Exhibit 10.5


 


NEW SOUTHERN BANK


2001 STOCK INCENTIVE PLAN


 





















 


TABLE OF CONTENTS


 


	
   

  	
  page 

  
	
   

  	
   

  
	
  SECTION 1    DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  1.1

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 2    THE STOCK INCENTIVE PLAN

  	
  4

  
	
   

  	
   

  
	
  2.1

  	
  PURPOSE OF THE PLAN

  	
  4

  
	
  2.2

  	
  STOCK SUBJECT TO THE PLAN

  	
  4

  
	
  2.3

  	
  ADMINISTRATION OF THE PLAN

  	
  4

  
	
  2.4

  	
  ELIGIBILITY AND LIMITS

  	
  5

  
	
   

  	
   

  	
   

  
	
  SECTION 3    TERMS OF STOCK INCENTIVES

  	
  6

  
	
   

  	
   

  
	
  3.1

  	
  general terms and conditions

  	
  6

  
	
  3.2

  	
  terms and conditions of options

  	
  7

  
	
  (a)

  	
  Option Price

  	
  7

  
	
  (b)

  	
  Option Term

  	
  7

  
	
  (c)

  	
  Payment

  	
  7

  
	
  (d)

  	
  Conditions to the Exercise of an Option

  	
  7

  
	
  (e)

  	
  Termination of Incentive Stock Option

  	
  8

  
	
  (f)

  	
  Special Provisions for Certain Substitute Options

  	
  8

  
	
  3.3

  	
  treatment
  of awards upon termination of service

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 4    RESTRICTIONS ON STOCK

  	
  8

  
	
   

  	
   

  
	
  4.1

  	
  escrow
  of shares

  	
  8

  
	
  4.2

  	
  restrictions
  on transfer

  	
  9

  
	
   

  	
   

  	
   

  
	
  SECTION 5    GENERAL PROVISIONS

  	
  9

  
	
   

  	
   

  
	
  5.1

  	
  withholding

  	
  9

  
	
  5.2

  	
  changes
  in capitalization; merger; liquidation

  	
  10

  
	
  5.3

  	
  cash
  awards

  	
  10

  
	
  5.4

  	
  compliance
  with code

  	
  11

  
	
  5.5

  	
  right
  to terminate service

  	
  11

  
	
  5.6

  	
  restrictions
  on delivery and sale of shares; legends

  	
  11

  
	
  5.7

  	
  non-alienation
  of benefits

  	
  11

  
	
  5.8

  	
  termination
  and amendment of the plan

  	
  11

  
	
  5.9

  	
  stockholder
  approval

  	
  11

  
	
  5.10

  	
  choice
  of law

  	
  12

  
	
  5.11

  	
  effective date of the plan

  	
  12

  
				



 





















 


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;


 





















 


(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-l1 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;


 


2





















 


(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.


 


3





















 


(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 whether each Committee member shall qualify as an
“outside director” as defined in Treasury


 


4





















 


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.


 


5





















 


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.


 


6





















 


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


 


7





















 


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(c), 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


 


8





















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.


 


9





















 


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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