plan, as
currently in effect, is incorporated by reference and is attached to this
Agreement.
This Option shall be exercisable only during the period (the "Exercise
Period") commencing on October 12, 1995 (the "Commencement Date"), and ending at
5:00 p.m., Gilmer, Texas time, on the date ten years after the Commencement
Date, such later time and date being referred to as the "Expiration Date." This
option shall vest and become exercisable according to the following schedule:
20% on October 12, 1996
20% on October 12, 1997
20% on October 12, 1998
20% on October 12, 1999
20% on October 12, 2000
During the Exercise Period, only the vested portion of this Option shall be
exercisable in whole at any time or in part from time to time, subject to the
provisions of this Agreement, and further subject to the condition that the
aggregate Market Value (as defined in the Plan and as determined as of the Grant
Date) of the Option Shares with respect to which Incentive Stock Options (as
defined in the Plan) are exercisable for the first time by the Optionee in any
calendar year shall not exceed One Hundred Thousand Dollars ($100,000.00). To
the extent that this Option does not qualify as an Incentive Stock Option for
any reason, it shall become a Non-Qualified Stock Option under the Plan. In the
event of the death or disability (total or partial) of the Optionee, the
Committee shall, with the consent of the Optionee, accelerate the vesting of
this Option, which may cause a portion of the Option to lose its status as an
Incentive Stock Option.
2. Method of Exercise of this Option. This Option may be exercised during
the Exercise Period by giving written notice to the Corporation specifying the
number of Option Shares to be
1
purchased. The notice must be in the form prescribed by the committee referred
to in Section 3 of the Plan or its successor (the "Committee") and directed to
the address set forth in Section 12 below. The date of exercise is the date on
which such notice is received by the Corporation. Such notice must be
accompanied by payment in full of the Exercise Price for the Option Shares to be
purchased upon such exercise. Payment shall be made either (i) in cash, which
may be in the form of a check, bank draft, or money order payable to the
Corporation, or (ii) if the Committee shall have previously approved such form
of payment, by delivering shares of Common Stock already owned by the Optionee
having a "Market Value" (as defined in the Plan as in effect on the date of the
grant of this Option) equal to the applicable exercise price, or (iii) if the
Committee shall have previously approved such form of payment, a combination of
cash and such shares. Promptly after such payment, subject to Section 3 below,
the Corporation shall issue and deliver to the Optionee or other person
exercising this Option a certificate or certificates representing the shares of
Common Stock so purchased, registered in the name of the Optionee (or such other
person), or, upon request, in the name of the Optionee (or such other person)
and in the name of another jointly with right of survivorship.
3. Delivery and Registration of Shares of Common Stock. The Corporation's
obligation to deliver shares of Common Stock hereunder shall, if the Committee
so requests, be conditioned upon the receipt of a representation as to the
investment intention of the Optionee or any other person to whom such shares are
to be delivered, in such form as the Committee shall determine to be necessary
or advisable to comply with the provisions of the Securities Act of 1933, as
amended, or any other federal, state or local securities law or regulation. In
requesting any such representation, it may be provided that such representation
requirement shall become inoperative upon a registration of such shares or other
action eliminating the necessity of such representation under such Securities
Act or other securities law or regulation. The Corporation shall not be required
to deliver any shares upon exercise of this Option prior to (i) the admission of
such shares to listing on any stock exchange or system on which the shares of
Common Stock may then be listed, and (ii) the completion of such registration or
other qualification of such shares under any state or federal law, rule or
regulation, as the Committee shall determine to be necessary or advisable.
4. Non-transferability of this Option. This Option may not be assigned,
encumbered, or transferred except, in the event of the death of the Optionee, by
will or the laws of descent and distribution to the extent provided in Section 5
below. Except as provided herein, this Option is exercisable during the
Optionee's lifetime only by the Optionee. The provisions of this Option shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto,
the successors and assigns of the Corporation and any person to whom this Option
is transferred by will or by the laws of descent and distribution.
5. Termination of Service or Death of the Optionee. Except as provided in
the second or third paragraphs of this Section 5 and notwithstanding any other
provision of this Option to the contrary, this Option shall not be exercisable
unless the Optionee, at the time he exercises this Option, has maintained
"Continuous Service" (as defined in the Plan as in effect on the date of the
grant of this Option) since the date of the grant of this Option.
2
If the Optionee shall cease to maintain Continuous Service for any reason
(excluding death or disability and termination of employment by the Corporation
or any Affiliate for cause), the Optionee may, but only within the period of
three months immediately succeeding such cessation of Continuous Service and in
no event after the Expiration Date, exercise this Option to the extent the
Optionee was entitled to exercise this Option at the date of cessation. If the
Optionee shall cease to maintain Continuous Service by reason of death or
disability then, this Option shall become fully exercisable upon the happening
of such event and shall remain so exercisable in the event of death for a period
of one year and in the event of disability for a period of three months
following such date. If the Optionee is terminated for cause, all rights under
this Option shall expire immediately upon the giving to the Optionee of notice
of such termination.
In the event of the death of the Optionee while in Continuous Service of
the Corporation or an Affiliate (as defined in the Plan) or within the three
months referred to in the immediately preceding paragraph, the person to whom
the Option has been transferred by will or by the laws of descent and
distribution may, but only to the extent the Optionee was entitled to exercise
this Option immediately prior to his death, exercise this Option at any time
within one year following the death of the Optionee, but in no event later than
ten years from the date of the grant of this Option. Following the death of the
Optionee, the Committee may, as an alternative means of settlement of this
Option, elect to pay to the person to whom this Option is transferred by will or
by the laws of descent and distribution the amount by which the Market Value (as
defined in the Plan) per share of Common Stock on the date of exercise of this
Option shall exceed the Exercise Price per Option Share, multiplied by the
number of Option Shares with respect to which this Option is properly exercised.
Any such settlement of this Option shall be considered an exercise of this
Option for all purposes of this Option and of the Plan.
6. Notice of Sale. The Optionee or any person to whom the Option or the
Option Shares shall have been transferred by will or by the laws of descent and
distribution promptly shall give notice to the Corporation in the event of the
sale or other disposition of Option Shares within the later of (i) two years
from the date of grant of this Option or (ii) one year from the date of exercise
of this Option. Such notice shall specify the number of Option Shares sold or
otherwise disposed of and be directed to the address set forth in Section 11
below.
7. Adjustments for Changes in Capitalization of the Corporation. In the
event of any change in the outstanding shares of Common Stock by reason of any
reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation, or any change in the corporate
structure of the Corporation or in the shares of Common Stock, the number and
class of shares covered by this Option and the Exercise Price shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive.
8. Effect of Merger. In the event of any merger, consolidation or
combination of the Corporation (other than a merger, consolidation, or
combination in which the Corporation is the continuing entity and which does not
result in the outstanding shares of Common Stock being converted into or
exchanged for different securities, cash or other property, or any combination
thereof), pursuant to a plan or agreement the terms of which are binding upon
all stockholders of the Corporation (except to the extent that dissenting
stockholders may be entitled, under statutory
3
provisions or provisions contained in the certificate of incorporation, to
receive the appraised or fair value of their holdings), the Optionee shall,
provided the Option has been granted at least six months prior to such event,
have the right (subject to the provisions of the Plan and the limitations
contained herein), thereafter and during the Exercise Period, to receive upon
exercise of this Option an amount equal to the excess of the fair market value
on the date of such exercise of the securities, cash or other property, or
combination thereof, receivable upon such merger, consolidation or combination
in respect of a share of Common Stock over the Exercise Price, multiplied by the
number of Option Shares with respect to which this Option shall have been
exercised. Such amount may be payable fully in cash, fully in one or more of the
kind or kinds of property payable in such merger, consolidation or combination,
or partly in cash and partly in one or more of such kind or kinds of property,
all in the discretion of the Committee.
9. Stockholder Rights not Granted by this Option. The Optionee is not
entitled by virtue hereof to any rights of a stockholder of the Corporation or
to notice of meetings of stockholders or to notice of any other proceedings of
the Corporation.
10. Withholding Tax. Upon exercise of this Option, the Corporation shall
have the right to require the Optionee or such other person as is entitled to
exercise this Option, to pay to the Corporation the amount of any taxes which
the Corporation or any of its Affiliates is required to withhold with respect to
such Option Shares, or, in lieu thereof, to retain, or sell without notice, a
sufficient number of such shares to cover the amount required to be withheld or
in lieu of any of the foregoing, to withhold a sufficient sum from the
Optionee's compensation payable by the Corporation to satisfy the Corporation's
tax withholding requirements. The Corporation's method of satisfying its
withholding obligations shall be solely in the discretion of the Corporation,
subject to applicable federal, state and local law.
11. Notices. All notices hereunder to the Corporation shall be delivered
or mailed to it addressed to the Secretary of Gilmer Financial Services, Inc.,
218 West Cass Street, Gilmer, Texas 75644. Any notices hereunder to the Optionee
shall be delivered personally or mailed to the Optionee's address noted below.
Such addresses for the service of notices may be changed at any time provided
written notice of the change is furnished in advance to the Corporation or to
the Optionee, as the case may be.
12. Plan and Plan Interpretations as Controlling. This Option and the
terms and conditions herein set forth are subject in all respects to the terms
and conditions of the Plan, which are controlling. All determinations and
interpretations of the Committee shall be binding and conclusive upon the
Optionee or his legal representatives with regard to any question arising under
this Agreement or under the Plan.
13. Optionee Service. Nothing in this Option shall limit the right of the
Corporation or any of its Affiliates to terminate the Optionee's service as a
director, officer or employee, or otherwise impose upon the Corporation or any
of its Affiliates any obligation to employ or accept the services of the
Optionee.
4
14. Optionee Acceptance. The Optionee shall signify his acceptance of the
terms and conditions of this Option by signing in the space provided below and
returning a signed copy of this Agreement to the Corporation at the address set
forth in Section 11 above. In signing this Agreement, the Grantee acknowledges
that shares acquired pursuant to the exercise of this Option may not be sold or
otherwise transferred by the Grantee for at least six months from the date
stockholder approval of the Plan is received, without creating an obligation
under Section 16 of the Securities Exchange Act of 1934 to pay to the
Corporation the profit on any such transaction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
GILMER FINANCIAL SERVICES, INC.
By: _________________________________
ACCEPTED:
-----------------------------------
---------------------
-----------------------------------
(Street Address)
-----------------------------------
(City, State and Zip Code)