EXHIBIT 10.4.1

 

AMENDED AND RESTATED 1997 STOCK COMPENSATION PLAN

 

1.    Purpose

 

The Stock Compensation Plan (the “Plan”) of Palmetto Bancshares, Inc. (the
“Company”) is intended to allow certain key employees and directors of the
Company and its subsidiaries to have an opportunity to acquire an ownership
interest in the Company as an additional incentive to attract and retain
employees and directors and to encourage them to promote the Company’s business.
This purpose will be achieved through the grant of stock options (“Options”) to
purchase shares of common stock of the Company (“Common Stock”).

 

2.    Administration

 

The Plan shall be administered by the Company’s Board of Directors (the “Board”)
or by a committee of the Board (the “Committee”) composed solely of all members
thereof who are “disinterested persons” (as so defined)).

 

The Board or Committee shall have complete authority to: (i) interpret all terms
and provisions of the Plan consistent with law; (ii) select from the group of
officers and key employees eligible to participate in the Plan the officers and
key employees to whom Options shall be granted; (iii) within the limits
established herein, determine the number of shares to be subject to, the
exercise price of and the term of each Option granted to each director, officer
and key employee; (iv) prescribe the form of instrument(s) evidencing Options
granted under this Plan; (v) determine the time or times at which Options shall
be granted to directors, officers or key employees; (vi) make special grants of
Options to directors, officers or key employees when determined to be
appropriate; (vii) provide, if appropriate, for the exercisability of Options
granted to directors, officers or key employees in installments or subject to
specified conditions; (viii) determine the method of exercise of Options granted
under the Plan; (ix) adopt, amend and rescind general and special rules and
regulations for the Plan’s administration; and (x) make all other determinations
necessary or advisable for the administration of this Plan.

 

The Board or Committee may designate selected Board or Committee members or
certain employees of the Company to assist the Board or Committee in the
administration of the Plan and may grant authority to such persons to execute
documents, including Options, on behalf of the Board or Committee.

 

No member of the Board or Committee or employee of the Company assisting the
Board or Committee pursuant to the preceding paragraph shall be liable for any
action taken or determination made in good faith.

 

3.    Stock Subject to Plan

 

The stock to be offered under this Plan shall be authorized but unissued shares
of Common Stock, shares of Common Stock previously issued and thereafter
acquired by the Company, or any combination thereof. An aggregate of 450,000
shares are reserved for the grant under this Plan of Options. Any or all of the
options granted under Section 4 hereof to officers and key employees may, at the
Board’s or Committee’s discretion, be intended to qualify as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”). The numbers of shares which may be granted under this Plan and under
Section 4 hereof, respectively, may be adjusted to reflect any change in the
capitalization of the Company as contemplated by Section 9 of the Plan and
occurring after the adoption of this Plan. The Board or Committee will maintain
records showing the cumulative total of all shares subject to Options
outstanding under this Plan.

 

4.    Eligibility and Factors to be Considered in Granting Options

 

The grant of Options under this Plan shall be limited to directors and to those
officers and key employees of the Company or any of its Subsidiaries who have
the greatest impact on the Company’s long-term performance and are selected by
the Board or Committee. Members of the Company’s Board of Directors who are also

--------------------------------------------------------------------------------

officers or employees of the Company are eligible to receive Options under this
Plan. In making any determination as to the officer(s) and key employee(s) to
whom Options shall be granted under this Plan and as to the number of shares to
be subject thereto, the Board or Committee shall take into account, in each
case, the level and responsibility of the person’s position, the level of the
person’s performance, the person’s level of compensation, the assessed potential
of the person and such additional factors as the Board or Committee shall deem
relevant to the accomplishment of the purposes of the Plan.

 

Options may be granted under this Section 4 only for a reason connected with an
officer’s or key employee’s employment by the Company or any Subsidiary.

 

Notwithstanding any other provision of the Plan, the aggregate number of shares
of Common Stock that may be acquired by any individual director who is not an
employee of the Company shall not exceed 5,000 shares, subject to adjustment as
provided in Section 9.

 

a.  Allotment of Shares

 

The Board or Committee may, in its sole discretion and subject to the provisions
of this Plan, grant to participants eligible under this Plan, on or after the
date hereof, Options to purchase shares of Common Stock. Options granted under
this Plan may, at the discretion of the Board or Committee, be: (i) Options
which are intended to qualify as incentive stock options under Section 422 of
the Code; (ii) Options which are not intended so to qualify under Section 422 of
the Code; or (iii) both of the foregoing, if granted separately, and not in
tandem. Each Option granted under this Plan must be clearly identified as to its
status as an incentive stock option or not. Non-employee directors shall be
granted only options not intended to qualify under Section 422 of the Code.

 

Options granted under this Plan may be allotted to participants in such amounts,
subject to the limitations specified in this Plan, as the Board or Committee, in
its sole discretion, may from time to time determine.

 

In the case of Options intended to be incentive stock options, the aggregate
fair market value (determined at the time of the Options’ respective grants) of
the shares with respect to which incentive stock options are exercisable for the
first time by a participant hereunder during any calendar year (under all plans
taken into account pursuant to Section 422(d) of the Code) shall not exceed
$100,000. Options under this Plan not intended to qualify as incentive stock
options under Section 422 of the Code may be granted to any Plan participant
without regard to the Section 422(d) limitations.

 

b.  Option Price

 

The price per share at which each Option granted under this Plan may be
exercised shall be such price as shall be determined by the Board or Committee
at the time of grant based on such criteria as may be adopted by the Board or
Committee at the time of grant in good faith, taking into account, in each case,
the market price of the Common Stock, the level and responsibility of the
person’s position, the level of the person’s performance, the person’s level of
compensation, the assessed potential of the person, and such additional factor
or factors as the Board or Committee shall deem relevant to the accomplishment
of the purposes of the Plan; provided, however, that in no event shall the
exercise price per share of an Option be less than 100% of the fair market value
of the Company’s shares of Common Stock on the date the Option is granted. In
the case of an Option intended to qualify as an incentive stock option under
Section 422 of the Code, the price per share shall not be less than 100% (or
110% for owners of more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary) of the fair market value of
the Common Stock at the time such Option is granted.

 

If the Company’s shares of Common Stock are:

 

(1)  actively traded on any national securities exchange or NASDAQ system that
reports their sales prices, fair market value shall be the average of the high
and the low sales prices per share on the date the Board or Committee grants the
Option;

--------------------------------------------------------------------------------

(2)  otherwise traded over the counter, fair market value shall be the average
of the final bid and asked prices for the shares of Common Stock as reported for
the date the Board or Committee grants the Option; or

 

(3)  not traded, the Board or Committee shall consider any factor or factors
which it believes affects fair market value, and shall determine fair market
value without regard to any restriction other than a restriction which by its
terms will never lapse. The Board or Committee may cause fair market value to be
determined by an independent third party appraiser.

 

c.  Term of Option

 

The term of each Option granted under this Plan shall be established by the
Board or Committee, but shall not exceed 10 years (or 5 years for owners of more
than 10% of the total combined voting power of all classes of stock of the
Company or of a Subsidiary) from the date of the grant.

 

d.  Time of Granting Options

 

The date of grant of an Option shall, for all purposes, be the date on which the
Board or Committee makes the determination of granting such Option. Notice of
the determination shall be given to each director, officer or key employee to
whom an Option is so granted within a reasonable time after the date of such
grant.

 

e.  Cancellation and Replacement of Options

 

The Board or Committee may at any time or from time to time permit the voluntary
surrender by the holder of any outstanding Option granted under this Plan where
such surrender is conditioned upon the granting under this Plan to such holder
of new Option(s) for such number of shares as the Board or Committee shall
determine, or may require such a voluntary surrender as a condition precedent to
the grant under this Plan of new Option(s) to such holder.

 

The Board or Committee shall determine the terms and conditions of any such new
Option(s), including the prices at and periods during which they may be
exercised, in accordance with the provisions of this Plan, all or any of which
may differ from the terms and conditions of the Option(s) surrendered. Any such
new Option(s) shall be subject to all the relevant provisions of this Plan.

 

The shares subject to any Option so surrendered shall no longer be charged
against the limitation or limitations provided in Section 3 of this Plan and may
again become shares subject to the same applicable limitations of this Plan.

 

The granting of new Option(s) in connection with the surrender of outstanding
Option(s) under this Plan shall be considered for the purposes of the Plan as
the grant of new Option(s) and not an alteration, amendment or modification of
the Plan or of the Option(s) being surrendered.

 

5.    Non-transferability

 

An Option granted to a participant under this Plan shall not be transferable by
him or her except: (i) by will; (ii) by the laws of descent and distribution; or
(iii) pursuant to a qualified domestic relations order as defined by the Code or
in Title I of the Employee Retirement Income Security Act, or the rules
thereunder. In the case of an Option intended to be an incentive stock option,
such Option shall not be transferable by a participant other than by will or the
laws of descent and distribution and during the optionee’s lifetime shall be
exercisable only by him or her.

 

6.    Exercising of Options

 

Subject to the provisions of this Plan, an Option granted under this Plan shall
be exercisable at such time or times after the date of grant thereof, according
to such schedule and upon such conditions as may be determined by the Board or
Committee at the time of grant.

--------------------------------------------------------------------------------

For a period of six months commencing on the date of grant of an Option
hereunder to a participant, such participant may not sell any share(s) of Common
Stock acquired upon exercise of such Option.

 

Any Option granted under this Plan shall terminate prior to the expiration of
its term on the date the optionee ceases to be a director of the Company or an
employee of the Company or any Subsidiary of the Company, unless the optionee
shall (a) die while a director of the Company or an employee of the Company or
such Subsidiary, in which case the participant’s legatee(s) under his or her
last will or the participant’s personal representative or representatives may
exercise all or part of the previously unexercised portion of the Option at any
time within one year after the participant’s death to the extent the optionee
could have exercised the Option immediately prior to his or her death, (b)
become permanently or totally disabled within the meaning of section 22(e)(3) of
the Code (or any successor provision), in which case the participant or his or
her personal representative may exercise the previously unexercised portion of
the Option at any time within one year after termination of his or her
employment or directorship to the extent the optionee could have exercised the
Option immediately prior to such termination, or (c) resign or retire with the
consent of the Company, in which case the participant may exercise the
previously unexercised portion of the Option at any time within three months
after the participant’s resignation or retirement to the extent the optionee
could have exercised the Option immediately prior to such resignation or
retirement.

 

In no event may an Option be exercised after the expiration of its fixed term.

 

7.    Method of Exercise

 

Each Option granted under the Plan shall be deemed exercised when the holder (a)
shall indicate the decision to do so in writing delivered to the Company, (b)
shall at the same time tender to the Company payment in full in cash or in
shares of Common Stock at the fair market value of such shares at the time of
exercise of the exercise price for the shares for which the Option is exercised,
(c) shall tender to the Company payment in full in cash of the amount of all
federal and state withholding or other employment taxes applicable to the
taxable income, if any, of the holder resulting from such exercise, and (d)
shall comply with such other reasonable requirements as the Board or Committee
may establish.

 

No person, estate or other entity shall have any of the rights of a shareholder
with reference to shares subject to an Option until a certificate for the shares
has been delivered.

 

An Option granted under this Plan may be exercised for any lesser number of
shares than the full amount for which it could be exercised. Such a partial
exercise of an Option shall not affect the right to exercise the Option from
time to time in accordance with this Plan for the remaining shares subject to
the Option.

 

8.    Termination of Options

 

An Option granted under this Plan shall be considered terminated in whole or
part, to the extent that, in accordance with the provisions of this Plan and
such Option, it can no longer be exercised for any shares originally subject to
the Option. The shares subject to any Option or portion thereof, which
terminates, shall no longer be charged against the applicable limitation or
limitations provided in Section 3 of this Plan and may again become shares
available for the purposes, and subject to the same applicable limitations, of
this Plan.

 

9.    Adjustments Upon Changes in Capitalization

 

In the event of any change in the outstanding Common Stock of the Company by
reason of a stock dividend, stock split, stock consolidation, recapitalization,
reorganization, merger, split up or the like, the shares available for purposes
of this Plan, the shares to be covered by subsequent grants under Section 3
hereof and the number and kind of shares under option in outstanding option
agreements pursuant to this Plan and the option price under such agreements
shall be appropriately adjusted so as to preserve, but not increase, the
benefits of this Plan to the Company and the benefits to the holders of such
Options; provided in the case of incentive stock options that, in the case of a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or

--------------------------------------------------------------------------------

liquidation, the excess of the aggregate fair market value of the shares subject
to any Option immediately after such event over the aggregate option price of
such shares is not more than the excess of the aggregate fair market value of
all shares subject to the Option immediately before such event over the
aggregate option price of such shares.

 

In the event of a consolidation or a merger in which the Company is not the
surviving corporation, or any other merger in which the shareholders of the
Company exchange their shares of stock in the Company for stock of another
corporation, or in the event of complete liquidation of the Company, or in the
case of a tender offer approved by the Board of Directors, all outstanding
options shall become exercisable in full immediately prior to the effective date
of any such transaction, regardless of the exercise schedule.

 

Adjustments under this Section shall be made by the Board or Committee, whose
determination as to what adjustments shall be made and the extent thereof, shall
be final, binding and conclusive.

 

10.    Compliance with Securities Laws and Other Requirements

 

No certificate(s) for shares shall be executed and delivered upon exercise of an
Option until the Company shall have taken such action, if any, as is then
required to comply with the provisions of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the South Carolina
Uniform Securities Act, as amended, any other applicable state securities law(s)
and the requirements of any exchange on which the Common Stock may, at the time,
be listed.

 

In the case of the exercise of an Option by a person or estate acquiring the
right to exercise the Option by bequest or inheritance, the Board or Committee
may require reasonable evidence as to the ownership of the Option and may
require such consents and releases of taxing authorities as it may deem
advisable.

 

11.    No Right to Employment

 

Neither the adoption of the Plan nor its operation, nor any document describing
or referring to the Plan, or any part thereof, shall confer upon any employee
participant under the Plan any right to continue in the employ of the Company,
or upon any director participant under the Plan any right to continue as a
director of the Company, or shall in any way affect the right and power of the
Company to terminate the employment or position with the Company of any
participant under this Plan at any time with or without assigning a reason
therefor, to the same extent as the Company might have done if this Plan had not
been adopted.

 

12.    Amendment and Termination

 

The Board or Committee may at any time suspend, amend or terminate this Plan.
The Board or Committee may make such modifications of the terms and conditions
of a holder’s Option as it shall deem advisable. No Option may be granted during
any suspension of the Plan or after such termination. Notwithstanding the
foregoing provisions of this Section, no amendment, suspension or termination
shall, without the consent of the holder of an Option, alter or impair any
rights or obligations under any Option theretofore granted under the Plan.

 

In addition to Board or Committee approval of an amendment, if the amendment
would: (i) materially increase the benefits accruing to participants; (ii)
increase the number of securities issuable under this Plan; (iii) change the
class or classes of individuals eligible to receive Options; or (iv) otherwise
materially modify the requirements for eligibility, then such amendment must be
approved by the holders of a majority of the Company’s outstanding capital stock
present or represented by proxy and entitled to vote at a meeting duly held of
the stockholders of the Company.

 

13.    Use of Proceeds

 

The proceeds received by the Company from the sale of shares pursuant to Options
granted under the Plan shall be used for general corporate purposes as
determined by the Board.

--------------------------------------------------------------------------------

14.    Indemnification of Board or Committee

 

In addition to such other rights of indemnification as they may have as members
of the Board, the members of the Board or Committee shall, to the fullest extent
permitted by law, be indemnified by the Company against the reasonable expenses,
including attorney’s fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided the settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Board member or Committee
member is liable for gross negligence or misconduct in the performance of his
duties; provided that within 60 days after institution of any such action, suit
or proceeding the Board member or Committee member shall in writing offer the
Company the opportunity, at its own expense, to handle and defend the same.

 

15.    Effective Date of the Plan

 

This Plan was adopted by the Board of the Company on December 9, 1997 and shall
be effective as of December 9, 1997, subject to its approval by the appropriate
shareholder vote at the next ensuing annual meeting of shareholders of the
Company.

 

16.    Duration of the Plan

 

Unless previously terminated by the Board or Committee, this Plan shall
terminate at the close of business on December 8, 2007, and no Option shall be
granted under it thereafter, but such termination shall not affect any Option
theretofore granted under this Plan.

 

Amended and Restated Effective April 15, 2003