Exhibit 10(b)
SOUTHERN NATIONAL CORPORATION
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
Adopted By Action of
Board of Directors
December 19, 1991
SOUTHERN NATIONAL CORPORATION
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
Southern National Corporation ("SNC"), a North Carolina corporation, whose
principal office is located at 500 North Chestnut Street, Lumberton, North
Carolina 28358, hereby adopts this Non-Employee Directors' Stock Option Plan, in
order to provide incentives for highly qualified non-employee directors to
continue their best efforts on behalf of SNC and to share in the ownership and
growth of SNC as well as its subsidiaries ("Subsidiaries"). The adoption of this
stock option plan for non-employee directors is, subject to shareholder
approval, to become effective December 19, 1991.
-------------------------------------------
1. Purpose. (a) The purpose of this Non-Employee Directors' Stock Option
Plan (the "Plan"), is to promote the interests of Southern National Corporation
("SNC") and its Subsidiaries, by affording an incentive to non-employee
directors of SNC to remain on the Board and to use their best efforts on its
behalf, and further aid SNC and its Subsidiaries in attracting, maintaining, and
developing capable management of a caliber required to insure SNC's continued
success, through means of an offer to such persons of an opportunity to acquire
or increase their proprietary interest in SNC through the granting of
non-qualified options to purchase SNC's Common Stock pursuant to the terms of
the Plan ("Options"). Such Options are intended not to qualify as incentive
stock options within the meaning of (S) 422 of the Internal Revenue Code of
1986, as amended, (the "Code") and shall be so construed.
(b) Consistent with the purpose of the Plan as recited herein, there are
certain income tax considerations that will result by the election to receive
Options under this Plan in lieu of Board compensation otherwise receivable by
directors of SNC. Under current Treasury Regulations neither the election to
receive Options in lieu of cash compensation nor the actual grant of Options
will result in the receipt of taxable income by the Participant or the allowance
of a deduction by SNC for income tax purposes. However, Participants who
receive Options in lieu of cash compensation will realize ordinary income at the
tine of exercise of any Option in an amount measured by the excess of the market
value of the Option shares on the date of exercise over the Option price. To
the extent that any Participant realizes such ordinary income, SNC will be
entitled to a corresponding deduction for income tax purposes, at that time.
2. Definitions. The singular shall include the plural and vice-versa,
and the use of one gender shall be deemed to include the other whenever
appropriate.
a. Non-Employee Director. Shall mean any active member of
1
the Board of Directors of Southern National Corporation, who at the
time a grant of Options is made under this Plan is not an employee of
SNC or any Subsidary thereof. A director emeritus shall not be
considered as an active Board member for purposes of this definition.
b. Beneficiary. Any person (including a trust) who may, under any Non-
Employee Director's will or under the laws of descent and
distribution, succeed to the Non-Employee Director's right to exercise
any Option by reason of the person's death.
c. Option. Non-Employee Director's right to purchase one or more shares
of SNC Common Stock, as granted and determined in accordance with
provision of this Plan.
d. Option Price. The amount to be paid by a Non-Employee Director for the
purchase of shares of SNC Common Stock pursuant to the exercise of an
Option, as determined pursuant to paragraph 8, hereof.
e. Participant. Any Non-Employee Director of SNC who becomes eligible to
participate in this Plan under paragraph 6, hereof.
f. Legal Disability. Legal Disability shall mean that because of injury
or sickness, the Participant cannot perform each of the material
duties of his regular occupation and can not perform his functions as
an active Board member.
g. SNC Common Stock. Southern National Corporation's $5 par value common
stock registered pursuant to the Securities Act of 1933 (the "Act")
specifically for purposes of this Plan.
h. Board. The Board shall mean the Board of Directors of Southern
National Corporation.
3. Shares Subject to the Plan. (a) The shares of SNC Common Stock to
be delivered upon exercise of Options granted under the Plan shall be made
available, at the discretion of the Board of Directors of SNC, from the
authorized, unissued and registered shares of SNC's $5.00 par value Common
Stock. Such stock shall be the subject of a registration statement to be filed
on Form S-8 or other appropriate registration statement form, by SNC with the
Securities and Exchange Commission ("Commission"), and applicable state
securities regulators, and which is anticipated to be made effective thereafter.
Further, the Board of Directors shall have the authority to take any action
related to this Plan which may be required in connection with the registration
of the SNC Common Stock as well as the listing of such stock upon the New York
Stock
2
Exchange, the principal exchange for the trading of SNC's common stock.
(b) Subject to adjustments made pursuant to provisions of paragraph 12, the
aggregate number of shares which may be issued upon exercise of all Options
which may be granted under this Plan shall not exceed 400,000 shares SNC Common
Stock.
(c) In the event that any Option granted under the Plan expires or
terminates for any reason whatsoever without having been exercised in full, the
shares subject to, but not delivered under such Option, shall become available
for other Options to the same Participant or other Non-Employee Directors
without decreasing the aggregate number of shares which may be granted under the
Plan or, shall be available for any other lawful corporate purpose.
(d) All Options shall be granted on the condition that the Participant
shall not resell any SNC Common Stock purchased by the exercise of an Option
except in compliance with all applicable state and federal securities laws and
regulations. Each Participant shall, prior to any transfer of SNC Common Stock
purchased through the exercise of an Option, advise SNC of the proposed transfer
and demonstrate, to the satisfaction of the Board, that such transfer is in
compliance with such laws and regulations.
4. Option Agreements. (a) Each Option granted under the Plan shall be
evidenced by an Option Agreement which shall be signed by a duly authorized
officer of SNC and by the Participant, and which shall contain such provisions
as may be approved by the Committee (as defined in paragraph 5).
(b) The Option Agreements shall constitute binding contracts between SNC
and the Participant, and upon acceptance of any such Option Agreement, each
party shall be bound by the terms and restrictions of this Plan and of the
Option Agreements. Any Option Agreement utilized for the purpose of granting
Options to Participants under this Plan shall specify that such Options are
non-qualified stock options and they are not intended to qualify as incentive
stock options within the meaning of (S) 422 of the Code, as amended, and shall
be so construed.
(c) The terms of the Option Agreements shall be in accordance with this
Plan, but may include additional provisions and restrictions, provided that the
same are not inconsistent with the Plan.
5. Administration of the Plan. The Board of Directors is hereby authorized
to administer the Plan. However, this compensation committee ("Committee"),
previously appointed by the SNC Board, is hereby delegated by the Board to
administer this Plan and such Committee shall serve at the pleasure of the Board
and
3
shall consist of not less than three (3) members of the Board. The Committee
shall have full power and authority to construe, interpret, and administer the
Plan and may from time to time adopt such rules and regulations for carrying out
this Plan. Provided further, the Committee shall have exclusive jurisdiction to
fix such other provisions of the Option Agreement as the Committee may deem
necessary or desirable consistent with the terms of this Plan, and to determine
all other questions relating to the administration of the Plan. The
interpretation of any provisions of this Plan by the Committee shall be final,
conclusive, and binding upon all persons and the Board shall place into effect
the determination of the Committee.
6. Eligibility. Any and all active Non-Employee Directors of SNC shall be
eligible to receive Options as Participants. If and when a Non-Employee Director
becomes inactive or becomes a director emeritus, Options previously granted
pursuant to this Plan shall remain exercisable the same as if the inactive
director or director emeritus was at all times an active Non-Employee Director.
At such time as a Non-Employee Director's or a director emeritus's service
terminates for any reason whatsoever, then that Participant or his heirs and
successors, shall have the right to exercise any Option granted to that
Participant for a time period ending on the earlier of (i) the third anniversary
of the Participant's termination; or (ii) the expiration date of the term of the
Option(s) as provided in the Option Agreement. Nothing contained in this Plan
shall be construed to limit the right of SNC to grant Options otherwise than
under the Plan for any proper and lawful corporate purpose, including but not
limited to, Options granted to employee or Non-Employee Directors.
7. Terms of the Options. (a) The Participants' total compensation for
services as a Non-Employee Director shall consist of a combination of the annual
retainer received by each Board member and the sum of all Board meeting fees
received by Board members (respectively, "Retainer Fee" and "Meeting Fees").
Each Non-Employee Director may elect under this Plan, to defer 0%, 50% or 100%
of his Retainer Fee for each calendar year for the application of that amount
towards the grant of Options. In addition, each Non-Employee Director may elect
under this Plan, to defer 0%, 50% or 100% of his Meeting Fees for each calendar
year for the application of that amount towards the grant of Options.
(b) Each Non-Employee Director shall make an irrevocable election in writing on
a form to be approved by the Committee, to receive Options in lieu of all or a
designated percentage of his Retainer Fee, on or before December 31, of the year
preceding the calendar year for which the Retainer Fee applies. As to the
deferral of the Meeting Fees, a separate irrevocable election in writing on a
form approved by the Committee shall be made to receive Options in lieu of all
or a designated percentage of the Meeting Fees, on or before December 31 of the
year preceding the calendar year during which
4
the Meeting Fees will be earned. For purposes of this Plan, Meeting Fees shall
include all fees or other compensation received for meetings of the Board or
committees thereof.
(c) On July 1, following the beginning of the calendar year for which an
election has been made pursuant to this paragraph 6, Options shall be granted to
any Non-Employer Director for the elected portion of his Retainer Fee for that
calendar year. On that same date, Options shall be granted to any Non-Employee
Director who has so elected, for the elected portion of the Meeting Fees
actually earned by the Participant in the first six (6) month period of the
applicable calendar year. For the second six (6) months of the applicable
calendar year, Options shall be granted to Non-Employer Directors for the
elected portion of the second six (6) months' Meeting Fees, on December 31 of
the applicable calendar year. For purposes of this subparagraph 7(c), the
following definitions shall apply in making the above calculations:
(i) The elected portion of the Meeting Fees earned in the first six (6)
months of the calendar year shall be defined as the fraction of the
Meeting Fees that the Non-Employer Director elected to defer,
multiplied by the cash attendance fee for each Board meeting,
multiplied by the number of Board meetings actually attended by that
director in the first six (6) months of the applicable calendar year;
and
(ii) The elected portion of the Meeting Fees earned in the second six (6)
months of the calendar year shall be defined as the fraction of the
Meeting Fees that the Non-Employer Director elected to defer,
multiplied by the cash attendance fee for each Board meeting,
multiplied by the number of Board meetings actually attended in the
second six (6) months of the applicable calendar year.
(d) For purposes of determining the number of shares to be the subject of
Options granted in accordance with this Plan, the number of Option shares will
be equal to the elected portion of the Non-Employee Director's Retainer, the
elected portion of the Meeting Fees earned in the first six (6) months of the
calendar year and the elected portion of the Meeting Fees earned in the second
six (6) months of the calendar year, divided by 25% of the "Average Market
Value" of SNC's common stock on the date of each grant. The Average Market Value
of SNC's common stock on the date of grant shall be determined by computing the
average of the closing prices of SNC common stock as reported by the New York
Stock Exchange for the thirty (30) consecutive full trading days of SNC's common
stock prior to the actual date of grant.
(e) Fractional shares of SNC Common Stock shall not be granted under this Plan
and any remaining amount of elected Retainer Fees
5
and Meeting Fees will be paid to each Non-Employee Director in cash, on the date
or dates Option grants are made in accordance with this Plan.
8. Option Exercise Price and Term. (a) The price at which shares of SNC
Common Stock may be purchased under an Option granted pursuant to this Plan
shall be equal to 75% of the market value of SNC's Common Stock on the date of
the grant. Market value of SNC's Common Stock for purposes of determining the
exercise price shall be determined in accordance with the provisions of
subparagraph 7(d) of this Plan.
(b) Except as provided in paragraph 6 hereof, Options granted in accordance with
this Plan may be exercised during the period commencing on a date six (6) months
from the date of grant and ending on the date ten (10) years from the date of
the grant.
9. Exercise of Options. (a) No shares shall be delivered pursuant to the
exercise of any Option until the requirement of such laws and regulations as may
be deemed by the Committee to be applicable to them are satisfied and until
payment in full in cash, or in SNC Common Stock as provided in subparagraph
9(b), below, of the Option price for such Options is received by SNC. No
Participant, or legal representative, or distributee of a Participant shall be
deemed to be a holder of any shares subject to any Option unless and until the
certificate or certificates for such shares have been issued and delivered. The
Participant's rights to exercise any Option is further subject to the terms and
conditions of the Option Agreement to be entered into by and between SNC or its
Subsidiaries and the Participant.
(b) Options may be exercised by payment of the Option price in full (i) in
cash, (ii) by surrender of SNC common stock having a fair market value as of the
date of exercise, equal to the Option price of SNC Common Stock to be purchased
or (iii) a combination of cash and SNC common stock. Provided however, any
Non-Employee Director intending to surrender SNC common stock in full or partial
payment for the Option price shall first obtain prior approval of the Board and
may not surrender SNC common stock as full or partial payment unless the SNC
common stock to be surrendered has been beneficially owned by the Non-Employee
Director for a minimum of six (6) months prior to such surrender.
(c) In the event there is a "change of control" of SNC within the meaning
of the Act during the term of the Plan or during the term of Options granted
pursuant to the Plan, all Options granted under this Plan shall become
immediately exercisable in full.
10. Other Terms and Conditions. This Plan shall be governed by and
construed in accordance with the laws of the State of North Carolina.
6
11. Transferability of Options. An Option granted under the Plan may not be
transferred except by will or the laws of descent and distribution, and during
the lifetime of the Participant to whom granted, may be exercised only by such
Participant, or the Participant's legal representative in the event the
participant becomes legally disabled.
12. Capital Adjustments Effecting Stock. In the event of a capital
adjustment resulting from a stock dividend, stock split, reorganization, merger,
consolidation, or a combination or exchange of shares, the number of shares of
SNC Common Stock subject to this Plan and the number of shares under Option
shall be adjusted consistent with such capital adjustment. The Option price of
any share under Option shall be adjusted so that there will be no change in the
aggregate purchase price payable under exercise of any such Option. The granting
of an Option pursuant to this Plan shall not affect in any way the right or
power of SNC to make adjustments, reorganizations, reclassification, or changes
of its capital or business structures or to merge consolidate, dissolve,
liquidate, or sell or transfer all or any part of its business or assets.
13. Amendments, Suspension, or Termination of the Plan.
(a) The Board shall have the right, at any time, to amend, suspend or
terminate the Plan in any respect which it may deem to be in the best interests
of SNC, provided, however, no amendments shall be made in the Plan without the
approval of the stockholders of SNC which: (i) materially increase the benefits
accruing to Participants under the Plan; (ii) materially increase the number of
securities which may be issued under the Plan; or (iii) materially modify the
requirements as to eligibility for participation in the Plan;
(b) In no event shall any modification effect outstanding Options or any
unexercised rights thereunder, or in anyway impair the rights of any Option
holder without his consent; and
(c) In no event shall the formula which determines the Option price and
terms, as set forth in paragraphs 7 and 8 of this Plan, be amended more than
once every six (6) months, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
14. Effective Date, Term, and Approval. Subject to approval of the
stockholders of SNC at the annual meeting to be held on April 22, 1992, or such
other date to be established by the Board, the Plan shall take effect on
December 19, 1991, the date the Plan was adopted by the Board of Directors of
SNC. This Plan will terminate on December 18, 2001 and no Options may be granted
under the Plan after that date, unless an earlier termination date is fixed by
action of the Board, but any Option granted prior
7
thereto may be exercised in accordance with its terms.
The Plan and all Options granted pursuant to it are subject to all laws,
approvals, requirements and regulations of any governmental authority which may
be applicable thereto and, notwithstanding any revisions of the Plan or Option
Agreement, the holder of an Option shall not be entitled to exercise his Option
nor shall SNC be obligated to issue any shares to the holder if such exercise or
issuance shall constitute a violation, by the holder or SNC, of any provisions
of any such approval requirements, law or regulation.
IN WITNESS WHEREOF, Southern National Corporation has caused these
presents to be executed by its duly authorized officer on this _________ day of
December, 1991.
SOUTHERN NATIONAL CORPORATION
ATTEST:
By: (SEAL)
----------------------------
L. Glenn Orr, Jr.
(SEAL) Chairman of the Board,
- ---------------------------- President and Chief
Secretary Executive Officer
8