Document:

Exhibit 10.2a

 

REDSTONE BANK, N.A,

2004 STOCK OPTION PLAN

 

SECTION 1.                            Purpose of the Plan. The purpose of this Redstone Bank, N.A. 2004 Stock Option Plan (“Plan”)  is to encourage ownership of common stock, $1.50 par value (“Common Stock”),  of Redstone Bank, N.A., (the “Bank”),  by eligible employees, directors, and consultants of the Bank, its subsidiaries and certain entities strategically related to the Bank (hereinafter collectively referred to as the “Bank”)  and to provide increased incentive for such employees, directors, and consultants to render services and to exert maximum effort for the business success of the Bank. In addition, the Bank expects that the Plan will further strengthen the identification of employees and directors with the stockholders. Options granted under this Plan will be nonqualified options (“Nonqualified Options”)  which are options which do not qualify as incentive stock options pursuant to Section 422 of the Internal Revenue Code of 1986, as amended (“Code”)  or options which are intended to qualify as incentive stock options (“ISOs”).

 

SECTION 2.                            Administration of the Plan.

 

(a)                                 Composition of Committee. The Plan shall be administered by a committee designated by the Board of Directors of the Bank (“Board”)  which shall also designate the chairman of the committee. If the Bank is subject to Section 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”),  the committee shall be composed of not less than two Non-Employee Directors (within the meaning of such Rule 16b-3 promulgated by the Securities and Exchange Commission (“Commission”)  under the Exchange Act (“Rule 16b-3”),  each of whom shall be an “outside director” for purposes of Section 162(m)(4) of the Code, and shall be appointed by and serve at the pleasure of the Board. The committee as administrators of the Plan shall hereinafter be referred to as “Committee.”

 

(b)                                 Committee Action. The Committee shall hold its meetings at such times and places as it may determine. A majority of its members shall constitute a quorum, and all determinations of the Committee shall be made by not less than a majority of its members. Any decision or determination reduced to writing and signed by a majority of the members shall be fully effective as if it had been made by a majority vote of its members at a meeting duly called and held. The Committee may designate the Secretary of the Bank or other Bank employees to assist the Committee in the administration of the Plan, and may grant authority to such persons to execute option agreements or other documents on behalf of the Committee and the Bank.

 

(c)                                  Committee Expenses. All expenses and liabilities incurred by the Committee in the administration of the Plan shall be borne by the Bank. The Committee may employ attorneys, consultants, accountants or other persons.

 

SECTION 3.                            Stock Reserved for the Plan. Subject to adjustment as provided in Section 6 (j) hereof, the aggregate number of shares of Common Stock that may be optioned

 

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under the Plan is 793,651. The  shares subject to the Plan shall consist of authorized but unissued shares of Common Stock or previously issued shares of Common Stock reacquired and held by the Bank and such number of shares shall be and is hereby reserved for sale for such purpose. Shares of Common Stock shall be deemed to have been issued under the Plan only to the extent actually issued and delivered pursuant to an option. To the extent that an option lapses or the rights of its Optionee terminate or the option is cashed-out, the Common Stock subject to an option shall again be available for grant of another option. Shares which may remain unsold and which are not subject to outstanding options at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan or the termination of the last of the options granted under the Plan, whichever last occurs, the Bank shall at all times reserve a sufficient number of shares to meet the requirements of the Plan.

 

SECTION 4.                            Eligibility. The persons eligible to participate in the Plan as a recipient of options (“Optionee”)  shall include employees, directors, and consultants of the Bank at the time the option is granted. An employee, director or consultant who has been granted an option here-under may be granted an additional option or options, if the Committee shall so determine.

 

SECTION 5.                            Grant of Options.

 

(a)                                 Committee Discretion. Except where the Committee has explicitly given the authority to some other individual, the Committee shall have sole and absolute discretionary authority (i) to determine, authorize, and designate those employees and directors of the Bank who are to receive options under the Plan, (ii) to determine the number of shares of Common Stock to be covered by such options and the terms thereof, and (iii) to determine the type of option granted: ISO, Nonqualified Option or a combination of ISO and Nonqualified Options; provided that a director may not receive any ISOs. If the Bank is subject to Section 16 of the Exchange Act, the Committee shall specifically pre-approve each grant to each Optionee subject to Section 16(b) of the Exchange Act in accordance with Rule 16b-3 as Amended, unless such grant is or will be otherwise exempt from Section 16(b) of the Exchange Act. The Committee shall there-upon grant options in accordance with such determinations as evidenced by a written option agreement. Subject to the express provisions of the Plan, the Committee shall have discretionary authority to prescribe, amend and rescind rules and regulations relating to the Plan, to interpret the Plan, to prescribe and amend the terms of the option agreements (which need not be identical) and to make all other determinations deemed necessary or advisable for the administration of the Plan.

 

(b)                                 Stockholder Approval. All options granted under this Plan are subject to, and may not be exercised before, the approval of this Plan by the stockholders prior to the first anniversary date of the Board meeting held to approve the Plan, by the affirmative vote of the holders of a majority of the outstanding shares of the Bank present, or represented by proxy, and entitled to vote thereat or by written consent in accordance with the laws of the State of Texas provided that if such approval by the stockholders of the Bank is not forthcoming, all options previously granted under this Plan shall be void.

 

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(c)                                  Limitation on Incentive Stock Options. The aggregate number of shares of Common Stock that may be optioned as ISOs under the Plan is 793,651. The aggregate fair market value (determined in accordance with Section 6(b) of this Plan at the time the option is granted) of the Common Stock with respect to which ISOs may be exercisable for the first time by any Optionee during any calendar year under all such plans of the Bank and its subsidiaries shall not exceed $100,000.

 

SECTION 6.                            Terms and Conditions. Each option granted under the Plan shall be evidenced by an agreement, in a form approved by the Committee, which shall be subject to the following express terms and conditions and to such other terms and conditions as the Committee may deem appropriate.

 

(a)                                 Option Period. The Committee shall promptly notify the Optionee of the option grant and a written agreement shall promptly be executed and delivered by and on behalf of the Bank and the Optionee, provided that the option grant shall expire if a written agreement is not signed by said Optionee (or his agent or attorney) and returned to the Bank within 60 days from date of receipt by the Optionee of such agreement. The date of grant shall be the date the option is actually granted by the Committee, even though the written agreement may be executed and delivered by the Bank and the Optionee after that date. Each option agreement shall specify the period for which the option thereunder is granted (“Option Period”),  which in no event shall exceed the tenth (10th) anniversary date of the date the option is granted.

 

(b)                                 Option Price. The purchase price of each share of Common Stock subject to each option granted pursuant to the Plan shall be determined by the Committee at the time the option is granted and, in the case of ISOs, shall not be less than 100% of the fair market value of a share of Common Stock on the date the option is granted, as determined by the Committee. In the case of an ISO granted to an individual who, at the time of grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Bank or its Affiliate (“Ten Percent Stockholder”),  the option price shall not be less than 110% of the fair market value of a share of Common Stock on the date the option is granted. The purchase price of each share of Common Stock subject to a Nonqualified Option under this Plan shall be determined by the Committee prior to granting the option. The Committee shall set the purchase price for each share subject to a Nonqualified Option at such price as the Committee in its sole discretion shall determine.

 

(c)                                  Exercise Period. The Committee may provide in the option agreement that an option may be exercised in whole, immediately, or is to be exercisable in increments. However, no portion of any option may be exercised by an Optionee prior to the approval of the Plan by the stockholders of the Bank.

 

(d)                                 Procedure for Exercise. Options shall be exercised by the delivery of (i) written notice to the Secretary of the Bank setting forth the number of shares with respect to which the option is being exercised, (ii) cash or cashier’s check, bank draft, postal or express money order payable to the order of the Bank, or at the option of the Committee,

 

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in Common Stock theretofore owned by such Optionee (or any combination of cash and Common Stock) and (iii) executed signature pages of the Shareholders Agreement and S Corp Consents (if applicable) (both defined in Section 6(r)) as required in Section 6(r). In addition, in the discretion of the Committee, payment for any shares subject to an option may also be made by instructing the Committee to withhold a number of such shares having a fair market value on the date of exercise equal to the aggregate exercise price of such option.

 

Notice and the executed signature pages of the Shareholders Agreement and S Corp Consents (if applicable) may also be delivered by fax or telecopy provided that the purchase price of such shares is delivered to the Bank via wire transfer on the same day the fax is received by the Bank. The notice shall specify the address to which the certificates for such shares are to be mailed. An Optionee shall be deemed to be a stockholder with respect to shares covered by an option on the date the Bank receives such written notice, such option payment and such executed signature pages of the Shareholders Agreement and S Corp Consents (if applicable).

 

As promptly as practicable after receipt of such written notification, payment, and executed signature pages and consents the Bank shall deliver to the Optionee certificates for the number of shares with respect to which such option has been so exercised, issued in the Optionee’s name or such other name as Optionee directs; provided, however, that such delivery shall be deemed effected for all purposes when a stock transfer agent of the Bank shall have deposited such certificates in the United States mail, addressed to the Optionee at the address specified pursuant to this Section 6(d).

 

(e)                                  Termination of Employment. If an Optionee’s service with the Bank is terminated during the Option Period, so that Optionee no longer serves in any capacity as an employee, a director or consultant (“Termination of Service”)  for any reason other than death or disability, (i) any option which is not exercisable on the date of such Termination of Service shall expire on such date and (ii) any option which is exercisable on the date of such Termination of Service shall expire within three (3) months after the date of such Termination of Service. Notwithstanding anything herein to the contrary, the Committee, in its sole discretion, may allow an Optionee to exercise all or a portion of the option granted, whether exercisable or not, for any period of time after the Optionee’s Termination of Service. Any decision or determination by the Committee as set forth in the immediately preceding sentence may vary among individual Optionees and may vary with respect to options held by any individual Optionee.

 

(f)                                   Disability or Death of Optionee.

 

(1) In the event an Optionee’s Termination of Service is on account of the Optionee’s death or disability, (i) any option which is not exercisable on the date of such death or disability shall expire on such date and (ii) any option which is exercisable shall expire on such date which is one year after the date the Optionee’s Termination of Service on account of the Optionee’s death or disability.

 

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(2) An Optionee shall be deemed to be disabled if, in the opinion of a physician selected by the Committee, he is incapable of performing services for the Bank of the kind he was performing at the time the disability occurred by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long, continued and indefinite duration. The date of determination of disability for purposes hereof shall be the date of such determination by such physician.

 

(3) Notwithstanding anything herein to the contrary, the Committee, in its sole discretion, may allow an Optionee to exercise all or a portion of the option granted, whether exercisable or not, for a longer period than one year after disability or death. Any decision or determination by the Committee as set forth in the immediately preceding sentence may vary among individual Optionees and may vary with respect to options held by any individual Optionee.

 

(g)                                  Assignability. An option shall not be assignable or otherwise transferable except by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined in the Code or Title I of the Employee Retirement Income Security Act, as amended, or the rules thereunder; provided however, that if any such assignment or transfer is anticipated to be to any person (which shall include, but not be limited to an entity or trust) which could, in the sole determination of the Committee, cause the Bank to lose its AS corporation@ status under Section 1361 of the Code (if applicable), then such potential assignee or transferee shall be paid the Cash Out Amount as defined in Section 6(o) below, and such person shall relinquish such option. During the lifetime of an Optionee, an option shall be exercisable only by him.

 

(h)                                 Incentive Stock Options. Each option agreement may contain such terms and provisions as the Committee may determine to be necessary or desirable in order to qualify an option designated as an incentive stock option.

 

(i)                                     No Rights as Stockholder. No Optionee shall have any rights as a stockholder with respect to shares covered by an option until the option is exercised by the written notice and accompanied by payment as provided in clause (d) above.

 

(j)                                    Extraordinary Corporate Transactions.

 

(1) The existence of outstanding options shall not affect in any way the right or power of the Bank or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, exchanges, or other similar changes in the Bank’s capital structure or its business, or any merger or consolidation of the Bank, or any issuance of Common Stock or other securities or subscription rights thereto, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Bank, or any sale or transfer of all

 

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or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

(2) If the Bank recapitalizes or otherwise changes its capital structure, or merges, consolidates, sells all of its assets or dissolves and such transaction is not a Change of Control as defined in Section 6(k) below (each of the foregoing a “Fundamental Change”),  then thereafter upon any exercise of an option theretofore granted the Optionee shall be entitled to purchase under such option, in lieu of the number of shares of Common Stock covered by such option, the number and class of shares of stock and securities to which the Optionee would have been entitled pursuant to the terms of the Fundamental Change if, immediately prior to such Fundamental Change, the Optionee had been the holder of record of the number of shares of Common Stock covered by the option.

 

(3) The issuance by the Bank of any other class of securities which is not Common Stock or convertible into Common Stock shall not affect the number of shares of Common Stock subject to options theretofore granted or the purchase price per share, unless the Committee shall determine in its sole discretion than an adjustment is necessary to provide equitable treatment to Optionee.

 

(k)                                 Change of Control.                                        Except as provided below, each of the following events shall hereinafter be defined as a “Change of Control”:

 

(1)                                 Upon the occurrence of both of the following events:

 

(a)                                 the Bank shall not be the surviving entity in any merger or consolidation with an entity which is not related to the Bank (or survives only as a subsidiary of another entity other than one of the Bank’s related entities); and

 

(b)                                 as a result of or in connection with the occurrence of (a) above, the persons who were Directors of the Bank just prior to such event cease to constitute a majority of the Board of the Bank or its successor; or

 

(2)                                 the Bank sells all or substantially all of its assets to any other person or entity (other than an entity which is related to the Bank); or

 

(3)                                 the Bank is to be dissolved and liquidated.

 

(1)                                 Occurrence of a Change of Control. Upon the occurrence of an event of Change of Control, all or a portion of an Optionee’s options, whether exercisable (vested) or not may be exercised in accordance with the Optionee’s option agreement. Further, in the event of a Change of Control, the Committee, in its discretion, may act to effect one or more of the following alternatives with respect to outstanding options, which may vary among individual Optionees and which may vary among options held by any individual Optionee:

 

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(1)                                 determine a reasonable period of time on or before a specified date (before or after such Change of Control) after which specified date all unexercised options and all rights of Optionees thereunder shall terminate;

 

(2)                                 require the mandatory surrender to the Bank by selected Optionees of some or all of the outstanding options held by such Optionees (irrespective of whether such options are then exercisable under the provisions of the Plan) as of a date, before or after such Change of Control, specified by the Committee, in which event the Committee shall thereupon cancel such options and the Bank shall pay to each Optionee an amount of cash per share equal to the excess, if any, of the fair market value of the shares subject to such option over the exercise price(s) under such options for such shares; or

 

(3)                                 provide that upon any exercise of an option granted, the Optionee shall be entitled to purchase under such option, in lieu of the number of shares of Common Stock then covered by such option, the number and class of shares of stock or other securities or property (including, without limitation, cash) to which the Optionee would have been entitled if, immediately prior to the Change of Control, the Optionee has been the holder of record of the number of shares of Common Stock then covered by the option. The provisions contained in this Section shall not terminate any rights of the Optionee to further payments pursuant to any other agreement with the Bank following a Change of Control.

 

(m)                             Changes in Bank’s Capital Structure. If the outstanding shares of Common Stock or other securities of the Bank, or both, for which the option is then exercisable shall at any time be changed or exchanged by declaration of a stock dividend, stock split, or combination of shares, the number and kind of shares of Common Stock or other securities which are subject to the Plan or subject to any options theretofore granted, and the option prices, shall be appropriately and equitably adjusted so as to maintain the proportionate number of shares or other securities without changing the aggregate option price.

 

(n)                                 Acceleration of Options. Notwithstanding anything to the contrary contained in this Plan, the Committee may in its sole discretion accelerate the time at which any option may be exercised, including, but not limited to, upon the occurrence of the events specified in this Section 6. With respect to the foregoing sentence, any Committee actions may vary among individual Optionees and may vary among options held by any individual Optionee.

 

(o)                                 Cashing Out Option. On receipt of written notice of exercise, the Committee may elect to cash out all or part of the portion of the shares of Common Stock for which an option is being exercised by paying the Optionee an amount, in cash or Common Stock, equal to the excess of the fair market value of the Common Stock over the option price times the number of shares of Common Stock for which the option is being exercised on the effective date of such cash-out (“Cash Out Amount”). The fair market value of the Common Stock shall be determined by the Committee, in its sole

 

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discretion. To determine such value, the Committee may use such assumptions, forecasts and discounts as the Committee deems appropriate. The Committee may, in its sole discretion, periodically have an independent third party appraiser assess the fair market value of the Common Stock, and such appraiser may use any assumptions, forecasts and discounts, as the appraiser deems appropriate. Such valuation may be used by the Committee in making its determination of fair market value but is not necessarily binding on the Committee.

 

(p)                                 Relinquishment of Option. Beginning nine years after the Effective Date (as defined in Section 14), the Committee, in its sole discretion, may terminate an option granted an Optionee under this Plan, and upon such termination the Optionee’s rights and benefits under the option agreements related to such terminated options shall be relinquished. Upon the termination and relinquishment of any option, the Bank shall pay the Optionee the Cash Out Amount related to the option terminated and relinquished. Such Cash Out Amount shall include value relating to both exercisable and unexercisable options at the time of such termination and relinquishment. With respect to any determinations made by the Committee under this Section, any Committee actions may vary among individual Optionees and may vary among options held by any individual Optionee.

 

(q)                                 Stockholders Agreements. The Committee shall provide in the option agreement with respect to any shares of Common Stock purchased pursuant to an option granted under the Plan, that as a condition to and a requirement of receiving any shares of Common Stock upon the exercise of an option granted under this Plan, the Optionee (or the Optionee’s representative upon the Optionee’s death) shall execute the Redstone Bank, N.A. Stock Restriction Agreement or any other similar agreement placing contractual obligations on shareholders of the Bank which restrict the ability of such shareholders of the Bank to transfer their shares of Common Stock (“Shareholders Agreements”)  and any S Corporation consents and questionnaires (“S Corp Consents”),  if applicable.

 

SECTION 7.                            Amendments or Termination. The Board may amend, alter or discontinue the Plan, but no amendment or alteration shall be made which would impair the rights of any Optionee, without his consent, under any option theretofore granted, or which, without the approval of the stockholders, would: (i) except as is provided in Sections 6(j), (k), (1) and (m) of the Plan, increase the total number of shares reserved for the purposes of the Plan, (ii) change the class of persons eligible to participate in the Plan as provided in Section 4 of the Plan, (iii) extend the applicable maximum option period provided for in Section 6(a) of the Plan, (iv) extend the expiration date of this Plan set forth in Section 14 of the Plan, (v) except as provided in Sections 6(j), (k), (1) and (m) of the Plan, decrease to any extent the option price of any option granted under the Plan or (vi) withdraw the administration of the Plan from the Committee.

 

SECTION 8.                            Compliance With Other Laws and Regulations. The Plan, the grant and exercise of options thereunder, and the obligation of the Bank to sell and deliver shares under such options, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required. The Bank shall

 

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not be required to issue or deliver any certificates for shares of Common Stock prior to the completion of any registration or qualification of such shares under any federal or state law or issuance of any ruling or regulation of any government body which the Bank shall, in its sole discretion, determine to be necessary or advisable. Any adjustments provided for herein in Sections 6(j), (k), (1) and (m) shall be subject to any shareholder action required by Texas corporate law.

 

SECTION 9.                            Purchase for Investment. Unless the options and shares of Common Stock covered by this Plan have been registered under the Securities Act of 1933, as amended, or the Bank has determined that such registration is unnecessary, each person exercising an option under this Plan may be required by the Bank to give a representation in writing that he is acquiring such shares for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.

 

SECTION 10.                     Taxes.

 

(a)                               The Bank may make such provisions as it may deem appropriate for the withholding of any taxes which it determines is required in connection with any options granted under this Plan.

 

(b)                               Notwithstanding the terms of Paragraph 10(a), any Optionee may pay all or any portion of the taxes required to be withheld by the Bank or paid by him in connection with the exercise of a nonqualified option by electing to have the Bank withhold shares of Common Stock, or by delivering previously owned shares of Common Stock, having a fair market value, determined in accordance with Section 6(b), equal to the amount required to be withheld or paid; provided that such tax withholding or stock delivery rights was specifically pre-approved by the Committee as a feature of the option or is otherwise approved in accordance with Rule 16b-3. An Optionee must make the foregoing election on or before the date that the amount of tax to be withheld is determined (“Tax Date”). All such elections are irrevocable and subject to disapproval by the Committee.

 

SECTION 11.                     Replacement of Options. The Committee from time to time may permit an Optionee under the Plan to surrender for cancellation any unexercised outstanding option and receive from the Bank in exchange an option for such number of shares of Common Stock as may be designated by the Committee. The Committee may, with the consent of the person entitled to exercise any outstanding option, amend such option, including reducing the exercise price of any option or extending the term thereof.

 

SECTION 12.                     No Right to Employment, Directorship, or Consultant Relationship. An Optionee shall be considered to be in the employment of the Bank, in service on the Board or be a consultant to the Bank so long as he or she remains an employee, director, or consultant of the Bank. Any questions as to whether and when there has been a termination of such employment or service on the Board or consultant relationship and the cause of such termination shall be determined by the Committee, and its determination shall be final. Nothing contained herein shall be construed as conferring upon Optionee the right to continue in the employ of the Bank or

 

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to continue service on the Board or to continue in a consultant relationship, nor shall anything contained herein be construed or interpreted to limit the “employment at will” relationship between Optionee, (if the Optionee is an employee) and the Bank.

 

SECTION 13.                     Liability of Bank. The Bank which is in existence or hereafter comes into existence shall not be liable to an Optionee or other persons as to:

 

(a)                               The Non-Issuance of Shares. The non-issuance or sale of shares as to which the Bank has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Bank’s counsel to be necessary to the lawful issuance and sale of any shares hereunder; and

 

(b)                               Tax Consequences. Any tax consequence expected, but not realized, by any Optionee or other person due to the exercise of any option granted hereunder.

 

SECTION 14.                     Effectiveness and Expiration of Plan. The Plan shall be effective on the date of its approval and adoption by the Board (“Effective Date”). If the stockholders of the Bank fail to approve the Plan within twelve months of the date the Board approved the Plan, the Plan shall terminate and all options previously granted under the Plan shall become void and of no effect. The Plan shall expire on the the tenth (10th) anniversary date of the Effective Date.

 

SECTION 15.                     Non-Exclusivity of the Plan. Neither the adoption by the Board nor the submission of the Plan to the stockholders of the Bank for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including without limitation, the granting of stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

 

SECTION 16.                     Governing Law. This Plan and any agreements hereunder shall be interpreted and construed in accordance with the laws of the State of Texas and applicable federal law.

 

IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing by directors of the Bank, Redstone Bank, N.A. has caused these presents to be duly executed in its name and behalf by its proper officers thereunto duly authorized as of this       day of                    , 2004.

 

	
 
    	
REDSTONE BANK, N.A.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David C. Shindeldecker
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

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FORM OF STOCK OPTION ADDENDUM

(2004 Stock Option Plan)

 

To:                                         (“Optionee”)

 

Date:                  

 

On                   you were granted a stock option (“Option”) under the Redstone Bank, N.A. 2004 Stock Option Plan (“Plan”) and a related Option Agreement between you and Redstone Bank, N.A. Under the Option, you were granted the right to purchase         shares of common stock of the Redstone Bank, N.A. (“Redstone Bank Stock”) at an exercise price of       per share.

 

As a result of the acquisition of the issued and outstanding Redstone Bank Stock through a merger of Redstone Bank, N.A. into a subsidiary of Green Bancorp, Inc. (“Merger”), effective                  , you are 100% vested in the Option and you now have the right under the Option to purchase        shares of common stock of Green Bancorp, Inc. at an exercise price of       per share. Other terms of the Option Agreement with respect to the Option (including, for example, the term of the Option and the methods for exercise of the Option) remain the same as in effect immediately prior to the Merger; provided that all references in the Plan and your Option Agreement to Redstone Bank, N.A. and to shares of Redstone Bank Stock shall respectively be references to Green Bancorp, Inc. and to shares of common stock of Green Bancorp, Inc. The number of shares of Green Bancorp, Inc. common stock which are now subject to the Option equal the shares of Redstone Bank Stock which were subject to the Option multiplied by the Exchange Ratio used in the Merger, and the new exercise price as stated above equals the exercise price to purchase Redstone Bank Stock as previously stated in the Option divided by the Exchange Ratio.

 

Please indicate your acknowledgement of this change to the Option by signing below, and return this Addendum to John Durie.

 

 

	
OPTIONEE
    	
GREEN   BANCORP, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Printed   Name
    	
 
    	
Title:
    	
 
    

 

 

REDSTONE BANK, N.A.

FORM OF NONQUALIFIED STOCK OPTION AGREEMENT

 

This Nonqualified Stock Option Agreement (“Option Agreement”)  is between Redstone Bank, N.A. (the “Bank”), and                                          (the “Optionee”).

 

W  I  T  N  E  S  S  E  T  H:

 

The Bank has adopted the Redstone Bank, N.A. 2004 Stock Option Plan (the “Plan”)  for the purpose of providing employees, directors and consultants of the Bank, its subsidiaries and certain entities strategically related to the Bank (collectively hereinafter referred to as the “Bank”)  with additional incentive to promote the success of the business, to increase their proprietary interest in the success of the Bank, and to encourage them to remain in the employ of the Bank, remain as a director of the Bank or remain as a consultant or service provider to the Bank.

 

NOW THEREFORE, for and in consideration of these premises it is agreed as follows:

 

1.                                      Option. Subject to the terms and conditions contained herein, the Bank, effective as of December 29, 2006 (the “Grant Date”),  hereby irrevocably grants to Optionee the right and option (“Option”)  to purchase from the Bank 100,000 shares (“Shares”)  of the Bank’s common stock, $1.50 par value (“Common Stock”),  at a price of $4.45 per share.

 

2.                                      Option Period. The Option herein granted may be exercised by Optionee in whole or in part at any time during a ten (10) year period (the “Option Period”)  beginning on the Grant Date, subject to the limitation that said Option shall not be exercisable for more than a percentage of the aggregate number of shares offered by this Option so long as the Optionee remains employed by the Bank or remains a director, consultant or service provider to the Bank on the dates set forth below in the following schedule:

 

	
After the
    	
 
    	
 
    	
 
    
	
Following Dates
    	
 
    	
Percentage of
    	
 
    
	
(“Vesting Dates”)
    	
 
    	
Shares Purchasable
    	
 
    
	
Before 1st Anniversary of December 29, 2006
    	
 
    	
0
    	
%
    
	
After 1st Anniversary of December 29, 2006
    	
 
    	
20
    	
%
    
	
After 2nd Anniversary of December 29, 2006
    	
 
    	
40
    	
%
    
	
After 3rd Anniversary of December 29, 2006
    	
 
    	
60
    	
%
    
	
After 4th Anniversary of December 29, 2006
    	
 
    	
80
    	
%
    
	
After 5th Anniversary of December 29, 2006
    	
 
    	
100
    	
%
    

 

 

3.                                      Procedure for Exercise. This Option may be exercised by the Optionee’s delivery to the Secretary of the Bank of (i) written notice setting forth the number of shares of Common Stock with respect to which the Option is to be exercised and specifying the address to which the certificate for such shares is to be mailed, (ii) cash, or a cashier’s check, bank draft, postal or express money order payable to the order of the Bank, or at the discretion of the Committee, in Common Stock owned by the Optionee (or a combination of cash and Common Stock) and (iii) executed signature pages of the Shareholders Agreement and S Corp Consents (if applicable) (both defined in Section 15) as required in Section 15. Notice and the executed signature pages of the Shareholders Agreement and S Corp Consents may also be delivered by fax or telecopy provided that the purchase price of such shares is delivered to the Bank via wire transfer on the same day the fax is received by the Bank. As promptly as practicable after receipt of such written notification, payment, and executed signature pages and consents, the Bank shall deliver to the Optionee certificates for the number of shares with respect to which such Option has been so exercised, issued in the Optionee’s name or such other name as Optionee directs.

 

4.                                      Termination of Service.

 

(a)                                  For Cause or Voluntary, Without Good Reason. Except as provided in Section 4(c) below, if the Optionee’s service with the Bank is terminated by the Bank during the Option Period for “Cause” (as defined below) or if, during the Option Period, the Optionee voluntarily terminates his service without “Good Reason” (as defined below) so that the Optionee no longer serves in any capacity as an employee, a director, a consultant, or a service provider, (i) any portion of the Option which is not exercisable on the date of such termination of service shall expire on such date and (ii) any portion of the Option which is exercisable on the date of such termination of service shall expire the earlier to occur of the last day of the Option Period or on the date which is ninety (90) days following the date of such termination of service.

 

As used in this Agreement, the term “Cause”  means the commission of an act involving the reckless disregard of one’s duties to the Bank or any of its subsidiaries, willful misconduct, fraud or the indictment for or conviction of any felony under any applicable United States federal, state or other statute.

 

As used in this Agreement, the term “Good Reason”  for termination of service means a decrease in the Optionee’s base salary, a material diminution of overall authority, responsibilities, or duties, or the relocation of Optionee’s place of employment to a location in excess of fifty (50) miles from the place of Optionee’s employment on the Grant Date.

 

(b)                                  Without Cause or Voluntary, For Good Reason. Except as provided in Section 4(c) below, if, during the Option Period, the Optionee’s service with the Bank is terminated by the Bank without Cause or the Optionee voluntarily terminates his or her service with the Bank for Good Reason, then all Options hereunder, whether exercisable or not, shall expire on the earlier to occur of the last day of the Option Period or the second anniversary date of the date of such termination of service.

 

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(c)                                    On or After a Change of Control. If, during the Option Period, the Optionee’s service with the Bank is terminated for any reason on ‘or after a Change of Control (as defined in Section 9 below), then all Options hereunder, whether exercisable or not, shall expire at the end of the Option Period, and not before the end of such period.

 

5.                                      Death or Disability.

 

(a)                                 Except as provided in Section 4(c) above, in the event an Optionee’s termination of service is on account of the Optionee’s death or disability, (i) any portion of the Option which is not exercisable on the date of such death or disability shall expire on such date and (ii) any portion of the Option which is exercisable shall expire on the earlier to occur of the last day of the Option Period or the second anniversary of the date of the Optionee’s termination of service on account of the Optionee’s death or disability.

 

(b)                                 An Optionee shall be deemed to be disabled if, in the opinion of a physician selected by the Committee, he is incapable of performing services for the Bank of the kind he was performing at the time the disability occurred by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long, continued and indefinite duration. The date of determination of disability for purposes hereof shall be the date of such determination by such physician.

 

6.                                      Transferability. This Option shall not be transferable by Optionee otherwise than by Optionee’s will or by the laws of descent and distribution; provided however, that if any such assignment or transfer is anticipated to be to any person (which shall include, but not be limited to an entity or trust) which could, in the sole determination of the Committee, cause the Bank to lose its “S corporation” status under Section 1361 of the Code (if applicable), then such potential assignee or transferee shall be paid the Cash Out Amount as defined in Section 6(o) of the Plan, and such person shall relinquish such option. During the lifetime of Optionee, the Option shall be exercisable only by him. Any heir or legatee of Optionee shall take rights herein granted subject to the terms and conditions hereof. No such transfer of this Option Agreement to heirs or legatees of Optionee shall be effective to bind the Bank unless the Bank shall have been furnished with written notice thereof and a copy of such evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions hereof.

 

7.                                      No Rights as Stockholder. Optionee shall have no rights as a stockholder with respect to any shares of Common Stock covered by this Option Agreement until the Bank receives the written notice of exercise of all or a portion of this Option, the Option payment and the executed signature pages and consents pursuant to Section 3. Until such time, Optionee shall not be entitled to dividends or to vote at meetings of the stockholders of the Bank. Except as provided in Section 11 hereof, no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash or securities or other property) paid or distributions or other rights granted in respect of any share of Common Stock for which the record date for such payment, distribution or grant is prior to the date upon which the Bank receives the written notice of exercise of all or a portion of this Option, the Option payment and the executed signature pages and consents pursuant to Section 3.

 

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8.                                      Extraordinary Corporate Transactions.

 

(a)                                 The existence of this Option shall not affect in any way the right or power of the Bank or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, exchanges, or other similar changes in the Bank’s capital structure or its business, or any merger or consolidation of the Bank, or any issuance of Common Stock or other securities or subscription rights thereto, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Bank, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

(b)                                 If the Bank recapitalizes or otherwise changes its capital structure, or merges, consolidates, sells all of its assets or dissolves and such transaction is not a Change of Control as defined in Section 9 below (each of the foregoing a “Fundamental Change”), then thereafter upon any exercise of this Option, Optionee shall be entitled to purchase under this Option, in lieu of the number of shares of Common Stock covered by such option, the number and class of shares of stock and securities to which the Optionee would have been entitled pursuant to the terms of the Fundamental Change if, immediately prior to such Fundamental Change, the Optionee had been the holder of record of the number of shares of Common Stock covered by the option.

 

(c)                                  The issuance by the Bank of any other class of securities which is not Common Stock or convertible into Common Stock shall not affect the number of shares of Common Stock subject to this Option or the purchase price per share under this Option, unless the Committee shall determine in its sole discretion than an adjustment is necessary to provide equitable treatment to Optionee.

 

9.                                      Change of Control. Except as provided below, each of the following events shall hereinafter be defined as a “Change of Control”:

 

(1)                                 Upon the occurrence of both of the following events:

 

(a)                                 the Bank shall not be the surviving entity in any merger or consolidation with an entity which is not related to the Bank (or survives only as a subsidiary of another entity other than one of the Bank’s related entities); and

 

(b)                                 as a result of or in connection with the occurrence of (a) above, the persons who were Directors of the Bank just prior to such event cease to constitute a majority of the Board of the Bank or its successor; or

 

(2)                                 the Bank sells all or substantially all of its assets to any other person or entity (other than an entity which is related to the Bank); or

 

(3)                                 the Bank is to be dissolved and liquidated.

 

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10.                               Occurrence of a Change of Control. Upon the occurrence of an event of Change of Control, the Committee, in its discretion, may act to affect one or more of the following alternatives with respect to this Option:

 

(a)                                 determine a reasonable period of time on or before a specified date (before or after such Change of Control) after which specified date any unexercised portion of the Option and all rights of Optionee shall terminate;

 

(b)                                 require the mandatory surrender to the Bank by the Optionee of some or all of the unexercised portion of the Option as of a date, before or after such Change of Control, specified by the Committee, in which event the Committee shall thereupon cancel such Option and the Bank shall pay to the Optionee an amount of cash per share equal to the excess, if any, of the fair market value of the shares subject to the unexercised portion of the Option over the exercise price of the Option; or

 

(c)                                  provide that upon any exercise of this Option, the Optionee shall be entitled to purchase under such Option, the number and class of shares of stock or other securities or property (including, without limitation, cash) to which the Optionee would have been entitled if, immediately prior to the Change of Control, the Optionee had been the holder of record of the number of shares of Common Stock then covered by the Option. The provisions contained in this Section shall not terminate any rights of the Optionee to further payments pursuant to any other agreement with the Bank following a Change of Control.

 

11.                               Changes in Capital Structure. If the outstanding shares of Common Stock of the Bank shall at any time be changed or exchanged by declaration of a stock dividend, stock split, or combination of shares, the number and kind of shares subject to this Option, and the Option exercise price, shall be appropriately and equitably adjusted so as to maintain the proportionate number of shares without changing the aggregate Option exercise price.

 

12.                               Compliance With Securities Laws. Upon the acquisition of any shares pursuant to the exercise of the Option herein granted, Optionee (or any person acting under Section 6) will enter into such written representations, warranties and agreements as the Bank may reasonably request in order to comply with applicable securities laws or with this Option Agreement.

 

13.                               Compliance With Laws. Notwithstanding any of the other provisions hereof, Optionee agrees that he will not exercise this Option, and that the Bank will not be obligated to issue any shares pursuant to this Option Agreement, if the exercise of this Option or the issuance of such shares of Common Stock would constitute a violation by the Optionee or by the Bank of any provision of any law or regulation of any governmental authority.

 

14.                               Withholding of Tax. To the extent that the exercise of this Option or the disposition of shares of Common Stock acquired by exercise of this Option results in compensation income to the Optionee for federal or state income tax purposes, the Optionee shall pay to the Bank at the time of such exercise or disposition (or such other time as the law permits if the Optionee is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended) such amount of money as the

 

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Bank may require to meet its obligation under applicable tax laws or regulations; and, if the Optionee fails to do so, the Bank is authorized to withhold from any cash remuneration then or thereafter payable to the Optionee, any tax required to be withheld by reason of such resulting compensation income or Bank may otherwise refuse to issue or transfer any shares otherwise required to be issued or transferred pursuant to the terms hereof.

 

15.                               Stockholders Agreements. As a condition to and a requirement of receiving any shares of Common Stock upon the exercise of this Option, the Optionee (or the Optionee’s representative upon the Optionee’s death) shall execute the Redstone Bank, N.A. Stock Restriction Agreement or any other similar agreement placing contractual obligations on shareholders of the Bank which restrict the ability of such shareholders of the Bank to transfer their shares of Common Stock (“Shareholders Agreements”)  and any S Corporation consents and questionnaires (“S Corp Consents”), if applicable.

 

16.                               Resolution of Disputes. As a condition of the granting of the Option hereby, the Optionee and his heirs and successors agree that any dispute or disagreement which may arise hereunder shall be determined by the Committee in its sole discretion and judgment, and that any such determination and any interpretation by the Committee of the terms of this Option Agreement shall be final and shall be binding and conclusive, for all purposes, upon the Bank, Optionee, his heirs and personal representatives.

 

17.                               Legends on Certificate. The certificates representing the shares of Common Stock purchased by exercise of this Option will be stamped or otherwise imprinted with legends in such form as the Bank or its counsel may require with respect to any applicable restrictions on sale or transfer and the stock transfer records of the Bank will reflect stop-transfer instructions with respect to such shares, including, but not limited to, any legends required under the Shareholders Agreements.

 

18.                               Notices. Every notice hereunder shall be in writing and shall be given by registered or certified mail or by fax or telecopy. All notices of the exercise of any Option hereunder shall be directed to Redstone Bank, N.A., 109 North Post Oak Lane, Suite 200, Houston, Texas 77024, Attention: Corporate Secretary with a copy to Redstone Bank, N.A., 109 North Post Oak Lane, Suite 200, Houston, Texas 77024, Attention: Executive Vice President, Human Resources. Any notice given by the Bank to Optionee directed to him at his address on file with the Bank shall be effective to bind him and any other person who shall acquire rights hereunder. The Bank shall be under no obligation whatsoever to advise Optionee of the existence, maturity or termination of any of Optionee’s rights hereunder and Optionee shall be deemed to have familiarized himself with all matters contained herein and in the Plan which may affect any of Optionee’s rights or privileges hereunder.

 

19.                               Construction and Interpretation. Whenever the term “Optionee” is used herein under circumstances applicable to any other person or persons to whom this award, in accordance with the provisions of Section 6 hereof, may be transferred, the word “Optionee”  shall be deemed to include such person or persons. Whenever the term “Bank”  is used herein, the word “Bank”  shall be deemed to include any successor to its business and/or assets which assumes this Option Agreement by

 

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operation of law, written agreement, or otherwise. References to the masculine gender herein also include the feminine gender for all purposes.

 

20.                               Agreement Subject to Plan. This Option Agreement is subject to the Plan. The terms and provisions of the Plan (including any subsequent amendments thereto) are hereby incorporated herein by reference thereto. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail. All definitions of words and terms contained in the Plan shall be applicable to this Option Agreement.

 

21.                               No Right to Employment, Directorship, or Consultant Relationship. Optionee shall be considered to be in the employment of the Bank, in service on the Board or be a consultant to the Bank so long as he or she remains an employee, director, or consultant of the Bank. Any questions as to whether and when there has been a termination of such employment or service on the Board or consultant relationship and the cause of such termination shall be determined by the Committee, and its determination shall be final. Nothing contained herein shall be construed as conferring upon Optionee the right to continue in the employ of the Bank or to continue service on the Board or to continue in a consultant relationship, nor shall anything contained herein be construed or interpreted to limit the “employment at will” relationship between Optionee, (if the Optionee is an employee) and the Bank.

 

22.                               Binding Effect. This Option Agreement shall be binding upon and inure to the benefit of any successors to the Bank and all persons lawfully claiming under Optionee.

 

IN WITNESS WHEREOF, this Option Agreement has been executed as of this        day of                          .

 

	
 
    	
REDSTONE BANK, N.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    
	
 
    	
OPTIONEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    

 

7Exhibit 10.2b

 

GREEN BANCORP, INC.
 2006 STOCK OPTION PLAN.

 

Green Bancorp (the “Company”), a Texas corporation and the proposed holding company for Redstone Bank, NA (the “Bank”), a national bank, hereby adopts this 2006 Stock Option Plan (the “Plan”), under which options may be granted from time to time to directors, officers and employees of the Company and of any subsidiary corporation (as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”)), including the Bank, and any subsidiary corporation of the Company which may be established in the future, to purchase shares of common stock of the Company, par value  $0.01 per share (the “Common Stock”).

 

1.            PURPOSE OF THE PLAN. The purpose of the Plan is to aid the Company in attracting and retaining capable directors, officers and employees and to provide a long range incentive for such persons to remain in the management of the Company, to perform at increasing levels of effectiveness and to acquire a permanent stake in the Company with the interest and outlook of an owner. These objectives will be promoted through the granting of options to acquire shares of Common Stock pursuant to the terms of this Plan.

 

2.            ADMINISTRATION.

 

(a)          The Plan shall be administered by a committee (the “Committee”), which shall consist of not less than two members of the Board of Directors of the. Company (the “Board’). Members of the Committee shall serve at the pleasure of the Board. In the absence at any time of a duly appointed Committee, this Plan shall be administered by the Board, in which case all references to the Committee in this Plan shall be deemed to refer to the Board. The Committee may designate any officers or employees of the Company to assist in the administration of the Plan and to execute documents on behalf of the Committee and perform such other ministerial duties as may be delegated to them by the Committee.

 

(b)          Subject to the provisions of the Plan, the determinations or the interpretation and construction of any provision of the Plan by the Committee shall be final and conclusive upon all persons affected thereby. By way of illustration and not of limitation, the Committee shall have the discretion (a) to construe and interpret the Plan and all options granted hereunder and to determine the terms and provisions (and amendments thereof) of the options granted under the Plan (which need not be identical); (b) to define the terms used in the Plan and in the options granted hereunder; (c) to prescribe, amend and rescind the rules and regulations relating to the Plan; (d) to determine the individuals to whom and the time or times at which such options shall be granted, the number of shares to be subject to each option, the option price, and the determination of leaves of absence which may be granted to participants without constituting a termination of their employment for the purposes of the Plan; and (e) to make all other determinations necessary or advisable for the administration of the Plan.

 

(c)           It shall be in the discretion of the Committee to grant options which qualify as “incentive stock options,” as that term is defined in Section 422 of the Code (“Incentive Stock Options”), or which do not qualify as Incentive Stock Options (“Nonqualified Stock Options”) (herein referred to collectively as “Options;” however, whenever reference is specifically made

 

 

only to “Incentive Stock Options” or “Nonqualified Stock Options,” such reference shall be deemed to be made to the exclusion of the other). Any options granted which fail to satisfy the requirements for Incentive Stock Options shall become Nonqualified Stock Options.

 

3.            STOCK AVAILABLE FOR OPTIONS. Common Stock issued upon exercise of Options granted under the Plan may be authorized but unissued shares of Common Stock and/or shares of Common Stock which are acquired by the Company from shareholders of the Company in public or private transactions. The total number of shares of Common Stock for which Options may be granted under this Plan is 450,000, (15% of the number of shares of Common Stock to be issued by the Company. Such total number of shares is subject to any capital adjustments as provided in Section 13. In the event that an Option granted under the Plan is forfeited, released, expires or is terminated unexercised as to any shares covered thereby, such shares thereafter shall be available for the granting of Options under the Plan; provided that if the forfeiture, expiration, release or termination date of an Option is beyond the term of existence of the Plan as described in Section 18, then any shares covered by forfeited, unexercised, released or terminated options shall not reactivate the existence of the Plan and therefore may not be available for additional grants under the Plan. The Company, during the term of the Plan, will reserve and keep available a number of shares of Common Stock sufficient to satisfy the requirements of the Plan.

 

4.            ELIGIBILITY. Options may be granted to such directors, officers and/or employees of the Company as may be designated from time to time by the Committee, provided that a member of the Board of Directors of the Company who is not an officer or employee of the Company shall be eligible to receive only Nonqualified Stock Options under the Plan. In determining the directors, officers and employees to whom Options shall be granted and the number of shares to be covered by each Option, the Committee shall take into account the nature of the services rendered by such persons, their present and potential contributions to the success of the Company and such other factors as the Committee shall deem relevant. A director, officer or employee who has been granted an Option under the Plan may be granted an additional Option or Options under the Plan if the Committee shall so determine.

 

5.            OPTION GRANTS. The proper officers on behalf of the Company and each Optionee shall execute a Stock Option Agreement (the “Option Agreement”) which shall set forth the total number of shares of Common Stock to which it pertains, the exercise price, whether it is a Nonqualified Stock Option or an Incentive Stock Option, and such other terms, conditions, restrictions and privileges as the Committee in each instance shall deem appropriate, provided that they are not inconsistent with the terms, conditions and provisions of this Plan, Each Optionee shall receive a copy of his executed Option Agreement. Any Option granted with the intention that it will be an Incentive Stock Option but which fails to satisfy a requirement for Incentive Stock Options shall continue to be valid and shall be treated as a Nonqualified Stock Option.

 

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6.            OPTION PRICE.

 

(a)          The option price of each Option granted under the Plan shall be not less than 100% of the market value of the stock on the date of grant of the Option. In the case of incentive stock options granted to a shareholder who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (a “ten percent shareholder”), the option price of each Option granted under the Plan shall not he less than 110% of the market value of the stock on the date of grant of the Option. The market value per share of the Common Stock shall be its fair market value as determined by the Committee, in its sole and absolute discretion. The Committee shall maintain a written record of its method of determining such value.

 

(b)          Payment in full of the purchase price for shares of Common Stock purchased pursuant to the exercise of any Option shall be made to the Company upon exercise of the Option. All shares sold under the Plan shall be fully paid and nonassessable. Payment for shares may be made by the optionee (i) in cash or by check, (ii) at the discretion of the Committee, by delivery of a properly executed exercise notice, together with irrevocable instructions to a broker to sell the shares and then to properly deliver to the Company the amount of sale proceeds to pay the exercise price, all in accordance with applicable laws and regulations, or (iii) at the discretion of the Committee, by delivering shares of Common Stock (including shares acquired pursuant to the exercise of an Option) equal in fair market value to the purchase price of the shares to be acquired pursuant to the Option, by withholding some of the shares of Common Stock which are being purchased upon exercise of an Option, or any combination of the foregoing.

 

7.            EXPIRATION OF OPTIONS. The Committee shall determine the expiration date or dates of each Option, but such expiration date shall be not later than 10 years after the date such Option is granted. In the event an Incentive Stock Option is granted to a ten percent shareholder, the expiration date or dates of each Option shall be not later than five years after the date such Option is granted. The Committee, in its discretion, may extend the expiration date or dates of an Option after such date was originally set; however, such expiration date may not exceed the maximum expiration date described in this Section 7.

 

8.            TERMS AND CONDITIONS OF OPTIONS.

 

(a)          All Options must be granted within 10 years of the Effective Date of this Plan, as defined in Section 17.

 

(b)          Subject to Section 4 hereof, the Committee may grant Options which are intended to be Incentive Stock Options and Nonqualified Stock Options, either separately or jointly, to an eligible director, officer or employee.

 

(c)           The grant of Options shall be evidenced by a written Option Agreement containing terms and conditions established by the Committee consistent with the provisions of this Plan.

 

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(d)            Unless otherwise determined by the Committee, not less than 100 shares may be purchased upon exercise of an Option at any one time unless the number purchased is the total number at that time purchasable under the Plan or Option Agreement.

 

(e)            The recipient of an Option shall have no rights as a shareholder with respect to any shares covered by his Option until payment in full by him for the shares being purchased. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock is fully paid for.

 

(f)           Notwithstanding any contrary provisions contained in this Plan, and as long as required by Section 422 of the Code, the aggregate fair market value of the Common Stock (determined as of the time the Option is granted) with respect to which Incentive Stock Options are exercisable for the first time by any optionee during any calendar year (under this Plan or any other stock option plan maintained by the Company) shall not exceed $100,000.

 

(g)           All stock obtained pursuant to an Option which qualifies as an Incentive Stock Option may, in the discretion of the Committee, be held in escrow for a period which ends on the later of (i) two years from the date of the granting of the Option or (ii) one year after the transfer of the stock pursuant to the exercise of the Option. The stock shall be held by the Company or its designee. The employee who has exercised the Option shall during such holding period have all rights of a shareholder, including but not limited to the rights to vote, receive dividends and sell the stock. The sole purpose of the escrow is to inform the Company of a disqualifying disposition of the stock within the meaning of Section 422 of the Code, and it shall be administered solely for that purpose.

 

(h)            No more than 40% of the shares which are reserved for issuance upon exercise of Options granted hereunder may be issued to any one participant under the Plan.

 

9.            EXERCISE OF OPTIONS.

 

(a)          Options shall become vested and exercisable at the times, at the rate and subject to such limitations as may be set forth in the Option Agreement executed in connection therewith; provided, however, that unless otherwise determined by the Committee, Options granted during the first three years of the Company’s operations shall vest in approximately equal percentages each year over a period no shorter than three years; and provided further that the Committee may waive this minimum three-year vesting requirement for persons awarded options to purchase only a nominal number of shares or otherwise in their discretion.

 

(b)          Unless otherwise determined by the Committee, upon the optionee’s death, retirement (as defined in Section 11 hereof) or disability within the meaning of Section 22(e)(3) of the Code all Options granted to such optionee hereunder shall become vested and exercisable for the period set forth in Section 11 hereof. In addition, all outstanding Options shall become

 

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immediately vested and exercisable in full in the event of a “change in control of the Company” as of the effective date of such change in control of the Company. A “change in control of the Company” shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company in fact is required to comply with Regulation 14A thereunder; provided that, without limitation, such a change in control shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities, or (ii) during any period of twenty-four consecutive months during the term of an Option, individuals who at the beginning of such period constitute the Board of the Company 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 who was not a director at the date of grant has been approved in advance by directors representing at least two-thirds of the directors then in office who were directors at the beginning of the period.

 

(c)          The exercise of any Option must be evidenced by written notice to the Company that the optionee intends to exercise his Option. In no event shall an Option be deemed granted by the Company or exercisable by a recipient prior to the mutual execution by the Company and the recipient of an Option Agreement which comports with the requirements of Section 5 and Section 8(c) hereof.

 

(d)          Any right to exercise Options in annual installments shall be cumulative and any vested installments may be exercised, in whole or in part, at the election of the optionee.

 

(e)           The inability of the Company to obtain approval from any regulatory body or authority deemed by counsel to be necessary to the lawful issuance and sale of any shares of Common Stock hereunder shall relieve the Company of any liability in respect of the non-issuance or sale of such shares. As a condition to the exercise of an Option, the Company may require the person exercising the Option to make such representations and warranties as may be necessary to ensure compliance with federal or state securities laws.

 

(f)            The Committee shall have the discretionary authority to impose in the Option Agreements such restrictions on shares of Common Stock as it may deem appropriate or desirable, including but not limited to the authority to impose a right of first refusal or to establish repurchase rights or both of these restrictions.

 

10.           TERMINATION OF DIRECTORSHIP OR EMPLOYMENT - EXCEPT BY DISABILITY, RETIREMENT OR DEATH.  If an optionee ceases to be a director, officer or employee of the Company for any reason other than death, retirement or disability (as defined in Section 11), he may, at any time within three months after his date of termination, or such longer period as may be determined by the Committee in its discretion but not later than the date of expiration of the Option, exercise any Option only to the extent it was vested and he was entitled

 

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to exercise the Option on the date of termination. Any Options or portions of Options of such optionees which are not so exercised shall terminate and be forfeited.

 

11.           TERMINATION OF DIRECTORSHIP OR EMPLOYMENT - DISABILITY, RETIREMENT OR DEATH. If an optionee dies or ceases to be a director, officer or employee of the Company due to his becoming disabled within the meaning of Section 22(e)(3) of the Code, or as a result of retirement, all unvested and forfeitable Options of such optionee shall immediately become vested and exercisable and he, or the person or persons to whom the Option is transferred by will or by the laws of descent and distribution, may, at any time within twelve months after the death or date of termination, or such longer period as may be determined by the Committee in its discretion but not later than the date of expiration of the Option, exercise any Option with respect to all shares subject thereto. Any Options or portions of Options of such optionees which are not so exercised shall terminate and be forfeited. “Retirement” means a termination of employment or service which constitutes a “retirement” under any applicable qualified pension benefit plan maintained by the Company or a subsidiary corporation, or, if no such, plan is applicable, which would constitute “retirement” under the Company’s pension benefit plan, if such individual were a participant in that plan.

 

12.          RESTRICTIONS ON TRANSFER. An Option granted under this Plan may not be transferred except by will or the laws of descent and distribution and, during the lifetime of the optionee to whom it was granted, may be exercised only by such optionee.

 

13.          CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK.

 

(a)           The aggregate number of shares of Common Stock available for issuance under the Plan, the number of shares to which any outstanding Option relates and the exercise price per share of Common Stock under any outstanding Option shall be proportionately adjusted for any increase or decrease in the total number of outstanding shares of Common Stock issued subsequent to the Effective Date (as defined in Section 17) resulting from a split, subdivision or consolidation of shares or any other capital adjustment, the payment of a stock dividend or other increase or decrease in such shares effected without receipt or payment of consideration by the Company. If, upon a merger, consolidation, reorganization, liquidation, recapitalization or the like of the Company, the shares of the Common Stock shall be exchanged for other securities of the Company or of another corporation, each recipient of an Option shall be entitled, subject to the conditions herein stated, to purchase or acquire such number of shares of Common Stock or amount of other securities of the Company or such other corporation as were exchangeable for the number of shares of Common Stock of the Company which such optionees would have been entitled to purchase or acquire except for such action, and appropriate adjustments shall be made to the per share exercise price of outstanding Options.

 

(b)           To the extent that the foregoing adjustments described in Section 13(a) above relate to particular Options or to particular stock or securities of the Company subject to Option under this Plan, such adjustments shall be made by the Committee, whose determination in that respect shall be final and conclusive.

 

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(c)          The grant of an Option pursuant to this Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets.

 

(d)          No fractional shares of Common Stock shall be issued under the Plan for any adjustment made pursuant to this Section 13 or otherwise.

 

(e)          Any adjustment made pursuant to this Section 13 shall be made, to the extent practicable, in such manner as not to constitute a modification of any outstanding Incentive Stock Options within the meaning of Section 424(h) of the Code.

 

14.          INVESTMENT PURPOSE. At the discretion of the Committee, any Option Agreement may provide that the optionee shall, by accepting the Option, represent and agree, for himself and his transferees by will or the laws of descent and distribution, that all shares of Common Stock purchased upon the exercise of the Option will be acquired for investment and not for resale or distribution, and that upon each exercise of any portion of an Option, the person entitled to exercise the same shall furnish evidence of such facts which is satisfactory to the Company. Certificates for shares of Common Stock acquired under the Plan may be issued bearing such restrictive legends as the Company and its counsel may deem necessary to ensure that the optionee is not an “underwriter” within the meaning of the federal securities laws.

 

15.          APPLICATION OF FUNDS. The proceeds received by the Company from the sale of Common Stock pursuant to Options will be used for general corporate purposes.

 

16.          NO OBLIGATION TO EXERCISE. The granting of an Option shall impose no obligation upon the optionee to exercise such Option. Notwithstanding the foregoing, the Bank’s primary federal regulator can direct the Company to require Plan participants to exercise or forfeit their Options if the Bank’s capital falls below the minimum regulatory requirements as determined by the Bank’s state or primary federal regulator. In such event, any options not so exercised shall terminate and be forfeited.

 

17.           EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of the date of adoption of the Plan by the Board of Directors of the Company (the “Effective Date”). The Plan, and any previously granted Options thereunder, shall be subject to the approval of the shareholders of the Company at a meeting held within 12 months of the Effective Date in order to meet the requirements of Section 422 of the Code and regulations thereunder.

 

18.           TERM OF THE PLAN. Unless sooner terminated, this Plan shall remain in effect for a period of ten years ending on the tenth anniversary of the Effective Date. Termination of the Plan shall not affect any Options previously granted and such Options shall remain valid and in effect until they have been fully exercised or earned, are surrendered or by their terms expire or are forfeited.

 

7

 

19.         TIME OF GRANTING OF OPTIONS. Nothing contained in the Plan or in any resolution adopted or to be adopted by the Committee or the shareholders of the Company and no action taken by the Committee shall constitute the granting of any Option hereunder. The granting of an Option pursuant to the Plan shall take place only when an Option Agreement shall have been duly executed and delivered by and on behalf of the Company at the direction of the Committee.

 

20.         WITHHOLDING TAXES. Whenever the Company proposes or is required to cause to be issued or transferred shares of stock, cash or other assets pursuant to this Plan, the Company shall have the right to require the optionee to remit to the Company an amount sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the issuance of any certificate or certificates for such shares or delivery of such cash or other assets. Alternatively, the Company may issue or transfer such shares of stock or make other distributions of cash or other assets net of the number of shares or other amounts sufficient to satisfy the withholding tax requirements. For withholding tax purposes, the shares of stock, cash and other assets to be distributed shall be valued on the date the withholding obligation is incurred.

 

21.         TERMINATION AND AMENDMENT. The Board may at any time alter, suspend, terminate or discontinue the Plan, subject to any applicable regulatory requirements and any required shareholder approval or any shareholder approval which the Board may deem advisable for any reason, such as for the purpose of obtaining or retaining any statutory or regulatory benefits under tax, securities or other laws or satisfying applicable stock exchange or quotation system listing requirements. The Board may not, without the consent of the holder of an Option previously granted, make any alteration which would deprive the optionee of his rights with respect thereto.

 

22.         CAPTIONS AND HEADINGS; GENDER AND NUMBER. Captions and paragraph headings used herein are for convenience only, do not modify or affect the meaning of any provision herein, and are not a part, and shall not serve as a basis for interpretation or construction of, this Plan. As used herein, the masculine gender shall include the feminine and neuter, and the singular number shall include the plural, and vice versa, whenever such meanings are appropriate.

 

23.           COST OF PLAN; EXCULPATION AND INDEMNIFICATION. All costs and expenses incurred in the operation and administration of the Plan shall be borne by the Company. In connection with this Plan, no member of the Board and no member of the Committee shall be personally liable for any act or commission to act or for any mistake in judgment made in good faith, unless arising out of, or resulting from, such person’s own bad faith, willful misconduct or criminal acts. To the extent permitted by applicable laws and regulations, the Company shall indemnify, defend and hold harmless the members of the Board and members of the Committee, and each other officer or employee of the Company or of subsidiary corporation to whom any power or duty relating to the administration or interpretation

 

8

 

of this Plan may be assigned or delegated, from and against any and all liabilities (including any amount paid in settlement of a claim with the approval of the Board), and any costs or expenses (including counsel fees) incurred by such persons arising out of or as a result of, any act or omission to act, in connection with the performance of such person’s duties, responsibilities and obligations under this Plan, other than such liabilities, costs and expenses as may arise out of, or result from, the bad faith, willful misconduct or criminal acts of such persons.

 

24.           GOVERNING LAW. Without regard to the principles of conflicts of laws, the laws of the State of Texas shall govern and control the validity, interpretation, performance and enforcement of this Plan.

 

APPROVED by the Board of Directors on this the 21st day of June 2006.

 

	
 
    	
/s/   Manuel J. Mehos
    
	
 
    	
Manuel   J. Mehos, Director
    
	
 
    	
 
    
	
 
    	
/s/   Catherine N. Wylie
    
	
 
    	
Catherine   N. Wylie, Director
    

 

APPROVED by the Stockholder on this the 21st day of June 2006.

 

	
 
    	
/s/   Manuel J. Mehos
    
	
 
    	
Manuel   J. Mehos, Sole Stockholder
    

 

9

 

UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF

GREEN BANCORP, INC.

 

The undersigned, being all of the members of the Board of Directors of Green Bancorp, Inc., a Texas corporation (the “Corporation”), hereby waive any right to notice and meeting and do hereby take, adopt and consent in writing to the following resolutions and actions:

 

RESOLVED, that the Corporation’s 2006 Stock Option Plan, attached hereto as Exhibit A, be and hereby is approved;

 

FURTHER RESOLVED, that the officers of the Corporation be and they each hereby are authorized to execute and deliver any and all further instruments, agreements, documents, notices, agreements and applications as may be necessary and proper to carry out the purposes of these resolutions.

 

FURTHER RESOLVED, that any and all action taken in good faith by the officers and directors of the Corporation prior to the date hereof on behalf of the Corporation and in furtherance of the transactions contemplated by the foregoing resolutions are in all respects ratified, confirmed, and approved by the Corporation as its own act and deed, and shall be conclusively deemed to be such corporate act and deed for all purposes.

 

IN WITNESS WHEREOF, the undersigned have caused this Written Consent to be executed as of the 27th day of December, 2006.

 

	
 
    	
/s/   Manuel J. Mehos
    
	
 
    	
Manuel   J. Mehos
    
	
 
    	
 
    
	
 
    	
/s/   Catherine N. Wylie
    
	
 
    	
Catherine   N. Wylie
    

 

 

EXHIBIT A

 

 

GREEN BANCORP, INC.

2006 STOCK OPTION PLAN

FORM OF STOCK OPTION AGREEMENT

 

	
 
    	
Date of Grant:
    	
 
    	
 
    

 

1.  Grant of Option.  Subject to the terms and conditions herein and the provisions of the Green Bancorp, Inc. Stock Option Plan (the “Plan”), Green Bancorp, Inc. (the “Company”) on the above date has granted to the optionee named below (the “Optionee”) the right and option to purchase from the Company the number of shares of common stock of the Company at the exercise price shown below:

 

Optionee:

Shares Subject to Option:

Exercise Price: $10.00 per share

 

The option evidenced by this agreement is intended to be an incentive stock option within the meaning of section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), to the maximum extent permitted under that section of the Code.

 

All capitalized terms used herein shall have the same meaning as set forth in the Plan, except as otherwise specified in this agreement.

 

2.  Exercisability.  The Optionee shall be entitled to exercise the option evidenced by this Agreement in accordance with the following schedule:

 

shares on                                  , 2008;

shares on                                  , 2009;

shares on                                  , 2010;

shares on                                  , 2011.

 

In addition, the option shall become exercisable with respect to all                shares subject to the option as of:

 

(a)                                 the date of Optionee’s death;

 

(b)                                 the date of Optionee’s termination of employment as a result of being “disabled” (within the meaning of section 22(e)(3) of the Code;

 

(c)                                  the date of Optionee’s termination of employment with the Company as a result of “retirement,” as defined in the Plan; or

 

(d)                                 the date of a “change in control of the Company,” as defined in the Plan.

 

 

3.              Forfeiture.  To the extent not otherwise exercisable pursuant to the provisions of Section 2 above, the option shall be forfeited upon the Optionee’s termination of employment with the Company.

 

4.              Expiration.  The rights to exercise the option privilege evidenced by this Agreement shall no longer be exercisable upon the earliest of the following:

 

(a)                                 The 10-year anniversary of the date the option privilege was granted;

 

(b)                                 The day that is three months after the Optionee’s termination of employment other than for death, disability or retirement (the last two as defined above); or

 

(c)                                  The 12-month anniversary of the Optionee’s termination of employment as a result of death, disability or retirement (the last two as defined above).

 

5.              Nontransferability.  The option shall not be assignable or transferable, except by will or by the laws of descent and distribution.  Any transferee by will or by the laws of descent and distribution shall be bound by the provisions of this Plan.  Any attempt to assign, pledge, transfer, hypothecate, or otherwise dispose of the option and any levy of execution, attachment, or similar process on the option shall be null and void.

 

6.              Adjustment.  In the event that any distribution, capital contribution, split-up, reorganization, merger, consolidation, spin-off, reclassification, split or combination of the shares of the Company’s common stock, or other similar transactions or events affects the shares subject to the option such that an adjustment is determined by the Committee to be appropriate under the Plan, then the Committee shall, in its sole discretion and in such manner as it may deem equitable, adjust any or all of the number, kind, or other terms of the shares of the Company’s common stock.

 

7.              No Right to Employment.  Nothing contained in this option agreement shall confer upon the Optionee any right to the continuation of his employment, agency, or other relationship with the Company or any affiliate or interfere in any way with the right of the Company or any affiliate, subject to the terms of any separate employment or other agreement to the contrary, at any time to terminate such employment or agreement or to increase or decrease the compensation of the individual from the rate in effect at the time of the grant of an option.

 

8.              Withholding.  Whenever the Company issues or transfers stock in connection with the exercise of the option evidenced by this Agreement, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy any federal, state, and local withholding tax requirements prior to the delivery of any such stock.  In the Committee’s sole discretion and in the manner and amount determined by the Committee, the recipient may elect to satisfy any withholding obligation, in whole or in part, by electing to have the Company withhold stock (that would otherwise be issued or transferred to such person) with a fair market value equal to the amount required to be withheld.

 

9.              Administration and Interpretation.  In consideration of the grant, the Optionee agrees that the Committee shall have the exclusive power to interpret the Plan and this agreement

 

 

and to adopt such rules for the administration, interpretation, and application of the Plan and agreement as are consistent therewith and to interpret or revoke any such rules.  All actions taken and all interpretations and determinations made by the Committee shall be final, conclusive, and binding upon the Optionee, the Company, and all other interested persons.  No member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this agreement.  The Committee may delegate its interpretive authority to an officer or officers of the Company.

 

10.                               Incorporation of Terms of Plan.  By his or her signature below, Optionee acknowledges that he or she has read the terms of the Plan and agrees to be bound by all provisions thereof.

 

IN WITNESS WHEREOF, Green Bancorp, Inc. has caused this agreement to be executed by an appropriate officer and the Optionee has executed this agreement, both as of the date of grant shown above.

 

	
 
    	
GREEN   BANCORP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Dated:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Optionee:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Dated:

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