**Exhibit 10.2**

 

**SOUTHERN HERITAGE BANK**

**2000STOCK OPTION PLAN FOR EMPLOYEES**

 

# 1.             *Purpose*. The purposes of the Southern HeritageBank 2000 Stock Option Plan (“Plan”) is to advance the growth and prosperity ofSouthern Heritage Bank (“Company”) and its subsidiaries by providing keyemployees with an additional incentive to contribute to the best interests ofthe Company. Without prejudice to other compensation programs approved fromtime to time by the Board of Directors (“Board”) and\or shareholders of theCompany, such additional incentive is to be given key employees by means ofstock options provided for under the Plan. In the discretion of the Committeehereinafter provided for and the Board, such options may be “Incentive StockOptions” within the meaning of Section 422 of the Internal Revenue Code of1986, as amended (“Code”), or “non-statutory” stock options.

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# 2.             *Administration of the Plan*.

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## 2.1           The Plan shall be administeredby the Board unless and until such time as the Board delegates administrationto a committee pursuant to subparagraph 2.3 (“Committee”). The Board shalladminister the Plan only if a majority of’ the entire Board, and a majority ofthe directors acting with respect to each matter pertaining to theadministration of the Plan, is comprised of Disinterested Persons. For thepurposes of this paragraph 2, “Disinterested Persons” shall mean a person whohas not at any time within one year prior to the date in question been eligiblefor participation in the Plan or any other plan of the Company or any of itssubsidiaries entitling the participants therein to acquire stock or stockoptions of the Company or any of its subsidiaries.

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## 2.2           The Board [or Committee if theBoard delegates authority under Section 2.3] shall have the power, subject to, andwithin, the limits of the express provisions of the Plan:

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#### (i)          To determine from time to time which of theeligible persons shall be granted options under the Plan, the term of eachgranted option, the time or times during the term of each option within all orportions of each option may be exercised, whether the options granted shall beincentive Stock Options or non-statutory options, and the number of shares forwhich each option shall be granted.

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#### (ii)         To construe and interpret the Plan andoptions granted under it, and to establish, amend and revoke rules andregulations for its administration. The Board, in the exercise of this power,shall generally determine all questions of policy and expediency that may ariseand may correct any defect, omission or inconsistency in the Plan or in anyoption agreement in a manner and to the extent it shall deem necessary orexpedient to make the Plan fully effective.

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#### (iii)        To prescribe the terms and provisions of eachoption granted (which need not be identical).

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#### (iv)        To amend the Plan as provided herein.

 

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#### (v)         Generally, to exercise such powers and toperform such acts as are deemed necessary or expedient to promote the beatinterests of the Company.

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## 2.3           The Board, by resolution, maydelegate administration of the Plan [including, without limitation, The Board’spowers under subparagraph 2.2] to a Committee comprised of three (3) members,all of whom shall be Disinterested Persons. Members of the Committee shall beappointed by the Board to serve far a term of four (4) years or until theirsuccessors are duly elected and qualified. If administration is delegated to aCommittee, the Committee shall have, in connection with the administration ofthe Plan, the powers therefore possessed by the Board, subject, however, tosuch constraints, not inconsistent with the provisions of the Plan, as may beadopted from time to time by the Board. The Board at any time may removemembers from or add members to the Committee or may abolish the Committee andre-vest in the Board the administration of the Plan. Vacancies on theCommittee, however caused, shall be filled by the Board.

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## 2.4           The interpretation andconstruction by the Board of any provisions of the Plan or of any optiongranted under it shall be final, and the interpretation of construction by anyCommittee appointed pursuant to subparagraph 2.3 or any such provisions oroption shall also, unless otherwise determined by the Board, be final. Nomember of such Committee or the Board shall be liable for any action or determinationmade in good faith with respect to the Plan or any option granted under it.

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# 3.             *Eligible Employees*. The Board or the Committeeshall determine from time to time those officers and key employees of theCompany and its subsidiaries to whom options shall be granted and, pursuant tothe provisions of the Plan, the amount thereof and the terms and conditions,including requirements as to continued employment by participant, upon whichsuch options are granted and are exercisable. Directors of the Company who arenot also employees of the Company or its subsidiaries shall not be eligible toparticipate in the Plan.

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# 4.             *The Stock*The stock subject to the options shallbe shares of the Company’s authorized and unissued Common Stock, $1.00 parvalue, or reacquired Common Stock held in the treasury. The total number ofshares of the Company’s Common Stock that may be transferred pursuant to theexercise of stock options under the Plan shall not exceed in the aggregate141,443 shares. Shares subject to options which terminate or expire prior toexercise shall be available for further option hereunder.

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Each option granted underthis Plan shall be subject to the requirement that if at any time the Board orthe Committee shall determine that the listing, registration or qualificationof the shares subject thereto upon any securities exchange or under any stateor Federal law, or the consent or approval of any governmental regulatory bodyare necessary or desirable in connection with the issue or transfer of sharessubject thereto, no such option may be exercised in whole or in part unlesssuch listing, registration, qualification, consent or approval shall have beeneffected or obtained free of any conditions not acceptable to the Board orCommittee. If required at any time by the Board or the Committee, an option maynot be exercised until the optionee has delivered an investment letter to theCompany containing the representations that all shares being purchased arebeing acquired for investment and nor with a view to, or for resale inConnection with, any distribution of such shares.

 

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# 5.             *Terms and Conditions of Options*. Allstock options granted pursuant to the Plan shall be in such form as the Boardor the Committee shall from time to time determine, shall clearly indicatewhether such option is an Incentive Stock Option or a non-statutory stockoption, and shall be subject to the following terms and conditions:

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## 5.1           *Option Price*. Theprice per share far Common Stock under each option granted under the Plan shallbe determined by the Board or the Committee but, in the case of Incentive StockOptions, shall in no event be less that 100% of the fair market value of theCommon Stock on the date of grant of such option. In the case of the grant ofan Incentive Stock Option to an individual who, at the time of the grant, ownsmore than 10% of the total combined voting power of all classes of stock of theCompany, such price per share shall not be less than 110% of the fair marketvalue of the Common Stock on the date of grant of the option.

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## 5.2           *Option Period*. Theperiod during which an option may be exercised shall be determined by the Boardor the Committee, provided, however, that in no event shall an Incentive StockOption be exercisable after the expiration of 10 years from the date suchoption was granted; and provided further that in the case of the grant of anIncentive Stock Option to an individual, who at the time of the grant, ownsmore than 10% of the total combined voting power of all classes of stock of theCompany, in no event shall such option be exercisable more that five years fromthe date of the grant. Options may be made exercisable in installments, andsuch installments thereof may be exercised in part from time to time alter theybecome exercisable. The maturity of any installment or installments may beaccelerated at the discretion of the Board or Committee.

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### 5.2.1        Inthe event that a participant shall cease to be employed by the Company or one ofits subsidiaries for any reason other than his death, all options held by himpursuant to the Plan and not previously exercised at the date of suchtermination shall terminate immediately and become void and of no effect;provided, however, that the Board or the Committee shall have the right toextend the exercise period not in excess of three months following the date oftermination of the participant’s employment, subject to the furthercondition, however, that no Incentive Stock Option shall be exercisable afterthe expiration of 10 years from the date is granted. Notwithstanding theforgoing, if the termination is due to disability, or to retirement with theconsent of the Company, such disabled or retiring participant shall have theright to exercise his options which have not previously been exercised at thedate of such termination of employment at any time within three months aftersuch termination, subject to the condition that no Incentive Stock Option shallbe exercisable after the expiration of 10 years from the date it is granted.Whether termination of employment is due to disability or is to be consideredretirement with the consent of the Company shall be determined by the Board orthe Committee, which determination shall be final and conclusive.

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### 5.2.2        If the participant should diewhile in the employ of the Company or a subsidiary of the Company or within aperiod of three months after the termination of his employment by retirementand shall not have full exercised options granted under the Plan, such optionsmay be exercised in whole or in part at any time within 12 months after theparticipant’s death by the executors or administrators of the participant’sestate or by any person or persons who shall have acquired the options directlyfrom the  participant  

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### by bequest or inheritance, subject tothe condition that no Incentive Stock Option shall be exercisable after theexpiration of 10 years from the date it is granted.

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### 5.2.3        The exercise of an optiongranted under the Plan shall not affect the optionee’s right or ability toexercise any other option under the Plan or any other stock option plan of theCompany or its subsidiaries.

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## 5.3           *Limitations on Grants*. If anyIncentive Stock Option be granted to any participant under the Plan, theaggregate fair market value (as of the datethe option is granted) of the Common Stock with respect to which IncentiveStock Options are exercisable for the first time by the optionee during anycalendar year under this Plan and any other incentive stock option plan of theCompany or any subsidiary shall not exceed $100,000. The foregoing limitationshall be modified from time to time to reflect any changes in Section 422(d) ofthe Code setting forth such limitations.

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## 5.4           *Limitations on Disposition*. Toobtain any tax benefits which may become associated with Incentive StockOptions, the optionee must make no disposition of shares acquired pursuant tothe exercise of an Incentive Stock Option within two years from the granting ofsuch Incentive Stock Option or within one year from the date of the exercise ofIncentive Stock Option.

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# 6.             *Payment for Stock*. Payment for shares subject tooptions granted under the Plan shall be made by the optionee in the form of cash.Payment in currency or by check, bank draft, cashier’s check or postal moneyorder shall be considered payment in cash.

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# 7.             *Non-Assignability*. No option shall betransferable otherwise than by Will or the laws of descent and distribution andan option is exercisable during the lifetime of the optionee only by him orher.

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# 8.             *Adjustment Upon Changes in Stock*.  The number of shares of Common Stockavailable for the granting of options under the Plan and the number of sharesand price per share of Common Stock subject to outstanding options and stockappreciation rights granted pursuant to the Plan may be adjusted by the Boardor by the Committee in an equitable manner to reflect changes in thecapitalization of the Company, including, but not limited to, such changes asresult from exchange, consolidation, reorganization, recapitalization, stockdividend, dividend in property other than cash, stock split, liquidatingdividend, combination of shares, exchange of shares and change in corporatestructure. If any adjustment under this paragraph would create a fractionalshare of Common Stock or a right to acquire a fractional share of Common Stock,such fractional share shall be disregarded and the number of shares availableunder the Plan and the number covered under any options granted pursuant to thePlan shall be the next lower number of shares, rounding all fractions downward.Any adjustment made by the Board or the Committee under this paragraph 8 shallbe conclusive and binding on all affected persons. No Incentive Stock Optiongranted pursuant to the Plan shall be adjusted in a manner that causes suchIncentive Stock Option to fail to continue to quality as an Incentive StockOption within the meaning of Section 422 of the Code,

 

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# 9.             *Amendment.* The Board from time to time may amendthis Plan, but except as provided above with respect to dilutions or otheradjustments or exchanges or consolidations, or with the approval of the Company’sshareholders, may not (a) increase the aggregate number of shares available foroption hereunder, (b) change the price at which options may be granted, (c)extend the maximum period during which an option may be exercised, or (d)change the eligibility requirements for options hereunder. Rights andobligations under any option granted before amendment of the Plan shall not bealtered or impaired by amendment of the Plan, except with the consent of theperson to whom the option was granted.

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# 10.           *Fair Market Value of Stock.* Wheneverpursuant to the terms of the Plan the fair market value of the Company’s CommonStock is required to be determined as of a particular date, such fair marketvalue shall equal the mean between the closing bid and asked price of theCommon Stock on the National Association of Securities Dealers AutomatedQuotation System (“NASDAQ”), or if no bid quotation is available on NASDAQ, thefair market value of such Common Stock as determined by the Board or Committee,in each case, on the business day immediately preceding the date on which thedetermination is made. Fair market value shall be determined in all caseswithout regard to any restriction other than a restriction which, by its terms,will never lapse.

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# 11.           *No Rights as Shareholder*. A participant in the Planshall have no rights as a shareholder with respect to any shares covered by hisoption until the date of the issuance of a stock certificate to him. Noadjustment shall be made for dividends (ordinary or extraordinary, whether incash, securities or other property) or distributions or other rights for whichthe record date is prior to the date such stock certificate is issued.

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# 12.           *Indemnification of Committee*. Inaddition to such other rights of indemnification as they many have as directorsor as members of the Committee, the members of the Committee shall beindemnified by the Company against the reasonable expenses, including attorney’sfees actually and necessarily incurred in connection with the defense of anyaction, suit or proceeding, or in connection with any appeal therein, to whichthey or any of them may be a party by reason of any action taken or failure toact under or in connection with the plan or any option granted thereunder, andagainst all amounts paid by them in settlement thereof (provided suchsettlement is approved by independent legal counsel selected by the Company) orpaid by them in satisfaction of a judgment in any such action, suit orproceeding, except in relation to matters as to which it shall be adjudged insuch action, suit or proceeding that such Committee member is liable fornegligence or misconduct in the performance of his duties; provided that within60 days after institution of any such action, suit or proceeding, the Committeemember shall in writing offer the Company the opportunity, at its own expense,to handle and defend the same.

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# 13.           *Termination*. This Plan shall terminate on March31, 2010, unless sooner terminated by action of the Board. No option may begranted hereunder after termination of the Plan, but such termination shall notaffect the validity of any option then outstanding.

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# 14.           *Shareholder Approval*. The Plan shall be subject toapproval by the holders of a majority of the outstanding shares of Common Stockof the Company present and voting at a meeting of shareholders, which approvalmust occur within the period beginning  12  months  before  and  ending 12  months  after the  date  the  Plan  is  adopted  by  the  Board,  provided,  however, that  

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# options may be grantedthereunder when all the conditions (other than shareholder approval) precedentto the granting of options under the Plan have been completed by the Company.

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# 15.           *Change in Control Provisions.*

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## 15.1         *Impact of Event*.  In the event of:

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1.             a “Change in Control” as defined in Section15.2 or

 

2.             a “Potential Change in Control” as defined inSection 15.3, but only if and to the extent so determined by the Committee orthe Board at or after grant (subject to any right of approval expresslyreserved by the Committee or the Board at the time of such determination), thenany Stock Option awarded under the Plan not previously exercisable and vestedshall become fully exercisable and vested.

 

## 15.2         *Definition of “Change in Control”*. Forpurposes of Section 15.1, a “Change in Control” means the happening of any ofthe following:

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

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#### (ii)           as a result of, or in connection with, anycash tender or exchange offer, merger or other business combination, sale ofassets or contested election, or any combination of the foregoing transactionless than a majority of the combined voting power of the then outstandingsecurities of the Company or any successor corporation or entity entitled tovote generally in the election of the directors of the Company or such othercorporation or entity after such transactions are held in the aggregate by theholders of the Company’s securities entitled to vote generally in the electionof’ directors of the Company immediately prior to such transaction; or

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

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## 15.3         *Definition of Potential Change in Control.* Forpurposes of Section 15.1, a “Potential Change in Control” means the *happening* of any one of the following:

 

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#### (i)            The approval by stockholders of an agreementby the Company, the consummation of which would result in a Change in Controlof the Company as defined in Section 15.2; and

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

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## 15.4         *Contingent Action by FederalRegulator*. In the event the Company’s capital falls below the minimumrequirements asestablished by the Company’s state or primary federal regulatory agency, theprimary federal regulatory agency shall have the right to:

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#### (i)            direct the Company to require planparticipants to exercise their stock rights granted hereunder, or

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#### (ii)           direct the Company to require planparticipants to forfeit their stock rights granted hereunder.

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The Southern Heritage Bank2000 Stock Option Plan for Employees was adopted by action taken by the Boardof Directors of Southern Heritage Bank on March 16, 2000.

 
|   | Southern  Heritage Bank |
|--------|-------------------------|
|   |                    |
|   |                    |
|   | By:                     | /s/  J. Lee Stewart |   |
|   |                    | President |   |

 

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