Document:

Exhibit 10.6

Exhibit
10.6

NON-QUALIFIED STOCK OPTION AGREEMENT

under the

FIRST SECURITY GROUP, INC.

2002 LONG-TERM INCENTIVE PLAN

Optionee:
___________________________________     

Number Shares Subject to Option:
____________________    

Exercise Price per Share: $ _______________  

Date of Grant: ________________________    

1.     Grant of Option. First
Security Group, Inc. (the "Company") hereby grants to the Optionee named above
(the "Optionee"), under the First Security Group, Inc. 2002 Long--Term Incentive
Plan (the "Plan"), a Non-Qualified Stock Option to purchase, on the terms and
conditions set forth in this agreement (this "Option Agreement"), the number of
shares indicated above of the Company's $0.01 par value common stock (the
"Stock"), at the exercise price per share set forth above (the "Option").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned such terms in the Plan.

2.     Vesting of Option. Unless the
exercisability of the Option is accelerated in accordance with Sections 9.7,
9.8, 9.9 and/or 9.10 of the Plan, the Option shall vest (become exercisable) in
accordance with the following schedule:

	 	
      Years
      of Service
	 	 	 
	 	
      After
      Date of Grant
	 	
      Percent
      of Option Shares Vested
	 

3.     Period of Option and Limitations
on Right to Exercise. The Option will, to the extent not previously
exercised, lapse under the earliest of the following circumstances; provided,
however, that the Committee may, prior to the lapse of the Option under the
circumstances described in paragraphs (b), (c) and (d) below, provide in writing
that the Option will extend until a later date:

(a)     The Option shall lapse as of 5:00
p.m., Eastern Time, on the tenth anniversary of the date of grant (the
"Expiration Date").

(b)     The Option shall lapse three months
after the date the Optionee ceases to serve on the Board of Directors of the
Company, a Parent, or a Subsidiary for any reason other than the Optionee's
death or Disability; provided, however, that if the Optionee ceases to serve on
the Board of Directors of the Company, a Parent, or a Subsidiary by reason of a
voluntary resignation during the term of his appointment or voluntarily chooses
not to stand for re-election, then the Option shall lapse immediately.

(c)     If the Optionee ceases to serve on
the Board of Directors of the Company, a Parent, or a Subsidiary by reason of
Disability, the Option shall lapse one year after the date of the Optionee's
termination of service.

(d)     If the Optionee dies before the
Option otherwise lapses and (i) while serving on the Board of Directors of the
Company, a Parent, or a Subsidiary, (ii) during the three-month period described
in subsection (b) above, or (iii) during the one-year period described in
subsection (c) above, the Option shall lapse one year after the date of the
Optionee's death. Upon the Optionee's death, the Option may be exercised by the
Optionee's beneficiary.

If the Optionee or his beneficiary exercises an Option after
termination of service, the Option may be exercised only with respect to the
shares that were otherwise vested on the date the Optionee ceased to serve on
the Board of Directors of the Company, a Parent, or a Subsidiary (including
vesting by acceleration in accordance with Sections 9.7, 9.8, 9.9 and/or 9.10 of
the Plan).

Whether a termination of service as a director of the Company, a
Parent, or a Subsidiary has occurred, as contemplated by this Paragraph 3, shall
be determined in accordance with the applicable provisions of the Plan,
including, but not limited to, Section 3.1(j) thereof. 

4.     Exercise of Option. The Option
shall be exercised by written notice directed to the Secretary of the Company at
the principal executive offices of the Company, in substantially the form
attached hereto as Exhibit A, or such other form as the Committee may hereafter
approve and require. Unless the exercise is a broker-assisted "cashless
exercise" as described below, such written notice shall be accompanied by full
payment in cash, shares of Stock previously acquired by the Optionee, or any
combination thereof, for the number of shares specified in such written notice;
provided, however, that if shares of Stock are used to pay the exercise price,
such shares must have been held by the Optionee for at least six months. The
Fair Market Value of the surrendered Stock as of the last trading day
immediately prior to the exercise date shall be used in valuing Stock used in
payment of the exercise price. To the extent permitted under Regulation T of the
Federal Reserve Board, and subject to applicable securities laws, the Option may
be exercised through a broker in a so-called "cashless exercise" whereby the
broker sells the Option shares and delivers cash sales proceeds to the Company
in payment of the exercise price. In such case, the date of exercise shall be
deemed to be the date on which notice of exercise is received by the Company and
the exercise price shall be delivered to the Company on the settlement
date.

Subject to the terms of this Option Agreement, the Option may be
exercised at any time, or from time to time in part, and without regard to any
other option held by the Optionee to purchase stock of the Company, as to any
Option Shares then vested under Paragraph 2. 

2

5.     Limitation of Rights. The
Option does not confer to the Optionee or the Optionee's personal representative
any rights of a shareholder of the Company unless and until shares of Stock are
in fact issued to such person in connection with the exercise of the Option.
Nothing in this Option Agreement shall interfere with or limit in any way the
right of the Company or any Parent or Subsidiary to terminate the Optionee's
service as a director of the Company, a Parent, or a Subsidiary at any time, nor
confer upon the Optionee any right to continue to serve the Company or any
Parent or Subsidiary as a director.

6.     Stock Reserve. The Company
shall at all times during the term of this Option Agreement reserve and keep
available such number of shares of Stock as will be sufficient to satisfy the
requirements of this Option Agreement.

7.     Restrictions on Transfer and
Pledge. The Option may not be pledged, encumbered, or hypothecated to or in
favor of any party other than the Company or a Parent or Subsidiary, or be
subject to any lien, obligation, or liability of the Optionee to any other party
other than the Company or a Parent or Subsidiary. The Option is not assignable
or transferable by the Optionee other than by will or the laws of descent and
distribution or pursuant to a domestic relations order that would satisfy
Section 414(p)(1)(A) of the Code; provided, however, that the Committee may (but
need not) permit other transfers where the Committee concludes that such
transferability (i) does not result in accelerated taxation and (ii) is
otherwise appropriate and desirable, taking into account any factors deemed
relevant, including without limitation, state or federal tax or securities laws
applicable to transferable options. The Option may be exercised during the
lifetime of the Optionee only by the Optionee or any permitted transferee.

8.     Restrictions on Issuance of
Shares. If at any time the Board shall determine in its discretion, that
listing, registration or qualification of the shares of Stock covered by the
Option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition to the exercise of the Option, the Option may not be
exercised in whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board.

9.     Plan Controls. The terms
contained in the Plan are incorporated into and made a part of this Option
Agreement and this Option Agreement shall be governed by and construed in
accordance with the Plan. In the event of any actual or alleged conflict between
the provisions of the Plan and the provisions of this Option Agreement, the
provisions of the Plan shall be controlling and determinative.

10.    Successors. This Option Agreement
shall be binding upon any successor of the Company, in accordance with the terms
of this Option Agreement and the Plan.

11.    Severability. If any one or more of
the provisions contained in this Option Agreement are invalid, illegal, or
unenforceable, the other provisions of this Option Agreement will be construed
and enforced as if the invalid, illegal, or unenforceable provision had never
been included.

3

12.    Notice. Notices and communications
under this Option Agreement must be in writing and either personally delivered
or sent by registered or certified United States mail, return receipt requested,
postage prepaid. Notices to the Company must be addressed to:

First Security Group, Inc.

817 Broad Street

Chattanooga, TN 37402

Attn: Secretary

or any other address designated by the Company in a written notice to
the Optionee. Notices to the Optionee will be directed to the address of the
Optionee then currently on file with the Company, or at any other address given
by the Optionee in a written notice to the Company.

13.    Exercise or Forfeiture as Required by
Law. To the extent required by law, in the event the capital of the Company
or a financial institution subsidiary of the Company falls below the minimum
capital requirements established from time to time by the applicable state or
primary federal regulator, such primary federal regulator may require that
Options issued under the Plan that are not exercised within a specific period of
time be cancelled and have no further force or effect.

IN WITNESS WHEREOF, First Security Group, Inc., acting by and through
its duly authorized officers, has caused this Option Agreement to be executed,
and the Optionee has executed this Option Agreement, all as of the day and year
first above written.

 

 

	 	
      FIRST SECURITY GROUP, INC.
	 
	 	 	 	 
	 	
      By: 
	 	 
	 	
      Name:
	 	 
	 	
      Title:
	 	 
	 	 	 	 
	 	
      OPTIONEE:
	 
	 	 	 
	 	 	 

4

EXHIBIT
A

NOTICE OF
EXERCISE OF OPTION TO PURCHASE

COMMON
STOCK OF

FIRST
SECURITY GROUP, INC.

	 	
      Name:
      
	 	 
	 	
      Address:
	 	 
	 	 	 	 
	 	
      Date:
	 	 

First
Security Group, Inc.

817 Broad
Street

Chattanooga,
TN 37402

Attn:
Secretary

Re:
 Exercise
of Non-Qualified Stock Option

I elect
to purchase ____________ shares of Common Stock of First Security Group, Inc.
pursuant to the First Security Group, Inc. Non-Qualified Stock Option Agreement
dated _____________________ and the First Security Group, Inc. 2002 Long-Term
Incentive Plan of First Security Group, Inc. The purchase will take place on the
Exercise Date, which will be (i) as soon
as practicable following the date this notice and all other necessary forms and
payments are received by the Company, unless I specify a later date (not to
exceed 30 days following the date of this notice), or (ii) in the
case of a broker-assisted cashless exercise (as indicated below), the date of
this notice.

On or
before the Exercise Date (or, in the case of a broker-assisted cashless
exercise, on the settlement date following the Exercise Date), I will pay the
full exercise price in the form specified below (check one):

	 	
      [
      ]
	
      Cash
      Only:
      by delivering a check to First Security Group, Inc. for
      $__________.

 

	 	
      [
      ]
	
      Cash
      and Shares:
      by delivering a check to First Security Group, Inc. for $__________ for
      the part of the exercise price. I will pay the balance of the exercise
      price by delivering to the Company a stock certificate with my endorsement
      for shares of Company common stock ("Stock") that I have owned for at
      least six months. If the number of shares of Stock represented by such
      stock certificate exceeds the number needed to pay the exercise price, the
      Company will issue me a new stock certificate for the
    excess.

	 	
      [
      ]
	
      Shares
      Only:
      by delivering to the Company a stock certificate with my endorsement for
      shares of Stock that I have owned for at least six months. If the number
      of shares of Stock represented by such stock certificate exceeds the
      number needed to pay the exercise price, the Company will issue me a new
      stock certificate for the excess.

	 	
      [
      ]
	
      Cash
      From Broker:
      by delivering the purchase price from __________________, a broker, dealer
      or other "creditor" as defined by Regulation T issued by the Board of
      Governors of the Federal Reserve System (the "Broker"). I authorize the
      Company to issue a stock certificate in the number of shares indicated
      above in the name of the Broker in accordance with instructions received
      by the Company from the Broker and to deliver such stock certificate
      directly to the Broker (or to any other party specified in the
      instructions from the Broker) upon receiving the exercise price from the
      Broker.

Please
deliver the stock certificate to me (unless I have chosen to pay the purchase
price through a Broker).

	 	
      Very
      truly yours,
	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

AGREED TO
AND ACCEPTED:

FIRST
SECURITY GROUP, INC.

By:
_________________________________________     

Title:
________________________________________     

Number of
Option Shares 

Exercised:
____________________________________    

Number of
Option Shares 

Remaining:
___________________________________    

Date:
_______________________________________Exhibit 10.7

Exhibit
10.7

 

FIRST
SECURITY GROUP, INC.

RESTRICTED
STOCK AWARD

This
RESTRICTED STOCK AWARD (the “Award”) is made and entered into as of the 26th day
of February, 2003 by and between First Security Group, Inc. (the “Company”), a
Tennessee corporation, and _____________________________ (the
“Director”).

Upon and
subject to the Additional Terms and Conditions attached hereto and incorporated
herein by reference as part of this Award, the Company hereby awards as of the
Grant Date to the Director the Restricted Shares described below pursuant to the
First Security Group, Inc. 2002 Long-Term Incentive Plan (the “Plan”) in
consideration of the Director’s past and future services to the Company.

	 	
      A.
	
      Grant
      Date:
       .

	 	
      B.
	
      Restricted
      Shares:
      ______________ shares of the Company’s common stock (“Common Stock”), $.01
      par value per share.

	 	
      C.
	
      Vesting
      Schedule:
      The Restricted Shares shall vest or be forfeited back to the Company, as
      the case may be, according to the Vesting Schedule attached hereto as
      Schedule 1
      hereto (the “Vesting Schedule”). The Restricted Shares which have become
      vested pursuant to the Vesting Schedule are herein referred to as the
      “Vested Restricted Shares.” 

IN
WITNESS WHEREOF, the Company has signed and sealed this Award as of the Grant
Date set forth above.

	 	
      FIRST
      SECURITY GROUP, INC.
	 
	 	 	 	 
	 	
      By:
      
	 	 
	 	 	 	 
	 	
      Title:
	 	 

ATTEST:

By:
________________________________

Title:
______________________________

[CORPORATE
SEAL] 

ADDITIONAL
TERMS AND CONDITIONS OF

FIRST
SECURITY GROUP, INC.

RESTRICTED
STOCK AWARD

1.    Restricted
Shares Held by the Share Custodian.
Director hereby authorizes and directs the Company to deliver any share
certificate issued by the Company to evidence Restricted Shares to the Secretary
of the Company or such other officer of the Company as may be designated by the
Committee (the “Share Custodian”) to be held by the Share Custodian until the
Restricted Shares become Vested Restricted Shares or, if applicable, until
forfeited, all in accordance with the Vesting Schedule. Director hereby
irrevocably appoints the Share Custodian, and any successor thereto, as the true
and lawful attorney-in-fact of the Director with full power and authority to
execute any stock transfer power or other instrument necessary to transfer the
Restricted Shares to the Company upon any forfeiture of the Restricted Shares,
in the name, place, and stead of the Director. The term of such appointment
shall commence on the Grant Date and shall continue until the Restricted Shares
are delivered to the Director as provided above or to the Company upon a
forfeiture of the Restricted Shares. Any shares of Common Stock or other
securities issued with respect to the Restricted Shares on account of an event
described in Section 5 below shall be subject to the provisions of this Award
and the Director agrees that any certificate representing such shares of Common
Stock or other securities issued as a result thereof shall be delivered to the
Share Custodian and shall be subject to all of the provisions of this Award as
if initially granted hereunder. For purposes of this Award, such shares of
Common Stock also shall be deemed to be Restricted Shares. To effect the
provisions of this Section, the Director shall complete an irrevocable stock
power in favor of the Share Custodian in the form attached hereto as
Exhibit A.

2.    Dividends
and Voting. During
the period that the Share Custodian holds the Restricted Shares subject to
Section 1 above, the Director shall be entitled to all rights applicable to
shares of Common Stock not so held, except as provided in this Award. In that
regard, the Director
shall be entitled to dividends paid on all Restricted Shares as and when
declared and paid and shall be entitled to vote the Restricted Shares unless and
until they are forfeited. 

3.    Restrictions
on Transfer of Restricted Shares.

(a)    General
Restrictions. Except
as provided by this Award, the Director shall not have the right to make or
permit to exist any transfer or hypothecation, whether outright or as security,
with or without consideration, voluntary or involuntary, of all or any part of
any right, title or interest in or to any Restricted Shares. Any such
disposition not made in accordance with this Award shall be deemed null and
void. The Company will not recognize, or have the duty to recognize, any
disposition not made in accordance with the Plan and this Award, and any
Restricted Shares so transferred will continue to be bound by the Plan and this
Award. The
Director (and any subsequent holder of Restricted Shares) may not sell, pledge
or otherwise directly or indirectly transfer (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law)
any interest in or any beneficial interest in any Restricted Shares except
pursuant to the provisions of this Award. Any sale, pledge or other transfer (or
any attempt to effect the same) of any Restricted Shares in violation of any
provision of the Plan or this Award shall be void, and the Company shall not
record such transfer, assignment, pledge or other disposition on its books or
treat any purported transferee of such Restricted Shares as the owner of such
Restricted Shares for any purpose.

Additional
Terms and Conditions - Page 1 of
4

(b)    Certain
Permitted Transfers. The
restrictions contained in this Section 3 will not apply with respect to
transfers of the Restricted Shares pursuant to applicable laws of descent and
distribution; provided that the
restrictions contained in this Section 3 will continue to be applicable to the
Restricted Shares after any such transfer; and provided
further that the
transferees of such the Restricted Shares must agree in writing to be bound by
the provisions of the Plan and this Award.

4.    Additional
Restrictions on Transfer.

 

(a)    In
addition to any legends required under applicable securities laws, the
certificates representing the Restricted Shares shall be endorsed with the
following legend and the Director shall not make any transfer of the Restricted
Shares without first complying with the restrictions on transfer described in
such legend

TRANSFER
IS RESTRICTED

 

	 	THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
      RESTRICTIONS ON TRANSFER AND FORFEITURE PROVISIONS WHICH ALSO APPLY
      TO THE TRANSFEREE AS SET FORTH IN A RESTRICTED STOCK AWARD, DATED
      _________________, A COPY OF WHICH IS AVAILABLE FROM THE
COMPANY.	 

 

(b)    Opinion
of Counsel. No
holder of Restricted Shares may sell, transfer, assign, pledge or otherwise
dispose of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law) any interest in or any beneficial interest
in any Restricted Shares, except pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the “Securities Act”), without
first delivering to the Company an opinion of counsel (reasonably acceptable in
form and substance to the Company) that neither registration nor qualification
under the Securities Act and applicable state securities laws is required in
connection with such transfer.

5.    Change
in Capitalization.

 

(a)    The
number and kind of Restricted Shares shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a subdivision or combination of shares or the payment of a stock dividend
in shares of Common Stock to holders of outstanding shares of Common Stock or
any other increase or decrease in the number of shares of Common Stock
outstanding if effected without receipt of consideration by the Company. No
fractional shares shall be issued in making such adjustment. All adjustments
made by the Committee under this Section shall be final, binding and
conclusive.

Additional
Terms and Conditions - Page 2 of
4

(b)    In the
event of a merger or consolidation, extraordinary dividend (including a
spin-off), reorganization or other change in the corporate structure of the
Company or a tender offer for shares of Common Stock, an appropriate adjustment
may be made with respect to the Restricted Shares such that other securities,
cash or other property may be substituted for the Common Stock held by the
Director pursuant to the this Award.

 

(c)    The
existence of the Plan and this Award shall not affect the right or power of the
Company to make or authorize any adjustment, reclassification, reorganization or
other change in its capital or business structure, any merger or consolidation
of the Company, any issue of debt or equity securities having preferences or
priorities as to the Common Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or part of its business
or assets, or any other corporate act or proceeding.

6.    Governing
Laws. This
Award shall be construed, administered and enforced according to the laws of the
State of Tennessee; provided, however, no Restricted Shares shall be issued
except, in the reasonable judgment of the Committee, in compliance with
exemptions under applicable state securities laws of the state in which the
Director resides, and/or any other applicable securities laws.

7.    Successors. This
Award shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors, and permitted assigns of the parties.

8.    Notice. Except
as otherwise specified herein, all notices and other communications under this
Award shall be in writing and shall be deemed to have been given if personally
delivered or if sent by registered or certified United States mail, return
receipt requested, postage prepaid, addressed to the proposed recipient at the
last known address of the recipient. Any party may designate any other address
to which notices shall be sent by giving notice of the address to the other
parties in the same manner as provided herein.

9.    Severability. In the
event that any one or more of the provisions or portion thereof contained in
this Award shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, the same shall not invalidate or otherwise affect any other
provisions of this Award, and this Award shall be construed as if the invalid,
illegal or unenforceable provision or portion thereof had never been contained
herein.

10.    Entire
Agreement. Subject
to the terms and conditions of the Plan, this Award expresses the entire
understanding and agreement of the parties with respect to the subject matter.
This Award may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instrument.

11.    Violation. Any
disposition of the Restricted Shares or any portion thereof shall be a violation
of the terms of this Award and shall be void and without effect.

Additional
Terms and Conditions - Page 3 of
4

12.    Headings
and Capitalized Terms.
Paragraph headings used herein are for convenience of reference only and shall
not be considered in construing this Award. Capitalized
terms used, but not defined, in this Award shall be given the meaning ascribed
to them in the Plan.

13    Specific
Performance. In the
event of any actual or threatened default in, or breach of, any of the terms,
conditions and provisions of this Award, the party or parties who are thereby
aggrieved shall have the right to specific performance and injunction in
addition to any and all other rights and remedies at law or in equity, and all
such rights and remedies shall be cumulative.

14.    No
Right to Continued Retention. Neither
the establishment of the Plan nor the award of Restricted Shares hereunder shall
be construed as giving Director the right to any continued service relationship
with the Company or any affiliate of the Company.

Additional
Terms and Conditions - Page 4 of
4

SCHEDULE 1

FIRST
SECURITY GROUP, INC.

2002
LONG-TERM INCENTIVE PLAN

RESTRICTED
STOCK AWARD

Vesting
Schedule

	
      I.
	
      The
      Restricted Shares shall become vested in accordance with the following
      Vesting Schedule:

	 	 	 	
      Percentage
      of Restricted Shares
	 
	 	
      Months
      of Vesting Service
	 	
      which
      are Vested Restricted Shares
	 

	II.  	
      The
      Director shall receive credit for one Month of Vesting Service for each
      full consecutive calendar month beginning ___________________ and ending
      on the date the Director is neither a director of the Company nor of any
      wholly-owned subsidiary of the Company, regardless of the reason. Except
      as provided in Paragraph III below, the Restricted Shares shall be
      forfeited if they have not become vested at the time the Director is
      neither a director of the Company nor of any wholly-owned subsidiary of
      the Company, regardless of the reason.

	III.  	
      The
      Restricted Shares also shall become Vested Restricted Shares if the
      Director ceases to serve upon the Board of Directors of the Company or the
      board of directors of any wholly-owned subsidiary prior to end of
      _______________________ by reason of his death or
    Disability.

Schedule
1-Page of
1

EXHIBIT A

IRREVOCABLE
STOCK POWER

FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers to First Security
Group, Inc., a Tennessee corporation (the “Company”), ______ shares of the
Common Stock, $.01 par value per share, of the Company registered in the name of
the undersigned on the stock transfer records of the Company and represented by
Stock Certificate No. ____________________ of the Company; and the undersigned
does hereby irrevocably constitute and appoint
_______________________________________, his attorney-in-fact, to transfer the
aforesaid shares on the books of the Company, with full power of substitution;
and the undersigned does hereby ratify and confirm all that said
attorney-in-fact lawfully shall do by virtue hereof.

	
      Date:
	 	 	
      Signed:
	 
	 	 	 	 	 
	 	 	 	
      Print
      Name: 
	 

IN THE
PRESENCE OF:

_______________________________

(Print
Name)

_______________________________

(Signature)

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