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EXHIBIT 4.1
SOUTHFIRST BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
(AS AMENDED AND RESTATED)
1. PURPOSE OF THE PLAN
The purpose of this SouthFirst Bancshares, Inc. 1998 Stock Option and
Incentive Plan, as amended and restated (the "Plan") is to advance the interests
of SouthFirst Bancshares, Inc. (the "Company"), through providing select key
Employees and Directors of the Association, the Company and their Affiliates
with the opportunity to acquire Shares and participate in the equity of the
Company. By encouraging such stock ownership, the Company seeks to attract,
retain and motivate the best available personnel for positions of substantial
responsibility and to provide additional incentive to Directors and key
Employees of the Company, the Association or any Affiliate to promote the
success of the business.
2. DEFINITIONS
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company or the Association, as such terms are
defined in Section 424(e) and (f), respectively, of the Code, and shall also
include, as the context requires, the Company and the Association.
(b) "Agreement" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "Association" shall mean First Federal of the South,
a Federal Savings Association.
(d) "Awards" shall mean, collectively, Options and SARs,
unless the context clearly indicates a different meaning.
(e) "Board" shall mean the Board of Directors of the
Company.
(f) "Change in Control" shall mean the occurrence of any
one of the following events: (1) a change in the ownership, holding or power to
vote more than 25% of the Association's or Company's voting stock, (2) a change
in the ownership or possession of the ability to control the election of a
majority of the Association's or Company's directors, (3) a change in the
ownership or possession of the ability to exercise a controlling influence over
the management or policies of the Association or the Company by any person or by
persons acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934) (except in the case of (1), (2) and (3) hereof,
ownership or control of the Association or its directors by the Company itself
shall not constitute a "Change in Control"), or (4) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company or the Association (the "Continuing
Directors") cease for any reason to constitute at least two-thirds of the
members of such Board of Directors, provided that any individual whose election
or nomination for election as a member of such Board was approved by a vote of
at least two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. For purposes of this subparagraph only, the
term "person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool,
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syndicate, sole proprietorship, unincorporated organization or any other form of
entity not specifically listed herein. The decision of the Committee as to
whether a Change in Control has occurred shall be conclusive and binding.
(g) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(h) "Committee" shall mean, as the case may be, either, a
committee appointed by the Board in accordance with Paragraph 5(a) hereof or the
Board.
(i) "Common Stock" shall mean the common stock, par value
$.01 per share, of the Company.
(j) "Company" shall mean SouthFirst Bancshares, Inc.
(k) "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee or Director of the Company
or an Affiliate. Continuous Service shall not be considered interrupted in the
case of sick leave, military leave or any other leave or absence approved by the
Company or in the case of transfers between payroll locations of the Company or
between the Company, the Association or an Affiliate.
(l) "Director" shall mean any member of the Board or of
the Board of Directors of an Affiliate, including any member of the Board or
Board of Directors of an Affiliate who is serving as an Emeritus Director.
(m) "Disinterested Person" shall mean any Non-Employee
Director.
(n) "Effective Date" shall mean the date specified in
Paragraph 15 hereof.
(o) "Emeritus Director" means any Director of the Company
appointed by the Board who is 72 years of age or older.
(p) "Employee" shall mean any person employed by the
Company or an Affiliate.
(q) "Exercise Price" shall mean the price per Optioned
Share at which an Option or SAR may be exercised.
(r) "ISO" means an option to purchase Common Stock which
meets the requirements set forth in the Plan, and which is intended to be and is
identified as an "incentive stock option" within the meaning of Section 422 of
the Code.
(s) "Market Value" shall mean the fair market value of
the Common Stock, as determined under Paragraph 7(b) hereof.
(t) "Non-Employee Director" means any member of the Board
who is a 'non-employee director' within the meaning of Rule 16b-3.
(u) "Non-ISO" means an option to purchase Common Stock
which meets the requirements set forth in the Plan, but which is not intended to
be, and is not identified as, an ISO.
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(v) "Officer" means any officer of the Company or an
Affiliate.
(w) "Option" means an ISO and/or a Non-ISO.
(x) "Optioned Shares" shall mean Shares subject to an
option granted pursuant to this Plan.
(y) "Participant" shall mean any person who receives an
Award pursuant to the Plan.
(z) "Plan" shall mean the SouthFirst Bancshares, Inc.
1998 Stock Option and Incentive Plan, as amended and restated.
(aa) "Retirement" means termination of employment with the
Company, other than upon death, Total and Permanent Disability, or for Cause (as
defined in Section 8(c)), on or after the date of the 65th birthday of the
retiring person, in the case of an Employee, or on or after the date of the 72nd
birthday of the retiring person, in the case of a Director; provided that
Retirement for any Emeritus Director means termination of his or her
directorship, other than for Cause (as defined in Section 8(c)), on or after the
date of the 75th birthday of such Emeritus Director.
(bb) "Rule 16b-3" shall mean Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended. .
(cc) "SAR" (or "Stock Appreciation Right") means a right
to receive the appreciation in value, or a portion of the appreciation in value,
from the date of grant, of a specified number of shares of Common Stock.
(dd) "Shares" means the shares of Common Stock reserved
for issuance under the Plan.
3. TERM OF THE PLAN AND AWARDS
(a) Term of the Plan. The Plan shall continue in effect
for a term of ten (10) years from the Effective Date, unless sooner terminated
pursuant to Paragraph 19 hereof. No Award shall be granted under the Plan after
ten (10) years from the Effective Date.
(b) Term of Awards. The term of each Award granted under
the Plan shall be established by the Committee, but shall not exceed ten (10)
years from the date of grant; provided, however, that in the case of the grant
of an ISO to an Employee who owns shares representing more than 10% of the
outstanding Common Stock of the Company at the time the ISO is granted, the term
of such ISO shall not exceed five (5) years.
4. SHARES SUBJECT TO THE PLAN
(a) General Rule. Except as otherwise required by the
provisions of Paragraph 12 hereof, the aggregate number of Shares issuable
pursuant to Awards shall be 63,361 Shares. Such Shares may either be
authorized-but-unissued shares of Common Stock or shares of Common Stock held in
treasury. If Awards shall expire, become unexercisable or be forfeited for any
reason without having been exercised or become vested in full, the Optioned
Shares shall, unless the Plan shall have been terminated, be available for the
grant of additional Awards under the Plan.
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(b) Special Rule for SARs. The number of Shares with
respect to which an SAR is granted, but not the number of Shares which the
Company delivers or could deliver to an Employee or individual upon exercise of
an SAR, shall be charged against the aggregate number of Shares remaining
available under the Plan; provided, however, that in the case of an SAR granted
in conjunction with an Option, under circumstances in which the exercise of the
SAR results in termination of the Option and vice versa, only the number of
Shares subject to the Option shall be charged against the aggregate number of
Shares remaining available under the Plan. The Shares relating to an Option as
to which option rights have terminated by reason of the exercise of a related
SAR, as provided in Paragraph 10 hereof, shall not be available for the grant of
further Options under the Plan.
5. ADMINISTRATION OF THE PLAN
(a) Administration by Entire Board or Committee. The Plan
shall be administered by, either, the Board or by a committee appointed by the
Board, which committee, if appointed, shall consist of not less than two (2)
members of the Board who are Disinterested Persons. Members of this committee
shall serve at the pleasure of the Board. In the absence at any time of a duly
appointed committee, the Plan shall be administered by the Board.
(b) Powers of the Committee. Except as limited by the
express provisions of the Plan or by resolutions adopted by the Board, the
Committee shall have the sole and complete authority and discretion (i) to
select Participants and grant Awards, (ii) to determine the form and content of
Awards to be issued and the form of Agreements under the Plan, (iii) to
interpret the Plan, (iv) to prescribe, amend and rescind rules and regulations
relating to the Plan, and (v) to make other determinations necessary or
advisable for the administration of the Plan. The Committee shall have and may
exercise such other power and authority as may be delegated to it by the Board
from time to time. A majority of the entire Committee shall constitute a quorum
and the action of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority of the Committee
without a meeting, shall be deemed the action of the Committee.
(c) Agreement. Each Award shall be evidenced by a written
agreement containing such provisions as may be approved by the Committee. Each
such Agreement shall constitute a binding contract between the Company and the
Participant, and every Participant, upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such Agreement. The terms
of each such Agreement shall be in accordance with the Plan, but each Agreement
may include such additional provisions and restrictions determined by the
Committee, in its discretion, provided that such additional provisions and
restrictions are not inconsistent with the terms of the Plan. In particular, the
Committee shall set forth in each Agreement (i) the Exercise Price of an Option
or SAR, (ii) the number of Shares subject to, and the expiration date of, the
Award, (iii) the manner, time and rate (cumulative or otherwise) of exercise or
vesting of such Award, and (iv) the restrictions, if any, to be placed upon such
Award, or upon Shares which may be issued upon exercise of such Award.
The Chairman of the Committee and such other officers as shall
be designated by the Committee are hereby authorized to execute Agreements on
behalf of the Company and to cause them to be delivered to the recipients of
Awards.
(d) Effect of the Committee's Decisions. All decisions,
determinations and interpretations of the Committee shall be final and
conclusive on all persons affected thereby.
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(e) Indemnification. In addition to such other rights of
indemnification as they may have, the members of the Committee shall be
indemnified by the Company in connection with any claim, action, suit or
proceeding relating to any action taken or failure to act under or in connection
with the Plan or any Award, granted hereunder to the full extent provided for
under the Company's Charter or By-Laws with respect to the indemnification of
Directors.
6. GRANT OF OPTIONS
(a) General Rule. In its sole discretion, the Committee
may grant Options to Employees of the Company or its Affiliates. Non-Employee
Directors may be granted Options only in accordance with Paragraph 9 hereof.
(b) Special Rules for ISOs. The aggregate Market Value, as of
the date the Option is granted, of the Shares with respect to which ISOs are
exercisable for the first time by an Employee during any calendar year (under
all incentive stock option plans, as defined in Section 422 of the Code, of the
Company or any present or future Parent or Subsidiary of the Company) shall not
exceed $100,000. Notwithstanding the prior provisions of this paragraph, the
Committee may grant Options in excess of the foregoing limitation, in which case
such Options granted in excess of which limitation shall be Options which are
Non-ISOs.
7. EXERCISE PRICE FOR OPTIONS
(a) Limits on Committee Discretion. The Exercise Price as
to any particular Option granted under the Plan shall be determined by the
Committee but shall not be less than the Market Value of the Optioned Shares on
the date of grant. In the case of an Employee who owns shares of Common Stock
representing more than 10% of the Company's outstanding shares of Common Stock
at the time an ISO is granted, the Exercise Price of such ISO shall not be less
than 110% of the Market Value of the Optioned Shares at the time the ISO is
granted.
(b) Standards for Determining Exercise Price. If the
Common Stock is listed on a national securities exchange (including the NASDAQ
National Market System) on the date in question, then the Market Value per Share
shall be not less than the average of the highest and lowest selling price on
such exchange on such date, or if there were no sales on such date, then the
Exercise Price shall be not less than the mean between the bid and asked price
on such date. If the Common Stock is traded otherwise than on a national
securities exchange on the date in question, then the Market Value per Share
shall be not less than the mean between the bid and asked price on such date,
or, if there is no bid and asked price on such date, then on the next prior
business day on which there was a bid and asked price. If no such bid and asked
price is available, then the Market Value per Share shall be its fair market
value as determined by the Committee, in its sole and absolute discretion.
8. EXERCISE OF OPTIONS
(a) Generally. Any Option granted hereunder shall be
exercisable at such times and under such conditions as shall be permissible
under the terms of the Plan and of the Agreement granted to a Participant.
However, the exercise of any Option granted hereunder shall be subject to, and
shall not exceed, vesting at a rate of 20% a year, from the date of the Award,
provided that (i) each Participant shall be 100% vested upon death or upon
Permanent and Total Disability (as defined in Section 8 (c) below), (ii) each
Participant shall be 100% vested upon Retirement, and (iii) each Participant
shall be 100% vested upon
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the occurrence of a Change in Control event in accordance with Section 11,
below. An Option may not be exercised for a fractional Share.
(b) Procedure for Exercise. A Participant may exercise
Options, subject to provisions relative to its termination and limitations on
its exercise, only by (1) written notice to the Company of intent to exercise
the Option with respect to a specified number of Shares, and (2) payment to the
Company (contemporaneously with delivery of such notice) in cash, in Common
Stock, or a combination of cash and Common Stock, of the amount of the Exercise
Price for the number of Shares with respect to which the Option is then being
exercised. Each such notice (and payment where required) shall be delivered, or
mailed by prepaid registered or certified mail, addressed to the Treasurer of
the Company at the Company's executive offices. Common Stock utilized in full or
partial payment of the Exercise Price for Options shall be valued at its Market
Value at the date of exercise.
(c) Period of Exercisability. Except to the extent
otherwise provided by the Committee in the terms of an Agreement, an Option may
be exercised by an Employee only while he is an Employee and has maintained
Continuous Service from the date of the grant of the Option, or within three (3)
months after termination of such Continuous Service (but not later than the date
on which the Option would otherwise expire), except if the Participant's
Continuous Service terminates by reason of --
(1) "Cause" which for purposes hereof shall have the
meaning set forth in any unexpired employment or severance
agreement between the Participant and the Association and/or
the Company (and, in the absence of any such agreement, shall
mean termination because of the Participant's personal
dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure
to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order), in which case the
Participant's rights to exercise such Option shall expire on
the date of such termination;
(2) Death, in which case, 100% of the outstanding Options
of the deceased Participant such Options having vested in
their entirety as a consequence of the death of the
Participant, as provided in Section 8(a), may be exercised
within two (2) years from the date of his death (but not later
than the date on which the Option would otherwise expire) by
the personal representative of his estate or person or persons
to whom his rights under such Option shall have passed by will
or by laws of descent and distribution;
(3) Permanent and Total Disability (as such term is
defined in Section 22(e)(3) of the Code), in which case, 100%
of the outstanding Options of the Permanently and Totally
disabled Participant, such Options having vested in their
entirety as a consequence of the Permanent and Total
Disability of the Participant, as provided in Section 8(a),
may be exercised within one (1) year from the date of such
permanent and total disability, but not later than the date on
which the Option would otherwise expire.
(4) Retirement, in which case 100% of the outstanding
Options of the retiring Participant, such Options having
vested in their entirety as a consequence of the Retirement of
the Participant, as provided in Section 8(a), may be exercised
within six (6) months from the date of the Participant's
retirement, but not later than the date on which the Option
would otherwise expire.
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(5) Change in Control, in which case 100% of the
outstanding Options of each Participant in the Plan shall
become immediately exercisable in accordance with Section 11
of the Plan.
Notwithstanding the provisions of any Option which provides for its exercise in
installments as designated by the Committee, such Option shall become
immediately exercisable upon the vesting of such Option upon the occurrence of a
vesting event set forth in Section 8(a).
(d) Effect of the Committee's Decisions. The Committee's
determination whether a Participant's Continuous Service has ceased, and the
effective date thereof shall be final and conclusive on all persons affected
thereby.
9. GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS
(a) Automatic Grants. Notwithstanding any other
provisions of this Plan, each Director who is a Non-Employee Director, other
than an Emeritus Director, on the Effective Date shall receive, on said date,
Non-ISOs to purchase 2,700 Shares, at an Exercise Price per Share equal to the
Market Value of the Common Stock on the date of grant.
(b) Terms of Exercise. Options received under the
provisions of this Paragraph 9 may be exercised from time to time by (a) written
notice to the Company of intent to exercise the Option with respect to all or a
specified number of the Optioned Shares, and (b) payment to the Company
(contemporaneously with the delivery of such notice), in cash, in Common Stock,
or a combination of cash and Common Stock, of the amount of the Exercise Price
for the number of Optioned Shares with respect to which the Option is then being
exercised. Each such notice and payment shall be delivered, or mailed by prepaid
registered or certified mail, addressed to the Treasurer of the Company at the
Company's executive offices. A Director who exercises Options pursuant to this
Paragraph may satisfy all applicable federal, state and local income and
employment tax withholding obligations, in whole or in part, by irrevocably
electing to have the Company withhold shares of Common Stock, or to deliver to
the Company shares of Common Stock that he already owns, having a value equal to
the amount required to be withheld; provided that to the extent not inconsistent
herewith, such election otherwise complies with those requirements of Paragraphs
8 and 21 hereof.
Options granted under this Paragraph shall have a term of ten (10)
years, and may be exercised at any time and from time to time prior to their
expiration only while the Participant is a Director of the Company, or within
three (3) months after termination of the Participant's Continuous Service as a
Director for reasons other than "Cause," death, "Permanent and Total Disability"
or "Retirement" of the Director, or a "Change in Control" of the Company. In the
event of such Director's death during the term of his directorship, Options
granted under this Paragraph may be exercised within one (1) year from the date
of his death by the personal representatives of his estate or person or persons
to whom his rights under such Options shall have passed by will or by laws of
descent and distribution, but in no event later than the date on which such
Options would otherwise expire. Unless otherwise inapplicable or inconsistent
with the provisions of this Paragraph, the Options to be granted to Directors
hereunder shall be subject to all other provisions of this Plan, including the
provisions of Section 8(c) relating to the period of exercisability if a
Director's Continuous Service terminates for "Cause," "Permanent and Total
Disability" or "Retirement" and the provisions of Section 11 relating to the
vesting and exercise of Options upon a "Change in Control" of the Company.
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10. SARS (STOCK APPRECIATION RIGHTS)
(a) Granting of SARs. In its sole discretion, the
Committee may from time to time grant `SARs to Employees either in conjunction
with, or independently of, any Options granted under the Plan. An SAR granted in
conjunction with an Option may be an alternative right wherein the exercise of
the Option terminates the SAR to the extent of the number of shares purchased
upon exercise of the Option and, correspondingly, the exercise of the SAR
terminates the Option to the extent of the number of Shares with respect to
which the SAR is exercised. Alternatively, an SAR granted in conjunction with an
Option may be an additional right wherein both the SAR and the Option may be
exercised. An SAR may not be granted in conjunction with an ISO under
circumstances in which the exercise of the SAR affects the right to exercise the
ISO or vice versa, unless the SAR, by its term, meets all of the following
requirements:
(1) The SAR will expire no later than the ISO;
(2) The SAR may be for no more than the difference
between the Exercise Price of the ISO and the Market Value of
the Shares subject to the ISO at the time the SAR is
exercised;
(3) The SAR is transferable only when the ISO is
transferable, and under the same conditions;
(4) The SAR may be exercised only when the ISO may be
exercised; and
(5) The SAR may be exercised only when the Market Value
of the Shares subject to the ISO exceed the Exercise Price of
the ISO.
(b) Exercise Price. The Exercise Price as to any
particular SAR shall not be less than the Market Value of the Optioned Shares on
the date of grant.
(c) Timing of Exercise. Any election by a Participant to
exercise SARs shall be made during the period beginning on the 3rd business day
following the release for publication of quarterly or annual financial
information and ending on the 12th business day following such date. This
condition shall be deemed to be satisfied when the specified financial data is
first made publicly available. In no event, however, may an SAR be exercised
within the six-month period following the date of its grant.
The provisions of Paragraph 8(c) regarding the period of
exercisability of Options is incorporated by reference herein, and shall
determine the period of exercisability of SARs.
(d) Exercise of SARs. An SAR granted hereunder shall be
exercisable at such times and under such conditions as shall be permissible
under the term of the Plan and of the Agreement granted to a Participant,
provided that an SAR may not be exercised for a fractional Share. Upon exercise
of an SAR, the Participant shall be entitled to receive, without payment to the
Company except for applicable withholding taxes, an amount equal to the excess
of (or, in the discretion of the Committee if provided in the Agreement, a
portion of the excess of) the then aggregate Market Value of the number of
Optioned Shares with respect to which the Participant exercises the SAR, over
the aggregate Exercise Price of such number of Optioned Shares. This amount
shall be payable by the Company, in the discretion of the Committee, in cash or
in Shares valued at the then Market Value thereof, or any combination thereof.
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(e) Procedure for Exercising SARs. To the extent not
inconsistent herewith, the provisions of Paragraph 8(b) as to the procedure for
exercising Options are incorporated by reference, and shall determine the
procedure for exercising SARs.
11. CHANGE IN CONTROL
(a) General Rule. Notwithstanding the provisions of any
Award which provides for the exercise or vesting in installments, and for a
period of sixty (60) days beginning on the date of such Change in Control, all
Options and SARs shall be immediately exercisable and fully vested. With respect
to Options, at the time of a Change in Control, the Participant shall, at the
discretion of the Committee, be entitled to receive cash in an amount equal to
the excess of the Market Value of the Common Stock subject to such Option over
the Exercise Price of such Shares, in exchange for the cancellation of such
Options by the Participant.
(b) Exception to General Rule. Notwithstanding
subparagraph (a) of this Paragraph, in no event may an SAR be exercised, or an
Option be canceled in exchange for cash, within the six-month period following
the date of its grant.
12. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN
(a) Recapitalizations; Stock Splits, Etc. The number and
kind of Shares reserved for issuance under the Plan, and the number and kind of
Shares subject to outstanding Awards (and the Exercise Price thereof in the case
of Options and SARs), shall be proportionately adjusted for any increase,
decrease, change or exchange of Shares for a different number or kind of Shares
or other securities of the Company which results from a merger, consolidation,
recapitalization, reorganization, reclassification, stock dividend, split-up,
combination of Shares, or similar event in which the number or kind of Shares is
changed without the receipt or payment of consideration by the Company.
(b) Transactions in which the Company is Not the
Surviving Entity. In the event of (i) the liquidation or dissolution of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving entity, or (iii) the sale or disposition of all or substantially all
of the Company's assets (any of the foregoing to be referred to herein as a
"Transaction"), all outstanding Awards shall be surrendered. With respect to
each Award so surrendered, the Committee shall in its sole and absolute
discretion, but subject to the vesting requirements of Section 8(a), determine
whether the holder of the surrendered Award shall receive --
(1) for each Share then subject to an outstanding Award
the number and kind of Shares into which each outstanding
Share (other than Shares held by dissenting stockholders) is
changed or exchanged, together with an appropriate adjustment
to the Exercise Price in the case of Options and SARs; or
(2) a cash payment (from the Company or the successor
corporation), in an amount equal to the Market Value of the
Shares subject to the Award on the date of the Transaction,
less the Exercise Price of the Award in the case of Options
and SARs.
(c) Special Rule for ISOs. Any adjustment made pursuant
to subparagraphs (a) or (b)(1) hereof shall be made in such a manner as not to
constitute a modification, within the meaning of Section 424(h) of the Code, of
outstanding ISOs.
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(d) Conditions and Restrictions on New, Additional, or
Different Shares or Securities. If, by reason of any adjustment made pursuant to
this Paragraph, a Participant becomes entitled to new, additional, or different
Shares of stock or securities, such new, additional, or different Shares of
stock or securities shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the Award before
the adjustment was made.
(e) Other Issuances. Except as expressly provided in this
Paragraph, the issuance by the Company or an Affiliate of Shares of stock of any
class, or of securities convertible into Shares or stock of another class, for
cash or property or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, shall not affect, and no
adjustment shall be made with respect to, the number, class, or Exercise Price
of Shares then subject to Awards or reserved for issuance under the Plan.
13. NON-TRANSFERABILITY OF AWARDS
Awards may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution, or pursuant to the terms of a "qualified domestic relations order"
(within the meaning of Section 414(p) of the Code and the regulations and
rulings thereunder).
14. TIME OF GRANTING AWARDS
The date of grant of an Award shall, for all purposes, be the date on
which the Committee makes the determination for granting such Award. Notice of
the determination shall be given to each Participant to whom an Award is so
granted within a reasonable time after the date of such grant.
15. EFFECTIVE DATE
The effective date of the Plan (the "Effective Date") shall be the date
the Plan is adopted by the Board or the date the Plan is approved by the
shareholders of the Company, whichever is earlier. The Plan must be approved by
the affirmative vote, cast either in person or by proxy, of not less than a
majority of the Shares entitled to vote at a meeting at which a quorum is
present, which shareholder vote must be taken within twelve (12) months after
the date the Plan is adopted by the Board of Directors. Such shareholder vote
shall not alter the Effective Date of the Plan. In the event shareholder
approval of the adoption of the Plan is not obtained within the aforesaid twelve
(12) month period, then any Options granted in the intervening period shall be
void.
16. MODIFICATION OF AWARDS
At any time, and from time to time, the Board may authorize the
Committee to direct execution of an instrument providing for the modification of
any outstanding Award, provided no such modification shall confer on the holder
of such Award any right or benefit which could not be conferred on him by the
grant of a new Award at such time, or impair the Award without the consent of
the holder of the Award, or revise the terms of the Award, including the
exercise price at which the Award was granted.
17. AMENDMENT AND TERMINATION OF THE PLAN
With respect to any shares of stock at the time not subject to an award
of Options or SARs under the Plan, the Board may at any time and from time to
time, terminate, modify or amend the Plan in any respect, except that no such
modification or amendment shall be made absent the approval of the
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shareholders of the Company to: (i) increase the number of shares for which
Options or SARs may be granted under the Plan; (ii) extend the period during
which Options or SARs may be granted or exercised; (iii) change the class of
persons eligible for awards of Options or SARs; or (iv) otherwise materially
modify the requirements as to eligibility for participation in the Plan. The
Company's Board of Directors may also suspend the granting of Options or SARs
pursuant to the Plan at any time and may terminate the Plan at any time;
provided, however, no such suspension or termination shall modify or amend any
Option or SAR granted before such suspension or termination unless the affected
participant consents in writing, to such modification or amendment or there is a
dissolution or liquidation of the Company.
18. CONDITIONS UPON ISSUANCE OF SHARES
(a) Compliance with Securities Laws. Shares of Common
Stock shall not be issued with respect to any Award unless the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the rules
and regulations promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may then be listed.
The Plan is intended to comply with Rule 16b-3, and any provision of the Plan
which the Committee determines in its sole and absolute discretion to be
inconsistent with said Rule shall, to the extent of such inconsistency, be
inoperative and null and void, and shall not affect the validity of the
remaining provisions of the Plan.
(b) Special Circumstances. The inability of the Company
to obtain approval from any regulatory body or authority deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder
shall relieve the Company of any liability in respect of the non-issuance or
sale of such Shares. As a condition to the exercise of an option or SAR, the
Company may require the person exercising the Option or SAR to make such
representations and warranties as may be necessary to assure the availability of
an exemption from the registration requirements of federal or state securities
law.
(c) Committee Discretion. The Committee shall have the
discretionary authority to impose in Agreements such restrictions on Shares as
it may deem appropriate or desirable, including, but not limited to, the
authority to impose a right of first refusal or to establish repurchase rights
or both of these restrictions.
19. RESERVATION OF SHARES
The Company, during the term of the Plan, will reserve and keep
available a number of Shares sufficient to satisfy the requirements of the Plan.
20. WITHHOLDING TAX
The Company's obligation to deliver Shares upon exercise of Options
and/or SARs (or such earlier time that the Participant makes an election under
Section 83(b) of the Code) shall be subject to the Participant's satisfaction of
all applicable federal, state and local income and employment tax withholding
obligations. The Committee, in its discretion, may permit the Participant to
satisfy the obligation, in whole or in part, by irrevocably electing to have the
Company withhold the Shares, or to deliver to the Company the Shares that he
already owns, having a value equal to the amount required to be withheld. The
value of Shares to be withheld, or delivered to the Company, shall be based on
the Market Value of the Shares on the date the amount of tax to be withheld is
to be determined. As an alternative, the Company may retain, or sell without
notice, a number of such Shares sufficient to cover the amount required to be
withheld.
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21. NO EMPLOYMENT OR OTHER RIGHTS
In no event shall an Employee's or Director's eligibility to
participate or participation in the Plan create or be deemed to create any legal
or equitable right of the Employee, Director, or any other party to continue
service with the Company, the Association, or any Affiliate of such
corporations. No Employee or Director shall have a right to be granted an Award
or, having received an Award, the right to again be granted an Award, except to
the extent provided in Paragraph 9(a). However, an Employee or Director who has
been granted an Award may, if otherwise eligible, be granted an additional Award
or Awards.
22. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws
of the State of Delaware, except to the extent that federal law shall be deemed
to apply.
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