Exhibit 10.6

 

 

 

SMARTFINANCIAL, INC.
2010 INCENTIVE PLAN

 

 

 

 

 

 

 

 

SMARTFTNANC1AL, INC.
2010 INCENTIVE PLAN

 

 

 

 

 

 

SMARTFINANCIAL, INC.2010 INCENTIVE PLAN

 

ARTICLE 1 PURPOSE 4     1.1 General 4       ARTICLE 2 DEFINITIONS 4     2.1
Definitions 4       ARTICLE 3 EFFECTIVE TERM OF PLAN 10     3.1 Effective Date
10       3.2 Term of Plan 11       ARTICLE 4 ADMINISTRATION 11     4.1 Committee
11       4.2 Actions and Interpretations by the Committee 11       4.3 Authority
of Committee 11       4.4 Delegation 12       4.5 Indemnification 13      
ARTICLE 5 SHARES SUBJECT TO THE PLAN 13     5.1 Number of Shares 13       5.2
Share Counting 13       5.3 Stock Distributed 14       ARTICLE 6 ELIGIBILITY 14
    6.1 General 14       ARTICLE 7 STOCK OPTIONS 14     7.1 General 14       7.2
Incentive Stock Options 15       ARTICLE 8 STOCK APPRECIATION RIGHTS 16     8.1
Grant of Stock Appreciation Rights 16       ARTICLE 9 RESTRICTED STOCK,
RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS 17     9.1 Grant of Restricted
Stock, Restricted Stock Units and Deferred Stock Units 17       9.2 Issuance and
Restrictions 17       9.3 Dividends on Restricted Stock 17       9.4 Forfeiture
17

 

 

 

 

9.5 Delivery of Restricted Stock 18       ARTICLE 10 PERFORMANCE AWARDS 18    
10.1 Grant of Performance Awards 18       10.2 Performance Goals 18      
ARTICLE 11 DIVIDEND EQUIVALENTS 19     11.1 Grant of Dividend Equivalents 19    
  ARTICLE 13 STOCK OR OTHER STOCK-BASED AWARDS 19     12.1 Grant of Stock or
Other Stock-Based Awards 19       ARTICLE 13 PROVISIONS APPLICABLE TO AWARDS 19
    13.1 Award Certificates 19       13.2 Form of Payment of Awards 20      
13.3 Limits on Transfer 20       13.4 Beneficiaries 20       13.5 Stock Trading
Restrictions 20       13.6 Acceleration upon Death or Disability 20       13.7
Effect of a Change in Control 21       13.8 Acceleration for Any Other Reason 23
      13.9 Forfeiture Events 23       13.10 Substitute Awards 23       ARTICLE
14 CHANGES IN CAPITAL STRUCTURE 23     14.1 Mandatory Adjustments 23       14.2
Discretionary Adjustments 24       14.3 General 24       ARTICLE 15 AMENDMENT,
MODIFICATION AND TERMINATION 25     15.1 Amendment, Modification and Termination
25       15.2 Awards Previously Granted 25       15.3 Compliance Amendments 25  
    ARTICLE 16 GENERAL PROVISIONS 26     16.1 Rights of Participants 26      
16.2 Withholding 26       16.3 Special Provisions Related to Section 409A of the
Code 27

 

 

 

 

16.4 Unfunded Status of Awards 28       16.5 Relationship to Other Benefits 28  
    16.6 Expenses 28       16.7 Titles and Headings 28       16.8 Gender and
Number 28       16.9 Fractional Shares 28       16.10 Government and Other
Regulations 28       16.11 Governing Law 29       16.12 Severability 29      
16.13 No Limitations on Rights of Company 29       16.14 Indemnification 30

 

 

 

  

SMARTFINANCIAL, INC.
2010 INCENTIVE PLAN

 

ARTICLE 1

PURPOSE

 

1.1. GENERAL. The purpose of the SmartFinancial, Inc. 2010 Incentive Plan (the
"Plan") is to promote the success, and enhance the value, of SmartFinancial,
Inc. (the "Company"), by linking the personal interests of employees, officers,
directors and consultants of the Company or any Affiliate (as defined below) to
those of Company shareholders and by providing such persons with an incentive
for outstanding performance. The Plan is further intended to provide flexibility
to the Company in its ability to motivate, attract, and retain the services of
employees, officers, directors and consultants upon whose judgment, interest,
and special effort the successful conduct of the Company's operation is largely
dependent. Accordingly, the Plan permits the grant of incentive awards from time
to time to selected employees, officers, directors and consultants of the
Company and its Affiliates.

 

ARTICLE 2
DEFINITIONS

 

2.1. DEFINITIONS. When a word or phrase appears in this Plan with the initial
letter capitalized, and the word or phrase does not commence a sentence, the
word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning is required by the
context. The following words and phrases shall have the following meanings:

 

(a)          "Affiliate" means (i) any Subsidiary or Parent, or (ii) an entity
that directly or through one or more intermediaries controls, is controlled by
or is under common control with, the Company, as determined by the Committee.

 

(b)          "Award" means an award of Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Deferred Stock Units, Performance
Awards, Dividend Equivalents, Other Stock-Based Awards, or any other right or
interest relating to Stock or cash, granted to a Participant under the Plan.

 

(c)          "Award Certificate" means a written document, in such form as the
Committee prescribes from time to time, setting forth the terms and conditions
of an Award. Award Certificates may be in the form of individual award
agreements or certificates or a program document describing the terms and
provisions of an Award or series of Awards under the Plan. The Committee may
provide for the use of electronic, internet or other non-paper Award
Certificates, and the use of electronic, internet or other non-paper means for
the acceptance thereof and actions thereunder by a Participant.

 

 

 

 

(d)          "Beneficial Owner" shall have the meaning given such term in Rule
13d-3 of the General Rules and Regulations under the 1934 Act.

 

(e)          "Board" means the Board of Directors of the Company.

 

(f)          "Cause" as a reason for a Participant's termination of employment
shall have the meaning assigned such term in the employment, severance or
similar agreement, if any, between such Participant and the Company or an
Affiliate, provided, however that if there is no such employment, severance or
similar agreement in which such term is defined, and unless otherwise defined in
the applicable Award Certificate, "Cause" shall mean any of the following acts
by the Participant, as determined by the Committee: gross neglect of duty,
prolonged absence from duty without the consent of the Company, material breach
by the Participant of any published Company code of conduct or code of ethics;
or willful misconduct, misfeasance or malfeasance of duty which is reasonably
determined to be detrimental to the Company. With respect to a Participant's
termination of directorship, "Cause" means an act or failure to act that
constitutes cause for removal of a director under applicable Tennessee law. The
determination of the Committee as to the existence of "Cause" shall be
conclusive on the Participant and the Company.

 

(g)          "Change in Control" means and includes the occurrence of any one of
the following events but shall specifically exclude a Public Offering:

 

(i)          during any consecutive 12-month period, individuals who, at the
beginning of such period, constitute the Board of Directors of the Company (the
"Incumbent Directors") cease for any reason to constitute at least a majority of
such Board, provided that any person becoming a director after the beginning of
such 12-month period and whose election or nomination for election was approved
by a vote of at least a majority of the Incumbent Directors then on the Board
shall be an Incumbent Director provided, however, that no individual initially
elected or nominated as a director of the Company as a result of an actual or
threatened election contest with respect to the election or removal of directors
("Election Contest") or other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board ("Proxy Contest"),
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest, shall be deemed an Incumbent Director; or

 

(ii)         any person becomes a Beneficial Owner, directly or indirectly, of
either (A) 50% or more of the then-outstanding shares of common stock of the
Company ("Company Common Stock") or (B) securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of directors (the "Company Voting
Securities"); provided, however, that for purposes of this subsection (ii), the
following acquisitions of Company Common Stock or Company Voting Securities
shall not constitute a Change in Control: (w) an acquisition directly from the
Company, (x) an acquisition by the Company or a Subsidiary, (y) an acquisition
by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any Subsidiary, or (z) an acquisition pursuant to a Non-Qualifying
Transaction (as defined in subsection (iii) below); or

 

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(iii) the consummation of a reorganization, merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the Company or
a Subsidiary (a "Reorganization"), or the sale or other disposition of all or
substantially all of the Company's assets (a "Sale") or the acquisition of
assets or stock of another corporation or other entity (an "Acquisition"),
unless immediately following such Reorganization, Sale or Acquisition: (A) all
or substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the outstanding Company Common Stock and outstanding
Company Voting Securities immediately prior to such Reorganization, Sale or
Acquisition beneficially own, directly or indirectly, more than 35% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Reorganization, Sale or Acquisition (including, without
limitation, an entity which as a result of such transaction owns the Company or
all or substantially all of the Company's assets or stock either directly or
through one or more subsidiaries, the "Surviving Entity") in substantially the
same proportions as their ownership, immediately prior to such Reorganization,
Sale or Acquisition, of the outstanding Company Common Stock and the outstanding
Company Voting Securities, as the case may be, and (B) no person (other than (x)
the Company or any Subsidiary, (y) the Surviving Entity or its ultimate parent
entity, or (z) any employee benefit plan (or related trust) sponsored or
maintained by any of the foregoing) is the Beneficial Owner, directly or
indirectly, of 50% or more of the total common stock or 50% or more of the total
voting power of the outstanding voting securities eligible to elect directors of
the Surviving Entity, and (C) at least a majority of the members of the board of
directors of the Surviving Entity were Incumbent Directors at the time of the
Board's approval of the execution of the initial agreement providing for such
Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition
which satisfies all of the criteria specified in (A), (B) and (C) above shall be
deemed to be a "Non-Qualifying Transaction"); or

 

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(iv) approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

 

(h)          "Code" means the Internal Revenue Code of 1986, as amended from
time to time. For purposes of this Plan, references to sections of the Code
shall be deemed to include references to any applicable regulations thereunder
and any successor or similar provision.

 

(i)          "Committee" means the committee of the Board described in Article
4.

 

(j)          "Company" means SmartFinancial, Inc., a Tennessee corporation, or
any successor corporation.

 

(k)          "Continuous Service" means the absence of any interruption or
termination of service as an employee, officer, consultant or director of the
Company or any Affiliate, as applicable; provided, however, that for purposes of
an Incentive Stock Option "Continuous Service" means the absence of any
interruption or termination of service as an employee of the Company or any
Parent or Subsidiary, as applicable, pursuant to applicable tax regulations.
Continuous Service shall not be considered interrupted in the following cases:
(i) a Participant transfers employment between the Company and an Affiliate or
between Affiliates, or (ii) in the discretion of the Committee as specified at
or prior to such occurrence, in the case of a spin-off, sale or disposition of
the Participant's employer from the Company or any Affiliate, or (iii) any leave
of absence authorized in writing by the Company prior to its commencement;
provided, however, that for purposes of Incentive Stock Options, no such leave
may exceed 90 days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed. on the 91st day of such
leave any Incentive Stock Option held by the Participant shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Whether military, government or other service or
other leave of absence shall constitute a termination of Continuous Service
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive; provided, however,
that for purposes of any Award that is subject to Code Section 409A, the
determination of a leave of absence must comply with the requirements of a "bona
fide leave of absence" as provided in Treas. Reg. Section 1.409A-1(h).

 

(l)          "Deferred Stock Unit" means a right granted to a Participant under
Article 9 to receive Shares (or the equivalent value in cash or other property
if the Committee so provides) at a future time as determined by the Committee,
or as determined by the Participant within guidelines established by the
Committee in the case of voluntary deferral elections.

 

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(m)          "Disability" of a Participant means that the Participant (i) 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 (ii) is, 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, receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Participant's employer. If the determination of
Disability relates to an Incentive Stock Option, Disability means Permanent and
Total Disability as defined in Section 22(e)(3) of the Code. In the event of a
dispute, the determination of whether a Participant is Disabled will be made by
the Committee and may be supported by the advice of a physician competent in the
area to which such Disability relates.

 

(n)          "Dividend Equivalent" means a right granted to a Participant under
Article 11.

 

(o)          "Effective Date" has the meaning assigned such term in Section 3.1.

 

(p)          "Eligible Participant" means an employee (including a leased
employee), officer, consultant or director of the Company or any Affiliate.

 

(q)          "Fair Market Value," on any date, means (i) if the Stock is listed
on a securities exchange, the closing sales price on the principal such exchange
on such date or, in the absence of reported sales on such date, the closing
sales price on the immediately preceding date on which sales were reported, or
(ii) if the Stock is not listed on a securities exchange, the mean between the
bid and offered prices as quoted by the applicable interdealer quotation system
for such date, provided that if the Stock is not quoted on an interdealer
quotation system or it is determined that the fair market value is not properly
reflected by such quotations, Fair Market Value will be determined by such other
method as the Committee determines in good faith to be reasonable and in
compliance with Code Section 409A.

 

(r)          "Full-Value Award" means an Award other than in the form of an
Option or SAR, and which is settled by the issuance of Stock (or at the
discretion of the Committee, settled in cash valued by reference to Stock
value).

 

(s)          "Good Reason" (or a similar term denoting constructive termination)
has the meaning, if any, assigned such term in the employment, consulting,
severance or similar agreement, if any, between a Participant and the Company or
an Affiliate, provided, however that if there is no such employment, consulting,
severance or similar agreement in which such term is defined, "Good Reason"
shall have the meaning, if any, given such term in the applicable Award
Certificate. If not defined in either such document, the term "Good Reason" as
used herein shall not apply to a particular Award.

 

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(t)          "Grant Date" of an Award means the rust date on which all necessary
corporate action has been taken to approve the grant of the Award as provided in
the Plan, or such later date as is determined and specified as part of that
authorization process. Notice of the grant shall be a provided to the grantee
within a reasonable time after the Grant Date.

 

(u)          "Incentive Stock Option" means an Option that is intended to be an
incentive stock option and meets the requirements of Section 422 of the Code or
any successor provision thereto.

 

(v)         "Nonstatutory Stock Option" means an Option that is not an Incentive
Stock Option.

 

(w)          "Option" means a right granted to a Participant under Article 7 of
the Plan to purchase Stock at a specified price during specified time periods.
An Option may be either an Incentive Stock Option or a Nonstatutory Stock
Option.

 

(x)          "Other Stock-Based Award" means a right, granted to a Participant
under Article 12, that relates to or is valued by reference to Stock or other
Awards relating to Stock.

 

(y)          "Parent" means a corporation, limited liability company,
partnership or other entity which owns or beneficially owns a majority of the
outstanding voting stock or voting power of the Company. Notwithstanding the
above, with respect to an Incentive Stock Option, Parent shall have the meaning
set forth in Section 424(e) of the Code.

 

(z)          "Participant" means an Eligible Participant who has been granted an
Award under the Plan; provided that in the case of the death of a Participant,
the term "Participant" refers to a beneficiary designated pursuant to Section
13.4 or the legal guardian or other legal representative acting in a fiduciary
capacity on behalf of the Participant under applicable state law and court
supervision.

 

(aa) "Performance Award" means any award granted under the Plan pursuant to
Article 10.

 

(bb) "Person" means any individual, entity or group, within the meaning of
Section 3(a)(9) of the 1934 Act and as used in Section 13(d)(3) or 14(d)(2) of
the 1934 Act.

 

(cc) "Plan" means the SmartFinancial, Inc. 2010 Incentive Plan, as amended from
time to time.

 

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(dd) "Public Offering" means a public offering of any class or series of the
Company's equity securities pursuant to a registration statement filed by the
Company under the 1933 Act.

 

(ee) "Restricted Stock" means Stock granted to a Participant under Article 9
that is subject to certain restrictions and to risk of forfeiture.

 

(ff) "Restricted Stock Unit" means the right granted to a Participant under
Article 9 to receive shares of Stock (or the equivalent value in cash or other
property if the Committee so provides) in the future, which right is subject to
certain restrictions and to risk of forfeiture.

 

(gg) "Shares" means shares of the Company's Stock. If there has been an
adjustment or substitution pursuant to Article 14, the term "Shares" shall also
include any shares of stock or other securities that are substituted for Shares
or into which Shares are adjusted pursuant to Article 14.

 

(hh) "Stock" means the $1.00 par value common stock of the Company and such
other securities of the Company as may be substituted for Stock pursuant to
Article 14.

 

(ii)   "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference between
the Fair Market Value of a Share as of the date of exercise of the SAR over the
base price of the SAR, all as determined pursuant to Article 8.

 

(jj)   "Subsidiary" means any corporation, limited liability company,
partnership or other entity of which a majority of the outstanding voting stock
or voting power is beneficially owned directly or indirectly by the Company.
Notwithstanding the above, with respect to an Incentive Stock Option, Subsidiary
shall have the meaning set forth in Section 424(f) of the Code.

 

(kk) "1933 Act" means the Securities Act of 1933, as amended from time to time.

 

(ll) "1934 Act" means the Securities Exchange Act of 1934, as amended from time
to time.

 

ARTICLE 3

EFFECTIVE TERM OF PLAN

 

3.1. EFFECTIVE DATE. Subject to the approval of the Plan by the Company's
shareholders within 12 months after the Plan's adoption by the Board, the Plan
will become effective on the date that it is adopted by the Board (the
"Effective Date").

 

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3.2. TERMINATION OF PLAN. Unless earlier terminated as provided herein, the Plan
shall continue in effect until the tenth anniversary of the Effective Date or,
if the shareholders approve an amendment to the Plan that increases the number
of Shares subject to the Plan, the tenth anniversary of the date of such
approval. The termination of the Plan on such date shall not affect the validity
of any Award outstanding on the date of termination, which shall continue to be
governed by the applicable terms and conditions of the Plan.

 

ARTICLE 4

ADMINISTRATION

 

4.1. COMMITTEE. The Plan shall be administered by a Committee appointed by the
Board (which Committee shall consist of at least two directors) or, at the
discretion of the Board from time to time, the Plan may be administered by the
Board. The members of the Committee shall be appointed by, and may be changed at
any time and from time to time in the discretion of, the Board. The Board may
reserve to itself any or all of the authority and responsibility of the
Committee under the Plan or may act as administrator of the Plan for any and all
purposes. To the extent the Board has reserved any authority and responsibility
or during any time that the Board is acting as administrator of the Plan, it
shall have all the powers and protections of the Committee hereunder, and any
reference herein to the Committee (other than in this Section 4.1) shall include
the Board. To the extent any action of the Board under the Plan conflicts with
actions taken by the Committee, the actions of the Board shall control.

 

4.2. ACTION AND INTERPRETATIONS BY THE COMMITTEE. For purposes of administering
the Plan, the Committee may from time to time adopt rules, regulations,
guidelines and procedures for carrying out the provisions and purposes of the
Plan and make such other determinations, not inconsistent with the Plan, as the
Committee may deem appropriate. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any Award in the
manner and to the extent it deems necessary to carry out the intent of the Plan.
The Committee's interpretation of the Plan, any Awards granted under the Plan,
any Award Certificate and all decisions and determinations by the Committee with
respect to the Plan are final, binding, and conclusive on all parties. Each
member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other
employee of the Company or any Affiliate, the Company's or an Affiliate's
independent certified public accountants, Company counsel or any executive
compensation consultant or other professional retained by the Company to assist
in the administration of the Plan. No member of the Committee will be liable for
any good faith determination, act or omission in connection with the Plan or any
Award.

 

4.3. AUTHORITY OF COMMITTEE. Except as provided in Section 4.1 hereof, the
Committee has the exclusive power, authority and discretion to:

 

(a)          Grant Awards;

 

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(b)          Designate Participants;

 

(c)          Determine the type or types of Awards to be granted to each
Participant;

 

(d)          Determine the number of Awards to be granted and the number of
Shares or dollar amount to which an Award will relate;

 

(e)          Determine the terms and conditions of any Award granted under the
Plan;

 

(f)          Prescribe the form of each Award Certificate, which need not be
identical for each Participant;

 

(g)          Decide all other matters that must be determined in connection with
an Award;

 

(h)          Establish, adopt or revise any rules, regulations, guidelines or
procedures as it may deem necessary or advisable to administer the Plan;

 

(i)          Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to administer
the Plan;

 

(j)          Amend the Plan or any Award Certificate as provided herein; and

 

(k)          Adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of the United
States or any non-U.S. jurisdictions in which the Company or any Affiliate may
operate, in order to assure the viability of the benefits of Awards granted to
participants located in the United States or such other jurisdictions and to
further the objectives of the Plan.

 

4.4. DELEGATION. The Board may, by resolution, expressly delegate to a special
committee, consisting of one or more directors who may but need not be officers
of the Company, the authority, within specified parameters as to the number and
terms of Awards, to (i) designate officers and/or employees of the Company or
any of its Affiliates to be recipients of Awards under the Plan, and (ii) to
determine the number of such Awards to be received by any such Participants. The
acts of such delegates shall be treated hereunder as acts of the Board and such
delegates shall report regularly to the Board and the Compensation Committee
regarding the delegated duties and responsibilities and any Awards so granted.

 

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4.5. INDEMNIFICATION. Each person who is or shall have been a member of the
Committee, or of the Board, or an officer of the Company to whom authority was
delegated in accordance with this Article 4 shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him or her in connection with
or resulting from any claim, action, suit, or proceeding to which he or she may
be a party or in which he or she may be involved by reason of any action taken
or failure to act under the Plan and against and from any and all amounts paid
by him or her in settlement thereof, with the Company's approval, or paid by him
or her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf, unless such loss, cost,
liability, or expense is a result of his or her own willful misconduct or except
as expressly provided by statute. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's charter or bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

 

ARTICLE 5

SHARES SUBJECT TO THE PLAN

 

5.1. NUMBER OF SHARES. Subject to adjustment as provided in Sections 5.2 and
Section 14.1, the aggregate number of Shares reserved and available for issuance
pursuant to Awards granted under the Plan shall be 500,000. The maximum number
of Shares that may be issued upon exercise of Incentive Stock Options granted
under the Plan shall be 500,000.

 

5.2. SHARE COUNTING. Shares covered by an Award shall be subtracted from the
Plan share reserve as of the Grant Date, but shall be added back to the Plan
share reserve in accordance with this Section 5.2

 

(a)     To the extent that an Award is canceled, terminates, expires, is
forfeited or lapses for any reason, any unissued or forfeited Shares originally
subject to the Award will be added back to the Plan share reserve and again be
available for issuance pursuant to Awards granted under the Plan.

 

(b)     Shares subject to Awards settled in cash will be added back to the Plan
share reserve and again be available for issuance pursuant to Awards granted
under the Plan.

 

(c)     Shares withheld or repurchased from an Award or delivered by a
Participant to satisfy minimum tax withholding requirements will be added back
to the Plan share reserve and again be available for issuance pursuant to Awards
granted under the Plan.

 

(d)     If the exercise price of an Option is satisfied in whole or in part by
delivering Shares to the Company (by either actual delivery or attestation), the
number of Shares so tendered (by delivery or attestation) shall be added to the
Plan share reserve and will be available for issuance pursuant to Awards granted
under the Plan.

 

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(e)     To the extent that the full number of Shares subject to an Option or SAR
is not issued upon exercise of the Option or SAR for any reason, including by
reason of net-settlement of the Award, the unissued Shares originally subject to
the Award will be added back to the Plan share reserve and again be available
for issuance pursuant to other Awards granted under the Plan.

 

(f)     To the extent that the full number of Shares subject to an Award other
than an Option or SAR is not issued for any reason, including by reason of
failure to achieve maximum performance goals, the unissued Shares originally
subject to the Award will be added back to the Plan share reserve and again be
available for issuance pursuant to Awards granted under the Plan.

 

(g)     Substitute Awards granted pursuant to Section 13.10 of the Plan shall
not count against the Shares otherwise available for issuance under the Plan
under Section 5.1.

 

5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist,
in whole or in part, of authorized and unissued Stock, treasury Stock or Stock
purchased on the open market.

 

ARTICLE 6
ELIGIBILITY

 

6.1. GENERAL. Awards may be granted only to Eligible Participants. Incentive
Stock Options may be granted only to Eligible Participants who are employees of
the Company or a Parent or Subsidiary as defined in Section 424(e) and (f) of
the Code. Eligible Participants who are service providers to an Affiliate may be
granted Options or SARs under this Plan only if the Affiliate qualifies as an
"eligible issuer of service recipient stock" within the meaning of
§1.409A-1(b)(5)(iii)(E) of the final regulations under Code Section 409A.

 

ARTICLE 7

STOCK OPTIONS

 

7.1. GENERAL. The Committee is authorized to grant Options to Participants on
the following terms and conditions:

 

(a)     EXERCISE PRICE. The exercise price per Share under an Option shall be
determined by the Committee, provided that the exercise price for any Option
(other than an Option issued as a substitute Award pursuant to Section 13.10)
shall not be less than the Fair Market Value as of the Grant Date.

 

 - 14 - 

 

 

(b)     TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time
or times at which an Option may be exercised in whole or in part, subject to
Section 7.1(d), including a provision that an Option that is otherwise
exercisable and has an exercise price that is less than the Fair Market Value of
the Stock on the last day of its term will be automatically exercised on such
final date of the term by means of a "net exercise," thus entitling the optionee
to Shares equal to the intrinsic value of the Option on such exercise date, less
the number of Shares required for tax withholding. The Committee shall also
determine the performance or other conditions, if any, that must be satisfied
before all or part of an Option may be exercised or vested.

 

(c)     PAYMENT. The Committee shall determine the methods by which the exercise
price of an Option may be paid, the form of payment, and the methods by which
Shares shall be delivered or deemed to be delivered to Participants. As
determined by the Committee at or after the Grant Date, payment of the exercise
price of an Option may be made in, in whole or in part, in the form of (i) cash
or cash equivalents, (ii) delivery (by either actual delivery or attestation) of
previously-acquired Shares based on the Fair Market Value of the Shares on the
date the Option is exercised, (iii) withholding of Shares from the Option based
on the Fair Market Value of the Shares on the date the Option is exercised, (iv)
broker-assisted market sales, or (iv) any other "cashless exercise" arrangement.

 

(d)     EXERCISE TERM. Except for Nonstatutory Options granted to Participants
outside the United States, no Option granted under the Plan shall be exercisable
for more than ten years from the Grant Date.

 

(e)     NO DEFERRAL FEATURE. No Option shall provide for any feature for the
deferral of compensation other than the deferral of recognition of income until
the exercise or disposition of the Option.

 

(f)     NO DIVIDEND EQUIVALENTS. No Option shall provide for Dividend
Equivalents.

 

7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options granted
under the Plan must comply with the requirements of Section 422 of the Code.
Without limiting the foregoing, any Incentive Stock Option granted to a
Participant who at the Grant Date owns more than 10% of the voting power of all
classes of shares of the Company must have an exercise price per Share of not
less than 110% of the Fair Market Value per Share on the Grant Date and an
Option term of not more than five years. If all of the requirements of Section
422 of the Code (including the above) are not met, the Option shall
automatically become a Nonstatutory Stock Option.

 

 - 15 - 

 

 

ARTICLE 8

STOCK APPRECIATION RIGHTS

 

8.1. GRANT OF STOCK APPRECIATION RIGHTS. The Committee is authorized to grant
Stock Appreciation Rights to Participants on the following terms and conditions:

 

(a)     RIGHT TO PAYMENT. Upon the exercise of a SAR, the Participant has the
right to receive, for each Share with respect to which the SAR is being
exercised, the excess, if any, of:

 

(1)     The Fair Market Value of one Share on the date of exercise; over

 

(2)     The base price of the SAR as determined by the Committee and set forth
in the Award Certificate, which shall not be less than the Fair Market Value of
one Share on the Grant Date.

 

(b)     TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time
or times at which a SAR may be exercised in whole or in part, including a
provision that a SAR that is otherwise exercisable and has a base price that is
less than the Fair Market Value of the Stock on the last day of its term will be
automatically exercised on such final date of the term, thus entitling the
holder to cash or Shares equal to the intrinsic value of the SAR on such
exercise date, less the cash or number of Shares required for tax withholding.
Except for SARs granted to Participants outside the United States, no SAR shall
be exercisable for more than ten years from the Grant Date.

 

(c)    NO DEFERRAL FEATURE. No SAR shall provide for any feature for the
deferral of compensation other than the deferral of recognition of income until
the exercise or disposition of the SAR.

 

(d)    NO DIVIDEND EQUIVALENTS. No SAR shall provide for Dividend Equivalents.

 

(e)     OTHER TERMS. All SARs shall be evidenced by an Award Certificate.
Subject to the limitations of this Article 8, the terms, methods of exercise,
methods of settlement, form of consideration payable in settlement (e.g., cash,
Shares or other property), and any other terms and conditions of the SAR shall
be determined by the Committee at the time of the grant and shall be reflected
in the Award Certificate.

 

 - 16 - 

 

 

ARTICLE 9

RESTRICTED STOCK, RESTRICTED STOCK UNITS

AND DEFERRED STOCK UNITS

 

9.1. GRANT OF RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS.
The Committee is authorized to make Awards of Restricted Stock, Restricted Stock
Units or Deferred Stock Units to Participants in such amounts and subject to
such terms and conditions as may be selected by the Committee. An Award of
Restricted Stock, Restricted Stock Units or Deferred Stock Units shall be
evidenced by an Award Certificate setting forth the terms, conditions, and
restrictions applicable to the Award.

 

9.2. ISSUANCE AND RESTRICTIONS. Restricted Stock, Restricted Stock Units or
Deferred Stock Units shall be subject to such restrictions on transferability
and other restrictions as the Committee may impose (including, for example,
limitations on the right to vote Restricted Stock or the right to receive
dividends on the Restricted Stock). These restrictions may lapse separately or
in combination at such times, under such circumstances, in such installments,
upon the satisfaction of performance goals or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter. Except as
otherwise provided in an Award Certificate or any special Plan document
governing an Award, a Participant shall have none of the rights of a stockholder
with respect to Restricted Stock Units or Deferred Stock Units until such time
as Shares of Stock are paid in settlement of such Awards.

 

 9.3 DIVIDENDS ON RESTRICTED STOCK. In the case of Restricted Stock, the
Committee may provide that ordinary cash dividends declared on the Shares before
they are vested (i) will be forfeited, (ii) will be deemed to have been
reinvested in additional Shares or otherwise reinvested (subject to Share
availability under Section 5.1 hereof), or (iii) in the case of Restricted Stock
that is not subject to performance-based vesting, will be paid or distributed to
the Participant as accrued (in which case, such dividends must be paid or
distributed no later than the 15th day of the 3rd month following the later of
(A) the calendar year in which the corresponding dividends were paid to
shareholders, or (B) the first calendar year in which the Participant's right to
such dividends is no longer subject to a substantial risk of forfeiture). Unless
otherwise provided by the Committee, dividends accrued on Shares of Restricted
Stock before they are vested shall, as provided in the Award Certificate, either
(i) be reinvested in the form of additional Shares, which shall be subject to
the same vesting provisions as provided for the host Award, or (ii) be credited
by the Company to an account for the Participant and accumulated without
interest until the date upon which the host Award becomes vested, and any
dividends accrued with respect to forfeited Restricted Stock will be reconveyed
to the Company without further consideration or any act or action by the
Participant.

 

9.4. FORFEITURE. Subject to the terms of the Award Certificate and except as
otherwise determined by the Committee at the time of the grant of the Award or
thereafter, upon termination of Continuous Service during the applicable
restriction period or upon failure to satisfy a performance goal during the
applicable restriction period, Restricted Stock or Restricted Stock Units that
are at that time subject to restrictions shall be forfeited.

 

 - 17 - 

 

 

9.5. DELIVERY OF RESTRICTED STOCK. Shares of Restricted Stock shall be delivered
to the Participant at the Grant Date either by book-entry registration or by
delivering to the Participant, or a custodian or escrow agent (including,
without limitation, the Company or one or more of its employees) designated by
the Committee, a stock certificate or certificates registered in the name of the
Participant. If physical certificates representing shares of Restricted Stock
are registered in the name of the Participant, such certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock.

 

ARTICLE 10

PERFORMANCE AWARDS

 

10.1. GRANT OF PERFORMANCE AWARDS. The Committee is authorized to grant any
Award under this Plan, including cash-based Awards, with performance-based
vesting criteria, on such terms and conditions as may be selected by the
Committee. Any such Awards with performance-based vesting criteria are referred
to herein as Performance Awards. The Committee shall have the complete
discretion to determine the number of Performance Awards granted to each
Participant and to designate the provisions of such Performance Awards as
provided in Section 4.3. All Performance Awards shall be evidenced by an Award
Certificate or a written program established by the Committee, pursuant to which
Performance Awards are awarded under the Plan under uniform terms, conditions
and restrictions set forth in such written program.

 

10.2. PERFORMANCE GOALS. The Committee may establish performance goals for
Performance Awards which may be based on any criteria selected by the Committee.
Such performance goals may be described in terms of Company-wide objectives or
in terms of objectives that relate to the performance of the Participant, an
Affiliate or a division, region, department or function within the Company or an
Affiliate. If the Committee determines that a change in the business,
operations, corporate structure or capital structure of the Company or the
manner in which the Company or an Affiliate conducts its business, or other
events or circumstances render performance goals to be unsuitable, the Committee
may modify such performance goals in whole or in part, as the Committee deems
appropriate. If a Participant is promoted, demoted or transferred to a different
business unit or function during a performance period, the Committee may
determine that the performance goals or performance period are no longer
appropriate and may (i) adjust, change or eliminate the performance goals or the
applicable performance period as it deems appropriate to make such goals and
period comparable to the initial goals and period, or (ii) make a cash payment
to the participant in an amount determined by the Committee.

 

 - 18 - 

 

  

ARTICLE 11

DIVIDEND EQUIVALENTS

 

11.1. GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents with respect to Full-Value Awards granted hereunder,
subject to such terms and conditions as may be selected by the Committee.
Dividend Equivalents shall entitle the Participant to receive payments equal to
ordinary cash dividends or distributions with respect to all or a portion of the
number of Shares subject to a Full-Value Award, as determined by the Committee.
The Committee may provide that Dividend Equivalents (i) will be deemed to have
been reinvested in additional Shares or otherwise reinvested, or (ii) except in
the case of Performance Awards, will be paid or distributed to the Participant
as accrued (in which case, such Dividend Equivalents must be paid or distributed
no later than the 15th day of the 3rd month following the later of (A) the
calendar year in which the corresponding dividends were paid to shareholders, or
(B) the first calendar year in which the Participant's right to such Dividends
Equivalents is no longer subject to a substantial risk of forfeiture). Unless
otherwise provided by the Committee, Dividend Equivalents accruing on unvested
Full-Value Awards shall, as provided in the Award Certificate, either (i) be
reinvested in the form of additional Shares, which shall be subject to the same
vesting provisions as provided for the host Award, or (ii) be credited by the
Company to an account for the Participant and accumulated without interest until
the date upon which the host Award becomes vested, and any Dividend Equivalents
accrued with respect to forfeited Awards will be reconveyed to the Company
without further consideration or any act or action by the Participant.

 

ARTICLE 12

STOCK OR OTHER STOCK-BASED AWARDS

 

12.1. GRANT OF STOCK OR OTHER STOCK-BASED AWARDS. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to Shares, as deemed by the Committee to be
consistent with the purposes of the Plan, including without limitation Shares
awarded purely as a "bonus" and not subject to any restrictions or conditions,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Shares, and Awards valued by reference to book value of Shares
or the value of securities of or the performance of specified Parents or
Subsidiaries. The Committee shall determine the terms and conditions of such
Awards.

 

ARTICLE 13

PROVISIONS APPLICABLE TO AWARDS

 

13.1. AWARD CERTIFICATES. Each Award shall be evidenced by an Award Certificate.
Each Award Certificate shall include such provisions, not inconsistent with the
Plan, as may be specified by the Committee.

 

 - 19 - 

 

  

13.2. FORM OF PAYMENT FOR AWARDS. At the discretion of the Committee, payment of
Awards may be made in cash, Stock, a combination of cash and Stock, or any other
form of property as the Committee shall determine. In addition, payment of
Awards may include such terms, conditions, restrictions and/or limitations, if
any, as the Committee deems appropriate, including, in the case of Awards paid
in the form of Stock, restrictions on transfer and forfeiture provisions.
Further, payment of Awards may be made in the form of a lump sum, or in
installments, as determined by the Committee.

 

13.3. LIMITS ON TRANSFER. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or an Affiliate, or shall be
subject to any lien, obligation, or liability of such Participant to any other
party other than the Company or an Affiliate. No unexercised or restricted Award
shall be assignable or transferable by a Participant other than by will or the
laws of descent and distribution; provided, however, that the Committee may (but
need not) permit other transfers (other than transfers for value) where the
Committee concludes that such transferability (i) does not result in accelerated
taxation, (ii) does not cause any Option intended to be an Incentive Stock
Option to fail to be described in Code Section 422(b), and (iii) is otherwise
appropriate and desirable, taking into account any factors deemed relevant,
including without limitation, state or federal tax or securities laws applicable
to transferable Awards.

 

13.4. BENEFICIARIES. Notwithstanding Section 13.3, a Participant may, in the
manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Certificate applicable to the
Participant, except to the extent the Plan and Award Certificate otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, any payment due to the Participant shall be made to the
Participant's estate. Subject to the foregoing, a beneficiary designation may be
changed or revoked by a Participant, in the manner provided by the Company, at
any time provided the change or revocation is filed with the Committee.

 

13.5. STOCK TRADING RESTRICTIONS. All Stock issuable under the Plan is subject
to any stop-transfer orders and other restrictions as the Committee deems
necessary or advisable to comply with federal or state securities laws, rules
and regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee
may place legends on any Stock certificate or issue instructions to the transfer
agent to reference restrictions applicable to the Stock.

 

13.6. ACCELERATION UPON DEATH OR DISABILITY. Except as otherwise provided in the
Award Certificate or any special Plan document governing an Award, upon the
termination of a person's Continuous Service by reason of death or Disability:

 

 - 20 - 

 

  

(i)     all of that Participant's outstanding Options and SARs shall become
fully exercisable;

 

(ii)     all time-based vesting restrictions on that Participant's outstanding
Awards shall lapse as of the date of termination; and

 

(iii)     the payout opportunities attainable under all of that Participant's
outstanding performance-based Awards shall be deemed to have been fully earned
as of the date of termination as follows:

 

(A)     if the date of termination occurs during the first half of the
applicable performance period, all relevant performance goals will be deemed to
have been achieved at the "target" level, and

 

(B)     if the date of termination occurs during the second half of the
applicable performance period, the actual level of achievement of all relevant
performance goals against target will be measured as of the end of the calendar
quarter immediately preceding the date of termination, and

 

(C)     in either such case, there shall be a prorata payout to the Participant
or his or her estate within sixty (60) days following the date of termination
(unless a later date is required by Section 16.3 hereof), based upon the length
of time within the performance period that has elapsed prior to the date of
termination.

 

To the extent that this provision causes Incentive Stock Options to exceed the
dollar limitation set forth in Code Section 422(d), the excess Options shall be
deemed to be Nonstatutory Stock Options.

 

13.7. EFFECT OF A CHANGE IN CONTROL. The provisions of this Section 13.7 shall
apply in the case of a Change in Control, unless otherwise provided in the Award
Certificate or any special Plan document or separate agreement with a
Participant governing an Award.

 

 

 - 21 - 

 

 

(a)     Awards not Assumed or Substituted by Surviving Entity. Upon the
occurrence of a Change in Control, and except with respect to any Awards assumed
by the Surviving Entity or otherwise equitably converted or substituted in
connection with the Change in Control in a manner approved by the Committee or
the Board: (i) outstanding Options, SARs, and other Awards in the nature of
rights that may be exercised shall become fully exercisable, (ii) time-based
vesting restrictions on outstanding Awards shall lapse, and (iii) the target
payout opportunities attainable under outstanding performance-based Awards shall
be deemed to have been fully earned as of the effective date of the Change in
Control based upon (A) an assumed achievement of all relevant performance goals
at the "target" level if the Change in Control occurs during the first half of
the applicable performance period, or (B) the actual level of achievement of all
relevant performance goals against target measured as of the date of the Change
in Control, if the Change in Control occurs during the second half of the
applicable performance period, and, in either such case, subject to Section
16.3, there shall be a prorata payout to Participants within sixty (60) days
following the Change in Control (unless a later date is required by Section 16.3
hereof), based upon the length of time within the performance period that has
elapsed prior to the Change in Control. Any Awards shall thereafter continue or
lapse in accordance with the other provisions of the Plan and the Award
Certificate. To the extent that this provision causes Incentive Stock Options to
exceed the dollar limitation set forth in Code Section 422(d), the excess
Options shall be deemed to be Nonstatutory Stock Options.

 

(b)     Awards Assumed or Substituted by Surviving Entity. With respect to
Awards assumed by the Surviving Entity or otherwise equitably converted or
substituted in connection with a Change in Control: if within two (2) years
after the effective date of the Change in Control, a Participant's employment is
terminated without Cause or the Participant resigns for Good Reason, then (i)
all of that Participant's outstanding Options, SARs and other Awards in the
nature of rights that may be exercised shall become fully exercisable, (ii) all
time-based vesting restrictions on the his or her outstanding Awards shall
lapse, and (iii) the payout level under all of that Participant's
performance-based Awards that were outstanding immediately prior to effective
time of the Change in Control shall be determined and deemed to have been earned
as of the date of termination based upon (A) an assumed achievement of all
relevant performance goals at the "target'. level if the date of termination
occurs during the first half of the applicable performance period, or (B) the
actual level of achievement of all relevant performance goals against target
(measured as of the end of the calendar quarter immediately preceding the date
of termination), if the date of termination occurs during the second half of the
applicable performance period, and, in either such case, there shall be a
prorata payout to such Participant within sixty (60) days following the date of
termination of employment (unless a later date is required by Section 16.3
hereof), based upon the length of time within the performance period that has
elapsed prior to the date of termination of employment. With regard to each
Award, a Participant shall not be considered to have resigned for Good Reason
unless either (i) the Award Certificate includes such provision or (ii) the
Participant is party to an employment, severance or similar agreement with the
Company or an Affiliate that includes provisions in which the Participant is
permitted to resign for Good Reason. Any Awards shall thereafter continue or
lapse in accordance with the other provisions of the Plan and the Award
Certificate. To the extent that this provision causes Incentive Stock Options to
exceed the dollar limitation set forth in Code Section 422(d), the excess
Options shall be deemed to be Nonstatutory Stock Options.

 

 - 22 - 

 

   

13.8. ACCELERATION FOR ANY OTHER REASON. Regardless of whether an event has
occurred as described in Section 13.6 or 13.7 above, the Committee may in its
sole discretion at any time determine that all or a portion of a Participant's
Options, SARs, and other Awards in the nature of rights that may be exercised
shall become fully or partially exercisable, that all or a part of the
time-based vesting restrictions on all or a portion of the outstanding Awards
shall lapse, and/or that any performance-based criteria with respect to any
Awards shall be deemed to be wholly or partially satisfied, in each case, as of
such date as the Committee may, in its sole discretion, declare. The Committee
may discriminate among Participants and among Awards granted to a Participant in
exercising its discretion pursuant to this Section 13.8. Notwithstanding
anything in the Plan, including this Section 13.8, the Committee may not
accelerate the payment of any Award if such acceleration would violate Section
409A(a)(3) of the Code.

 

13.9. FORFEITURE EVENTS. The Committee may specify in an Award Certificate that
the Participant's rights, payments and benefits with respect to an Award shall
be subject to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award. Such events may include, but
shall not be limited to, (i) termination of employment for cause, (ii) violation
of material Company or Affiliate policies, (iii) breach of noncompetition,
confidentiality or other restrictive covenants that may apply to the
Participant, (iv) other conduct by the Participant that is detrimental to the
business or reputation of the Company or any Affiliate, or (v) a later
determination that the vesting of, or amount realized from, a Performance Award
was based on materially inaccurate financial statements or any other materially
inaccurate performance metric criteria, whether or not the Participant caused or
contributed to such material inaccuracy.

 

13.10. SUBSTITUTE AWARDS. The Committee may grant Awards under the Plan in
substitution for stock and stock-based awards held by employees of another
entity who become employees of the Company or an Affiliate as a result of a
merger or consolidation of the former employing entity with the Company or an
Affiliate or the acquisition by the Company or an Affiliate of property or stock
of the former employing corporation. The Committee may direct that the
substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.

 

ARTICLE 14

CHANGES IN CAPITAL STRUCTURE

 

14.1. MANDATORY ADJUSTMENTS. In the event of a nonreciprocal transaction between
the Company and its stockholders that causes the per-share value of the Stock to
change (including, without limitation, any stock dividend, stock split,
spin-off, rights offering, or large nonrecurring cash dividend), the
authorization limits under Section 5.1 shall be adjusted proportionately, and
the Committee shall make such adjustments to the Plan and Awards as it deems
necessary, in its sole discretion, to prevent dilution or enlargement of rights
immediately resulting from such transaction.

 

 - 23 - 

 

  

Action by the Committee may include: (i) adjustment of the number and kind of
shares that may be delivered under the Plan; (ii) adjustment of the number and
kind of shares subject to outstanding Awards; (iii) adjustment of the exercise
price of outstanding Awards or the measure to be used to determine the amount of
the benefit payable on an Award; and (iv) any other adjustments that the
Committee determines to be equitable. Notwithstanding the foregoing, the
Committee shall not make any adjustments to outstanding Options or SARs that
would constitute a modification or substitution of the stock right under Treas.
Reg. Sections 1.409A-1(b)(5)(v) that would be treated as the grant of a new
stock right or change in the form of payment for purposes of Code Section 409A.
Without limiting the foregoing, in the event of a subdivision of the outstanding
Stock (stock-split), a declaration of a dividend payable in Shares, or a
combination or consolidation of the outstanding Stock into a lesser number of
Shares, the authorization limits under Section 5.1 shall automatically be
adjusted proportionately, and the Shares then subject to each Award shall
automatically, without the necessity for any additional action by the Committee,
be adjusted proportionately without any change in the aggregate purchase price
therefor.

 

14.2 DISCRETIONARY ADJUSTMENTS. Upon the occurrence or in anticipation of any
corporate event or transaction involving the Company (including, without
limitation, any merger, reorganization, recapitalization, combination or
exchange of shares, or any transaction described in Section 14.1), the Committee
may, in its sole discretion, provide (i) that Awards will be settled in cash
rather than Stock, (ii) that Awards will become immediately vested and
non-forfeitable and exercisable (in whole or in part) and will expire after a
designated period of time to the extent not then exercised, (iii) that Awards
will be assumed by another party to a transaction or otherwise be equitably
converted or substituted in connection with such transaction, (iv) that
outstanding Awards may be settled by payment in cash or cash equivalents equal
to the excess of the Fair Market Value of the underlying Stock, as of a
specified date associated with the transaction, over the exercise or base price
of the Award, (v) that performance targets and performance periods for
Performance Awards will be modified, or (vi) any combination of the foregoing.
The Committee's determination need not be uniform and may be different for
different Participants whether or not such Participants are similarly situated.

 

14.3 GENERAL. Any discretionary adjustments made pursuant to this Article 14
shall be subject to the provisions of Section 15.2. To the extent that any
adjustments made pursuant to this Article 14 cause Incentive Stock Options to
cease to qualify as Incentive Stock Options, such Options shall be deemed to be
Nonstatutory Stock Options.

 

 - 24 - 

 

  

ARTICLE 15

AMENDMENT, MODIFICATION AND TERMINATION

 

15.1. AMENDMENT. MODIFICATION AND TERMINATION. The Board or the Committee may,
at any time and from time to time, amend, modify or terminate the Plan without
stockholder approval; provided, however, that if an amendment to the Plan would,
in the reasonable opinion of the Board or the Committee, either (i) materially
increase the number of Shares available under the Plan, (ii) expand the types of
awards under the Plan, (iii) materially expand the class of participants
eligible to participate in the Plan, (iv) materially extend the term of the
Plan, or (v) otherwise constitute a material change requiring stockholder
approval under applicable laws, policies or regulations, then such amendment
shall be subject to stockholder approval; and provided, further, that the Board
or Committee may condition any other amendment or modification on the approval
of stockholders of the Company for any reason, including by reason of such
approval being necessary or deemed advisable to satisfy any other tax,
securities or other applicable laws, policies or regulations.

 

15.2. AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however:

 

(a)          Subject to the terms of the applicable Award Certificate, such
amendment, modification or termination shall not, without the Participant's
consent, reduce or diminish the value of such Award determined as if the Award
had been exercised, vested, cashed in or otherwise settled on the date of such
amendment or termination (with the per-share value of an Option or SAR for this
purpose being calculated as the excess, if any, of the Fair Market Value as of
the date of such amendment or termination over the exercise or base price of
such Award);

 

(b)          The original term of an Option or SAR may not be extended;

 

(c)          No termination, amendment, or modification of the Plan shall
adversely affect any Award previously granted under the Plan, without the
written consent of the Participant affected thereby. An outstanding Award shall
not be deemed to be "adversely affected" by a Plan amendment if such amendment
would not reduce or diminish the value of such Award determined as if the Award
had been exercised, vested, cashed in or otherwise settled on the date of such
amendment (with the per-share value of an Option or SAR for this purpose being
calculated as the excess, if any, of the Fair Market Value as of the date of
such amendment over the exercise or base price of such Award).

 

15.3. COMPLIANCE AMENDMENTS. Notwithstanding anything in the Plan or in any
Award Certificate to the contrary, the Board may amend the Plan or an Award
Certificate, to take effect retroactively or otherwise, as deemed necessary or
advisable for the purpose of conforming the Plan or Award Certificate to any
present or future law relating to plans of this or similar nature (including,
but not limited to, Section 409A of the Code), and to the administrative
regulations and rulings promulgated thereunder. By accepting an Award under this
Plan, a Participant agrees to any amendment made pursuant to this Section 15.3
to any Award granted under the Plan without further consideration or action.

 

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ARTICLE 16

GENERAL PROVISIONS

 

16.1. RIGHTS OF PARTICIPANTS.

 

(a)          No Participant or any Eligible Participant shall have any claim to
be granted any Award under the Plan. Neither the Company, its Affiliates nor the
Committee is obligated to treat Participants or Eligible Participants uniformly,
and determinations made under the Plan may be made by the Committee selectively
among Eligible Participants who receive, or are eligible to receive, Awards
(whether or not such Eligible Participants are similarly situated).

 

(b)          Nothing in the Plan, any Award Certificate or any other document or
statement made with respect to the Plan, shall interfere with or limit in any
way the right of the Company or any Affiliate to terminate any Participant's
employment or status as an officer, or any Participant's service as a director,
at any time, nor confer upon any Participant any right to continue as an
employee, officer, or director of the Company or any Affiliate, whether for the
duration of a Participant's Award or otherwise.

 

(c)          Neither an Award nor any benefits arising under this Plan shall
constitute an employment contract with the Company or any Affiliate and,
accordingly, subject to Article 15, this Plan and the benefits hereunder may be
terminated at any time in the sole and exclusive discretion of the Committee
without giving rise to any liability on the part of the Company or an of its
Affiliates.

 

(d)          No Award gives a Participant any of the rights of a shareholder of
the Company unless and until Shares are in fact issued to such person in
connection with such Award.

 

16.2. WITHHOLDING. The Company or any Affiliate shall have the authority and the
right to deduct or withhold, or require a Participant to remit to the Company or
such Affiliate, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any exercise, lapse of restriction or other taxable event
arising as a result of the Plan. The obligations of the Company under the Plan
will be conditioned on such payment or arrangements and the Company or such
Affiliate will, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant. Unless
otherwise determined by the Committee at the time the Award is granted or
thereafter, any such withholding requirement may be satisfied, in whole or in
part, by withholding from the Award Shares having a Fair Market Value on the
date of withholding equal to the minimum amount (and not any greater amount)
required to be withheld for tax purposes, all in accordance with such procedures
as the Committee establishes. All such elections shall be subject to any
restrictions or limitations that the Committee, in its sole discretion, deems
appropriate.

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16.3. SPECIAL PROVISIONS RELATED TO SECTION 409A OF THE CODE.

 

(a)          General. It is intended that the payments and benefits provided
under the Plan and any Award shall either be exempt from the application of, or
comply with, the requirements of Section 409A of the Code. The Plan and all
Award Certificates shall be construed in a manner that effects such intent.
Nevertheless, the tax treatment of the benefits provided under the Plan or any
Award is not warranted or guaranteed. Neither the Company, its Affiliates nor
their respective directors, officers, employees or advisers (other than in his
or her capacity as a Participant) shall be held liable for any taxes, interest,
penalties or other monetary amounts owed by any Participant or other taxpayer as
a result of the Plan or any Award.

 

(b)          Definitional Restrictions. Notwithstanding anything in the Plan or
in any Award Certificate to the contrary, to the extent that any amount or
benefit that would constitute non-exempt "deferred compensation" for purposes of
Section 409A of the Code would otherwise be payable or distributable, or a
different form of payment (e.g., lump sum or installment) would be effected,
under the Plan or any Award Certificate by reason of the occurrence of a Change
in Control, or the Participant's Disability or separation from service, such
amount or benefit will not be payable or distributable to the Participant,
and/or such different form of payment will not be effected, by reason of such
circumstance unless the circumstances giving rise to such Change in Control,
Disability or separation from service meet any description or definition of
"change in control event," "disability" or "separation from service," as the
case may be, in Section 409A of the Code and applicable regulations (without
giving effect to any elective provisions that may be available under such
definition). This provision does not prohibit the vesting of any Award upon a
Change in Control, Disability or separation from service, however defined. If
this provision prevents the payment or distribution of any amount or benefit, or
the application of a different form of payment of any amount or benefit, such
payment or distribution shall be made at the time and in the form that would
have applied absent the Change in Control, Disability or separation from
service, as applicable, as applicable.

 

(c)          Allocation among Possible Exemptions. If any one or more Awards
granted under the Plan to a Participant could qualify for any separation pay
exemption described in Treas. Reg. Section 1.409A-1(b)(9), but such Awards in
the aggregate exceed the dollar limit permitted for the separation pay
exemptions, the Company (acting through the Committee) shall determine which
Awards or portions thereof will be subject to such exemptions.

 

(d)          Installment Payments. If, pursuant to an Award, a Participant is
entitled to a series of installment payments, such Participant's right to the
series of installment payments shall be treated as a right to a series of
separate payments and not to a single payment. For purposes of the preceding
sentence, the term "series of installment payments" has the meaning provided in
Treas. Reg. Section 1.409A-2(b)(2)(iii) (or any successor thereto).

 

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16.4. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an "unfunded" plan
for incentive and deferred compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award Certificate shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Affiliate. In its sole
discretion, the Committee may authorize the creation of grantor trusts or other
arrangements to meet the obligations created under the Plan to deliver Shares or
payments in lieu of Shares or with respect to Awards. This Plan is not intended
to be subject to ERISA.

 

16.5. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken
into account in determining any benefits under any pension, retirement, savings,
profit sharing, group insurance, welfare or benefit plan of the Company or any
Affiliate unless provided otherwise in such other plan. Nothing contained in the
Plan will prevent the Company from adopting other or additional compensation
arrangements, subject to shareholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific cases.

 

16.6. EXPENSES. The expenses of administering the Plan shall be borne by the
Company and its Affiliates.

 

16.7. TITLES AND HEADINGS. The tides and headings of the Sections in the Plan
are for convenience of reference only, and in the event of any conflict, the
text of the Plan, rather than such titles or headings, shall control.

 

16.8. GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

 

16.9. FRACTIONAL SHARES. No fractional Shares shall be issued and the Committee
shall determine, in its discretion, whether cash shall be given in lieu of
fractional Shares or whether such fractional Shares shall be eliminated by
rounding up or down.

 

16.10. GOVERNMENT AND OTHER REGULATIONS.

  

(a)          Notwithstanding any other provision of the Plan, no Participant who
acquires Shares pursuant to the Plan may, during any period of time that such
Participant is an affiliate of the Company (within the meaning of the rules and
regulations of the Securities and Exchange Commission under the 1933 Act), sell
such Shares, unless such offer and sale is made (i) pursuant to an effective
registration statement under the 1933 Act, which is current and includes the
Shares to be sold, or (ii) pursuant to an appropriate exemption from the
registration requirement of the 1933 Act, such as that set forth in Rule 144
promulgated under the 1933 Act.

 

 - 28 - 

 

  

(b)          Notwithstanding any other provision of the Plan, if at any time the
Committee shall determine that the registration, listing or qualification of the
Shares covered by an Award upon any exchange or under any foreign, federal,
state or local law or practice, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Award or the purchase or receipt of Shares
thereunder, no Shares may be purchased, delivered or received pursuant to such
Award unless and until such registration, listing, qualification, consent or
approval shall have been effected or obtained free of any condition not
acceptable to the Committee. Any Participant receiving or purchasing Shares
pursuant to an Award shall make such representations and agreements and furnish
such information as the Committee may request to assure compliance with the
foregoing or any other applicable legal requirements. The Company shall not be
required to issue or deliver any certificate or certificates for Shares under
the Plan prior to the Committee's determination that all related requirements
have been fulfilled. The Company shall in no event be obligated to register any
securities pursuant to the 1933 Act or applicable state or foreign law or to
take any other action in order to cause the issuance and delivery of such
certificates to comply with any such law, regulation or requirement.

 

16.11. GOVERNING LAW. To the extent not governed by federal law, the Plan and
all Award Certificates shall be construed in accordance with and governed by the
laws of the State of Tennessee.

 

16.12. SEVERABILITY. In the event that any provision of this Plan is found to be
invalid or otherwise unenforceable under any applicable law, such invalidity or
unenforceability will not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions will
be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.

 

16.13. NO LIMITATIONS ON RIGHTS OF COMPANY. The grant of any Award shall not in
any way affect the right or power of the Company to make adjustments,
reclassification or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any part of its
business or assets. The Plan shall not restrict the authority of the Company,
for proper corporate purposes, to draft or assume awards, other than under the
Plan, to or with respect to any person. If the Committee so directs, the Company
may issue or transfer Shares to an Affiliate, for such lawful consideration as
the Committee may specify, upon the condition or understanding that the
Affiliate will transfer such Shares to a Participant in accordance with the
terms of an Award granted to such Participant and specified by the Committee
pursuant to the provisions of the Plan.

 

 - 29 - 

 

  

16.14. INDEMNIFICATION. Each person who is or shall have been a member of the
Committee, or of the Board, or an officer of the Company to whom authority was
delegated in accordance with Article 4 shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
him or her in settlement thereof, with the Company's approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf, unless such loss, cost,
liability, or expense is a result of his or her own willful misconduct or except
as expressly provided by statute. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's chatter or bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

 

The foregoing is hereby acknowledged as being the SmartFinancial, Inc. 2010
Incentive Plan as adopted by the Board on March 10, 2010 and by the shareholders
on March 10, 2010.

 

  SMARTFINANCIAL, INC.       By: [tsig_ex10-6.jpg]          Its: President & CEO

  

 - 30 - 

 

  

SUMMARY OF THE

SMARTFINANCIAL, INC. 2010 INCENTIVE PLAN

 

Purpose. The purpose of the 2010 Incentive Plan is to promote the Company's
success by linking the personal interests of its employees, officers, directors
and consultants to those of its shareholders, and by providing participants with
an incentive for outstanding performance.

 

Authorized Shares. The aggregate number of shares of the Company's common stock
reserved and available for issuance pursuant to awards granted under the 2010
Incentive Plan is 500,000.

 

Awards Available. The 2010 Incentive Plan authorizes the granting of awards in
any of the following forms:

 

·options to purchase shares of common stock, which may be non-qualified stock
options or incentive stock options under the U.S. tax code;

 

·stock appreciation rights, which give the holder the right to receive the
difference between the fair market value per share of common stock on the date
of exercise over the grant price;

 

·restricted stock, which is subject to restrictions on transferability and
subject to forfeiture on terms set by the Board;

 

·restricted or deferred stock units, which represent the right to receive shares
of common stock (or an equivalent value in cash or other property) at a
designated time in the future, based upon the attainment of stated vesting or
performance criteria in the case of restricted stock units;

 

·performance awards, which are payable in cash or stock upon the attainment of
specified performance goals;

 

·dividend equivalents, which entitle the participant to payments (or an
equivalent value payable in stock or other property) equal to any dividends paid
on the shares of stock underlying an award;

 

·other stock-based awards in the discretion of the Board, including unrestricted
stock grants; and

 

·purely cash-based awards.

 

Administration. The 2010 Incentive Plan will be administered by the Board, or a
committee thereof. The details of awards, such as vesting terms and
post-termination exercise periods, would be addressed in the individual award
agreements, which would not have to be the same for all participants, although
some degree of uniformity is

 

 

 

  

·the payout opportunities attainable under all outstanding performance-based
awards will vest based on target or actual performance (depending on the time
during the performance period in which the change in control occurs) and the
awards will payout on a pro rata basis. based on the time elapsed prior to the
change in control, and

 

(B) with respect to awards assumed by the surviving entity or otherwise
equitably converted or substituted in connection with a change in control, if
within two years after the effective date of the change in control, a
participant's employment is terminated without Cause or the participant resigns
for Good Reason (as such terms are defined), then:

 

·all of that participant's outstanding options and SARs will become fully vested
and exercisable;

 

·all time-based vesting restrictions on that participant's outstanding awards
will lapse as of the date of termination; and

 

·the payout opportunities attainable under all of that participant's outstanding
performance-based awards will vest based on target or actual performance
(depending on the time during the performance period in which the date of
termination occurs) and the awards will payout on a pro rata basis, based on the
time elapsed prior to the date of termination.

 

Discretionary Acceleration. The Board also may in its discretion at any time
declare any or all awards to be fully vested. The Board may discriminate among
participants or among awards in exercising such discretion.

 

Termination or Amendment. The Board would be able to terminate, amend or modify
the 2010 Incentive Plan, but certain types of amendments would require
shareholder approval. No termination or amendment of the 2010 Incentive Plan may
adversely affect any award previously granted under the plan without the written
consent of the participant. The Board may amend or terminate outstanding awards,
but such amendments may require the consent of the participant.

 

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