Exhibit 10.1


 


SOUTHERN HERITAGE BANK


2000 NON-EMPLOYEE DIRECTORS


STOCK OPTION PLAN


 


SECTION 1.  PURPOSE; DEFINITIONS


 


The purpose of
the Southern Heritage Bank 2000 Non-Employee Director Stock Option Plan (“Plan”)
is to advance the long-term success of Southern Heritage Bank and its
shareholders by attracting and retaining highly qualified non-employee
directors. The Plan will provide non-employee directors with the ability to
increase their proprietary interest of the Company’s shareholders by the grant
to such directors of Non-Qualified Stock Options of the Company.


 


For purposes
of the Plan, the following terms shall be defined as set forth below:


 


A.            “Board”
means the Board of Directors of the Company.


 


B.            “Code”
means the Internal Revenue Code of 1986, as amended from time to time, and any
successor thereto.


 


C.            “Committee”
means the Stock Option Committee of the Board, as from time to time
constituted, or any successor committee of the Board with similar functions,
which shall consist of three members, each of whom shall be a Disinterested
Person.


 


D.            “Common
Stock” shall mean the common stock of the Company ($1.00 par value), subject to
adjustments pursuant to Section 3.2) below.


 


E.             “Company”
means Southern Heritage Bank, a corporation organized under the laws of the
State of Tennessee, or any successor corporation.


 


F.             “Disability”
means permanent and total disability of an Eligible Director within the meaning
of Section 22(e)(3) of the Code.


 


G.            “Disinterested
Person” shall have the meanings set forth in Rule 16b-3(c)(2)(i) as promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, or any successor definition adopted by the Commission.


 


H.            “Eligible
Directors” means duly elected directors of the Company who are not employees of
the Company or any Subsidiary thereof


 


I.              “Exchange
Act” means the Securities Exchange Act of 1934, as amended.


 


J.             “Fair
Market Value” shall mean, as of any date, (i) if the Common Stock is listed or
admitted to unlisted trading privileges on any national securities exchange or
is not so listed or admitted but transactions in the Common Stock are reported
by the NASDAQ National Market System, the closing sale price of the Common
Stock on such exchange or by the NASDAQ National Market System as of such
date (or, if no such shares were traded on such date,  as of the next
preceding day on which there was such a  





















 


trade); (ii)
if the Common Stock is not so listed or admitted to unlisted trading privileges
or reported on the NASDAQ National Market System, and bid and ask prices
therefore in the over-the-counter market are reported by the NASDAQ system or
the National Quotation Bureau, Inc., (or any comparable reporting service), the
mean of the closing bid and ask prices of the Common Stock as of such date, as
so reported: or (iii) if no quotations are available by any reporting services,
the fair market value of such Common Stock as determined by the Board, in each
case, on the business day immediately preceding the date on which the determination
is made,


 


K.            “Non-Qualified
Stock Option” means any Stock Option that does not comply with the provisions
of Section 422 of the Code.


 


L.             “Plan”
means this Southern Heritage Bank 2000 Non-Employee Director Stock Option Plan,
as hereinafter amended from time to time.


 


M.           “Retirement”
means the termination of service of an Eligible Director as a director of the
Company pursuant to and in accordance with the Board’s tenure policy or
otherwise retirement policy, or if approved by the Board for purposes of this
Plan, early retirement or other practice or policy then covering an Eligible
Director.


 


N.            “Stock”
means the Common Stock of the Company.


 


0.             “Stock
Option” or “Option” means any Non-Qualified Stock Option to purchase shares of
Common Stock granted pursuant to Section 5 below


 


P.             “Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations (other than
the last corporation in the unbroken chain) owns stock possessing 50% or more
at the total combined voting power of all classes of stock in one of the other
corporations in the chain.


 


In addition,
the terms “Change in Control” and “Potential Change in Control” shall have
meanings set forth, respectively, in Sections 6.1, 6.2, and 6.3 below and the
term “Cause” shall have the meaning set forth in Section 5.2.10 below.


 


SECTION 2.  ADMINISTRATION


 


2.1           The Plan shall be administered by the Committee. The
functions of the Committee specified in the Plan may be exercised by the
Committee, and may be exercised by the Board, if and to the extent that no
Committee exists which otherwise has the authority to so administer the Plan.
The Committee shall have full authority to grant Stock Options, pursuant to the
terms of the Plan, to Eligible Directors under the terms and conditions of
Section 5 of this Plan.


 


2.2           The Committee shall be appointed by the Directors and shall
serve for a term of four (4) years or until their successors are duly elected
and qualified.


 


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2.3           The Committee shall have the authority to adopt, alter and
repel such rules, guidelines and practices governing the Plan as it shall, from
time to time, deem advisable; to interpret the terms and provisions of the Plan
and any Stock Options issued under the Plan (and any agreements relating
thereto); and to otherwise supervise the administration of the Plan.


 


2.4           All decisions made by the Committee pursuant to the
provisions of the Plan shall be made in the Committee’s sole discretion and
shall be final and binding on all persons, including the Company and Plan
participants.


 


SECTION 3.  STOCK SUBJECT TO PLAN


 


3.1           The maximum number of shares of Common Stock reserved and
available for issuance under the Plan shall be 12,100 shares of the Company’s
Common Stock, subject to adjustment upon changes in capitalization of the
Company as provided in Section 3.3 below. Such shares may consist in whole or
in part, of authorized and unissued shares of the Company.


 


3.2           If any shares of Stock that have been optioned cease to be
subject to a Stock Option prior to the payment of any dividend, if applicable,
with respect to such Stock, then such shares shall again be available for
distribution in connection with future awards under the Plan.


 


3.3           In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, combination of shares, exchange
of shares, split-up, split-off, spin-off, liquidation or other change in
corporate structure affecting the Common Stock of the Plan, then appropriate
substitutions or adjustments shall be made in maximum aggregate number of
shares subject to an amount of shares reserved for issuance under the Plan,
provided that the number of shares subject to any award shall always be a whole
number.


 


SECTION 4.  STOCK OPTIONS


 


4.1           All Eligible Directors shall be eligible to participate in
the Plan and to receive Non-Qualified Stock Options (as described in Section 5)
under the Plan.


 


SECTION 5.  STOCK OPTIONS


 


5.1           After the Plan becomes effective, the Committee shall grant
to Eligible Directors an option to purchase shares of Common Stock of the
Company as determined by the Committee. The Committee shall provide each
Eligible Director with a Stock Option Agreement between the Company and each
Eligible Director to carry out the terms of the Stock Options granted to each
Eligible Director hereunder.


 


5.2           Stock Options granted under the Plan shall be subject to the
following terms and conditions:


 


5.2.1        Option Price. The option price per share of
Common Stock purchasable under a Stock Option shall be 100% of the Fair Market
Value of the Common Stock at the time such Option is granted.


 


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5.2.2        Option Term. No Stock Option shall be
exercisable more than ten years after the date the Option is granted.


 


5.2.3        Vesting. Stock Options granted under the Plan shall vest in full
immediately with the Eligible Director on the date of the grant of the Stock
Options provided the Eligible Director has continued to serve on the Board
until that date.


 


5.2.4        Exercisability. No Stock Option shall be
exercisable prior to six months and one day after the date of the granting of
the Option, except as provided in Sections 5.2.7, 5.2.8, and 5.2.9 and Section
6.


 


5.2.5        Method of Exercise. Stock Options, to the extent
they are vested, may be exercised in whole or in part at any time during the
option period, by giving written notice of exercise to the Company specifying
the number of shares to be purchased.


 


Such notice
shall be accompanied by payment in full of the purchase price, either by check,
note or such other instrument as the Committee may accept. As determined by the
Committee, in its sole discretion, at or after grant, payment in full or in part
may also be made in the form of Common Stock already owned by the Eligible
Director based on the Fair Market Value of the Common Stock on the date the
Option is exercised.


 


No shares of
Common Stock shall be issued until full payment therefore has been made. Ad
Eligible Director shall have the rights to dividends or other rights of a
stockholder with respect to shares subject to the Option when the Eligible
Director has given written notice of exercise, has paid in full for such
shares, and, if requested, has given the representation described in Section
8.1.


 


5.2.6        Non-Transferability of Options. No Stock Option shall be
transferable by an Eligible Director otherwise than by Will or by the laws of
descent and distribution, and all Stock Options shall be exercisable, during
the Eligible Director’s lifetime, only by the Eligible Director.


 


5.2.7        Termination by Death. If an Eligible Director’s
service on the Board terminates by reason of death, any Stock Option held by
such Eligible Director may thereafter by exercised, to the extent such option
was vested and exercisable at the time of death or on such accelerated basis as
the Committee may determine at or after grant (or as may be determined in
accordance with procedures established by the Committee), by the legal
representative of the estate or by the legatee of the Eligible Director under
the Will of the Eligible Director, for a period of one year from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is shorter.


 


5.2.8        Termination by Reason of Disability. If an Eligible Director’s
service on the Board terminates by reason of Disability, any Stock Option held
by such Eligible Director may thereafter be exercised by the Eligible Director,
to the extent it was vested and exercisable at the time of termination or on
such accelerated basis as the Committee may determine at or after grant (or as
may be determined in accordance with procedures established by the Committee),
for a period of one year from the date of such termination of service on the
Board or until the expiration of the stated term of such Stock Option,
whichever period is shorter;


 


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provided, however,
that, if the Eligible Director dies within such one year period, any
unexercised Stock Option held by such Eligible Director shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for
a period of twelve months from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is shorter.


 


5.2.9        Termination by Reason of Retirement. If an Eligible Director’s
service on the Board terminates by reason of retirement, any Stock Option held
by such Eligible Director may thereafter be exercised by the Eligible Director,
to the extent it was vested and exercisable at the time of such Retirement or
on such accelerated basis as the Committee may determine at or after grant (or
as may be determined in accordance with procedures established by the
Committee), for a period of three years from the date of such termination of
service on the Board or the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that, if the Eligible
Director dies within such three year period, any unexercised Stock Option held
by such Eligible Director shall thereafter be exercisable, to the extent to
which it was vested and exercisable at the time of death, for a period of one
year from the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.


 


5.2.10      Other Termination. If an Eligible Director’s
service on the Board terminates for any reason other than death, Disability or
Retirement, the Stock Option shall thereupon terminate, except that such Stock
Option may be exercised, to the extent otherwise then vested in exercisable,
for the lesser of three months or the balance of such Stock Option’s term if
the Eligible Director’s service on the Board is involuntarily terminated by the
Company or the shareholders of the Company without Cause. For purposes of this
Plan, “Cause” means (a) a felony conviction of an Eligible Director or the
failure of an Eligible Director to contest prosecution for a felony, or an
Eligible Director’s willful misconduct or dishonesty, any of which is directly
or materially harmful to the business or reputation of the Company or any
Subsidiary, or (b) the commission of a material violation of any laws and\or
regulations applicable to the Company or any Subsidiary.


 


SECTION 6.  CHANGE IN CONTROL PROVISIONS


 


6.1           Impact of Event.  In the event of:


 


(i)                                     a
“Change in Control” as defined in Section 6.2 or


 


(ii)                                  a
“Potential Change in Control” as defined in Section 6.3, but only if and to the
extent so determined by the Committee or the Board at or after grant (subject
to any right of approval expressly reserved by the Committee or the Board at
the time of such determination), then any Stock Option awarded under the Plan
not previously exercisable and vested shall become fully exercisable and
vested.


 


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6.2           Definition of “Change in Control.” For purposes of Section 6.1,
a “Change in Control” means the happening of any of the following:


 


(i)                                     any
person or entity, including a “group” as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, other than the Company or a wholly-owned
subsidiary thereof or any employee benefit plan of the Company or any of its
Subsidiaries, becomes the beneficial owner of the Company’s securities having
20% or more of the combined voting power of the then outstanding securities of
the Company that may be cast for the election of’ directors of the Company
(other than as a result of an issuance of securities initiated by the Company
in the ordinary course of business); or


 


(ii)                                  as
a result of, or in connection with, any cash tender or exchange offer, merger
or other business combination, sale of assets or contested election, or any
combination of the foregoing transaction less than a majority of the combined
voting power of the then outstanding securities of the Company or any successor
corporation or entity entitled to vote generally in the election of the
directors of the Company or such other corporation or entity after such
transactions are held in the aggregate by the holders of the Company’s
securities entitled to vote generally in the election of directors of the
Company immediately prior to such transaction; or


 


(iii)                               during
any period of two consecutive years, individuals who at the beginning of any
such period constitute the Board cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by the
Company’s stockholders, of each director of the Company first elected during
such period was approved by a vote of at least two-third of the directors of
the Company then still in office who were directors of the Company at the
beginning of such period.


 


6.3           Definition of Potential Change in Control. For purposes of Section 6.1, a
“Potential Change in Control” means the happening of any one of the following:


 


(i)                                     The
approval by stockholders of an agreement by the Company, the consummation of
which would result in a Change in Control of the Company as defined in Section
6.2; and


 


(ii)                                  The
acquisition of beneficial ownership, directly or indirectly, by an entity,
person or group [other than the Company or a subsidiary or any Company employee
benefit plan (including any trustee of such plan acting as such trustee)] of
securities of the Company representing 5% or more of the combined voting power
of the Company’s outstanding securities and the adoption by the Board of a
resolution to the effect that a Potential Change in Control of the Company has
occurred for purposes of this Plan.


 


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SECTION 7.  AMENDMENTS AND TERMINATION


 


7.1           The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made which would impair the
rights of the Eligible Director under any Stock Option theretofore granted,
without the Eligible Director’s consent or which, without approval of the
Company’s stockholders, would:


 


7.1.1        except as expressly provided in this Plan, increase the
total number of shares reserved for the purpose of the Plan;


 


7.1.2        change the method for valuation of the Stock;


 


7.1.3        change the class of Eligible Directors eligible to
participate in the Plan; or


 


7.1.4        extend the maximum option period under Section 5.2.2 of the
Plan.


 


7.2           The Committee may amend the terms of the Stock Option
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder’s consent. The Committee may also substitute new Stock Options for
previously granted Stock Option (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices.


 


7.3           Subject to the above provisions, the Board shall have broad
authority to amend the Plan to take into account changes in applicable
securities and tax laws and accounting rules, as well as other developments.
Not withstanding the foregoing, no amendment to the Plan may be made more than
once every six months, other than to comport with changes of the Code, the
Employee Retirement Income Security Act, or the rules or regulations
promulgated thereunder.


 


SECTION 8.  GENERAL PROVISIONS


 


8.1           The Committee may require each Eligible Director purchasing
shares pursuant to a Stock Option under the Plan to represent to and agree with
the Company in writing that the Eligible Director is acquiring the shares
without a view to distribution thereof.


 


All
certificates or shares of Stock delivered under the Plan shall be subject to
such stock-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.


 


8.2           Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.


 


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8.3           The adoption of the Plan shall not confer upon any Eligible
Director serving on the Board of the Company any right to continued service as
a director with the Company nor shall it interfere in any way with the right of
the Company or the shareholders of the Company to remove or otherwise terminate
his or her service as a director of the Company.


 


8.4           No later than the date as of which an amount first becomes
includable in the gross income of an Eligible Director for Federal income tax
purposes with respect to any award under the Plan, an Eligible Director shall
pay to the Company, or make arrangement satisfactory to the Committee regarding
the payment of any Federal, state, or local taxes of any kind required by law
to be withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations may be settled with Stock, including Stock
that is part of the award that gives rise to the withholding requirement. The
satisfaction of withholding obligations with Stock at the election of a grantee
who is subject to Section 16 of the Exchange Act shall be made either (i)
during the 10 business day window period described in Rule 16b-3(e)(3) (or any
successor provision) thereunder, if the exercise is also made during such a
period, or (ii) at least six months prior to the date as of which the income
attributable to the exercise of the related award is recognized under the Code,
and shall be irrevocable to the extent required under such Rule 16b-3(e)(3) (or
any successor provision). The obligations of the Company under the Plan shall
be conditional on such payment or arrangements and the Company shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to an Eligible Director.


 


8.5           The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Tennessee.


 


8.6           It is intended that the Plan shall comply in all respects
with Rule 16b-3 (as amended from time to time and including any successor rule
or regulation) of the Securities and Exchange Commission, and in the event that
any provision of the Plan is determined by the Committee, upon advice of
counsel, not to comply with Rule 16b-3, the Committee shall be authorized to
nullify and void any such provision.


 


SECTION 9.  EFFECTIVE DATE OF PLAN


 


9.1           The Plan shall be effective as of June 1, 2000, upon the
approval of the Share Exchange between the Bank and the Company by the holders
of the Bank’s Common Stock at the 2000 annual meeting of the shareholders.


 


SECTION 10.  TERM OF PLAN


 


10.1         No Stock Option shall be granted pursuant to the Plan on or
after the tenth anniversary of the date of stockholder approval, but awards
granted prior to such tenth anniversary may extend beyond that date.


 


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SECTION 11.  CONTINGENT ACTION BY FEDERAL REGULATOR.


 


11.1         In the event the Company’s capital falls below the minimum
requirements as established by the Company’s state or primary federal
regulatory agency, the primary federal regulatory agency shall have the right
to:


 


11.1.1      direct the Company to require plan participants to exercise
their stock rights granted hereunder, or


 


11.1.2      direct the Company to require plan participants to forfeit
their stock rights granted hereunder.


 


The Southern
Heritage Bank 2000 Non-Employee Directors Stock Option Plan was adopted by
action taken by the Board of Directors of Southern Heritage Bank on March 16,
2000.


 


	
   

  	
  Southern Heritage Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ J. Lee Stewart

  	
   

  
	
   

  	
   

  	
  President

  	
   

  



 


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