EXHIBIT 10.4

 

NEW SOUTHERN BANK 2001 STOCK INCENTIVE PLAN,

AS AMENDED

 

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FIRST AMENDMENT TO THE

NEW SOUTHERN BANK

2001 STOCK INCENTIVE PLAN

 

THIS FIRST AMENDMENT is made as of                         , 2002, by NEW
SOUTHERN BANK, a bank organized under the laws of the state of Georgia (the
“Bank”).

 

WHEREAS, the Bank maintains the New South Bank 2001 Stock Incentive Plan (the
“Plan”), which was adopted by the Bank’s Board of Directors as of
                                  , 2001;

 

WHEREAS, since the Plan was adopted by the Bank’s Board of Directors, the name
of the Bank has been changed to New Southern Bank; and

 

WHEREAS, the Bank desires to amend the Plan to reflect the change in the name of
the Bank.

 

NOW, THEREFORE, BE IT RESOLVED, that, effective as of                       ,
the Company does hereby amend the Plan in all relevant sections to reflect the
name of the Plan as the “New Southern Bank 2001 Stock Incentive Plan.”

 

Except as specifically amended hereby, the remaining provisions of the Plan
shall remain in full force and effect as prior to the adoption of this First
Amendment.

 

IN WITNESS WHEREOF, the Bank has caused this First Amendment to be executed,
effective as of the date first above written.

 

 

NEW SOUTHERN BANK

 

 

 

By:

 

 

 

 

 

Title:

 

 

 

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NEW SOUTHERN BANK

2001 STOCK INCENTIVE PLAN

 

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TABLE OF CONTENTS

 

SECTION 1

DEFINITIONS

 

1.1

Definitions

 

 

 

 

SECTION 2

THE STOCK INCENTIVE PLAN

 

2.1

Purpose of the Plan

 

2.2

Stock Subject to the Plan

 

2.3

Administration of the Plan

 

2.4

Eligibility and Limits

 

 

 

 

SECTION 3

TERMS OF STOCK INCENTIVES

 

3.1

General Terms and Conditions

 

3.2

Terms and Conditions of Options

 

 

(a)

Option Price

 

 

(b)

Option Term

 

 

(c)

Payment

 

 

(d)

Conditions to the Exercise of an Option

 

 

(e)

Termination of Incentive Stock Option

 

 

(f)

Special Provisions for Certain Substitute Options

 

3.3

Treatment of Awards Upon Termination of Service

 

 

 

 

SECTION 4

RESTRICTIONS ON STOCK

 

4.1

Escrow of Shares

 

4.2

Restrictions on Transfer

 

 

 

 

SECTION 5

GENERAL PROVISIONS

 

5.1

Withholding

 

5.2

Changes in Capitalization; Merger; Liquidation

 

5.3

Cash Awards

 

5.4

Compliance with Code

 

5.5

Right to Terminate Service

 

5.6

Restrictions on Delivery and Sale of Shares; Legends

 

5.7

Non-Alienation of Benefits

 

5.8

Termination and Amendment of the Plan

 

5.9

Stockholder Approval

 

5.10

Choice of Law

 

5.11

Effective Date of the Plan

 

 

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NEW SOUTHERN BANK

2001 STOCK INCENTIVE PLAN

 

SECTION 1  DEFINITIONS

 

1.1                                 Definitions.  Whenever used herein, the
masculine pronoun shall be deemed to include the feminine, and the singular to
include the plural, unless the context clearly indicates otherwise, and the
following capitalized words and phrases are used herein with the meaning
thereafter ascribed:

 

(a)                                  “Affiliate” means

 

(1)                                  any Subsidiary or Parent;

 

(2)                                  an entity that directly or through one or
more intermediaries controls, is controlled by, or is under common control with
the Bank, as determined by the Bank; or

 

(3)                                  any entity in which the Bank has such a
significant interest that the Bank determines it should be deemed an
“Affiliate,” as determined in the sole discretion of the Bank.

 

(b)                                 “Bank” means New Southern Bank, a proposed
state bank.

 

(c)                                  “Board of Directors” means the board of
directors of the Bank.

 

(d)                                 “Cause” has the same meaning as provided in
the employment agreement between the Participant and the Bank or Affiliate(s) on
the date of Termination of Service, or if no such definition or employment
agreement exists, “Cause” means conduct amounting to  (1) fraud or dishonesty
against the Bank or Affiliate(s); (2) Participant’s willful misconduct, repeated
refusal to follow the reasonable directions of the Board of Directors or knowing
violation of law in the course of performance of the duties of Participant’s
service with the Bank or Affiliate(s); (3) repeated absences from work without a
reasonable excuse; (4) repeated intoxication with alcohol or drugs while on the
Bank’s or Affiliate(s)’ premises during regular business hours; (5) a conviction
or plea of guilty or nolo contendere to a felony or a crime involving
dishonesty; or (6) a breach or violation of the terms of any agreement to which
Participant and the Bank or Affiliate(s) are party.

 

(e)                                  “Change in Control” means any one of the
following events which may occur after the date the Stock Incentive is granted:

 

(1)                                  the acquisition by any person or persons
acting in concert of the then outstanding voting securities of the Bank, if,
after the transaction, the acquiring person (or persons) owns, controls or holds
with power to vote forty percent (40%) or more of any class of voting securities
of the Bank;

 

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(2)                                  within any twelve-month period the persons
who were directors of the Bank immediately before the beginning of such
twelve-month period (the “Incumbent Directors”) shall cease to constitute at
least a majority of the Board of Directors; provided that any director who was
not a director as of the beginning of such twelve-month period shall be deemed
to be an Incumbent Director if that director were elected to the Board of
Directors by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors; and
provided further that no director whose initial assumption of office is in
connection with an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act
of 1934) relating to the election of directors shall be deemed to be an
Incumbent Director;

 

(3)                                  a reorganization, merger or consolidation,
with respect to which persons who were the stockholders of the Bank immediately
prior to such reorganization, merger or consolidation do not, immediately
thereafter, own more than fifty percent (50%) of the combined voting power
entitled to vote in the election of directors of the reorganized, merged or
consolidated company’s then outstanding voting securities; or

 

(4)                                  the sale, transfer or assignment of all or
substantially all of the assets of the Bank to any third party.

 

(f)                                    “Code” means the Internal Revenue Code of
1986, as amended.

 

(g)                                 “Committee” means the committee appointed by
the Board of Directors to administer the Plan pursuant to Plan Section 2.3.  If
the Committee has not been appointed, the Board of Directors in its entirety
shall constitute the Committee.

 

(h)                                 “Disability” has the same meaning as
provided in the long-term disability plan or policy maintained or, if
applicable, most recently maintained, by the Bank or an Affiliate for the
Participant.  If no long-term disability plan or policy was ever maintained on
behalf of the Participant or, if the determination of Disability relates to an
Incentive Stock Option, Disability shall mean that condition described in Code
Section 22(e)(3), as amended from time to time.  In the event of a dispute, the
determination of Disability shall be made by the Board of Directors and shall be
supported by advice of a physician competent in the area to which such
Disability relates.

 

(i)                                     “Disposition” means any conveyance,
sale, transfer, assignment, pledge or hypothecation, whether outright or as
security, inter vivos or testamentary, with or without consideration, voluntary
or involuntary.

 

(j)                                     “Fair Market Value” with regard to a
date means:.

 

(1)                                  the price at which Stock shall have been
sold on that date or the last trading date prior to that date as reported by the
national securities exchange selected by the Committee on which the shares of
Stock are then actively traded or, if applicable, as reported by the Nasdaq
Stock Market;

 

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(2)                                  if such market information is not published
on a regular basis, the price of Stock in the over-the-counter market on that
date or the last business day prior to that date as reported by the Nasdaq Stock
Market or, if not so reported, by a generally accepted reporting service; or

 

(3)                                  if Stock is not publicly traded, as
determined in good faith by the Committee with due consideration being given to
(i) the most recent independent appraisal of the Bank, if such appraisal is not
more than twelve months old and (ii) the valuation methodology used in any such
appraisal.

 

For purposes of Paragraphs (1), (2), or (3) above, the Committee may use the
closing price as of the applicable date, the average of the high and low prices
as of the applicable date or for a period certain ending on such date, the price
determined at the time the transaction is processed, the tender offer price for
shares of Stock, or any other method which the Committee determines is
reasonably indicative of the fair market value.

 

(k)                                  “Incentive Stock Option” means an incentive
stock option, as defined in Code Section 422, described in Plan Section 3.2.

 

(l)                                     “Non-Qualified Stock Option” means a
stock option, other than an option qualifying as an Incentive Stock Option,
described in Plan Section 3.2.

 

(m)                               “Option” means a Non-Qualified Stock Option or
an Incentive Stock Option.

 

(n)                                 “Over 10% Owner” means an individual who at
the time an Incentive Stock Option is granted owns Stock possessing more than
ten percent (10%) of the total combined voting power of the Bank or one of its
Parents or Subsidiaries, determined by applying the attribution rules of Code
Section 424(d).

 

(o)                                 “Parent” means any corporation (other than
the Bank) in an unbroken chain of corporations ending with the Bank if, with
respect to Incentive Stock Options, at the time of granting of the Incentive
Stock Option, each of the corporations other than the Bank owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

 

(p)                                 “Participant” means an individual who
receives a Stock Incentive hereunder.

 

(q)                                 “Plan” means the New Southern Bank 2001
Stock Incentive Plan.

 

(r)                                    “Stock” means the Bank’s common stock,
$5.00 par value per share.

 

(s)                                  “Stock Incentive Agreement” means an
agreement between the Bank and a Participant or other documentation evidencing
an award of a Stock Incentive.

 

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(t)                                    “Stock Incentives” means, collectively,
Incentive Stock Options and Non-Qualified Stock Options.

 

(u)                                 “Subsidiary” means any corporation (other
than the Bank) in an unbroken chain of corporations beginning with the Bank if,
with respect to Incentive Stock Options, at the time of the granting of the
Incentive Stock Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.  A “Subsidiary” shall include any entity other than a
corporation to the extent permissable under Section 424(f) or regulations or
rulings thereunder.

 

(v)                                 “Termination of Service” means the
termination of the service relationship, whether employment or otherwise,
between a Participant and the Bank and any Affiliates, regardless of the fact
that severance or similar payments are made to the Participant for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, Disability or retirement.  The Committee shall, in its
absolute discretion, determine the effect of all matters and questions relating
to a Termination of Service, including, but not by way of limitation, the
question of whether a leave of absence constitutes a Termination of Service, or
whether a Termination of Service is for Cause.

 

SECTION 2  THE STOCK INCENTIVE PLAN

 

2.1                                 Purpose of the Plan.  The Plan is intended
to (a) provide incentives to employees, directors and organizers of the Bank and
its Affiliates to stimulate their efforts toward the continued success of the
Bank and to operate and manage the business in a manner that will provide for
the long-term growth and profitability of the Bank; (b) encourage stock
ownership by employees, directors and organizers by providing them with a means
to acquire a proprietary interest in the Bank by acquiring shares of Stock; and
(c) provide a means of obtaining and rewarding key personnel.

 

2.2                                 Stock Subject to the Plan.  Subject to
adjustment in accordance with Section 5.2, 80,000 shares of Stock (the “Maximum
Plan Shares”) are hereby reserved exclusively for issuance upon exercise or
payment pursuant to Stock Incentives.  At such time as the Bank becomes subject
to Section 16 of the Exchange Act, at no time shall the Bank have outstanding
Stock Incentives subject to Section 16 of the Exchange Act and shares of Stock
issued in respect of Stock Incentives in excess of the Maximum Plan Shares.  The
shares of Stock attributable to the nonvested, unpaid, unexercised, unconverted
or otherwise unsettled portion of any Stock Incentive that is forfeited or
cancelled or expires or terminates for any reason without becoming vested, paid,
exercised, converted or otherwise settled in full will again be available for
purposes of the Plan.

 

2.3                                 Administration of the Plan.  The Plan shall
be administered by the Committee.  The members of the Committee shall consist
solely of at least two members of the Board of Directors.  During those periods
that the Bank is subject to the provisions of Section 16 of the Securities
Exchange Act of 1934, the Board of Directors shall consider the advisability of

 

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whether each Committee member shall qualify as an “outside director” as defined
in Treasury Regulations §1.162-27(e) as promulgated by the Internal Revenue
Service and a “non-employee director” as defined in Rule 16b-3(b)(3) as
promulgated under the Exchange Act.  The Committee shall have full authority in
its discretion to determine the employees, directors and organizers of the Bank
or its Affiliates to whom Stock Incentives shall be granted and the terms and
provisions of Stock Incentives subject to the Plan.  Subject to the provisions
of the Plan, the Committee shall have full and conclusive authority to interpret
the Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the respective Stock Incentive
Agreements and to make all other determinations necessary or advisable for the
proper administration of the Plan.  The Committee’s determinations under the
Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, awards under the Plan (whether or not such
persons are similarly situated).  The Committee’s decisions shall be final and
binding on all Participants.  Each member of the Committee shall serve at the
discretion of the Board of Directors and the Board of Directors may from time to
time remove members from or add members to the Committee.  Vacancies on the
Committee shall be filled by the Board of Directors.

 

The Committee shall select one of its members as chairman and shall hold
meetings at the times and in the places as it may deem advisable.  Acts approved
by a majority of the Committee in a meeting at which a quorum is present, or
acts reduced to or approved in writing by a majority of the members of the
Committee, shall be the valid acts of the Committee.

 

2.4                                 Eligibility and Limits.  Stock Incentives
may be granted only to employees, directors and organizers of the Bank or any
Affiliate; provided, however, that an Incentive Stock Option may only be granted
to an employee of the Bank or any Subsidiary.  In the case of Incentive Stock
Options, the aggregate Fair Market Value (determined as of the date an Incentive
Stock Option is granted) of stock with respect to which stock options intended
to meet the requirements of Code Section 422 become exercisable for the first
time by an individual during any calendar year under all plans of the Bank and
its Parents and Subsidiaries shall not exceed $100,000; provided further, that
if the limitation is exceeded, the Incentive Stock Option(s) which cause the
limitation to be exceeded shall be treated as Non-Qualified Stock Option(s).  On
such date as required by Code Section 162(m) of the Code and the regulations
thereunder for compensation to be treated as qualified performance based
compensation, the maximum number of shares of Stock with respect to which
Options may be granted during any calendar year to an employee may not exceed
50,000, subject to adjustment in accordance with Section 5.2.  If, after grant,
an Option is cancelled, the cancelled Option shall continue to be counted
against the maximum number of shares for which options may be granted to an
employee as described in this Section 2.4.  If, after grant, the exercise price
of an Option is reduced, the transaction shall be treated as the cancellation of
the Option and the grant of a new Option.  If an Option is deemed to be
cancelled as described in the preceding sentence, the Option that is deemed to
be cancelled and the Option that is deemed to be granted shall both be counted
against the maximum number of shares for which Options may be granted to an
employee during any calendar year.

 

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SECTION 3  TERMS OF STOCK INCENTIVES

 

3.1                                 General Terms and Conditions.

 

(a)                                  The number of shares of Stock as to which a
Stock Incentive shall be granted shall be determined by the Committee in its
sole discretion, subject to the provisions of Section 2.2, as to the total
number of shares available for grants under the Plan.

 

(b)                                 Each Stock Incentive shall be evidenced by a
Stock Incentive Agreement in such form and containing such terms, conditions and
restrictions as the Committee may determine is appropriate.  Each Stock
Incentive Agreement shall be subject to the terms of the Plan and any provision
in a Stock Incentive Agreement  that is inconsistent with the Plan shall be null
and void.

 

(c)                                  The date a Stock Incentive is granted shall
be the date on which the Committee has approved the terms of, and satisfaction
of any conditions applicable to, the grant of the Stock Incentive and has
determined the recipient of the Stock Incentive and the number of shares covered
by the Stock Incentive and has taken all such other action necessary to complete
the grant of the Stock Incentive.

 

(d)                                 The Committee may provide in any Stock
Incentive Agreement (or subsequent to the award of a Stock Incentive but prior
to its expiration or cancellation, as the case may be) that, in the event of a
Change in Control, the Stock Incentive shall or may be cashed out on the basis
of any price not greater than the highest price paid for a share of Stock in any
transaction reported by any market or system selected by the Committee on which
the shares of Stock are then actively traded during a specified period
immediately preceding or including the date of the Change in Control or offered
for a share of Stock in any tender offer occurring during a specified period
immediately preceding or including the date the tender offer commences; provided
that, in no case shall any such specified period exceed three (3) months (the
“Change in Control Price”).  For purposes of this Subsection, any Option shall
be cashed out on the basis of the excess, if any, of the Change in Control Price
over the Exercise Price to the extent the Option is then exercisable in
accordance with the terms of the Option and the Plan.

 

(e)                                  Any Stock Incentive may be granted in
connection with all or any portion of a previously or contemporaneously granted
Stock Incentive.  Exercise or vesting of a Stock Incentive granted in connection
with another Stock Incentive may result in a pro rata surrender or cancellation
of any related Stock Incentive, as specified in the applicable Stock Incentive
Agreement.

 

(f)                                    Stock Incentives shall not be
transferable or assignable except by will or by the laws of descent and
distribution and shall be exercisable, during the Participant’s lifetime, only
by the Participant; in the event of the Disability of the Participant, by the
legal representative of the Participant; or in the event of the death of the
Participant, by the personal representative of the Participant’s estate or if no
personal representative has been appointed, by the successor in interest
determined under the Participant’s will.

 

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3.2                                 Terms and Conditions of Options.  Each
Option granted under the Plan shall be evidenced by a Stock Incentive
Agreement.  At the time any Option is granted, the Committee shall determine
whether the Option is to be an Incentive Stock Option or a Non-Qualified Stock
Option, and the Option shall be clearly identified as to its status as an
Incentive Stock Option or a Non-Qualified Stock Option.  At the time any
Incentive Stock Option is exercised, the Bank shall be entitled to place a
legend on the certificates representing the shares of Stock purchased pursuant
to the Option to clearly identify them as shares of Stock purchased upon
exercise of an Incentive Stock Option.  An Incentive Stock Option may only be
granted within ten (10) years from the earlier of the date the Plan is adopted
by the Board of Directors or approved by the Bank’s stockholders.  All Options
shall provide that the primary Federal regulator of the Bank may require a
Participant to exercise an Option in whole or in part if the capital of the Bank
falls below minimum requirements and shall further provide that, if the
Participant fails to so exercise any such portion of the Option, that portion of
the Option shall be forfeited.

 

(a)                                  Option Price.   Subject to adjustment in
accordance with Section 5.2 and the other provisions of this Section 3.2, the
exercise price (the “Exercise Price”) per share of Stock purchasable under any
Option shall be as set forth in the applicable Stock Incentive Agreement.  With
respect to each grant of an Incentive Stock Option to a Participant who is not
an Over 10% Owner, the Exercise Price per share shall not be less than the Fair
Market Value on the date the Option is granted.  With respect to each grant of
an Incentive Stock Option to a Participant who is an Over 10% Owner, the
Exercise Price shall not be less than 110% of the Fair Market Value on the date
the Option is granted.  With respect to each grant of a Non-Qualified Stock
Option, the Exercise Price per share shall be no less than the Fair Market
Value.

 

(b)                                 Option Term.  The term of an Option shall be
as specified in the applicable Stock Incentive Agreement; provided, however that
any Option granted to a Participant shall not be exercisable after the
expiration of ten (10) years after the date the Option is granted and any
Incentive Stock Option granted to an Over 10% Owner shall not be exercisable
after the expiration of five (5) years after the date the Option is granted.

 

(c)                                  Payment.  Payment for all shares of Stock
purchased pursuant to the exercise of an Option shall be made in cash or, if the
Stock Incentive Agreement provides, in a cashless exercise through a broker.  
In its discretion, the Committee also may authorize (at the time an Option is
granted or thereafter) Bank financing to assist the Participant as to payment of
the Exercise Price on such terms as may be offered by the Committee in its
discretion.  Payment shall be made at the time that the Option or any part
thereof is exercised, and no shares shall be issued or delivered upon exercise
of an Option until full payment has been made by the Participant.  The holder of
an Option, as such, shall have none of the rights of a stockholder.

 

(d)                                 Conditions to the Exercise of an Option. 
Each Option granted under the Plan shall be exercisable by the Participant or
any other designated person, at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Committee shall specify in the
Stock Incentive Agreement; provided, however, that subsequent to the grant of an
Option, the Committee, at any time before complete termination of such Option,
may accelerate the time or times at which such Option may be exercised in whole
or in part, including, without limitation, upon a Change in Control and may
permit the Participant or any other designated

 

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person to exercise the Option, or any portion thereof, for all or part of the
remaining Option term notwithstanding any provision of the Stock Incentive
Agreement to the contrary.  Notwithstanding the foregoing, no Option granted
prior to the third anniversary of the date the Bank opens for business shall
contain provisions which allow the Option to become vested and exercisable at a
rate faster than in equal, annual one-third increments commencing with the first
anniversary of the Option’s grant date.

 

(e)                                  Termination of Incentive Stock Option
Status.  With respect to an Incentive Stock Option, in the event of the
termination of employment of a Participant, the Option or portion thereof held
by the Participant which is unexercised shall expire, terminate and become
unexercisable no later than three (3) months after the date of termination of
employment; provided, however, that in the case of a holder whose termination of
employment is due to death or Disability, up to one (1) year may be substituted
for such three (3) month period.  For purposes of this Subsection (e),
termination of employment of the Participant shall not be deemed to have
occurred if the Participant is employed by another corporation (or a parent or
subsidiary corporation of such other corporation) which has assumed the
Incentive Stock Option of the Participant in a transaction to which Code
Section 424(a) is applicable.

 

(f)                                    Special Provisions for Certain Substitute
Options.  Notwithstanding anything to the contrary in this Section 3.2, any
Option issued in substitution for an option previously issued by another entity,
which substitution occurs in connection with a transaction to which Code
Section 424(a) is applicable, may provide for an exercise price computed in
accordance with such Code Section and the regulations thereunder and may contain
such other terms and conditions as the Committee may prescribe to cause such
substitute Option to contain as nearly as possible the same terms and conditions
(including the applicable vesting and termination provisions) as those contained
in the previously issued option being replaced thereby.

 

3.3                                 Treatment of Awards Upon Termination of
Service.  Except as otherwise provided by Plan Section 3.2(e), any award under
this Plan to a Participant who suffers a Termination of Service may be
cancelled, accelerated, paid or continued, as provided in the Stock Incentive
Agreement or, in the absence of such provision, as the Committee may determine. 
The portion of any award exercisable in the event of continuation or the amount
of any payment due under a continued award may be adjusted by the Committee to
reflect the Participant’s period of service from the date of grant through the
date of the Participant’s Termination of Service or such other factors as the
Committee determines are relevant to its decision to continue the award.

 

SECTION 4  RESTRICTIONS ON STOCK

 

4.1                                 Escrow of Shares.  Any certificates
representing the shares of Stock issued under the Plan shall be issued in the
Participant’s name, but, if the Stock Incentive Agreement so provides, the
shares of Stock shall be held by a custodian designated by the Committee (the
“Custodian”).  Each applicable Stock Incentive Agreement providing for transfer
of shares of Stock to the Custodian shall appoint the Custodian as the
attorney-in-fact for the Participant for the term specified in the applicable
Stock Incentive Agreement, with full power and authority in

 

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the Participant’s name, place and stead to transfer, assign and convey to the
Bank any shares of Stock held by the Custodian for such Participant, if the
Participant forfeits the shares under the terms of the applicable Stock
Incentive Agreement.  During the period that the Custodian holds the shares
subject to this Section, the Participant shall be entitled to all rights, except
as provided in the applicable Stock Incentive Agreement, applicable to shares of
Stock not so held.  Any dividends declared on shares of Stock held by the
Custodian shall, as the Committee may provide in the applicable Stock Incentive
Agreement, be paid directly to the Participant or, in the alternative, be
retained by the Custodian until the expiration of the term specified in the
applicable Stock Incentive Agreement and shall then be delivered, together with
any proceeds, with the shares of Stock to the Participant or to the Bank, as
applicable.

 

4.2                                 Restrictions on Transfer.  The Participant
shall not have the right to make or permit to exist any Disposition of the
shares of Stock issued pursuant to the Plan except as provided in the Plan or
the applicable Stock Incentive Agreement.  Any Disposition of the shares of
Stock issued under the Plan by the Participant not made in accordance with the
Plan or the applicable Stock Incentive Agreement shall be void.  The Bank shall
not recognize, or have the duty to recognize, any Disposition not made in
accordance with the Plan and the applicable Stock Incentive Agreement, and the
shares so transferred shall continue to be bound by the Plan and the applicable
Stock Incentive Agreement.

 

SECTION 5  GENERAL PROVISIONS

 

5.1                                 Withholding.  The Bank shall deduct from all
cash distributions under the Plan any taxes required to be withheld by federal,
state or local government.  Whenever the Bank proposes or is required to issue
or transfer shares of Stock under the Plan, the Bank shall have the right to
require the recipient to remit to the Bank an amount sufficient to satisfy any
federal, state and local tax withholding requirements prior to the delivery of
any certificate or certificates for such shares.  A Participant may pay the
withholding obligation in cash, by tendering shares of Stock which have been
owned by the holder for at least six (6) months prior to the date of exercise
or, if the applicable Stock Incentive Agreement provides, a Participant may
elect to have the number of shares of Stock he is to receive reduced by the
smallest number of whole shares of Stock which, when multiplied by the Fair
Market Value of the shares of Stock determined as of the Tax Date (defined
below), is sufficient to satisfy federal, state and local, if any, withholding
obligation arising from exercise or payment of a Stock Incentive (a “Withholding
Election”).  A Participant may make a Withholding Election only if both of the
following conditions are met:

 

(a)                                  The Withholding Election must be made on or
prior to the date on which the amount of tax required to be withheld is
determined (the “Tax Date”) by executing and delivering to the Bank a properly
completed notice of Withholding Election as prescribed by the Committee; and

 

(b)                                 Any Withholding Election made will be
irrevocable; however, the Committee may, in its sole discretion, disapprove and
give no effect to the Withholding Election.

 

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5.2                                 Changes in Capitalization; Merger;
Liquidation.

 

(a)                                  The number of shares of Stock reserved for
the grant of Options, the maximum number of shares of Stock for which Options
may be granted to any individual during any calendar year, the number of shares
of Stock reserved for issuance upon the exercise of each outstanding Option, and
the Exercise Price of each outstanding Option shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Stock resulting
from a subdivision or combination of shares or the payment of an ordinary stock
dividend in shares of Stock to holders of outstanding shares of Stock or any
other increase or decrease in the number of shares of Stock outstanding effected
without receipt of consideration by the Bank.

 

(b)                                 In the event of any merger, consolidation,
reorganization, extraordinary dividend, spin-off, sale of substantially all of
the Bank’s assets, other change in the corporate structure of the Bank or its
Stock (including any Change in Control) or tender offer for shares of Stock, the
Committee, in its sole discretion, may make such adjustments with respect to
awards and take such other action as it deems necessary or appropriate to
reflect or in anticipation of such merger, consolidation, reorganization,
extraordinary dividend, spin-off, sale of substantially all of the Bank’s
assets, other change in corporate structure or tender offer, including, without
limitation; the assumption of other awards, the substitution of new awards, the
adjustment of outstanding awards (with or without the payment of any
consideration), the acceleration of awards or the removal of restrictions on
outstanding awards, all as may be provided in the applicable Stock Incentive
Agreement or, if not expressly addressed therein, as the Committee subsequently
may determine in the event of any such merger, consolidation, reorganization,
extraordinary dividend, spin-off, sale of substantially all of the Bank’s
assets, other change in the corporate structure of the Bank or its Stock or
tender offer for shares of Stock or the termination of outstanding awards in
exchange for the cash value, as determined in good faith by the Committee of the
vested and/or unvested portion of the award.  The Committee’s general authority
under this Section 5.2 is limited by and subject to all other express provisions
of the Plan.  Any adjustment pursuant to this Section 5.2 may provide, in the
Committee’s discretion, for the elimination without payment therefor of any
fractional shares that might otherwise become subject to any Stock Incentive.

 

(c)                                  The existence of the Plan and the Stock
Incentives granted pursuant to the Plan shall not affect in any way the right or
power of the Bank to make or authorize any adjustment, reclassification,
reorganization or other change in its capital or business structure, any merger
or consolidation of the Bank, any issue of debt or equity securities having
preferences or priorities as to the Stock or the rights thereof, the dissolution
or liquidation of the Bank, any sale or transfer of all or any part of its
business or assets, or any other corporate act or proceeding.

 

5.3                                 Cash Awards.  The Committee may, at any time
and in its discretion, grant to any holder of a Stock Incentive the right to
receive, at such times and in such amounts as determined by the Committee in its
discretion, a cash amount which is intended to reimburse such person for all or
a portion of the federal, state and local income taxes imposed upon such person
as a consequence of the receipt of the Stock Incentive or the exercise of rights
thereunder.

 

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5.4                                 Compliance with Code.  All Incentive Stock
Options to be granted hereunder are intended to comply with Code Section 422,
and all provisions of the Plan and all Incentive Stock Options granted hereunder
shall be construed in such a manner as to effectuate that intent.

 

5.5                                 Right to Terminate Service.  Nothing in the
Plan or in any Stock Incentive Agreement shall confer upon any Participant the
right to continue as an employee, director, organizer or officer of the Bank or
affect the right of the Bank to terminate the Participant’s services at any
time.

 

5.6                                 Restrictions on Delivery and Sale of Shares;
Legends.  Each Stock Incentive is subject to the condition that if at any time
the Committee, in its discretion, shall determine that the listing, registration
or qualification of the shares covered by such Stock Incentive upon any
securities exchange or under any state or federal law is necessary or desirable
as a condition of or in connection with the granting of such Stock Incentive or
the purchase or delivery of shares thereunder, the delivery of any or all shares
pursuant to such Stock Incentive may be withheld unless and until such listing,
registration or qualification shall have been effected.  If a registration
statement is not in effect under the Securities Act of 1933 or any applicable
state securities laws with respect to the shares of Stock purchasable or
otherwise deliverable under Stock Incentives then outstanding, the Committee may
require, as a condition of exercise of any Option or as a condition to any other
delivery of Stock pursuant to a Stock Incentive, that the Participant or other
recipient of a Stock Incentive represent, in writing, that the shares received
pursuant to the Stock Incentive are being acquired for investment and not with a
view to distribution and agree that the shares will not be disposed of except
pursuant to an effective registration statement, unless the Bank shall have
received an opinion of counsel that such disposition is exempt from such
requirement under the Securities Act of 1933 and any applicable state securities
laws.  The Bank may include on certificates representing shares delivered
pursuant to a Stock Incentive such legends referring to the foregoing
representations or restrictions or any other applicable restrictions on resale
as the Bank, in its discretion, shall deem appropriate.

 

5.7                                 Non-Alienation of Benefits.  Other than as
specifically provided herein, no benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge; and any attempt to do so shall be void.  No such benefit
shall, prior to receipt by the Participant, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Participant.

 

5.8                                 Termination and Amendment of the Plan.  The
Board of Directors at any time may amend or terminate the Plan without
stockholder approval; provided, however, that the Board of Directors may
condition any amendment on the approval of stockholders of the Bank if such
approval is necessary or advisable with respect to tax, securities or other
applicable laws.  No such termination or amendment without the consent of the
holder of a Stock Incentive shall adversely affect the rights of the Participant
under such Stock Incentive.

 

5.9                                 Stockholder Approval.   The Plan must be
submitted to the stockholders of the Bank for their approval within twelve (12)
months before or after the adoption of the Plan by the Board of Directors.

 

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5.10                           Choice of Law.  The laws of the State of Georgia
shall govern the Plan, to the extent not preempted by federal law.

 

5.11                           Effective Date of the Plan.  The Plan was
approved by the Board of Directors as of                                     ,
2001 and will be effective as of that date.

 

 

NEW SOUTHERN BANK

 

 

 

 

 

By:

 

 

 

 

 

Title:

 

 

ATTEST:

 

 

 

 

 

 

Secretary

 

 

 

[SEAL]

 

 

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