Exhibit 10.1
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SOUTHEASTERN BANK FINANCIAL CORPORATION
2006 LONG-TERM INCENTIVE PLAN
1. Establishment, Purpose, Types of Awards and Duration.
1.1. Establishment. Southeastern Bank Financial Corporation, a
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corporation organized and existing under the laws of the State of Georgia
(hereinafter called the "Bank"), hereby establishes a long-term incentive plan
for key employees, officers, directors and independent contractors providing
material services to the Bank, as described herein, which shall be known as the
"2006 Long-Term Incentive Plan" (the "Plan").
1.2. Purpose. The purpose of the Plan is to enhance stockholder
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investment by attracting, retaining and motivating key employees, officers,
directors and independent contractors of the Bank, and to encourage stock
ownership by such persons by providing them with a means to acquire a
proprietary interest in the Bank's success, and to align the interests of
management with those of stockholders.
1.3. Types of Awards. The Plan permits the granting of the
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following types of awards ("Awards"):
- Non-statutory Stock Options.
- Incentive Stock Options.
- Restricted Stock.
- Performance Shares.
1.4. Duration. The Plan shall become effective on the date of its
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approval by the Board of Directors of the Bank (the "Effective Date"); provided
that this Plan will be submitted to the Bank's stockholders for approval, and if
not approved by the stockholders in accordance with Applicable Laws (as
determined by the Committee in its discretion) within twelve (12) months from
the Effective Date, this Plan and any Awards shall be null, void and of no force
and effect. Awards granted under this Plan prior to approval of this Plan by
the stockholders shall be granted subject to such approval, and no Shares shall
be distributed before such approval. The Plan shall remain in effect, unless
sooner terminated by the Board of Directors pursuant to Article 13 hereof, until
March 8, 2016; provided that Incentive Stock Options may not be granted under
the Plan after March 7, 2016.
2. Definitions. In this Plan, except where the context otherwise
indicates, the following definitions shall apply:
2.1. "Affiliate" means, with respect to any Person (as defined
below), any other Person that directly or indirectly controls or is controlled
by or under common control with such Person. For the purposes of this
definition, "control," when used with respect to any Person, means the
possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of such Person or the power
to elect directors, whether through the ownership of voting securities, by
contract or otherwise; and the terms "affiliated," "controlling" and
"controlled" have meanings correlative to the foregoing.
2.2. "Applicable Law" means the legal requirements relating to the
administration of the Plan under applicable U.S. federal and state laws, the
Code, any applicable stock exchange or automated quotation system rules or
regulations, as such laws, rules, regulations and requirements shall be in place
from time to time.
2.3. "Award" means, individually or collectively, a grant under
this Plan of Non-statutory Stock Options, Incentive Stock Options, Restricted
Stock or Performance Shares.
2.4. "Award Agreement" means any written document setting forth
the terms of an Award that has been authorized by the Committee. The Committee
shall determine the form or forms of documents to be used, and may change them
from time to time for any reason.
2.5. "Board" means the Board of Directors of the Bank.
2.6. "Bank" means Southeastern Bank Financial Corporation, a
corporation organized and existing under the laws of the State of Georgia and
any successor as provided in Section 16.5 hereof.
2.7. "Change in Control" means the occurrence of any of the
following:
(a) when any "person," as such term is used in Section 13(d) or
14(d) of the Exchange Act (other than the Bank or any
subsidiary or any employee benefit plan of the Bank or any
subsidiary (including its trustee)), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly of
securities of the Bank representing twenty percent (20%) or
more of the combined voting power of the Bank's outstanding
securities;
(b) any transaction or event relating to the Bank required to be
described pursuant to the requirements of Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the
Exchange Act.
(c) when, during any period of two consecutive years during the
existence of the Plan, the individuals who, at the beginning
of such period, constitute the Board cease, for any reason,
to constitute at least a majority thereof, unless the
election or the nomination for election by the Bank's
stockholders of each director first elected during such
period was approved by a vote of at least two-thirds of the
directors then still in office who were directors of the
Bank at the beginning of any such period; or
(d) any transaction requiring stockholder approval for the
acquisition of the Bank by an entity other than the Bank or
any subsidiary through purchase of assets, or by merger, or
otherwise.
2.8. "Code" means the Internal Revenue Code of 1986, as amended.
2.9. "Committee" means a committee or subcommittee of the Board
appointed by the Board to administer this Plan or to make and/or administer
specific Awards under this Plan. If no such appointment is in effect at any
time, "Committee" shall mean the Board.
2.10. "Common Stock" means the Common Stock, par value $3.00 per
share, of the Bank.
2.11. "Consultant" means any person, including an advisor or
counselor, who is engaged by the Bank or any Affiliate to render services and is
compensated for such services.
2.12. "Covered Employee" means any key Employee who is or may
become a "Covered Employee" as defined in Section 162(m) of the Code, or any
successor statute, and who is designated, either as an individual Employee or
class of Employees, by the Committee within the shorter of (i) ninety (90) days
after the beginning of the Performance Period, or (ii) when twenty-five percent
(25%) of the Performance Period has elapsed, as a "Covered Employee" under this
Plan for such applicable Performance Period.
2.13. "Date of Grant" means the date on which an Award is granted
under this Plan.
2.14. "Director" means any individual who is a member of the Board
or who is a member of the board of directors of an Affiliate.
2.15. "Disability" or "Disabled" means an Eligible Person who
(a) is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than
12 months, or
(b) has, by reason of any medically determinable physical or
mental impairments which can be expected to result in death
or can be expected to last for a continuous period of not
less than 12 months, received income replacement benefits
for a period of
not less than 3 months under an accident or health plan
covering employees of the Bank.
2.16. "Effective Date" means the date described in Section 1.4
hereof.
2.17. "Eligible Person" means (a) any person who is an Employee,
(b) any person who is hired to be an Employee, (c) any Non-Employee Director,
and (d) any independent contractor to the Bank or an Affiliate who is determined
by the Committee to render key services to the Bank or an Affiliate.
2.18. "Employee" means any person determined by the Committee to
be an employee of the Bank or an Affiliate.
2.19. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.20. "Fair Market Value" means as of any date, the value of a
Share determined as follows:
(a) if the Shares are listed on any established stock exchange
or a national market system, the Fair Market Value of a
Share shall be the closing sales price for such Shares (or
the closing bid, if no sales were reported) as quoted on
such exchange or system on the day of, or the last market
trading day prior to, the day of determination, as reported
in the Wall Street Journal or such other source as the
Committee deems reliable;
(b) if the Shares are regularly quoted by a recognized
securities dealer but selling prices are not reported, the
Fair Market Value of the Shares shall be the mean between
the high bid and the low asked prices for the Shares on the
day of, or the last market trading day prior to, the day of
determination, as reported in the Wall Street Journal or
such other source as the Committee deems reliable, or
(c) in the absence of an established market for the Shares, the
Fair Market Value shall be determined in good faith by the
Committee using any method or methods which the Committee
may deem appropriate.
2.21. "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option under Section 422 of the Code, as designated in the
applicable Award Agreement.
2.22. "Non-Employee Director" means any member of the Bank's or an
Affiliate's Board of Directors or Advisory Board of Directors who is not an
Employee.
2.23. "Non-statutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable Award
Agreement.
2.24. "Option" means an Award granted pursuant to Article 6 of
this Plan.
2.25. "Option Period" means the period during which an Option may
be exercised.
2.26. "Option Price" means the price per Share at which an Option
may be exercised.
2.27. "Participant" means an Eligible Person who has received an
Award hereunder.
2.28. "Performance-Based Exception" means the performance-based
exception, set forth in Section 162(m)(4)(c) of the Code, from the deductibility
limitations of Section 162(m) of the Code.
2.29. "Performance Measures" means measures as described in
Article 9 on which the performance goals are based and which are approved by the
Bank's stockholders pursuant to this Plan in order to qualify Awards for the
Performance-Based Exception.
2.30. "Performance Period" has the meaning set forth in Section
8.1 hereof.
2.31. "Performance Shares" means an Award granted pursuant to
Article 8 of this Plan.
2.32. "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on the
passage of time, the achievement of performance goals, or upon the occurrence of
other events as determined by the Committee, at its discretion), and such Shares
are subject to a substantial risk of forfeiture, as provided in Article 7 of
this Plan.
2.33. "Person" means, unless otherwise specially defined in the
Plan, any natural person, association, trust, cooperative, corporation, general
partnership, joint venture, limited partnership, limited liability company, real
estate investment trust, regulatory body, governmental agency or
instrumentality, unincorporated organization or organizational entity.
2.34. "Plan" means the Southeastern Bank Financial Corporation
2006 Long-Term Incentive Plan, as amended from time to time.
2.35. "Qualifying Performance Criteria" has the meaning set forth
in Section 9.1.
2.36. "Reporting Person" means as officer, Director or Ten-Percent
Stockholder of the Bank within the meaning of Rule 16a-2 under the Exchange Act,
who is required to file reports pursuant to Rule 16a-3 under the Exchange Act.
2.37. "Required Withholding" has the meaning set forth in Article
14.
2.38. "Restricted Stock" means Shares subject to restrictions
imposed pursuant to Article 8 of this Plan.
2.39. "Share" means a share of Common Stock.
2.40. "Ten-Percent Stockholder" means a Participant who (applying
the rules of Section 424(d) of the Code) owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Bank or an Affiliate.
3. Administration.
3.1. The Committee. The Plan shall be administered by the
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Committee, except that any action taken with respect to grants and awards of
securities to and other acquisitions of securities by Reporting Persons under
the Plan shall be taken by the Committee only if all of the members of the
Committee meet the definition of a "non-employee director" under Rule
16b-3(b)(3) under the Exchange Act or if such grant, award or other acquisition
transaction is otherwise structured to be exempt from the provisions of Section
16(b) of the Exchange Act and the rules promulgated thereunder. If all of the
members of the Committee are not "non-employee directors," such action shall be
taken by a committee or subcommittee of two (2) or more members, all of whom are
"non-employee directors," or such transaction otherwise shall be structured to
be exempt from the provisions of Section 16(b) of the Exchange Act and the rules
promulgated thereunder. Any action taken with respect to executive officers for
purposes of meeting the Performance-Based Exception shall be taken by the
Committee only if all of the members of the Committee are "outside directors"
within the meaning of Code Section 162(m), subject to any applicable transition
rules under Code Section 162(m). If all of the members of the Committee are not
"outside directors," such action shall be taken by a committee or subcommittee
of two (2) or more members, all of whom are "outside directors."
3.2. Authority of the Committee. Except as limited by law, or by
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the Articles of Incorporation or Bylaws of the Bank, and subject to the
provisions hereof, the Committee shall have full power to do the following:
(a) designate the Eligible Persons who shall participate in the
Plan;
(b) determine the sizes, types, terms and provisions of Awards
in a manner consistent with the Plan;
(c) construe and interpret the Plan and any agreement or
instrument entered into under the Plan;
(d) establish, amend, or waive rules and regulations for the
Plan's administration;
(e) delegate to the chief executive officer of the Bank the
power to grant Options and Restricted Shares from time to
time to specified categories of Eligible Persons in amounts
and on terms to be specified by the Committee;
(f) delegate to officers, employees or independent contractors
of the Bank matters involving the routine administration of
the Plan and which are not specifically required by any
provision of this Plan of to be performed by the Committee;
and
(g) subject to the provisions of Article 13, amend the terms and
provisions of any outstanding Award to the extent such terms
and provisions are within the discretion of the Committee as
provided in the Plan, including, without limitation, (i) to
accelerate the exercisability (including exercisability
within a period of less than six months after the Date of
Grant) of, and to accelerate or waive any or all of the
terms and conditions pplicable to, any Award or any group of
Awards for any reason and at any time, including in
connection with a Participant ceasing to provide services to
the Bank or an Affiliate or otherwise ceasing to be an
Eligible Person, provided that any such waiver or
acceleration shall be consistent with Article 12; (ii)
subject to Articles 6.4 and 6.8, to extend the time during
which any Award or group of Awards may be exercised; and
(iii) to make such adjustments or modifications to Awards to
Participants who are working outside the United States as
are advisable to fulfill the purposes of the Plan or to
comply with applicable local law.
The Committee shall make all other decisions relating to the operation of the
Plan, and all other determinations which may be necessary or advisable for the
administration of the Plan. The Board may also authorize one or more officers
of the Bank to designate Employees to receive Awards and/or to determine the
number of such Awards to be received by such persons; provided, however, that
the Board shall specify the total number of Awards that such officers may so
award.
3.3. Decisions Binding. All determinations and decisions made by
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the Committee pursuant to the provisions of the Plan shall be final, conclusive
and binding on all persons, including the Bank, its stockholders, Employees,
Participants, and their estates and beneficiaries.
3.4. No Liability; Indemnification. Neither the Board or any
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Committee member, nor any Person acting at the direction of the Board or the
Committee, shall be liable for any act, omission, interpretation, construction
or determination made in good faith with respect to the Plan, any Award or any
Award Agreement. The Bank and its Affiliates shall pay or reimburse any member
of the Committee, as well as any Director, Employee or Consultant who takes
action in connection with the Plan, for all expenses incurred with respect to
the Plan, and to the full extent allowable under Applicable Law shall indemnify
each and every one of them for any claims, liabilities, and costs (including
reasonable attorney's fees) arising out of their good faith performance of
duties under the Plan. The Bank and its Affiliates may obtain liability
insurance for this purpose.
4. Eligibility.
4.1. Grant of Awards. Awards may be granted or awarded only to
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Eligible Persons.
4.2. General Rule. Incentive Stock Options may only be issued to
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Employees. Incentive Stock Options may be granted to officers or Directors of
the Bank or an Affiliate, provided they are also Employees of the Bank or an
Affiliate. Payment of a Director's fee shall not be sufficient to constitute
employment by the Bank or an Affiliate. Incentive Stock Options shall not be
granted under this Plan to any Employee if such grant would result in such
Employee holding the right to exercise for the first time in any one calendar
year, under all Incentive Stock Options granted under this Plan or any other
plan maintained by the Bank, with respect to Shares having an aggregate Fair
Market Value, determined as of the date of the Option is granted, in excess of
$100,000. Should it be determined that an Incentive Stock Option granted under
this Plan exceeds such maximum for any reason other than a failure in good faith
to value the Shares subject to such option, the excess portion of such Option
shall be considered a Non-statutory Stock Option. To the extent the Employee
holds two (2) or more such Options which become exercisable for the first time
in the same calendar year, the foregoing limitation on the exercisability of
such Options as Incentive Stock Options under the federal tax laws shall be
applied on the basis of the order in which such Options are granted. If, for any
reason, an entire Option does not qualify as an Incentive Stock Option by reason
of exceeding such maximum, such Option shall be considered a Non-statutory Stock
Option.
4.3. Limits on Awards. Over any period of three consecutive
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calendar years, no Participant may receive Awards that relate to more than
50,000 Shares. The Committee will adjust this limitation pursuant to Section
5.3 below.
4.4. Replacement Awards. Subject to Applicable Laws (including any
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associated stockholder approval requirements), the Committee may, in its sole
discretion and upon such terms as it deems appropriate, require as a condition
of the grant or an Award to a Participant that the Participant surrender for
cancellation some or all of the Awards that have previously been granted to the
Participant under this Plan or otherwise. An Award that is conditioned upon such
surrender may or may not be the same type of
Award, may cover the same (or a lesser or greater) number of Shares as such
surrendered Award, may have other terms that are determined without regard to
the terms or conditions or such surrendered Award, and may contain any other
terms that the Committee deems appropriate.
5. Stock Subject to Plan.
5.1. Shares Reserved. Subject to adjustment as provided in Section
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of this Plan, the maximum number of Shares that may be issued under this Plan or
pursuant to Awards made under this Plan is 250,000 Shares.
5.2. Lapsed Awards. If any Award granted hereunder is canceled,
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terminates, expires or lapses for any reason, any Shares subject to such Award
shall again be available for the grant of an Award under the Plan.
5.3. Adjustments in Authorized Shares.
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(a) In the event of any change in corporate capitalization, such
as a stock dividend or stock split, or a corporate
transaction, such as any merger, consolidation, separation,
including a spin-off, or other distribution of stock or
property of the Bank, any reorganization (whether or not
such reorganization comes within the definition of such term
in Section 368 of the Code) or any partial or complete
liquidation of the Bank, such adjustment shall be made in
the number and class of Shares reserved under the Plan, and
in the number, class and price of Shares subject to
outstanding Awards granted under the Plan, as may be
determined to be appropriate and equitable by the Committee,
in its sole discretion, to prevent dilution or enlargement
of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number.
(b) To the extent not previously exercised or settled, Options
shall terminate immediately prior to the dissolution or
liquidation of the Bank.
(c) In the event that the Bank is a party to a merger or other
reorganization, outstanding Awards shall be subject to the
agreement of merger or reorganization. Such agreement shall
provide for:
(i) The continuation of the outstanding Awards by the Bank,
if the Bank is a surviving corporation;
(ii) The assumption of the outstanding Awards by the
surviving corporation or its parent or subsidiary;
(iii) The substitution by the surviving corporation or its
parent or subsidiary of its own awards for the
outstanding Awards;
(iv) To the extent provided for in Article 12, full
exercisability, lapsing of restrictions and/or
accelerated vesting of the outstanding Awards; or
(v) Settlement of the full value of the outstanding Awards
in cash or cash equivalents followed by cancellation of
such Awards.
(d) Except as provided in this Section 5.3, a Participant shall
have no rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend
or any other increase or decrease in the number of shares of
stock of any class. Any issue by the Bank of shares of stock
of any class, or securities convertible into shares of stock
of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Option
Price or grant price of Shares subject to an Award. The
grant of an Award pursuant to the Plan shall not affect in
any way the right or power of the Bank to make adjustments,
reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its
business or assets.
6. Stock Options.
6.1. Grant of Options. Options granted under this Plan to Eligible
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Persons shall be either Incentive Stock Options or Non-statutory Stock Options,
as designated by the Committee; provided, however, that Incentive Stock Options
may not be granted to Eligible Persons who are not Employees.
6.2. Award Agreement. Each Option granted under this Plan shall be
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clearly identified either as a Non-statutory Stock Option or an Incentive Stock
Option and shall be evidenced by an Award Agreement that specifies the terms and
conditions of the grant. Options shall be subject to the terms and conditions
set forth in this Article 6 and such other terms and conditions not inconsistent
with this Plan as the Committee may specify.
6.3. Option Price. The Option Price shall be determined by the
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Committee, subject to this Section 6.3. The Option Price for an Option shall not
be less than one hundred percent (100%) of the Fair Market Value of the Common
Stock on the Date of Grant. Notwithstanding the foregoing, in the case of an
Incentive Stock Option granted to a Participant who is a Ten Percent
Stockholder, the Option Price shall not be less than one hundred and ten percent
(110%) of the Fair Market Value of the Common Stock on the Date of Grant.
6.4. Term of Options. The Option Period shall be determined by the
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Committee and specifically set forth in the Agreement; provided, however, that
an Option shall not be exercisable after ten (10) years (five (5) years in the
case of an Incentive Stock Option granted to a Ten Percent Stockholder) from its
Date of Grant.
6.5. Restrictions on Transfer. The Committee may impose such
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restrictions on the transfer of Shares acquired pursuant to the exercise of an
Option
granted under this Article as it may deem advisable, including, without
limitation, under Applicable Laws.
6.6. Exercise of Options. The Shares subject to an Option may be
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purchased in such installments and on such exercise dates as shall be set forth
in the Award Agreement. Any Shares not purchased on the applicable exercise date
may be purchased thereafter at any time prior to the final expiration of the
Option. In no event shall any Option be exercised, in whole or in part, after
its expiration date.
6.7. Payment. Options shall be exercised by the delivery of a
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written notice of exercise to the Bank, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares. The Option Price upon exercise of any Option shall be payable to the
Bank either: (a) in cash or its equivalent, or (b) by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the aggregate Option Price (provided that the Shares which are tendered
have been held by the Participant for at least six (6) months prior to their
tender to satisfy the Option Price), or (c) by a combination of (a) and (b). The
Committee also may allow cashless exercise through a registered broker-dealer
pursuant to such cashless exercise procedures which are, subject to applicable
securities laws restrictions, deemed acceptable by the Committee or by any other
means which the Committee determines to be consistent with the Plan's purpose
and Applicable Law. As soon as practicable after receipt of a written
notification of exercise and full payment, the Bank shall deliver to the
Participant, in the Participant's name, Share certificates in an appropriate
amount based upon the number of Shares purchased under the Option(s).
6.8. Termination of Service. Each Award Agreement with respect to
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Options granted hereunder shall set forth the extent to which the Participant
shall have the right to exercise the Options following termination of the
Participant's service with the Bank or its Affiliates, as the case may be. Such
provisions shall be determined in the sole discretion of the Committee, shall be
included in the Award Agreement, need not be uniform among all Options issued
pursuant to this Article, may reflect distinctions based on the reasons for
termination of service and may include provisions relating to a Participant's
competition with the Bank after termination of service. In that regard, if an
Award Agreement permits exercise of an Option following the death of the
Participant, the Award Agreement shall provide that such Option shall be
exercisable to the extent provided therein by any person that may be empowered
to do so under the Participant's will or, if the Participant shall fail to make
a testamentary disposition of the Option or shall have died intestate, by the
Participant's executor or other legal representative.
6.9. Additional Termination Provisions for Incentive Stock
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Options. No Incentive Stock Option may be exercised more than three (3) months
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after the Participant's termination of employment for any reason other than
Disability or death, unless (a) the Participant dies during such three-month
period, and (b) the Award Agreement or the Committee permits later exercise. No
Incentive Stock Option may be exercised more than one year after the
Participant's termination of employment on
account of Disability, unless (a) the Participant dies during such one year
period, and (b) the Award Agreement and/or the Committee permit later exercise.
6.10. Nontransferability of Options.
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(a) Incentive Stock Options. No Incentive Stock Option granted
under this Article may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than
by will or by the laws of descent and distribution. Further,
all Incentive Stock Options granted to a Participant shall
be exercisable during his or her lifetime only by such
Participant.
(b) Non-statutory Stock Options. Except as otherwise provided in
an Award Agreement, no Non-statutory Stock Option granted
under this Article may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than
by will or by the laws of descent and distribution. Further,
except as otherwise provided in an Award Agreement, all such
Options granted to a Participant shall be exercisable during
his or her lifetime only by such Participant.
7. Restricted Stock
7.1. Grant of Restricted Stock. Subject to the terms and
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conditions of this Article, and to such other terms and conditions as the
Committee may determine, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock to Eligible Persons in such numbers as the
Committee shall determine.
7.2. Award Agreement. Each Restricted Stock grant shall be
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evidenced by an Award Agreement that shall specify the Period or Periods of
Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.
7.3. Transferability. Except as provided in this Article, the
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Shares of Restricted Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the applicable
Period of Restriction established by the Committee and specified in the Award
Agreement, or upon earlier satisfaction of any other conditions, as specified by
the Committee in its sole discretion and set forth in the Award Agreement. All
rights with respect to Restricted Stock granted to a Participant under the Plan
shall be available during his or her lifetime only to such Participant.
7.4. Other Restrictions. The Committee may impose such conditions
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or restrictions on any Shares or Restricted Stock granted pursuant to the Plan
as it may deem advisable including, without limitation, a requirement that
Participants pay a certain purchase price for each Share of Restricted Stock,
restrictions based upon the
achievement of specific performance goals (Bank-wide, divisional, or
individual), time-based restrictions on vesting following the attainment of the
performance goals and restrictions under Applicable Laws. The Bank shall retain
the certificates representing Shares of Restricted Stock in the Bank's
possession until such time as all conditions and restrictions applicable to such
Shares have been satisfied. Except as otherwise provided in this Article or in
the applicable Award Agreement, or as otherwise required by law, Shares of
Restricted Stock shall become freely transferable by the Participant after the
last day of the Period of Restriction.
7.5. Voting Rights. During the Period of Restriction, Participants
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owning Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to such Shares.
7.6. Dividends and Other Distributions. During the Period of
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Restriction, Participants owning Shares of Restricted Stock granted hereunder
may be credited with regular cash dividends paid with respect to the underlying
Shares while they are so owned. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate. In the event that any dividend
constitutes a "derivative security" or an "equity security" pursuant to Section
16 under the Exchange Act, such dividend shall be subject to a vesting period
equal to the remaining vesting period of the Shares of Restricted Stock with
respect to which the dividend is paid.
7.7. Termination of Service. Each Award Agreement with respect to
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Restricted Stock granted hereunder shall set forth the extent to which the
Participant shall have the right to receive unvested Restricted Shares following
termination of the Participant's service with the Bank or its Affiliates, as the
case may be. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement, need not be uniform among
all Shares of Restricted Stock issued pursuant to the Plan, may reflect
distinctions based on the reasons for termination of service and may include
provisions relating to a Participant's competition with the Bank after
termination of service. In amplification but not limitation of the foregoing, in
the case of an Award of Restricted Stock to an executive officer which is
intended to qualify for the Performance- Based Exception, the Award Agreement
may provide that such Restricted Stock may become payable in the event of a
termination of service by reason of death, becoming Disabled or a Change in
Control, such payment not to occur before attainment of the related performance
goal.
8. Performance Shares
8.1. Grant of Performance Shares. Subject to the terms and
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conditions of this Article and to such other terms and conditions as the
Committee may determine, Performance Shares may be granted to eligible Employees
in such amounts, upon such terms and at such times as shall be determined by the
Committee. The number and vesting of Performance Shares granted shall be
conditioned upon the degree of attainment of specified performance goals or
other conditions over a specified period (the "Performance Period") as
determined by the Committee, subject to Section 3.1 hereof. The terms and
provisions of an Award of Performance Shares shall be evidenced by an
appropriate Award Agreement.
8.2. Form and Timing of Payment of Performance Shares. The
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Committee shall establish the amount of payment to be made under an Award of
Performance Shares if the performance goals or other conditions are met. Such
Award shall be expressed in terms of Shares. After the completion of a
Performance Period, the performance of the Bank, subsidiary, division or
individual, as the case may be, shall be measured against the performance goals
or other conditions, and the Committee shall determine whether all, none or a
portion of an Award shall be paid. The Committee shall pay any earned
Performance Shares as soon as practicable after they are earned in the form of
cash, Shares or a combination thereof (as determined by the Committee) having an
aggregate Fair Market Value equal to the value of the earned Performance Shares
as of the date they are earned. Any Shares used to pay earned Performance Shares
may be issued subject to any restrictions deemed appropriate by the Committee.
In addition, the Committee, in its discretion, may cancel any earned Performance
Shares and grant Stock Options to the Participant which the Committee determines
to be of equivalent value based on a conversion formula stated in the applicable
Award Agreement. The Committee, in its discretion, may also grant dividend
equivalent rights with respect to earned but unpaid Performance Shares as
evidenced by the applicable Award Agreement. Performance Shares shall have no
voting rights.
8.3. Termination of Service. Each Award Agreement with respect to
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Performance Shares granted hereunder shall set forth the extent to which the
Participant shall have the right to receive unearned Performance Shares
following termination of the Participant's service with the Bank and its
Affiliates, as the case may be. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreements, need not
be uniform among all Performance Shares awarded pursuant to the Plan, may
reflect distinctions based on the reasons for termination of service and may
include provisions relating to a Participant's competition with the Bank after
termination of service.
8.4. Nontransferability. Except as otherwise provided in an Award
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Agreement with respect to Performance Shares granted hereunder, Performance
Shares may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution.
Further, except as otherwise provided in an Award Agreement, a Participant's
rights under the Plan shall be exercisable during the Participant's lifetime
only by the Participant.
9. Performance Measures
9.1. Evaluation of Performance. The number of Shares or other
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benefits granted, issued, retainable and/or vested under an Award may be made
subject to the attainment of performance goals for a specified period of time
relating to one or more of the following performance criteria, either
individually, alternatively or in any combination, applied to either the Bank as
a whole or to a business unit or Subsidiary, either individually, alternatively
or in any combination, and measured either annually or cumulatively over a
period of years, on an absolute basis or relative to a pre-established target,
to previous years' results or to a designated comparison group or index, in each
case as specified by the Committee in the Award: (a) cash flow, (b) earnings per
share, (c) earnings before interest, taxes and amortization, (d) return on
equity, (e) total stockholder return, (f) share price performance, (g) return on
capital, (h) return on assets or net assets, (i) revenue, (j) income or net
income, (k) operating income or net operating income, (l) operating profit or
net operating profit, (m) operating margin or profit margin, (n) return on
operating revenue, (o) return on invested capital, or (p) market segment shares
("Qualifying Performance Criteria"). The Committee may appropriately adjust any
evaluation of performance under a Qualifying Performance Criteria to exclude any
of the following events that occurs during a performance period: (i) asset
write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect
of changes in tax law, accounting principles or other such laws or provisions
affecting reported results, (iv) accruals for reorganization and restructuring
programs and (v) any extraordinary nonrecurring items as described in Accounting
Principles Board Opinion No. 30 and/or in managements' discussion and analysis
of financial condition and results of operations appearing in the Bank's annual
report to stockholders for the applicable year. The Committee shall determine
the Qualifying Performance Criteria not later than the 90th day of the
Performance Period, and shall determine and certify, for each Participant, the
extent to which the Qualifying Performance Criteria have been met. To the extent
such inclusions or exclusions affect Awards to Covered Employees, they shall be
prescribed in a form that meets the requirements of Code Section 162(m) for
deductibility.
9.2. Adjustment of Performance-Based Exception. Awards that are
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intended to qualify for the Performance-Based Exception may not be adjusted
upward. The Committee shall retain the discretion to adjust such Awards
downward, either on a formula or discretionary basis or any combination, as the
Committee determines.
9.3. Committee Discretion. In the event that applicable tax and/or
--------------------
securities laws change to permit Committee discretion to alter the governing
Performance Measures without obtaining stockholder approval of such changes, the
Committee shall have sole discretion to make such changes without obtaining
stockholder approval. In addition, in the event that the Committee determines
that it is advisable to grant Awards that shall not qualify for the
Performance-Based Exception, the Committee may make such grants without
satisfying the requirements of Code Section 162(m) and base vesting on
Performance Measures other than those set forth in Section 9.1.
10. Beneficiary Designation
Each Participant may, from time to time, designate any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Bank, and will be effective only when filed by the Participant in writing with
the Bank during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
11. Deferrals
The Committee may permit or require a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of an Option, the lapse or
waiver or restrictions with respect to Restricted Stock, or the satisfaction or
any requirements or goals with respect to Performance Shares. If any such
deferral election is required or permitted, such deferral shall be made pursuant
to a deferred compensation plan that satisfies the requirements of Section 409A
of the Code.
12. Change in Control
Upon the occurrence of a Change in Control, unless otherwise specifically
prohibited under Applicable Laws: (i) any and all Options granted hereunder
shall become immediately exercisable, and shall remain exercisable throughout
their entire term; (ii) any restriction periods and restrictions imposed on
Shares of Restricted Stock shall lapse; (iii) the target payout opportunities
attainable under all outstanding Awards of Restricted Stock and Performance
Shares shall be deemed to have been fully earned for the entire Performance
Period(s) as of the effective date of the Change in Control; and (iv) the
vesting of all Awards shall be accelerated as of the effective date of the
Change in Control.
13. Termination or Amendment.
The Board may amend, alter or terminate this Plan in any respect at any time;
provided, however, that, after this Plan has been approved by the stockholders
of the Bank, no amendment, alteration or termination of this Plan shall be made
by the Board without approval of (a) the Bank's stockholders to the extent
stockholder approval of the amendment is required by Applicable Laws, if any,
and (b) each affected Participant if such amendment, alteration or termination
would adversely affect his or her rights or obligations under any Award made
prior to the date of such amendment, alteration or termination; provided,
further, that no such action of the Board without approval of the stockholders
may:
(a) materially increase the total number of Shares subject to
the Plan except as contemplated by Section 5.3 hereof;
(b) materially increase the benefits accruing to Participants
under the Plan;
(c) extend the term of the Plan;
(d) reduce the Option Price of outstanding Options; or
(e) materially modify the requirements as to eligibility for
participation in the Plan.
14. Withholding.
The Bank's obligation to deliver Shares or pay any amount pursuant to the terms
of any Award hereunder shall be subject to satisfaction of applicable federal,
state and local tax withholding requirements ("Required Withholding"). To the
extent provided in the applicable Award Agreement and in accordance with rules
prescribed by the Committee, a Participant may satisfy any such withholding tax
obligation by any of the following means or by a combination of such means: (a)
tendering a cash payment; (b) authorizing the Bank to withhold Shares otherwise
issuable to the Participant; or (c) delivering to the Bank already owned and
unencumbered Shares.
15. Conditions Upon Issuance of Shares.
Notwithstanding any other provision of the Plan or any Award Agreement entered
into by the Bank pursuant to the Plan, the Bank shall not be obligated, and
shall have no liability for failure, to issue or deliver any Shares under the
Plan unless such issuance or delivery would comply with Applicable Law, with
such compliance determined by the Bank in consultation with its legal counsel.
16. General Provisions.
16.1. No Participation Rights. The establishment of this Plan
--------------------------
shall not confer upon any Eligible Person any legal or equitable right against
the Bank, any Affiliate or the Committee, except as expressly provided in this
Plan.
16.2. No Employment Rights. This Plan does not constitute
-----------------------
inducement or consideration for the employment or service of any Eligible
Person, nor is it a contract between the Bank or any Affiliate and any Eligible
Person. Participation in this Plan shall not give an Eligible Person any right
to be retained in the service of the Bank or any Affiliate.
16.3. No Bar to Additional Awards. Neither the adoption of this
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Plan nor its submission to the stockholders, shall be taken to impose any
limitations on the powers of the Bank or its Affiliates to issue, grant, or
assume options, warrants, rights, or restricted stock, or other awards otherwise
than under this Plan, or to adopt other stock option, restricted stock, or other
plans or to impose any requirement of stockholder approval upon the same.
16.4. Awards Not Subject to Creditors. The interests of any
------------------------------------
Eligible Person under this Plan are not subject to the claims of creditors and
may not, in any way, be assigned, alienated or encumbered except as provided in
an Agreement.
16.5. Successors. All obligations of the Bank under the Plan with
-----------
respect to Awards granted hereunder shall be binding on any successor to the
Bank, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all substantially all
of the business or assets of the Bank.
16.6. Governing Law. This Plan shall be governed, construed and
---------------
administered in accordance with the laws of the State of Georgia, without regard
to conflicts of law principles.
16.7. Securities Law Compliance. The Committee may require each
----------------------------
person acquiring Shares pursuant to Awards hereunder to represent to and agree
with the Bank in writing that such person is acquiring the Shares without a view
to distribution thereof. The certificates for such Shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
All certificates for Shares issued pursuant to this Plan shall be subject to
such stock transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any securities exchange upon which the Common Stock is
then listed or automatic interdealer quotation system upon which the Common
Stock is then quoted, and any applicable federal or state securities laws. The
Committee may place a legend or legends on any such certificates to make
appropriate reference to such restrictions.
16.8. Compliance with the Code. The Plan shall be governed,
----------------------------
construed and administered in compliance with the deferred compensation
provisions of Section 409A of the Code and shall be amended as necessary to
maintain compliance with the provisions of Section 409A. The Committee may place
such restrictions or provisions in any Award Agreement as may be necessary to
comply with the provisions of Section 409A of the Code.
16.9. Notification under Code Section 83(b). If a Participant, in
--------------------------------------
connection with any exercise of an Option, or the grant of Restricted Stock,
makes the election permitted under Section 83(b) of the Code to include in such
Participant's gross income in the year of transfer the amounts specified in
Section 83(b) of the Code, then such Participant shall notify the Bank of such
election within 10 days of filing the notice of the election with the Internal
Revenue Service, in addition to filing any notification required pursuant to
regulations issued under Section 83(b) of the Code. The Committee may, in
connection with the grant of an Award or at any time thereafter prior to such an
election being made, prohibit a Participant from making such an election.
16.10. Requirements of Law. The Bank shall not be required to
----------------------
issue any certificate or certificates for Shares with respect to Awards under
this Plan, or record any person as a holder of record of such Shares, without
obtaining, to the complete satisfaction of the Committee, the approval of all
regulatory bodies deemed necessary by the Committee, and without complying to
the Board's or Committee's complete satisfaction, with all Applicable Laws.