**EXHIBIT 10.1** SOUTHEAST BANCSHARES, INC.STOCK OPTION PLAN 
 

 
          Table ofContents   Page 1. Establishment and Purpose of the Plan  2        2. Definitions  2        3. Eligibility  3        4. Plan Administration  3        5. Shares Subject to the Plan  3        6. Types of Grants  3        7. Options  4        8. Adjustments Upon Changes in Capitalization  4        9. Termination and Amendment  5        10. Non-Assignability  5        11. Exercise by Estate  5        12. General Provisions  5        13. Change of Control of the Bank  6        14. Undercapitalization  7 Exhibit 10.1-1
 

 
**SouthEast Bancshares, Inc. Stock Option Plan**1. Establishment and Purpose of the Plan. The purpose of this Plan is to provide a flexiblemeans of compensation and motivation for outstanding performance by employees and directors of theCompany and its Subsidiaries (including the Bank) and certain other persons to further the growthand profitability of the Company.2. Definitions.     Bank. SouthEast Bank & Trust, a bank chartered under the laws of Tennessee, and any successoror transferee of substantially all of its business or assets.     Board or Board of Directors. The Board of Directors of the Company.     Common Stock. The common stock of the Company, $1.00 par value.      Company. SouthEast Bancshares, Inc., a Tennessee corporation, and any successor or transfereeof substantially all of its business or assets.      Director. Any member of the board of directors of the Company or any of its Subsidiaries.     Employee. A full-time key employee of the Company, the Bank, or any other Subsidiary,including an officer who is such an employee.      Fair Market Value. The fair market value of the shares of Common Stock as of such date asdetermined in good faith by the Board of Directors.     Incentive Stock Option. Any Option intended to meet the requirements of an incentive stockoption as defined in Section 422.     Non-Qualified Stock Option. Any Option not intended to be an Incentive Stock Option.     Option. An option to purchase Common Stock granted under the Plan, including both anIncentive Stock Option and a Non-Qualified Stock Option.      Person. An individual, a partnership, a corporation, or any other private, governmental orother entity.     Plan. The SouthEast Bancshares, Inc. Stock Option Plan herein set forth, as the same may fromtime to time be amended.     Rule 16b-3. Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and anysuccessor rule or regulation.Exhibit 10.1 - 2
 

 
          Section 422. Section 422 of the Internal Revenue Code of 1986, as amended, or anysuccessor statute.          Subsidiary. Any business association (including a corporation or a partnership) in anunbroken chain of such associations beginning with the Company if each of the associations (otherthan the last association in such chain) owns equity interests possessing 50% or more of thecombined voting power of all classes of equity interests in one of the other associations in suchchain.     3. Eligibility. A grant under this Plan may be made to any Employee or Director or any otherperson as to whom the Board of Directors determines that making such grant is in the best interestsof the Company; provided, however, that (i) no grant may be made to a Director other than asprovided under Rule 16b-3, and (ii) no grant of an Incentive Stock Option may be made to a personother than an Employee.     4. Plan Administration. This Plan shall be administered by the Board of Directors. The Boardof Directors shall have full power to interpret and administer this Plan and full authority to actin selecting the grantees and in determining type and amount of grants, the terms and conditionsof grants, and the terms of agreements which will be entered into with grantees governing suchgrants. The Board of Directors shall have the power to make rules and guidelines for carrying outthe Plan and to make changes in such rules and guidelines from time to time as it deems proper.Any interpretation by the Board of Directors of the terms and provisions of the Plan and theadministration thereof and all action taken by the Board of Directors shall be final and binding.     5. Shares Subject to the Plan. Subject to adjustment as provided in this Section 5 or Section8 hereof, the total number of shares of Common Stock available for grant under this Plan shall beone hundred seventy-six thousand five hundred forty-nine (176,549) shares of Common Stock. CommonStock issued hereunder may consist, in whole or in part, of authorized and unissued shares,treasury shares and shares acquired in the open market or by private purchase by the Company. AnyCommon Stock which is purchased shall be purchased by the Company at prices no higher than theFair Market Value of such Common Stock at the time of purchase. If for any reason any shares ofCommon Stock issued under any grant hereunder are forfeited or canceled, or a grant otherwiseterminates or is terminated for any reason without the issuance of any shares, then all suchshares, to the extent of any such forfeiture, cancellation or termination, shall again be availablefor grant under this Plan.     6. Types of Grants.          (a) The Board of Directors may make such grants under this Plan as in its discretion it deemsadvisable to effect the purpose of the Plan, including without limitation grants of Incentive StockOptions and Non-Qualified Stock Options. Such grants may be issued separately or in combination,or in tandem, and additional grants may be issued in combination, or in tandem, with grantspreviously issued under this Plan or otherwise. As used in this Plan, references to grants intandem shall mean grants consisting of more than one type of grant where the exercise of oneelement of the grant effects the cancellation of one or more other elements of the grant.Exhibit 10.1 - 3
 

 
     (b) The exercise price of an Option or other grant shall equal at least 100% of the FairMarket Value of the shares of Common Stock on the date of such grant, and be paid in cash or suchother consideration as the Board of Directors may determine consistent with applicable law.     7.Options.          (a) Each Option shall have such terms and conditions as the Board of Directors shalldetermine in accordance with this Plan. A grantee shall have no rights of a shareholder withrespect to any shares of Common Stock subject to an Option unless and until a certificate for suchshares shall have been issued.          (b) All the provisions of Section 422 and the regulations thereunder as in effect from time totime are hereby incorporated by reference herein with respect to Incentive Stock Options to theextent that their inclusion in this Plan is necessary from time to time to preserve their status asIncentive Stock Options for purposes of Section 422. Each provision of this Plan and eachagreement relating to an Incentive Stock Option shall be construed so that it shall be an IncentiveStock Option for purposes of Section 422, and any provisions thereof which cannot be so construedshall be disregarded.          (c) Notwithstanding any other provision herein contained, no Employee may receive anIncentive Stock Option under this Plan if such Employee, at the time the award is granted, owns (asdefined in Section 424(d) of the Internal Revenue Code, as amended (the “Code”)) stock possessingmore than 10% of the total combined voting power of all classes of stock of the Company, itsparent or any Subsidiary, unless the option price for such Incentive Stock Option is at least 110%of the Fair Market Value of the Common Stock subject to such Incentive Stock Option on the date ofgrant and such Option is not exercisable after the date five (5) years from the date such Option isgranted.          (d) The aggregate Fair Market Value (determined with respect to each Incentive Stock Option asof the time such Incentive Stock Option is granted) of the capital stock with respect to whichIncentive Stock Options are exercisable for the first time by an Employee during any calendar year(under this Plan or any other plan of the Company or the parent or any Subsidiary of the Company)shall not exceed $100,000.          (e) No Option shall exceed ten (10) years in duration. No Incentive Stock Option shall begranted pursuant to this Plan at any time beyond ten (10) years from the earlier of the adoptiondate of this Plan or the date of shareholder approval of the Plan.     8. Adjustments Upon Changes in Capitalization. In the event of a reorganization,recapitalization, stock split, stock dividend, issuance of securities convertible into CommonStock, combination of shares, merger, consolidation or any other change in the corporate structureof the Company affecting Common Stock, or a sale by the Company of all or substantially all of itsassets, or any distribution to share holders other than a normal cash dividend, or any assumptionor conversion of outstanding grants as a result of an acquisition, and except as otherwise providedin an agreement between the grantee and the Company, the Board of Directors shall make appropriateadjustment in the number and kind of shares authorized byExhibit 10.1 - 4
 

 
this Plan and any adjustments in outstanding grants as it deems appropriate to maintainequivalent value; provided, however, that adjustments to Incentive Stock Options shall meet theapplicable requirements of Section 422 and Section 424 of the Code.     9.  Termination and Amendment.          (a) This Plan shall be effective upon its adoption by the Board of Directors, provided thatapproval by the shareholders of the Bank is obtained within the 12 months preceding or followingsuch adoption. It shall remain in full force and effect unless terminated by the Board ofDirectors, which shall have the power to amend, suspend, terminate or reinstate this Plan at anytime, provided that no amendment which increases the number of Shares of Common Stock subject tothe Plan, or materially adversely affects the availability of Rule 16b-3 with respect to this Plan,shall be made without the approval of the shareholders of the Bank.          (b) Without limiting the generality of the foregoing, the Board of Directors may (i) amend anylimitations in this Plan if and when they are no longer required under Rule 16b-3 or Section 422and (ii) amend the provisions of this Plan to assure its continued compliance with Rule 16b-3 andSection 422.     10.Non-Assignability. Unless otherwise specified in an agreement between a grantee and theCompany, grants are not transferable other than by will or the laws of descent and distribution. Agrant is exercisable during the grantee’s lifetime only by the grantee or his or her guardian orlegal representative.     11.Exercise by Estate. Any provision of this Plan to the contrary notwithstanding, unlessotherwise determined by the Board of Directors, the estate of any grantee shall have 12 monthsfrom the date of such grantee’s death to exercise any grant hereunder, or such longer period as theBoard of Directors may determine.     12.General Provisions.          (a) Nothing contained in this Plan, or in any grant made pursuant to this Plan, shall conferupon any grantee any right with respect to terms, conditions or continuance of employment by theCompany or any Subsidiary.          (b) For purposes of this Plan, transfer of employment between the Company and any of itsSubsidiaries shall not be deemed termination of employment.          (c) Appropriate provision may be made by the Board of Directors for all taxes required to bewithheld in connection with any grant, the exercise thereof, and the transfer of shares of CommonStock, in respect of any federal, state, local or foreign withholding taxes. In the case ofpayment in the form of Common Stock, the Company shall have the right to retain the number ofshares of Common Stock whose Fair Market Value equals the amount to be withheld.          (d) If any day on or before which such action by the Plan must beExhibit 10.1 - 5
 

 
taken falls on a Saturday, Sunday or legal holiday, such action may be taken on the nextsucceeding day which is not a Saturday, Sunday or legal holiday.          (e) This Plan and all determinations made and actions taken pursuant thereto shall be governedby the substantive laws and procedural provisions of the State of Tennessee, without regard toprinciples of conflicts of laws, unless otherwise governed by federal law.          (f) The Board of Directors may amend any outstanding grants to the extent it deemsappropriate, provided that the grantee’s consent shall be required in the case of amendmentsadverse to the grantee.     13.Change of Control of the Bank.          (a) Any provision of this Plan to the contrary notwithstanding, in the event of a change incontrol of the Company, unless (i) otherwise directed by the Board of Directors by resolutionadopted prior to such Change in Control or within ten days thereafter or (ii) otherwise providedin the agreement entered into between the Company and a recipient grantee, all of the grants underthis Plan shall become completely vested and immediately exercisable.          (b) For purposes of this Section 13, “Change in Control” of the Company shall mean theoccurrence of one or more of the following:          (i) acquisition in one or more transactions of 25 percent or more of the Common Stock byany Person, or by two or more Persons acting as a group, other than directly from theCompany;          (ii) acquisition in one or more transactions of at least 15 percent but less than 25percent of the Common Stock by any Person, or by two or more Persons acting as a group(excluding officers and directors of the Company), and the adoption by the Board ofDirectors of a resolution declaring that a change in control of the Company has occurred;          (iii) a merger, consolidation, reorganization, recapitalization or similar transactioninvolving the securities of the Company upon the consummation of which more than 50 percentin voting power of the voting securities of the surviving corporation(s) is held by Personsother than former shareholders of the Company; or          (iv) 25 percent or more of the directors elected by shareholders of the Company to theBoard of Directors are persons who were not listed as nominees in the Company’s then mostrecent proxy statement (the “New Directors”), unless a majority of the members of the Boardof Directors, excluding the New Directors, vote that no change of control shall haveoccurred by virtue of the election of the New Directors.          (c) If grants shall become exercisable pursuant to this Section 13, theExhibit 10.1 - 6
 

 
Company shall use its best efforts to assist the grantees in exercise of their grants in such a manner as to avoid liabilityto the Company for profits under section 16(b) of the SecuritiesExchange Act of 1934, as amended, as a result of such exercise, including (not by way of limitation) explanation of and assistance in meeting the requirements of Paragraph (e) of Rule 16b-3.     14. Undercapitalization. In the event of the Company’s or the Bank’s capital falls below minimum regulatory requirements, as determinedby the Company’s or the Bank’s primary state or federal regulator, the Company’sor the Bank’s primary state or federal regulator may direct tocompany to require any holder granted options under this Planto exercise or forfeit their stock rights under those grants.          INWITNESS WHEREOF, the forgoing SouthEast Bancshares, Inc. Stock OptionPlan has been executed this 11th day of April, 2006.      SouthEast Bancshares, Inc.