Ex-10.52



 





EXHIBIT 10.52








2001
STOCK OPTION PLAN




 









 








Table of Contents




	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Article 1 Purposes of the Plan	 	 	106	 
	 
	 	 	 	 	 	 
	Article 2 Certain Definitions and Terms	 	 	106	 
	Section 2.1

	 	Award
	 	 	106	 
	Section 2.2

	 	Board
	 	 	106	 
	Section 2.3

	 	Change of Control
	 	 	106	 
	Section 2.4

	 	Code
	 	 	107	 
	Section 2.5

	 	Company
	 	 	107	 
	Section 2.6

	 	Company Stock
	 	 	107	 
	Section 2.7

	 	Date of Grant
	 	 	107	 
	Section 2.8

	 	Disability
	 	 	107	 
	Section 2.9

	 	Exchange Act
	 	 	108	 
	Section 2.10

	 	Fair Market Value
	 	 	108	 
	Section 2.11

	 	Incentive Stock Option
	 	 	108	 
	Section 2.12

	 	Nonstatutory Stock Option
	 	 	108	 
	Section 2.13

	 	Option
	 	 	108	 
	Section 2.14

	 	Parent
	 	 	108	 
	Section 2.15

	 	Participant
	 	 	108	 
	Section 2.16

	 	Restricted Stock
	 	 	108	 
	Section 2.17

	 	Stock Option Committee
	 	 	108	 
	Section 2.18

	 	Subsidiary
	 	 	108	 
	Section 2.19

	 	Ten Percent Holder
	 	 	108	 
	 
	 	 	 	 	 	 
	Article 3 General Terms of the Plan	 	 	109	 
	Section 3.1

	 	Incentive and Nonstatutory Stock Options
	 	 	109	 
	Section 3.2

	 	Stock
	 	 	109	 
	Section 3.3

	 	Eligibility
	 	 	109	 
	 
	 	 	 	 	 	 
	Article 4 Grant and Exercise of Stock Options	 	 	109	 
	Section 4.1

	 	Stock Option Grants
	 	 	109	 
	Section 4.2

	 	Exercise Price
	 	 	110	 
	Section 4.3

	 	Full and Partial Exercise
	 	 	110	 
	Section 4.4

	 	Vesting and Exercise on Change in Control
	 	 	111	 
	 
	 	 	 	 	 	 
	Article 5 Method of Exercise	 	 	111	 
	Section 5.1

	 	Method of Exercise of Options
	 	 	111	 
	Section 5.2

	 	Restrictions, Taxes, and Other Limitations
	 	 	112	 
	 
	 	 	 	 	 	 
	Article 6 Administration of the Plan	 	 	112	 
	Section 6.1

	 	Administration of the Plan
	 	 	112	 
	Section 6.2

	 	Committee Authority and Discretion
	 	 	112	 
	Section 6.3

	 	Administrative Discretion, Etc
	 	 	113	 
	Section 6.4

	 	Committee Rules; Binding Determination
	 	 	113	 
	Section 6.5

	 	Actions by the Committee
	 	 	113	 
	 
	 	 	 	 	 	 
	Article 7 Transferability	 	 	113	 
	 
	 	 	 	 	 	 
	Article 8 Effective Date of the Plan, Termination, and Related Matters	 	 	114	 
	Section 8.1

	 	Effective Date
	 	 	114	 






 









 






	 	 	 	 	 	 	 
	Section 8.2

	 	Termination, Modification, Change
	 	 	114	 
	Section 8.3

	 	Change in Capital Structure
	 	 	114	 
	 
	 	 	 	 	 	 
	Article 9 Effective Date of the Plan	 	 	115	 
	 
	 	 	 	 	 	 
	Article 10 General Terms and Provisions of the Plan	 	 	115	 
	Section 10.1

	 	Notice
	 	 	115	 
	Section 10.2

	 	Interpretation
	 	 	115	 
	Section 10.3

	 	Shareholder Rights
	 	 	115	 
	Section 10.4

	 	No Contract of Employment
	 	 	115	 
	Section 10.5

	 	Withholding
	 	 	115	 
	Section 10.6

	 	Construction
	 	 	116	 
	 
	 	 	 	 	 	 
	Article 11 Shareholder Approval	 	 	116	 






 









 






BANK OF THE SOUTH

2001 STOCK OPTION PLAN




     The Board of Directors of Bank of the South hereby adopts the Bank of the South 2001 Stock
Option Plan as follows:



Article 1




Purposes of the Plan




     The purpose of this Bank of the South 2001 Stock Option Plan (the “Plan”) is to further the
long term stability and financial success of Bank of the South (the “Company”) by attracting and
retaining key employees and directors of the Company through the use of stock incentives. It is
believed that ownership of Company Stock will stimulate the efforts of those employees and
directors of the Company upon whose judgment and interest the Company is and will be largely
dependent for the successful conduct of its business. It is also believed that awards granted to
such persons under this Plan will strengthen their desire to remain with the Company and will
further the identification of those individuals’ interests with those of the Company’s
shareholders.



Article 2




Certain Definitions and Terms




     As used in the Plan, the following terms have the meanings indicated:



     Section 2.1 Award. “Award” means the grant of an Option under the Plan.



     Section 2.2 Board. “Board” means the board of directors of the Company.



     Section 2.3 Change of Control. “Change of Control” means:




	 	2.3.1	 	The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either the then
outstanding shares of Company Stock or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors, but excluding for this purpose, any such acquisition by
the Company or any of its subsidiaries, or any employee benefit plan (or
related trust) of the Company or its subsidiaries, or any corporation with respect to which, following such acquisition, more
than 50% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or indirectly, by
the individuals and entities who were the beneficial owners, respectively,
of the Common Stock and voting securities of the Company immediately prior
to such acquisition in 




 









 






	 	 	 	substantially the same proportion as their ownership,
immediately prior to such acquisition, of the then outstanding shares of
Common Stock of the Company or the combined voting power of all of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors, as the case may be; or






	 	2.3.2	 	Individuals who, as of the date hereof, constitute the Board
(as of the date hereof the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board, provided that any individual
becoming a director subsequent to the date hereof whose election or nomination
for election by the Company’s shareholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act); or
	 
	 	2.3.3	 	Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which
the individuals and entities who were the respective beneficial owners of the
Common Stock and voting securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such reorganization, merger or consolidation, or a
complete liquidation or dissolution of the Company or of its sale or other
disposition of all or substantially all of the assets of the Company.





     Section 2.4 Code. “Code” means the Internal Revenue Code of 1986, as amended.



     Section 2.5 Company. “Company” means Bank of the South, a Tennessee banking corporation, and any successor in interest
thereto.



     Section 2.6 Company Stock. “Company Stock” means common stock, par value $1.00 per share (“Common Stock”), of the Company.
If the par value of the Company Stock is changed, or in the event of a change in the capital structure of the
Company (as provided in Section 8.3), the shares resulting from such a change shall be deemed to be Company Stock
within the meaning of the Plan.



     Section 2.7 Date of Grant. “Date of Grant” means the date on which an Award is granted by the Board.



     Section 2.8 Disability. “Disability” or “Disabled” means, as to an Incentive Stock Option, a Disability within the meaning
of Code section 22(e)(3). As to all other Awards, the Committee shall determine whether a Disability exists and
such determination shall be conclusive.



 









 





     Section 2.9 Exchange Act. “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     Section 2.10 Fair Market Value. “Fair Market Value” means, if the Company Stock is not publicly traded, the value of a share
of Common Stock determined in good faith by the Board. If Company Stock is publicly traded, the term means, on any
given date, the average of the high and low price on such date, or if shares were not traded on that date, the
last date on which shares were traded, as reported in the Wall Street Journal for the stock exchange on which the
shares are traded.



     Section 2.11 Incentive Stock Option. “Incentive Stock Option” means an Option intended to meet the requirements of, and
qualify for favorable Federal income tax treatment under, Code section 422.



     Section 2.12 Nonstatutory Stock Option. “Nonstatutory Stock Option” means an Option, which does not meet the requirements of
Code section 422, or even if meeting the requirements of Code section 422, is not intended to be an Incentive
Stock Option and is so designated.



     Section 2.13 Option. “Option” means a right to purchase Company Stock granted under the Plan, at a price determined in
accordance with the Plan.



     Section 2.14 Parent. “Parent” means, with respect to any corporation, a present or future “parent corporation” of that
corporation within the meaning of Code section 424(e).



     Section 2.15 Participant. “Participant” means any eligible employee or director of the Company or any Parent or Subsidiary
who receives an Award under the Plan.



     Section 2.16 Restricted Stock. “Restricted Stock” means shares received pursuant to any Award that are made subject to
specific restrictions on voting, transferability or other matters and set forth in a specific agreement
(“Restricted Stock Agreement”).



     Section 2.17 Stock Option Committee. “Stock Option Committee” or “Committee” means the committee or committees appointed by
the Board as described under Article 6 or, if no committee has been appointed, the Board of Directors.



     Section 2.18 Subsidiary. “Subsidiary” means, with respect to any corporation, a present or future “subsidiary corporation” of
that corporation within the meaning of Code section 424(f).



     Section 2.19 Ten Percent Holder. “10% Shareholder” means a person who owns, directly or indirectly, stock possessing more
than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary of
the Company. Indirect ownership of stock shall be determined in accordance with Code section 424(d).



Article 3




General Terms of the Plan




 









 





     Section 3.1 Incentive and Nonstatutory Stock Options. Options granted under the Plan
may be Incentive Stock Options or Nonstatutory Stock Options.



     Section 3.2 Stock. Subject to Section 8.3 of the Plan, there shall be reserved for
issuance under the Plan an aggregate of Three Hundred Sixty Thousand (360,000) shares of Company
Stock, which shall be authorized, but unissued shares , including shares of the Company Stock that
have been reacquired by the Company. Shares allocable to Options or portions thereof granted under
the Plan that expire or otherwise terminate unexercised shall again be available for an Award under
the Plan.



     Section 3.3 Eligibility.




	 	3.3.1	 	Any employee of the Company (or Parent or Subsidiary of the
Company) who, in the judgment of the Committee has contributed or can be
expected to contribute to the profits or growth of the Company (or Parent or
Subsidiary) shall be eligible to receive Incentive Stock Options under the
Plan. Directors of the Company who are employees and are not members of the
Committee are eligible to participate in the Plan. The Committee shall have the
power and complete discretion, as provided in Article 6, to select eligible
employees to receive Awards and to determine for each employee the terms and
conditions, the nature of the award and the number of shares to be allocated to
each employee as part of each Award.
	 
	 	3.3.2	 	Any employee or director of the Company (or Parent or
Subsidiary of the Company), whether or not an employee of the Company or any
Parent or Subsidiary, who, in the judgment of the Committee has contributed or
can be expected to contribute to the profits or growth of the Company (or
Parent or Subsidiary) shall be eligible to receive Nonstatutory Stock Options
under the Plan. The Committee shall have the power and complete discretion, as
provided in Article 6, to select participants to receive Awards and to
determine for each Participant the terms and conditions, the nature of the
award and the number of shares to be allocated to each Participant as part of
each Award.
	 
	 	3.3.3	 	The grant of an Award shall not obligate the Company or any
Parent or Subsidiary of the Company to pay an employee any particular amount of
remuneration, to continue the employment of the employee after the grant or to
make further grants to the employee at any time thereafter.




 









 











Article 4




Grant and Exercise of Stock Options




     Section 4.1 Stock Option Grants. Whenever the Committee deems it appropriate to
grant Options, notice shall be given to the eligible Participant stating the number of shares for
which Options are granted, the Option price per share, whether the Options are Incentive Stock
Options or Nonstatutory Stock Options, and the conditions to which the grant and exercise of the
Options are subject. This, notice, when duly accepted in writing by the Participant, shall become a
stock option agreement between the Company and the Participant. Any grant hereunder shall be
subject to the forfeiture provision set out in Section 4.5.



     Section 4.2 Exercise Price. The exercise price of shares of Company Stock covered by
an Incentive Stock Option shall be not less than 100% of the Fair Market Value of such shares on
the Date of Grant. If the Participant is a 10% Shareholder and the Option is an Incentive Stock
Option, the exercise price shall be not less than 110% of the Fair Market Value of such shares on
the Date of Grant. The exercise price of Company Stock covered by a Nonstatutory Option shall be
set by the Board of Directors on the Date of Grant.



     Section 4.3 Full and Partial Exercise. Options may be exercised in whole or in part
at such times as may be specified by the Committee in the Participant’s stock option agreement;
provided that the exercise provisions for Incentive Stock Options shall in all events not be more
liberal than the following provisions:




	 	4.3.1	 	No Incentive Stock Option may be exercised after the first to
occur of (x) ten years (or, in the case of an Incentive Stock Option granted to
a 10% Shareholder, five years) from the Date of Grant, (y) three months from
the employee’s retirement or termination of employment with the Company and its
Parent and Subsidiary corporations for reasons other than Disability or death,
or (z) one year from the employee’s termination of employment on account of
Disability or death.
	 
	 	4.3.2	 	Except as otherwise provided in this paragraph, no Incentive
Stock Option may be exercised unless the employee is employed by the Company or
a Parent or Subsidiary of the Company at the time of the exercise (or was so
employed not more than three months before the time of the exercise) and has
been employed by the Company or a Parent or Subsidiary of the Company at all
times since the Date of Grant. If an employee’s employment is terminated other
than by reason of his Disability or death at a time when the employee holds an
Incentive Stock Option that is exercisable (in whole or in part), the employee
may exercise any or all of the exercisable portion of the Incentive Stock
Option (to the extent exercisable on the date of termination) within three
months after the employee’s termination of employment. If an employee’s
employment is terminated by reason of his Disability at a time when the
employee holds an Incentive Stock Option that is exercisable (in whole or in
part), the employee may exercise any or all of the exercisable portion of the
Incentive Stock Option (to the extent exercisable on the date of Disability)
within one year after the employee’s termination of employment. If an
employee’s employment is terminated by reason of his death at a time when the
employee holds an Incentive Stock Option that is exercisable (in whole or in part), the Incentive Stock Option may be
exercised (to the extent exercisable on the date of death) within one year
after the




 









 






	 	 	 	employee’s death by the person to whom the employee’s rights under
the Incentive Stock Option shall have passed by will or by the laws of
descent and distribution.






	 	4.3.3	 	An Incentive Stock Option by its terms, shall be exercisable
in any calendar year only to the extent that the aggregate Fair Market Value
(determined at the Date of Grant) of the Company Stock with respect to which
incentive stock options are exercisable for the first time during the calendar
year does not exceed $100,000 (the “Limitation Amount”). Incentive Stock
Options granted under the Plan and similar incentive options granted under all
other plans of the Company and any Parent or Subsidiary of the Company shall be
aggregated for purposes of determining whether the Limitation Amount has been
exceeded. The Board may impose such conditions as it deems appropriate on an
Incentive Stock Option to ensure that the foregoing requirement is met. If
Incentive Stock Options that first become exercisable in a calendar year exceed
the Limitation Amount, the excess Options will be treated as Nonstatutory Stock
Options to the extent permitted by law.
	 
	 	4.3.4	 	No Incentive or Nonstatutory Stock Option shall vest more
rapidly than pro rata over three years (that is, one-third for each full year),
nor shall any such option vest over more than ten years.





     Section 4.4 Vesting and Exercise on Change in Control. The Committee may, in its
discretion, grant Options which by their terms become fully exercisable upon a Change of Control,
notwithstanding other conditions on exercisability in the stock option agreement. Unless otherwise
specified by the terms of a specific grant, all Options granted under the Plan shall vest
immediately upon the consummation of a Change in Control and shall be deemed to have vested upon
the first execution of any agreement pursuant to which a Change in Control shall have occurred,
notwithstanding the subsequent amendment, restatement, modification or other change in such
agreement; provided that, exercise of Options deemed vested solely by virtue of any Change in
Control shall not be permitted unless and until such Change in Control shall have been consummated
and, further provided, in the event that a Change in Control shall not in fact occur as a result of
any such agreement, then the Options that would otherwise have vested solely by reason of such
agreement shall not, for that reason, be deemed to have vested. Notwithstanding the foregoing,
this Section 4.4 shall not be effective for a period of three years from the date that the Company
receives its Certificate of Authority to open for business. After such three year period, the
preceding sentence shall be void and of no further effect. If the management of the Bank adopts a
plan to create a one-bank holding company for the Bank with a view to retaining the shareholders of
the Bank as the shareholders of the holding company (except only for dissenters’ and fractional
shares), such transaction shall not, in and of itself, constitute a change in control hereunder so
long as the holding company agrees to exchange its options for options of the Bank on an
option-for-option basis, subject only to applicable tax laws, rules and regulations.



     Section 4.5 Forfeiture. Any Option granted or Award made pursuant to this Plan shall
be exercised or, if not exercised, forfeited at the direction of the Company or the Company’s
primary federal regulator if so required by said primary federal regulator if the Company’s capital
falls below the minimum requirements as determined by the Company’s state or primary federal
regulator.



 









 





Article 5




Method of Exercise




     Section 5.1 Method of Exercise of Options. Options may be exercised by the
Participant giving written notice of the exercise to the Company, stating the number of shares the
Participant has elected to purchase under the Option. In the case of the purchase of shares under
an Option, such notice shall be effective only if accompanied by the exercise price in full in
cash; provided that if the terms of an Option so permit, the Participant (i) may deliver, or cause
to be withheld from the Option Shares, shares of Company Stock (valued at their Fair Market Value
on the date of exercise) in satisfaction of all or any part of the exercise price, or (ii) if
permitted by law and by the Committee, on terms and conditions specified by the Committee from time
to time as to any Participant(s), individually or as a group, deliver an interest bearing
promissory note, payable to the Company, in payment of all or part of the exercise price, with such
payment terms (including down payment, if any) and maturity date, together with such collateral as
may be required by the Committee at the time of exercise. The interest rate under any such
promissory note shall be equal to the minimum interest rate required at the time to avoid imputed
interest to the Participant under the Code.



     Section 5.2 Restrictions, Taxes, and Other Limitations. The Company may place on any
certificate representing Company Stock issued upon the exercise of an Option any legend deemed
desirable by the Company’s counsel to comply with Federal or state securities laws, and the Company
may require of the Participant a customary written indication of his investment intent. Until the
Participant has made any required payment, including any applicable withholding taxes, and has had
issued to him a certificate for the shares of Company Stock acquired, he shall possess no
shareholder rights with respect to the shares.



     As an alternative to making a cash payment to the Company to satisfy a Participant’s tax
withholding obligations, if the Option agreement so provides, the Participant may, subject to the
other provisions set forth in this Plan, elect to (i) deliver shares of already owned Company Stock
or (ii) have the Company retain that number of shares of Company Stock that would satisfy
applicable Federal, state and local tax liabilities required to be withheld by the Company from the
Participant arising in the year of its exercise upon the exercise of a Nonstatutory Stock Option.
The Committee shall have sole discretion to approve or disapprove any such election. However,
notwithstanding this provision permitting a “cashless exercise,” such cashless exercise shall not
be permitted so long as (1) such type of exercise is not permitted by the Company’s primary federal
regulator or (2) the securities covered by this Plan consist of the stock of the Bank of the South
(as opposed to, for example, a parent holding company of the Company).



Article 6




Administration of the Plan




     Section 6.1 Administration of the Plan. The Plan shall be administered by the
Committee consisting of not less than two directors of the Company, who shall be appointed by the
Board. In the event the Company becomes a Public Company, then the Committee shall be so
constituted as to permit the plan to comply with Rule 16b-3 (as promulgated under the Exchange
Act). The Committee shall have general authority to impose any
limitation or condition upon an Award the Committee deems appropriate to achieve the objectives of
the Award and the Plan and, in addition, and without limitation and in addition to powers set forth
elsewhere in the Plan, shall have the following specific authority:



 









 





     Section 6.2 Committee Authority and Discretion. The Committee shall have the power
and complete discretion to determine (i) which eligible participants shall receive an Award, (ii)
the number of shares of Company Stock to be covered by each Award, (iii) whether Options shall be
Incentive Stock Options or Nonstatutory Stock Options, (iv) the fair market value of Company Stock,
(v) the time or times when an Award shall be granted, (vi) whether an Award shall become vested
over a period of time and when it shall be fully vested, (vii) when options may be exercised,
(viii) whether a Disability exists, (ix) the manner in which payment will be made upon the exercise
of Options, (x) conditions relating to the length of time before disposition of Company Stock
received upon the exercise of Options is permitted, (xi) whether to approve a Participant’s
election (x) to deliver shares of already owned Company Stock to satisfy tax liabilities arising
upon the exercise of a Nonstatutory Stock Option or (y) to have the Company withhold from the
shares to be issued upon the exercise of a Nonstatutory Stock Option that number of shares
necessary to satisfy tax liabilities arising from such exercise, (xii) notice provisions relating
to the sale of Company Stock acquired under the Plan, and (xiii) any additional requirements
relating to Awards that the Committee deems appropriate. Notwithstanding the foregoing, no “tandem
stock options” (where two stock options are issued together and the exercise of one option affects
the right to exercise the other option) may be issued in connection with Incentive Stock Options.
The Committee shall also have the power to amend the terms of previously granted Awards so long as
the terms as amended are consistent with the terms of the Plan and provided that the consent of the
Participant is obtained with respect to any amendment that would be detrimental to him.



     Section 6.3 Administrative Discretion, Etc. Administrative discretion regarding the
selection of any director of the Corporation to whom options may be granted pursuant to this Plan,
or the determination of the number of shares of Common Stock which may be allocated under such
options, will be exercised by a Committee of two or more directors having full authority to act in
the matter, all of whom must be, if the Corporation is a Public Company (that is, a company any of
the shares of which are registered under the Exchange Act), Disinterested (as that term is defined
in Rule 16b-3). Administrative discretion regarding the selection of any officer of the
Corporation (who is not a director) to whom options may be granted pursuant to this Plan once the
Corporation becomes a Public Company, or the determination of the number of shares of Common Stock
which may be allocated under such options, will be exercised by (a) the Board of Directors, if each
of its members is Disinterested, or (b) a committee of two or more directors, all of whom are
Disinterested.



     Section 6.4 Committee Rules; Binding Determination. The Committee may adopt rules
and regulations for carrying out the Plan. The interpretation and construction of any provision of
the Plan by the Committee shall be final and conclusive. The Committee may consult with counsel,
who may be counsel to the Company, and shall not incur any liability for any action taken in good
faith in reliance upon the advice of counsel.



     Section 6.5 Actions by the Committee. A majority of the members of the Committee
shall constitute a quorum, and all actions of the Committee shall be taken by a majority of the
members present. Any action may be taken by a written instrument signed by all of the members, and
any action so taken shall be fully effective as if it had been taken at a meeting.



 









 





Article 7




Transferability




     Incentive Stock Options by their terms, shall not be transferable or assignable by the
Participant except by will or by the laws of descent and distribution and shall be exercisable,
during the Participant’s lifetime, only by the Participant or by his guardian or legal
representative. Nonstatutory Stock Options by their terms, shall not be transferable or assignable
by the Participant except by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code, Title I of the Employee Retirement
Income Security Act, or the rules thereunder, and shall be exercisable, during the Participant’s
lifetime, only by the Participant or by his guardian or legal representative.



 









 





Article 8




Effective Date of the Plan, Termination, and Related Matters




     Section 8.1 Effective Date. This Plan shall be effective as provided in Article 9
hereof.



     Section 8.2 Termination, Modification, Change. If not sooner terminated by the
Board, this Plan shall terminate at the close of business on March 12, 2011. No Awards shall be
made under the Plan after its termination. The Board may terminate the Plan or may amend the Plan
in such respects as it shall deem advisable; provided, that in the event the Company registers its
stock under Section 12 of the Exchange Act and thereby becomes a “Public Company,” no change shall
be made that would result in the Plan no longer being in compliance with Rule 16b-3, as such rule
may be amended from time to time, or with any successor of the rule or other comparable regulatory
requirement. The company will use its best efforts to maintain the Plan and to assure that options
are granted and exercised under the Plan in accordance with Rule 16b-3, including, without
limitation, the seeking of any appropriate modifications or amendments to the Plan and all
requisite approvals and consents of the same. No changes to the Plan shall be made which increases
the total number of shares of Company Stock reserved for issuance pursuant to Awards granted under
the Plan (except pursuant to Section 8.3), expands the class of persons eligible to receive Awards,
or materially increases the benefits accruing to Participants under the Plan, unless such change is
authorized by the shareholders of the Company. A termination or amendment of the Plan shall not,
without the consent of the Participant, detrimentally affect a Participant’s rights under an Award
previously granted to him.



     Section 8.3 Change in Capital Structure.




	 	8.3.1.	 	In the event of a stock dividend, stock split or combination of shares,
recapitalization or merger in which the Company is the surviving corporation or
other change in the Company’s capital stock (including, but not limited to, the
creation or issuance to shareholders generally of rights, options or warrants
for the purchase of Common Stock or preferred stock of the Company), the number
and kind of shares of stock or securities of the Company to be subject to the
Plan and to Options then outstanding or to be granted thereunder, the maximum
number of shares or securities which may be delivered under the Plan, the
exercise price and other relevant provisions shall be appropriately adjusted by
the Committee, whose determination shall be binding on all persons. If the
adjustment would produce fractional shares with respect to any unexercised
Option, the committee may adjust appropriately the number of shares covered by
the Option so as to eliminate the fractional shares.
	 
	 	8.3.2	 	If the Company is a party to a consolidation or a merger in
which the Company is not the surviving corporation, a transaction that results
in the acquisition of substantially all of the Company’s outstanding stock by a
single person or entity, or a sale or transfer of substantially all of the
Company’s assets, the Committee may take such actions with respect to
outstanding Awards as the Committee deems appropriate.
	 
	 	8.3.3	 	Notwithstanding anything in the Plan to the contrary, the
Committee may take the foregoing actions without the consent of any
Participant, and the Committee’s determination shall be conclusive and binding
on all persons for all purposes.





 









 










Article 9




Effective Date of the Plan




     This Plan shall be effective on the date that the Company receives its Certificate of
Authority from the Tennessee Department of Financial Institutions and shall be submitted to the
shareholders of the Company for approval. Until (i) the Plan has been approved by the Company’s
shareholders, and (ii) the requirements of any applicable securities laws have been met, no Option
shall be exercisable. Until the foregoing conditions are met, the Company may revoke any Option
granted and/or terminate the Plan.



Article 10




General Terms and Provisions of the Plan




     Section 10.1 Notice. All notices and other communications required or permitted to
be given under this Plan shall be in writing and shall be deemed to have been duly given if
delivered personally or mailed first class, postage prepaid, as follows (a) if to the Company, at
its principal business address to the attention of the Treasurer; (b) if to any Participant, at the
last address of the Participant reflected in the Company’s records at the time the notice or other
communication is sent.



     Section 10.2 Interpretation. The terms of this Plan are subject to all present and
future regulations and rulings of the Secretary of the Treasury or his delegate relating to the
qualification of Incentive Stock Options under the Code. If any provision of the Plan conflicts
with any such regulation or ruling, then that provision of the Plan shall be, to the extent
practicable, deemed amended to the extent required to comply with such regulations and rulings or,
if it is impracticable or unlawful so to construe the provision, deemed to be void and of no
effect.



     Section 10.3 Shareholder Rights. No Participant shall have any rights as a
shareholder of the Company as a result of the grant of an Option under this Plan or his or her
exercise or surrender of such Option pending the actual delivery of the Stock subject to such
Option to such Participant. Subject to the other terms of the Plan, a Participant’s rights as a
shareholder in the shares of Stock underlying a Restricted Stock grant which is effective shall be
set forth in the related Restricted Stock Agreement.



     Section 10.4 No Contract of Employment. The grant of an Option or Restricted Stock
to a Participant under this Plan shall not constitute a contract of employment and shall not confer
on a Participant any rights upon his or her termination of employment in addition to those rights,
if any, expressly set forth in the Option Agreement which evidences his or her Option or the
Restricted Stock Agreement related to his or her Restricted Stock.



     Section 10.5 Withholding. The exercise or surrender of any Option granted under this
Plan and the acceptance of a Restricted Stock grant shall
constitute a Participant’s full and complete consent to whatever action the Committee deems
necessary to satisfy the federal and state tax withholding requirements, if any, which the
Committee in its discretion deems applicable to such exercise or surrender or such Restricted
Stock. The Committee also shall have the right to provide in an Option Agreement or Restricted
Stock Agreement that a Participant may elect to satisfy federal and state tax withholding
requirements through a reduction in the number of shares of Stock actually transferred to him or to
her under this Plan, and any such election and any such reduction shall be effected so as to
satisfy the conditions to the exemption under Rule 16b-3.



     Section 10.6 Construction. This Plan shall be construed under the laws of the State
of Tennessee.



 









 





Article 11




Shareholder Approval




     The Plan is subject to approval by the shareholders of the Company at the Organizational
Meeting of Shareholders to be held on April 19, 2001. If the Plan, as herein amended, is not so
approved by the shareholders, the Plan shall be deemed suspended until such time as the
Shareholders approve the Plan, to be effective on and as of the date of such approval.



     IN WITNESS WHEREOF, Bank of the South has caused its duly authorized officer to execute this
Plan this 12th day of April, 2001, to evidence its adoption of this Plan.



	 	 	 	 	 
	 	Bank of the South

 	 
	 	By:  	/s/ David Major
 	 
	 	 	David Major, Chairperson 	 
	 	 	 	 
	 


Date Plan Adopted by Board of Directors: March 1, 2001.



Date Plan Approved by Stockholders: April 19, 2001.