Document:

ex10-11.htm

    
      
        

      

    

    Exhibit
10.11

     

    Charter
Financial Corporation

    

    2001
Stock Option Plan

     

      
        

      

    

    

    Effective
as of April 24, 2002

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    TABLE
OF CONTENTS

    
      
        	 
      	 
      	 
      	
                Page

              
	 	 	 
	
                
Article
      I Purpose

              	 
      	
                1

              
	 	 	 
	
                Section 1.1.

              	
                General Purpose of the Plan

              	 
      	
                1

              
	 	 	 	 
	
                Section 2.1

              	
                Bank

              	 
      	
                1

              
	 	 	 	 
	
                Section 2.2

              	
                Board

              	 
      	
                1

              
	 	 	 	 
	
                Section 2.3

              	
                Change in Control

              	 
      	
                1

              
	 	 	 	 
	
                Section 2.4

              	
                Code

              	 
      	
                3

              
	 	 	 	 
	
                Section 2.5

              	
                Committee

              	 
      	
                3

              
	 	 	 	 
	
                Section 2.6

              	
                Company

              	 
      	
                3

              
	 	 	 	 
	
                Section 2.7

              	
                Disability

              	 
      	
                3

              
	 	 	 	 
	
                Section 2.8

              	
                Disinterested Board Member

              	 
      	
                3

              
	 	 	 	 
	
                Section 2.10

              	
                Eligible Director

              	 
      	
                3

              
	 	 	 	 
	
                Section 2.11

              	
                Eligible Employee

              	 
      	
                3

              
	 	 	 	 
	
                Section 2.12

              	
                Employer

              	 
      	
                3

              
	 	 	 	 
	
                Section 2.13

              	
                Exchange Act

              	 
      	
                4

              
	 	 	 	 
	
                Section 2.14

              	
                Exercise Price

              	 
      	
                4

              
	 	 	 	 
	
                Section 2.15

              	
                Fair Market Value

              	 
      	
                4

              
	 	 	 	 
	
                Section 2.16

              	
                Family Member

              	 
      	
                4

              
	 	 	 	 
	
                Section 2.17

              	
                FDIC Regulations

              	 
      	
                4

              
	 	 	 	 
	
                Section 2.18

              	
                Incentive Stock Option

              	 
      	
                4

              
	 	 	 	 
	
                Section 2.19

              	
                Non-Profit Organization

              	 
      	
                4

              
	 	 	 	 
	
                Section 2.20

              	
                Non-Qualified Stock Option

              	 
      	
                4

              
	 	 	 	 
	
                Section 2.21

              	
                Option

              	 
      	
                4

              
	 	 	 	 
	
                Section 2.22

              	
                Option Period

              	 
      	
                5

              
	 	 	 	 
	
                Section 2.23

              	
                Person

              	 
      	
                5

              
	 	 	 	 
	
                Section 2.24

              	
                Plan

              	 
      	
                5

              
	 	 	 	 
	
                Section 2.25

              	
                Retirement

              	 
      	
                5

              
	 	 	 	 
	
                Section 2.26

              	
                Share

              	 
      	
                5

              
	 	 	 	 
	
                Section 2.27

              	
                Termination for Cause

              	 
      	
                5

              
	 	 	 	 
	
                
Article
      III Available Shares

              	
                5

              
	 	 
	
                Section 3.1

              	
                Available Shares

              	 
      	
                5

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                
Article
      IV Administration

              	 
      	
                6

              
	 	 	 
	
                Section 4.1

              	
                Committee

              	 
      	
                6

              
	 	 	 	 
	
                Section 4.2

              	
                Committee Action

              	 
      	
                6

              
	 	 	 	 
	
                Section 4.3

              	
                Committee Responsibilities

              	 
      	
                7

              
	 	 	 	 
	
                
Article
      V Stock Option Grants

              	 
      	
                7

              
	 	 	 
	
                Section 5.1

              	
                Grant of Options

              	 
      	
                7

              
	 	 	 	 
	
                Section 5.2

              	
                Size of Option

              	 
      	
                8

              
	 	 	 	 
	
                Section 5.3

              	
                Exercise Price

              	 
      	
                8

              
	 	 	 	 
	
                Section 5.4

              	
                Option Period

              	 
      	
                8

              
	 	 	 	 
	
                Section 5.5

              	
                Required Regulatory Provisions

              	 
      	
                9

              
	 	 	 	 
	
                Section 5.6

              	
                Additional Restrictions on Incentive Stock
      Options

              	 
      	
                10

              
	 	 	 	 
	
                
Article
      VI Options In General

              	 
      	
                11

              
	 	 	 
	
                Section 6.1

              	
                Method of Exercise

              	 
      	
                11

              
	 	 	 	 
	
                Section 6.2

              	
                Limitations on Options

              	 
      	
                12

              
	 	 	 	 
	
                
Article
      VII Amendment and Termination

              	 
      	
                13

              
	 	 	 
	
                Section 7.1

              	
                Termination

              	 
      	
                13

              
	 	 	 	 
	
                Section 7.2

              	
                Amendment

              	 
      	
                13

              
	 	 	 	 
	
                Section 7.3

              	
                Adjustments in the Event of a Business
      Reorganization

              	 
      	
                13

              
	 	 	 	 
	
                
Article
      VIII Miscellaneous

              	 
      	
                14

              
	 	 	 
	
                Section 8.1

              	
                Status as an Employee Benefit Plan

              	 
      	
                14

              
	 	 	 	 
	
                Section 8.2

              	
                No Right to Continued Employment

              	 
      	
                14

              
	 	 	 	 
	
                Section 8.3

              	
                Construction of Language

              	 
      	
                14

              
	 	 	 	 
	
                Section 8.4

              	
                Governing Law

              	 
      	
                14

              
	 	 	 	 
	
                Section 8.5

              	
                Headings

              	 
      	
                15

              
	 	 	 	 
	
                Section 8.6

              	
                Non-Alienation of Benefits

              	 
      	
                15

              
	 	 	 	 
	
                Section 8.7

              	
                Taxes

              	 
      	
                15

              
	 	 	 	 
	
                Section 8.8

              	
                Notices

              	 
      	
                15

              
	 	 	 	 
	
                Section 8.9

              	
                Required Regulatory Provisions

              	 
      	
                16

              
	 	 	 	 
	
                Section 8.10

              	
                Approval of Shareholders

              	 
      	
                16

              
	 	 	 	 
	
                
Article
      IX Additional
      Provisions Subject to Further Shareholder
      Approval

              	 
      	
                16

              
	 	 	 
	
                Section 9.1

              	
                Accelerated Vesting Upon Retirement or Change in
      Control

              	 
      	
                16

              
	 	 	 	 
	
                Section 9.2

              	
                Discretion to Establish Vesting Schedules

              	 
      	
                16

              
	 	 	 	 
	
                Section 9.3

              	
                No Effect Prior to Shareholder Approval

              	 
      	
                16

              

      

    

     

    
      
        
           

        

        
          ii

          
            

          

        

        
           

        

      

    

     

    Charter Financial
Corporation 2001 Stock Option Plan

     

    Article I

     

    Purpose

     

    Section
1.1.                      General Purpose of the
Plan.

     

    The
purpose of the Plan is to promote the growth and profitability of Charter
Financial Corporation, to provide eligible directors, certain key officers and
employees of Charter Financial Corporation and its affiliates with an incentive
to achieve corporate objectives, to attract and retain individuals of
outstanding competence and to provide such individuals with an equity interest
in Charter Financial Corporation.

     

    Article II

     

    Definitions

     

    The
following definitions shall apply for the purposes of this Plan, unless a
different meaning is plainly indicated by the context:

     

    
Section
2.1                      Bank means
CharterBank and any successor thereto.

     

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

     

    
Section
2.3                      Change
in Control means any
of the following events:

     

    (a)           the
consummation of a reorganization, merger or consolidation of the Company with
one or more other persons, other than a transaction following
which:

     

    (i)           at
least 51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) in
substantially the same relative proportions by persons who, immediately prior to
such transaction, beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) at least 51% of the outstanding equity
ownership interests in the Company; and

     

    (ii)           at
least 51% of the securities entitled to vote generally in the election of
directors of the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who, immediately prior to
such transaction, beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) at least 51% of the securities entitled to
vote generally in the election of directors of the Company;

     

    (b)           the
acquisition of all or substantially all of the assets of the Company or
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the outstanding securities of the Company
entitled to vote generally in the election of directors by any person or by any
persons acting in concert;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)           a
complete liquidation or dissolution of the Company;

     

    (d)           the
occurrence of any event if, immediately following such event, at least 50% of
the members of the Board of Directors of the Company do not belong to any of the
following groups:

     

    (i)           individuals
who were members of the Board of Directors of the Company on the Effective Date;
or

     

    (ii)           individuals
who first became members of the Board of Directors of the Company after the
Effective Date either:

     

    (A)           upon
election to serve as a member of the Board of Directors of the Company by
affirmative vote of three-quarters of the members of such board, or of a
nominating committee thereof, in office at the time of such first election;
or

     

    (B)           upon
election by the shareholders of the Company to serve as a member of such board,
but only if nominated for election by affirmative vote of three-quarters of the
members of the Board of Directors of the Company, or of a nominating committee
thereof, in office at the time of such first nomination;

     

    provided, however, that such
individual’s
election or nomination did not result from an actual or threatened election
contest (within the meaning of Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies or
consents (within the meaning of Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) other than by or on behalf of the Board of Directors of the
Company; provided,
however, that this section 2.3(d) shall only apply if the Company is not
majority owned by First Charter, MHC; or

     

    (e)           approval
by the stockholders of the Company of any agreement, plan or arrangement for the
consummation of a transaction which, if consummated, would result in the
occurrence of an event described in section 2.3(a), (b), (c) or (d);
or

     

    (f)           any
event which would be described in section 2.3(a), (b), (c), (d) or (e) if the
term “Bank” were substituted
for the terms “Company“ therein.

     

    
      In no
event, however, shall a Change of Control be deemed to have occurred as a result
of (i) any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or any subsidiary of
either of them, or by any employee benefit plan maintained by any of them or
(ii) the conversion of First Charter, MHC to a stock form company and the
issuance of additional Shares of the Company in connection
therewith.  For purposes of this section 2.3, the term “person” shall have the
meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange
Act.

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
Section
2.4                      Code means the
Internal Revenue Code of 1986 (including the corresponding provisions of any
succeeding law).

     

    
Section
2.5                      Committee means the
Committee described in section 4.1.

     

    
Section
2.6                      Company means
Charter Financial Corporation, a corporation organized and existing under the
laws of the State of Georgia, and any successor thereto.

     

    
Section
2.7                      Disability means a
condition of total incapacity, mental or physical, for further performance of
duty with the Company which the Committee shall have determined, on the basis of
competent medical evidence, is likely to be permanent.

     

    
Section
2.8                      Disinterested Board Member
means a
member of the Board who (a) is not a current employee of the Company or a
subsidiary, (b) is not a former employee of the Company who receives
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year, (c) has not been an officer of the
Company, (d) does not receive remuneration from the Company or a subsidiary,
either directly or indirectly, in any capacity other than as a director except
in an amount for which disclosure would not be required pursuant to Item 404(a)
of the proxy solicitation rules of the Securities and Exchange Commission and
(e) does not possess an interest in any other transaction, and is not engaged in
a business relationship, for which disclosure would be required pursuant to Item
404(a) or (b) of the proxy solicitation rules of the Securities and Exchange
Commission.  The term Disinterested Board Member shall be interpreted
in such manner as shall be necessary to conform to the requirements of section
162(m) of the Code and Rule 16b-3 promulgated under the Exchange
Act.

     

    Section
2.9                      Effective Date means the
date on which the Bank converts from a mutual bank to a stock bank (the “Reorganization”) if permitted by
OTS Regulations, otherwise on April 24, 2002.

     

    
Section
2.10                      Eligible Director means a
member of the board of directors of an Employer who is not also an employee or
an officer of any Employer.

     

    
Section
2.11                      Eligible Employee means any
employee whom the Committee may determine to be a key officer or employee of an
Employer and select to receive a grant of an Option pursuant to the
Plan.

     

    
Section
2.12                      Employer means the
Company, the Bank and any successor thereto and, with the prior approval of the
Board, and subject to such terms and conditions as may be imposed by the Board,
any other savings bank, savings and loan association, bank, corporation,
financial institution or other business organization or
institution.  With respect to any Eligible Employer or Eligible
Director, the Employer shall mean the entity which employs such person or upon
whose board of directors such person serves.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
Section
2.13                      Exchange Act means the
Securities Exchange Act of 1934, as amended.

     

    
Section
2.14                      Exercise Price means the
price per Share at which Shares subject to an Option may be purchased upon
exercise of the Option, determined in accordance with section
5.3.

     

    
Section
2.15                      Fair Market Value means,
with respect to a Share on a specified date:

     

    (a)           the
final reported sales price on the date in question (or if there is no reported
sale on such date, on the last preceding date on which any reported sale
occurred) as reported in the principal consolidated reporting system with
respect to securities listed or admitted to trading on the principal United
States securities exchange on which the Shares are listed or admitted to
trading; or

     

    (b)           if
the Shares are not listed or admitted to trading on any such exchange, the
closing bid quotation with respect to a Share on such date on the National
Association of Securities Dealers Automated Quotations System, or, if no such
quotation is provided, on another similar system, selected by the Committee,
then in use; or

     

    (c)           if
sections 2.15(a) and (b) are not applicable, the fair market value of a Share as
the Committee may determine.

     

    
Section
2.16                      Family Member means the
spouse, parent, child or sibling of an Eligible Director or Eligible
Employee.

     

    
Section
2.17                      FDIC Regulations means the
rules and regulations of the Federal Deposit Insurance
Corporation.

     

    
Section
2.18                      Incentive Stock
Option means a
right to purchase Shares that is granted to Eligible Employees pursuant to
section 5.1, that is designated by the Committee to be an Incentive Stock Option
and that is intended to satisfy the requirements of section 422 of the
Code.

     

    
Section
2.19                      Non-Profit Organization
means any
organization which is exempt from federal income tax under section 501(c)(3),
(4), (5), (6), (7), (8) or (10) of the Internal Revenue Code.

     

    
Section
2.20                      Non-Qualified Stock Option
means a
right to purchase Shares that is either (a) granted to an Eligible Director or
(b) granted to an Eligible Employee and either (i)  is not designated
by the Committee to be an Incentive Stock Option, or (ii) does not satisfy the
requirements of section 422 of the Code.

     

    
Section
2.21                      Option means
either an Incentive Stock Option or a Non-Qualified Stock
Option.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
Section
2.22                      Option Period means the
period during which an Option may be exercised, determined in accordance with
section 5.4.

     

    
Section
2.23                      Person means an
individual, a corporation, a bank, a savings bank, a savings and loan
association, a financial institution, a partnership, an association, a
joint-stock company, a trust, an estate, an unincorporated organization and any
other business organization or institution.

     

    
Section
2.24                      Plan means the
Charter Financial Corporation 2001 Stock Option Plan, as amended from time to
time.

     

    
Section
2.25                      Retirement means
with respect to an Eligible Employee, termination of all service for all
Employers as an employee at or after the normal or early retirement date set
forth in any tax-qualified retirement plan of the Bank, whether or not the
individual in question actually participates in any such tax-qualified plan of
the Bank, and in the case of an Eligible Director, termination of all service
for all Employers as a voting member of the Employer’s board of directors after
the attainment of the latest age at which the Eligible Director is eligible for
election or appointment as a voting member of the Employer’s board of directors
under the Employer’s charter.

     

    
Section
2.26                      Share means a
share of Common Stock, par value $.01 share, of Charter Financial
Corporation.

     

    
Section
2.27                      Termination for Cause
means
termination of service or removal from office with the Employer upon the
occurrence of any of the following:  (a) the individual intentionally
engages in dishonest conduct in connection with his performance of services for
the Employer resulting in his conviction of a felony; (b) the individual is
convicted of, or pleads guilty or nolo contendere to, a felony
or any crime involving moral turpitude; (c) the individual breaches his
fiduciary duties to the Employer for personal profit; or (d) the individual
willfully breaches or violates any law, rule or regulation (other than traffic
violations or similar offenses), or final cease and desist order in connection
with his performance of services for the Employer.

     

    Article III

     

    Available
Shares

     

    Section
3.1                      Available
Shares.

     

    (a)           The
maximum aggregate number of Shares with respect to which Options may be granted
at any time shall be equal to the excess of:

     

    (i)           707,943
Shares; over

     

    (ii)           the
sum of:

     

    (A)           the
number of Shares with respect to which previously granted Options may then or
may in the future be exercised; plus

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (B)           the
number of Shares with respect to which previously granted Options have been
exercised;

     

    subject
to adjustment pursuant to section 7.3.

     

    (b)           Options
to purchase an aggregate maximum of 212,382 Shares (subject to adjustment
pursuant to section 7.3) may be granted to Eligible Directors, and Options to
purchase a maximum of 35,397 Shares (subject to adjustment pursuant to section
7.3) may be granted to any one Eligible Director.

     

    (c)           Options
to purchase a maximum of 176,985 Shares (subject to adjustment pursuant to
section 7.3) may be granted to any one Eligible Employee.

     

    (d)           For
purposes of this section 3.1, an Option shall not be considered as having been
exercised to the extent that such Option terminates by reason other than the
purchase of related Shares; provided, however, that for purposes of meeting the
requirements of section 162(m) of the Code, no Eligible Employee who is a
covered employee (within the meaning of section 162(m) of the Code) shall
receive grants of Options for an aggregate number of Shares that is in excess of
the amount specified for him under this section 3.1, computed as if any Option
which is canceled or forfeited reduced the maximum number of
Shares.

     

    Article
IV

    Administration

     

    Section
4.1                      Committee.

     

    The Plan
shall be administered by the members of the Compensation Committee of Charter
Financial Corporation who are Disinterested Board Members.  If the
Committee consists of fewer than two Disinterested Board Members, then the Board
shall appoint to the Committee such additional Disinterested Board Members as
shall be necessary to provide for a Committee consisting of at least two
Disinterested Board Members.

     

    Section
4.2                      Committee
Action.

     

    The
Committee shall hold such meetings, and may make such administrative rules and
regulations, as it may deem proper.  A majority of the members of the
Committee shall constitute a quorum, and the action of a majority of the members
of the Committee present at a meeting at which a quorum is present, as well as
actions taken pursuant to the unanimous written consent of all of the members of
the Committee without holding a meeting, shall be deemed to be actions of the
Committee.  All actions of the Committee shall be final and conclusive
and shall be binding upon the Company and all other interested
parties.  Any Person dealing with the Committee shall be fully
protected in relying upon any written notice, instruction, direction or other
communication signed by the Secretary of the Committee and one member of the
Committee, by two members of the Committee or by a representative of the
Committee authorized to sign the same in its behalf.

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    

    Section
4.3                      Committee
Responsibilities.

     

    Subject
to the terms and conditions of the Plan and such limitations as may be imposed
by the Board, the Committee shall be responsible for the overall management and
administration of the Plan and shall have such authority as shall be necessary
or appropriate in order to carry out its responsibilities, including, without
limitation, the authority:

     

    (a)           to
interpret and construe the Plan, and to determine all questions that may arise
under the Plan as to eligibility for participation in the Plan, the number of
Shares subject to the Options, if any, to be granted, and the terms and
conditions thereof;

     

    (b)           to
adopt rules and regulations and to prescribe forms for the operation and
administration of the Plan; and

     

    (c)           to
take any other action not inconsistent with the provisions of the Plan that it
may deem necessary or appropriate.

     

    Article V

     

    Stock Option
Grants

     

    Section
5.1                      Grant of
Options.

     

    (a)           Subject
to the limitations of the Plan, the Committee may, in its discretion, grant to
an Eligible Employee or an Eligible Director an Option to purchase
Shares.  An Option for Eligible Employees must be designated as either
an Incentive Stock Option or a Non-Qualified Stock Option and, if not designated
as either, shall be a Non-Qualified Stock Option.  An Option for an
Eligible Director shall be a Non-Qualified Stock Option.

     

    (b)           Any
Option granted under this section 5.1 shall be evidenced by a written agreement
which shall:

     

    (i)           specify
the number of Shares covered by the Option determined in accordance with section
5.2;

     

    (ii)           specify
the Exercise Price, determined in accordance with section 5.3, for the Shares
subject to the Option;

     

    (iii)           specify
the Option Period determined in accordance with section 5.4;

     

    (iv)           set
forth specifically or incorporate by reference the applicable provisions of the
Plan; and

     

    (v)           contain
such other terms and conditions not inconsistent with the Plan as the Committee
may, in its discretion, prescribe with respect to an Option granted to an
Eligible Employee or an Eligible Director.

     

    
      
        
        

      

      
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    Section
5.2                      Size of
Option.

     

    Subject
to section 3.1 and such limitations as the Board may from time to time impose,
the number of Shares as to which an Eligible Employee or Eligible Director may
be granted Options shall be determined by the Committee, in its
discretion.

     

    Section
5.3                      Exercise
Price.

     

    The price
per Share at which an Option granted to an Eligible Employee or Eligible
Director shall be determined by the Committee, in its discretion; provided, however, that the
Exercise Price shall not be less than the Fair Market Value of a Share on the
date on which the Option is granted.

     

    Section
5.4                      Option
Period.

     

    Subject
to section 5.5, the Option Period during which an Option granted to an Eligible
Employee may be exercised shall commence on the date specified by the Committee
in the Option agreement and shall expire on the date specified in the Option
agreement or, if no date is specified, on the earliest of:

     

    (a)           in
the case of an Option granted to an Eligible Employee:

     

    (i)           the
close of business on the last day of the three-month period commencing on the
date of the Eligible Employee's termination of employment with the Employer,
other than on account of death or Disability, Retirement or a Termination for
Cause;

     

    (ii)           the
close of business on the last day of the one-year period commencing on the date
of the Eligible Employee's termination of employment due to death, Disability or
Retirement;

     

    (iii)           the
date and time when the Eligible Employee ceases to be an employee of the
Employer due to a Termination for Cause; and

     

    (iv)           the
last day of the ten-year period commencing on the date on which the Option was
granted; and

     

    (b)           in
the case of an Option granted to an Eligible Director:

     

    (i)           removal
for cause in accordance with the Employer’s bylaws, or Termination for Cause;
or

     

    (ii)           the
last day of the ten-year period commencing on the date on which the Option was
granted.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Section
5.5                      Required
Regulatory Provisions.

     

    Notwithstanding
anything contained herein to the contrary:

     

    (a)           no
Option shall be granted to an Eligible Employee or Eligible Director under the
Plan prior to the later of (i) six months after the date of the Reorganization
or (ii) the approval of the Plan by shareholders in accordance with section
8.10;

     

    (b)           each
Option granted to an Eligible Employee or Eligible Director shall become
exercisable no more rapidly than as follows:

     

    (i)           prior
to the first anniversary of the Effective Date, an Option shall not be
exercisable;

     

    (ii)           on
and after the first anniversary, but prior to the second anniversary, of the
Effective Date, an Option may be exercised as to a maximum of twenty percent
(20%) of the Shares subject to the Option when granted;

     

    (iii)           on
and after the second anniversary, but prior to the third anniversary, of the
Effective Date, an Option may be exercised as to a maximum of forty percent
(40%) of the Shares subject to the Option when granted, including in such forty
percent (40%) any optioned Shares purchased prior to such second
anniversary;

     

    (iv)           on
and after the third anniversary, but prior to the fourth anniversary, of the
Effective Date, an Option may be exercised as to a maximum of sixty percent
(60%) of the Shares subject to the Option when granted, including in such sixty
percent (60%) any optioned Shares purchased prior to such third
anniversary;

     

    (v)           on
and after the fourth anniversary, but prior to the fifth anniversary, of the
Effective Date, an Option may be exercised as to a maximum of eighty percent
(80%) of the Shares subject to the Option when granted, including in such eighty
percent (80%) any optioned Shares purchased prior to such fourth anniversary;
and

     

    (vi)           on
and after the fifth anniversary of the Effective Date and for the remainder of
the Option Period, an Option may be exercised as to the entire number of
optioned Shares not theretofore purchased;

     

    provided, however, that such
an Option shall become fully exercisable, and all optioned Shares not previously
purchased shall become available for purchase, on the date of the Option
holder's death or Disability while in the service of an Employer.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c)           The
Option Period of any Option granted hereunder, whether or not previously vested,
shall be suspended as of the time and date at which the Option holder has
received notice from the Board that his or her employment is subject to a
possible Termination for Cause, or in the case of an Eligible Director, removal
for cause in accordance with the Employer’s by-laws.  Such suspension
shall remain in effect until the Option holder receives official notice from the
Board that he or she has been cleared of any possible Termination for Cause, or
in the case of an Eligible Director, removal for cause, at which time, the
original Exercise Period shall be reinstated without any adjustment for the
intervening suspended period.  In the event that the Option Period
under section 5.4 expires during such suspension, the Company shall pay to the
Eligible Employee, within 30 days after his reinstatement as an employee of the
Company, damages equal to the value of the expired Options (based on the Fair
Market Value of a Share as of the expiration of the Option Period less the
Exercise Price of such Options).

     

    (d)           No
Option granted to an Eligible Employee or Eligible Director hereunder, whether
or not previously vested, shall be exercised after the time and date at which
the Option holder's services with the Employer are terminated in a Termination
for Cause, or, in the case of an Eligible Director, removal for cause in
accordance with the Employer’s by-laws.

     

    Section
5.6                      Additional
Restrictions on Incentive Stock Options.

     

    An Option
granted to an Eligible Employee designated by the Committee to be an Incentive
Stock Option shall be subject to the following limitations:

     

    (a)           If,
for any calendar year, the sum of (i) plus (ii) exceeds $100,000, where (i)
equals the Fair Market Value (determined as of the date of the grant) of Shares
subject to an Option intended to be an Incentive Stock Option which first become
available for purchase during such calendar year, and (ii) equals the Fair
Market Value (determined as of the date of grant) of Shares subject to any other
options intended to be Incentive Stock Options and previously granted to the
same Eligible Employee which first become exercisable in such calendar year,
then that number of Shares optioned which causes the sum of (i) and (ii) to
exceed $100,000 shall be deemed to be Shares optioned pursuant to a
Non-Qualified Stock Option or Non-Qualified Stock Options, with the same terms
as the Option or Options intended to be an Incentive Stock Option;

     

    (b)           The
Exercise Price of an Incentive Stock Option granted to an Eligible Employee who,
at the time the Option is granted, owns Shares comprising more than 10% of the
total combined voting power of all classes of stock of the Company shall not be
less than 110% of the Fair Market Value of a Share, and if an Option designated
as an Incentive Stock Option shall be granted at an Exercise Price that does not
satisfy this requirement, the designated Exercise Price shall be observed and
the Option shall be treated as a Non-Qualified Stock Option;

     

    (c)           The
Option Period of an Incentive Stock Option granted to an Eligible Employee who,
at the time the Option is granted, owns Shares comprising more than 10% of the
total combined voting power of all classes of stock of the Company, shall expire
no later than the fifth anniversary of the date on which the Option was granted,
and if an Option designated as an Incentive Stock Option shall be granted for an
Option Period that does not satisfy this requirement, the designated Option
Period shall be observed and the Option shall be treated as a Non-Qualified
Stock Option;

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (d)           An
Incentive Stock Option that is exercised during its designated Option Period but
more than:

     

    (i)           three
(3) months after the termination of employment with the Company, a parent or a
subsidiary (other than on account of disability within the meaning of section
22(e)(3) of the Code or death) of the Eligible Employee to whom it was granted;
and

     

    (ii)           one
(1) year after such individual’s termination of
employment with the Company, a parent or a subsidiary due to disability (within
the meaning of section 22(e)(3) of the Code) or death;

     

    may be
exercised in accordance with the terms but shall at the time of exercise be
treated as a Non-Qualified Stock Option; and

     

    (e)           Except
with the prior written approval of the Committee, no individual shall dispose of
Shares acquired pursuant to the exercise of an Incentive Stock Option until
after the later of (i) the second anniversary of the date on which the Incentive
Stock Option was granted, or (ii) the first anniversary of the date on which the
Shares were acquired.

     

    Article
VI

     

    Options In
General

     

    Section
6.1                      Method
of Exercise.

     

    (a)           Subject
to the limitations of the Plan and the Option agreement, an Option holder may,
at any time during the Option Period, exercise his or her right to purchase all
or any part of the Shares to which the Option relates; provided, however, that the
minimum number of Shares which may be purchased at any time shall be 100, or, if
less, the total number of Shares relating to the Option which remain
unpurchased.  An Option holder shall exercise an Option to purchase
Shares by:

     

    (i)           giving
written notice to the Committee, in such form and manner as the Committee may
prescribe, of his intent to exercise the Option;

     

    (ii)           delivering
to the Committee full payment, consistent with section 6.1(b), for the Shares as
to which the Option is to be exercised; and

     

    (iii)           satisfying
such other conditions as may be prescribed in the Option agreement.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (b)           The
Exercise Price of Shares to be purchased upon exercise of any Option shall be
paid in full in cash (by certified or bank check or such other instrument as the
Company may accept) or, if and to the extent permitted by the Committee, by one
or more of the following:  (i) in the form of Shares already owned by
the Option holder having an aggregate Fair Market Value on the date the Option
is exercised equal to the aggregate Exercise Price to be paid; (ii) by
requesting the Company to cancel without payment Options outstanding to such
Person for that number of Shares whose aggregate Fair Market Value on the date
of exercise, when reduced by their aggregate Exercise Price, equals the
aggregate Exercise Price of the Options being exercised; or (iii) by a
combination thereof.  Payment for any Shares to be purchased upon
exercise of an Option may also be made by delivering a properly executed
exercise notice to the Company, together with a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale or loan
proceeds to pay the purchase price.  To facilitate the foregoing, the
Company may enter into agreements for coordinated procedures with one or more
brokerage firms.

     

    (c)           When
the requirements of section 6.1(a) and (b) have been satisfied, the Committee
shall take such action as is necessary to cause the issuance of a stock
certificate evidencing the Option holder's ownership of such
Shares.  The Person exercising the Option shall have no right to vote
or to receive dividends, nor have any other rights with respect to the Shares,
prior to the date as of which such Shares are transferred to such Person on the
stock transfer records of the Company, and no adjustments shall be made for any
dividends or other rights for which the record date is prior to the date as of
which such transfer is effected, except as may be required under section
7.3.

     

    Section
6.2                      Limitations
on Options.

     

    (a)           An
Option by its terms shall not be transferable by the Option holder other than to
Family Members or Non-Profit Organizations or by will or by the laws of descent
and distribution and shall be exercisable, during the lifetime of the Option
holder, only by the Option holder, a Family Member or a Non-Profit
Organization.  Any such transfer shall be effected by written notice
to the Company given in such form and manner as the Committee may prescribe and
shall be recognized only if such notice is received by the Company prior to the
death of the person giving it.  Thereafter, the transferee shall have,
with respect to such Option, all of the rights, privileges and obligations which
would attach thereunder to the transferor if the Option were issued to such
transferor.  If a privilege of the Option depends on the life,
employment or other status of the transferor, such privilege of the Option for
the transferee shall continue to depend on the life, employment or other status
of the transferor.  The Committee shall have full and exclusive
authority to interpret and apply the provisions of this Plan to transferees to
the extent not specifically described herein.  Notwithstanding the
foregoing, an Incentive Stock Option is not transferable by an Eligible Employee
other than by will or the laws of descent and distribution, and is exercisable,
during his lifetime, solely by him.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (b)           The
Company’s obligation to deliver Shares with respect to an Option shall, if the
Committee so requests, be conditioned upon the receipt of a representation as to
the investment intention of the Option holder to whom such Shares are to be
delivered, in such form as the Committee shall determine to be necessary or
advisable to comply with the provisions of applicable federal, state or local
law.  It may be provided that any such representation shall become
inoperative upon a registration of the Shares or upon the occurrence of any
other event eliminating the necessity of such representation.  The
Company shall not be required to deliver any Shares under the Plan prior to (i)
the admission of such Shares to listing on any stock exchange on which Shares
may then be listed, or (ii) the completion of such registration or other
qualification under any state or federal law, rule or regulation as the
Committee shall determine to be necessary or advisable.

     

    Article
VII

     

    Amendment and
Termination

     

    Section
7.1                      Termination.

     

    The Board
may suspend or terminate the Plan in whole or in part at any time prior to the
tenth anniversary of the Effective Date by giving written notice of such
suspension or termination to the Committee.  Unless sooner terminated,
the Plan shall terminate automatically on the day preceding the tenth
anniversary of the Effective Date.  In the event of any suspension or
termination of the Plan, all Options theretofore granted under the Plan that are
outstanding on the date of such suspension or termination of the Plan shall
remain outstanding and exercisable for the period and on the terms and
conditions set forth in the Option agreements evidencing such
Options.

     

    Section
7.2                      Amendment.

     

    The Board
may amend or revise the Plan in whole or in part at any time; provided, however, that, to
the extent required to comply with section 162(m) of the Code, no such amendment
or revision shall be effective if it amends a material term of the Plan unless
approved by the holders of a majority of the votes cast on a proposal to approve
such amendment or revision.

     

    Section
7.3                      Adjustments
in the Event of a Business Reorganization.

     

    (a)           In
the event of any merger, consolidation, or other business reorganization in
which the Company is the surviving entity, and in the event of any stock split,
stock dividend or other event generally affecting the number of Shares held by
each Person who is then a holder of record of Shares, the number of Shares
covered by each outstanding Option and the number of Shares available to any
individual or group of individuals pursuant to section 3.1 shall be adjusted to
account for such event.  Such adjustment shall be effected by
multiplying such number of Shares by an amount equal to the number of Shares
that would be owned after such event by a Person who, immediately prior to such
event, was the holder of record of one Share, and the Exercise Price of the
Options shall be adjusted by dividing the Exercise Price by such number of
Shares; provided,
however, that the Committee may, in its discretion, establish another
appropriate method of adjustment.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (b)           In
the event of any merger, consolidation, or other business reorganization in
which the Company is not the surviving entity, any Options granted under the
Plan which remain outstanding shall be converted into options to purchase voting
common equity securities of the business entity which survives such merger,
consolidation or other business reorganization having substantially the same
terms and conditions as the outstanding Options under this Plan and reflecting
the same economic benefit (as measured by the difference between the aggregate
exercise price and the value exchanged for outstanding Shares in such merger,
consolidation or other business reorganization), all as determined by the
Committee prior to the consummation of such merger; provided, however, that the
Committee may, at any time prior to the consummation of such merger,
consolidation or other business reorganization, direct that all, but not less
than all, outstanding Options be canceled as of the effective date of such
merger, consolidation or other business reorganization in exchange for a cash
payment per optioned Share equal to the excess (if any) of the value exchanged
for an outstanding Share in such merger, consolidation or other business
reorganization over the Exercise Price of the Option being
canceled.

     

    Article
VIII 

     

    Miscellaneous

     

    Section
8.1                      Status
as an Employee Benefit Plan.

     

    This Plan
is not intended to satisfy the requirements for qualification under section
401(a) of the Code or to satisfy the definitional requirements for an “employee benefit
plan” under section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended.  It is intended to be a non-qualified incentive
compensation program that is exempt from the regulatory requirements of the
Employee Retirement Income Security Act of 1974, as amended.  The Plan
shall be construed and administered so as to effectuate this
intent.

     

    Section
8.2                      No
Right to Continued Employment.

     

    Neither
the establishment of the Plan nor any provisions of the Plan nor any action of
the Board or the Committee with respect to the Plan shall be held or construed
to confer upon any Eligible Director or Eligible Employee any right to a
continuation of his or her position as a director or employee of the
Company.  The Employers reserve the right to remove any Eligible
Director or dismiss any Eligible Employee or otherwise deal with any Eligible
Director or Eligible Employee to the same extent as though the Plan had not been
adopted.

     

    Section
8.3                      Construction
of Language.

     

    Whenever
appropriate in the Plan, words used in the singular may be read in the plural,
words used in the plural may be read in the singular, and words importing the
masculine gender may be read as referring equally to the feminine or the
neuter.  Any reference to an Article or section number shall refer to
an Article or section of this Plan unless otherwise indicated.

     

    Section
8.4                      Governing
Law.

     

    The Plan
shall be construed, administered and enforced according to the laws of the State
of Georgia without giving effect to the conflict of laws principles thereof,
except to the extent that such laws are preempted by federal law.  The
Plan shall be construed to comply with applicable OTS Regulations.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Section
8.5                      Headings.

     

    The
headings of Articles and sections are included solely for convenience of
reference.  If there is any conflict between such headings and the
text of the Plan, the text shall control.

     

    Section
8.6                      Non-Alienation
of Benefits.

     

    The right
to receive a benefit under the Plan shall not be subject in any manner to
anticipation, alienation or assignment, nor shall such right be liable for or
subject to debts, contracts, liabilities, engagements or torts.

     

    Section
8.7                      Taxes.

     

    The
Company shall have the right to deduct from all amounts paid by the Company in
cash with respect to an Option under the Plan any taxes required by law to be
withheld with respect to such Option.  Where any Person is entitled to
receive Shares pursuant to the exercise of an Option, the Company shall have the
right to require such Person to pay the Company the amount of any tax which the
Company is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or to sell without notice, a sufficient number of Shares to
cover the minimum amount required to be withheld under applicable
law.

     

    Section
8.8                      Notices.

     

    Any
communication required or permitted to be given under the Plan, including any
notice, direction, designation, comment, instruction, objection or waiver, shall
be in writing and shall be deemed to have been given at such time as it is
delivered personally or five (5) days after mailing if mailed, postage prepaid,
by registered or certified mail, return receipt requested, addressed to such
party at the address listed below, or at such other address as one such party
may by written notice specify to the other party:

     

    (a)           If
to the Committee:

     

    Charter
Financial Corporation

    600 Third
Avenue

    West
Point, GA  31833

     

    Attention:            Corporate
Secretary

     

    (b)           If
to an Option holder, to the Option holder’s address as shown
in the Employer’s records.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Section
8.9                      Required Regulatory
Provisions.

     

    The grant
and settlement of Options under this Plan shall be conditioned upon and subject
to compliance with section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C.
1828(k), and the rules and regulations promulgated thereunder.

     

    Section
8.10                      Approval of
Shareholders.

     

    The Plan
shall not be effective prior to its approval by a majority of the total votes
cast by purchasers (other than First Charter, MHC) in the stock offering
conducted in conjunction with the Reorganization who become holders of
Shares.  If not effective due to the vote of purchasers in the
Reorganization, the Plan shall be effective upon the date of its approval by a
majority of the total votes eligible to be cast at any duly called annual or
special meeting of the Company.  If not effective prior to the one
year anniversary of the date of the Reorganization, the Plan shall be effective
on such later date as is specified by the Board.  No Option shall be
granted prior to the date on which the Plan becomes effective nor shall any
Option be granted within six months of the date of the
Reorganization.

     

    Article
IX

     

    Additional Provisions
Subject to Further Shareholder Approval

     

    Section
9.1                      Accelerated Vesting Upon
Retirement or Change in Control.

     

    Notwithstanding
anything in the Plan to the contrary, but subject to section 9.3(a) in the event
that any Eligible Employee terminates service as an Employee of all Employers,
or in the event that an Eligible Director terminates service as a voting member
of all Employers' boards of directors, and such termination constitutes a
Retirement, all Options outstanding to such holder on the date of his Retirement
shall, to the extent not already exercisable, become exercisable upon
Retirement; and (b) in the event of a Change in Control, all Options outstanding
under the Plan on the date of the Change in Control shall, to the extent not
already exercisable, become exercisable on the date of the Change in
Control.

     

    Section
9.2                      Discretion to Establish
Vesting Schedules.

     

    Notwithstanding
anything in the Plan to the contrary, but subject to section 9.3, section 5.5(b)
shall apply in determining the exercisability of Options granted to Eligible
Employees only if no different vesting schedule is established by the Committee
and specified in the agreement evidencing an outstanding Option.

     

    Section
9.3                      No Effect Prior to
Shareholder Approval.

     

    Notwithstanding
anything contained in this Article IX to the contrary, the provisions of this
Article IX shall not be applied, and shall be of no force or effect, unless and
until the shareholders of the Company shall have approved such provisions by
affirmative vote of the holders of a majority of the Shares represented in
person or by proxy and entitled to vote at a meeting of shareholders duly called
and held after October 16, 2002.

     

     

    16ex10-12.htm

    
      
        
          

        

      

      Exhibit
10.12

    

     

    Charter
Financial Corporation

     

    2001
Recognition and Retention Plan

     

      
        

      

    

     

    Effective
as of April 24, 2002

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
       

      Table of Contents

      
        	 
      	 
      	 
      
	 
      	 
      	
                Page

              
	 	 
	
                
Article I
      Purpose

              	
                1

              
	 
      	 
      
	
                
Section
      1.1

              	
                
General
      Purpose of the Plan

              	
                1

              
	 
      	 
      	 
      
	
                
Article II Definitions

              	
                1

              
	 
      	 
      
	
                
Section
      2.1

              	
                
Award

              	
                1

              
	 
      	 
      	 
      
	
                
Section
      2.2

              	
                
Award
      Notice

              	
                1

              
	 
      	 
      	 
      
	
                
Section
      2.3

              	
                
Bank

              	
                1

              
	 
      	 
      	 
      
	
                
Section
      2.4

              	
                
Beneficiary

              	
                1

              
	 
      	 
      	 
      
	
                
Section
      2.5

              	
                
Board

              	
                1

              
	 
      	 
      	 
      
	
                
Section
      2.6

              	
                
Change of
      Control

              	
                1

              
	 
      	 
      	 
      
	
                
Section
      2.7

              	
                
Code

              	
                3

              
	 
      	 
      	 
      
	
                
Section
      2.8

              	
                
Committee

              	
                3

              
	 
      	 
      	 
      
	
                
Section
      2.9

              	
                
Company

              	
                3

              
	 
      	 
      	 
      
	
                
Section
      2.10

              	
                
Disability

              	
                3

              
	 
      	 
      	 
      
	
                
Section
      2.11

              	
                
Disinterested Board
    Member

              	
                3

              
	 
      	 
      	 
      
	
                
Section
      2.12

              	
                
Effective
      Date

              	
                3

              
	 
      	 
      	 
      
	
                
Section
      2.13

              	
                
Eligible
      Director

              	
                3

              
	 
      	 
      	 
      
	
                
Section
      2.14

              	
                
Eligible
      Employee

              	
                3

              
	 
      	 
      	 
      
	
                
Section
      2.15

              	
                
Employer

              	
                4

              
	 
      	 
      	 
      
	
                
Section
      2.16

              	
                
Exchange
      Act

              	
                4

              
	 
      	 
      	 
      
	
                
Section
      2.17

              	
                
FDIC
      Regulations

              	
                4

              
	 
      	 
      	 
      
	
                
Section
      2.18

              	
                
Fund

              	
                4

              
	 
      	 
      	 
      
	
                
Section
      2.19

              	
                
Funding
      Agent

              	
                4

              
	 
      	 
      	 
      
	
                
Section
      2.20

              	
                
Funding
      Agreement

              	
                4

              
	 
      	 
      	 
      
	
                
Section
      2.21

              	
                
Person

              	
                4

              
	 
      	 
      	 
      
	
                
Section
      2.22

              	
                
Plan

              	
                4

              
	 
      	 
      	 
      
	
                
Section
      2.23

              	
                
Retirement

              	
                4

              
	 
      	 
      	 
      
	
                
Section
      2.24

              	
                
Share

              	
                4

              
	 
      	 
      	 
      
	
                
Article III
      Shares Available Under Plan

              	
                5

              
	 
      	 
      	 
      
	
                
Section
      3.1

              	
                
Shares
      Available Under Plan

              	
                5

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                
Article IV
      Administration

              	
                5

              
	 
      	 
      
	
                
Section
      4.1

              	
                
Committee

              	
                5

              
	 
      	 
      	 
      
	
                
Section
      4.2

              	
                
Committee
      Action

              	
                5

              
	 
      	 
      	 
      
	
                
Section
      4.3

              	
                
Committee
      Responsibilities

              	
                5

              
	 
      	 
      	 
      
	
                
Article V
      The Fund

              	
                6

              
	 
      	 
      	 
      
	
                
Section
      5.1

              	
                
Contributions

              	
                6

              
	 
      	 
      	 
      
	
                
Section
      5.2

              	
                
The
      Fund

              	
                6

              
	 
      	 
      	 
      
	
                
Section
      5.3

              	
                
Investments

              	
                6

              
	 
      	 
      	 
      
	
                
Article VI
      Awards

              	
                7

              
	 
      	 
      	 
      
	
                
Section
      6.1

              	
                
To Eligible
      Directors

              	
                7

              
	 
      	 
      	 
      
	
                
Section
      6.2

              	
                
To Eligible
      Employees

              	
                7

              
	 
      	 
      	 
      
	
                
Section
      6.3

              	
                
Awards in
      General

              	
                7

              
	 
      	 
      	 
      
	
                
Section
      6.4

              	
                
Share
      Allocations

              	
                7

              
	 
      	 
      	 
      
	
                
Section
      6.5

              	
                
Dividend
      Rights

              	
                7

              
	 
      	 
      	 
      
	
                
Section
      6.6

              	
                
Voting
      Rights

              	
                8

              
	 
      	 
      	 
      
	
                
Section
      6.7

              	
                
Tender
      Offers

              	
                8

              
	 
      	 
      	 
      
	
                
Section
      6.8

              	
                
Limitations
      on Awards

              	
                9

              
	 
      	 
      	 
      
	
                
Article VII
      Vesting

              	
                10

              
	 
      	 
      	 
      
	
                
Section
      7.1

              	
                
Vesting of
      Awards

              	
                10

              
	 
      	 
      	 
      
	
                
Section
      7.2

              	
                
Designation
      of Beneficiary

              	
                10

              
	 
      	 
      	 
      
	
                
Section
      7.3

              	
                
Manner of
      Distribution

              	
                10

              
	 
      	 
      	 
      
	
                
Section
      7.4

              	
                
Taxes

              	
                11

              
	 
      	 
      	 
      
	
                
Article
      VIII Amendment and Termination

              	
                11

              
	 
      	 
      	 
      
	
                
Section
      8.1

              	
                
Termination

              	
                11

              
	 
      	 
      	 
      
	
                
Section
      8.2

              	
                
Amendment

              	
                11

              
	 
      	 
      	 
      
	
                
Section
      8.3

              	
                
Adjustments
      in the Event of a Business Reorganization

              	
                11

              

      

      
        
           

        

        
          ii

          
            

          

        

        
           

        

      

      

      
        	
                
Article IX
      Miscellaneous

              	
                12

              
	 
      	 
      	 
      
	
                
Section
      9.1

              	
                
Status as
      an Employee Benefit Plan

              	
                12

              
	 
      	 
      	 
      
	
                
Section
      9.2

              	
                
No Right to
      Continued Employment

              	
                12

              
	 
      	 
      	 
      
	
                
Section
      9.3

              	
                
Construction of
Language

              	
                12

              
	 
      	 
      	 
      
	
                
Section
      9.4

              	
                
Governing
      Law

              	
                13

              
	 
      	 
      	 
      
	
                
Section
      9.5

              	
                
Headings

              	
                13

              
	 
      	 
      	 
      
	
                
Section
      9.6

              	
                
Non-Alienation of
    Benefits

              	
                13

              
	 
      	 
      	 
      
	
                
Section
      9.7

              	
                
Notices

              	
                13

              
	 
      	 
      	 
      
	
                
Section
      9.8

              	
                
Required
      Regulatory Provisions

              	
                14

              
	 
      	 
      	 
      
	
                
Section
      9.9

              	
                
Approval of
      Shareholders

              	
                14

              
	 
      	 
      	 
      
	
                
Article X
      Additional Provisions Subject to Further Shareholder
      Approval

              	
                14

              
	 
      	 
      	 
      
	
                
Section
      10.1

              	
                
Accelerated
      Vesting Upon Retirement or Change in Control

              	
                14

              
	 
      	 
      	 
      
	
                
Section
      10.2

              	
                
Discretion
      to Establish Vesting Schedules

              	
                14

              
	 
      	 
      	 
      
	
                
Section
      10.3

              	
                
No Effect
      Prior to Stockholder Approval

              	
                14

              

      

    

     

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    Charter
Financial Corporation

    2001
Recognition and Retention Plan

     

    Article I

     

    Purpose

     

    Section
1.1                      General
Purpose of the Plan.

     

    The
purpose of the Plan is to promote the growth and profitability of Charter
Financial Corporation and its affiliated companies and to provide eligible
directors, certain key officers and employees of Charter Financial Corporation
and its affiliated companies with an incentive to achieve corporate objectives,
to attract and retain directors, key officers and employees of outstanding
competence and to provide such directors, officers and employees with an equity
interest in Charter Financial Corporation and its affiliated
companies.

     

    Article II

     

    Definitions

     

    The
following definitions shall apply for the purposes of this Plan, unless a
different meaning is plainly indicated by the context:

     

    Section
2.1                     Award means
a grant of Shares to an Eligible Director or Eligible Employee pursuant to
section 6.1 or 6.2.

     

    Section
2.2                    Award
Notice means,
with respect to a particular Award, a written instrument signed by the Company
and the Awards recipient evidencing the granting of the Award and establishing
the terms and conditions thereof.

     

    Section
2.3                    Bank means
CharterBank and any successor thereto.

     

    
Section
2.4                   Beneficiary
means the
Person designated by an Eligible Director or Eligible Employee pursuant to
section 7.2 to receive distribution of any Shares available for distribution to
such Eligible Director or Eligible Employee, in the event such Eligible Director
or Eligible Employee dies prior to receiving distribution of such
Shares.

     

    
Section
2.5                    Board means
the Board of Directors of the Company.

     

    Section
2.6                    Change
of Control means
any of the following events:

     

    (a)           the
consummation of a reorganization, merger or consolidation of the Company with
one or more other persons, other than a transaction following
which:

     

    (i)           at
least 51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) in
substantially the same relative proportions by persons who, immediately prior to
such transaction, beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) at least 51% of the outstanding equity
ownership interests in the Company; and

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (ii)           at
least 51% of the securities entitled to vote generally in the election of
directors of the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who, immediately prior to
such transaction, beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) at least 51% of the securities entitled to
vote generally in the election of directors of the Company;

     

    (b)           the
acquisition of all or substantially all of the assets of the Company or
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the outstanding securities of the Company
entitled to vote generally in the election of directors by any person or by any
persons acting in concert;

     

    (c)          a
complete liquidation or dissolution of the Company;

     

    (d)          the
occurrence of any event if, immediately following such event, at least 50% of
the members of the board of directors of the Company do not belong to any of the
following groups:

     

    (i)           individuals
who were members of the board of directors of the Company on the Effective Date;
or

     

    (ii)          individuals
who first became members of the board of directors of the Company after the
Effective Date either:

     

    (A)           upon
election to serve as a member of the board of Directors of the Company by
affirmative vote of three-quarters of the members of such board, or of a
nominating committee thereof, in office at the time of such first election;
or

     

    (B)           upon
election by the shareholders of the Company to serve as a member of such board,
but only if nominated for election by affirmative vote of three-quarters of the
members of the board of directors of the Company, or of a nominating committee
thereof, in office at the time of such first nomination;

     

    provided,
however, that such individual’s election or nomination did not result
from an actual or threatened election contest (within the meaning of Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents (within the meaning of Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) other than by or on
behalf of the board of directors of the Company;
provided, however, that this section 2.6(d) shall only apply if the
Company is not majority owned by First Charter, MHC;

     

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

     

    (e)           approval
by the stockholders of the Company of any agreement, plan or arrangement for the
consummation of a transaction which, if consummated, would result in the
occurrence of an event described in section 2.6(a), (b), (c) or (d);
or

     

    (f)           any
event which would be described in section 2.6(a), (b), (c), (d) or (e) if the
term “Bank” were substituted for the term “Company” therein.

     

    In no
event, however, shall a Change of Control be deemed to have occurred as a result
of (i) any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or any subsidiary of
either of them, or by any employee benefit plan maintained by any of them or
(ii) the conversion of First Charter, MHC to a stock form company and the
issuance of additional Shares of the Company therewith.  For purposes
of this section 2.6, the term “person” shall have the meaning assigned to it
under sections 13(d)(3) or 14(d)(2) of the Exchange Act.

     

    Section
2.7                    Code means
the Internal Revenue Code of 1986 (including the corresponding provisions of any
succeeding law).

     

    Section
2.8                    Committee means
the Committee described in section 4.1.

     

    
Section
2.9                    Company means
Charter Financial Corporation, a corporation organized and existing under the
laws of the State of Georgia, and any successor thereto.

     

    Section
2.10                  Disability means
a condition of total incapacity, mental or physical, for further performance of
duty with the Company which the Committee shall have determined, on the basis of
competent medical evidence, is likely to be permanent.

     

    Section
2.11                 Disinterested
Board Member means
a member of the Board who (a) is not a current employee of the Company or a
subsidiary, (b) does not receive remuneration from the Company or a subsidiary,
either directly or indirectly, in any capacity other than as a director, except
in an amount for which disclosure would not be required pursuant to Item 404(a)
of the proxy solicitation rules of the Securities and Exchange Commission and
(c) does not possess an interest in any other transaction, and is not engaged in
a business relationship, for which disclosure would be required pursuant to Item
404(a) or (b) of the proxy solicitation rules of the Securities and Exchange
Commission.  The term Disinterested Board Member shall be interpreted
in such manner as shall be necessary to conform to the requirements of Rule
16b-3 promulgated under the Exchange Act.

     

    Section
2.12                 Effective
Date means
the date on which the Bank converts from a mutual bank to a stock bank (the
“Reorganization”) if permitted by OTS Regulations, otherwise on April 24,
2002.

     

    Section
2.13                 Eligible
Director means
a member of the board of directors of an Employer who is not also an employee or
an officer of any Employer.

     

    Section
2.14           
     Eligible
Employee means
any employee whom the Committee may determine to be a key officer or employee of
an Employer and selects to receive an Award pursuant to the Plan.

     

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

     

    Section
2.15                  Employer means
the Company, the Bank and any successor thereto and, with the prior approval of
the Board of Directors of the Company, and subject to such terms and conditions
as may be imposed by the Board, any other savings bank, savings and loan
association, bank, corporation, financial institution or other business
organization or institution. With respect to any Eligible Employee or
Eligible Director, the Employer shall mean the entity which employs such person
or upon whose board of directors such person serves.

     

    Section
2.16                  Exchange
Act means
the Securities and Exchange Act of 1934, as amended.

     

    Section
2.17                  FDIC
Regulations means
the rules and regulations of the Federal Deposit Insurance
Corporation.

     

    Section
2.18                 Fund means
the corpus (consisting of contributions paid over to the Funding Agent, and
investments thereof), and all earnings, appreciations or additions thereof and
thereto, held by the Funding Agent under the Funding Agreement in accordance
with the Plan, less any depreciation thereof and any payments made therefrom
pursuant to the Plan.

     

    Section
2.19                 Funding
Agent means
the trustee or custodian of the Fund from time to time in office.  The
Funding Agent shall serve as Funding Agent until it is removed or resigns from
office and is replaced by a successor Funding Agent or Funding Agents appointed
by Charter Financial Corporation.

     

    Section
2.20                 Funding
Agreement means
the agreement between Charter Financial Corporation and the Funding Agent
therein named or its successor pursuant to which the Fund shall be held in trust
or custody.

     

    Section
2.21                 Person means
an individual, a corporation, a bank, a savings bank, a savings and loan
association, a financial institution, a partnership, an association, a
joint-stock company, a trust, an estate, an unincorporated organization and any
other business organization or institution.

     

    Section
2.22                  Plan means
the Charter Financial Corporation 2001 Recognition and Retention Plan, as
amended from time to time.

     

    Section
2.23                 Retirement means
with respect to an Eligible Employee, termination of all service for all
Employers as an employee at or after the normal or early retirement date set
forth in any tax-qualified retirement plan of the Bank, whether or not the
individual in question actually participates in any such tax-qualified plan of
the Bank, and in the case of an Eligible Director, termination of all service
for all Employers as a voting member of the Employer’s board of directors after
the attainment of the latest age at which the Eligible Director is eligible for
election or appointment as a voting member of the Employer’s board of directors
under the Employer’s charter.

     

    Section
2.24                  Share means
a share of common stock of Charter Financial Corporation, par value $.01 per
share.

     

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

     

    Article III

     

    Shares
Available Under Plan

     

    Section
3.1                    Shares
Available Under Plan.

     

    (a)           The
maximum number of Shares available for Awards under the Plan shall be 283,177
Shares subject to adjustment pursuant to section 8.3.

     

    (b)           An
aggregate maximum of 84,953 Shares (subject to adjustment pursuant to section
8.3) may be granted as Awards to Eligible Directors, and a maximum of 14,158
Shares (subject to adjustment pursuant to section 8.3) may be granted as Awards
to any one Eligible Director.

     

    (c)           A
maximum of 70,794 Shares (subject to adjustment pursuant to section 8.3) may be
granted as Awards to any one Eligible Employee.

     

    Article IV

     

    Administration

     

    Section
4.1                    Committee.

     

    The Plan
shall be administered by the members of the Compensation Committee
of  Charter Financial Corporation who are Disinterested Board
Members.  If the Committee consists of fewer than two Disinterested
Board Members, then the Board shall appoint to the Committee such additional
Disinterested Board Members as shall be necessary to provide for a Committee
consisting of at least two Disinterested Board Members.

     

    Section
4.2                    Committee
Action.

     

    The
Committee shall hold such meetings, and may make such administrative rules and
regulations, as it may deem proper.  A majority of the members of the
Committee shall constitute a quorum, and the action of a majority of the members
of the Committee present at a meeting at which a quorum is present, as well as
actions taken pursuant to the unanimous written consent of all of the members of
the Committee without holding a meeting, shall be deemed to be actions of the
Committee.  All actions of the Committee shall be final and conclusive
and shall be binding upon the Company and all other interested
parties.  Any Person dealing with the Committee shall be fully
protected in relying upon any written notice, instruction, direction or other
communication signed by the Secretary of the Committee and one member of the
Committee, by two members of the Committee or by a representative of the
Committee authorized to sign the same in its behalf.

     

    Section
4.3                    Committee
Responsibilities.

     

    Subject
to the terms and conditions of the Plan and such limitations as may be imposed
by the Board, the Committee shall be responsible for the overall management and
administration of the Plan and shall have such authority as shall be necessary
or appropriate in order to carry out its responsibilities, including, without
limitation, the authority:

     

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

     

    (a)           to
interpret and construe the Plan, and to determine all questions that may arise
under the Plan as to eligibility for Awards under the Plan, the amount of
Shares, if any, to be granted pursuant to an Award, and the terms and conditions
of such Award;

     

    (b)           to
adopt rules and regulations and to prescribe forms for the operation and
administration of the Plan; and

     

    (c)           to
take any other action not inconsistent with the provisions of the Plan that it
may deem necessary or appropriate.

     

    Article V

     

    The
Fund

     

    Section
5.1                    Contributions.

     

    Charter
Financial Corporation shall contribute, or cause to be contributed, to the Fund,
from time to time, such amounts of money or property as shall be determined by
the Board, in its discretion.  No contributions by Eligible Directors
or Eligible Employees shall be permitted.

     

    Section
5.2                    The
Fund.

     

    The Fund
shall be held and invested under the Funding Agreement with the Funding
Agent.  The provisions of the Funding Agreement shall include
provisions conferring powers on the Funding Agent as to investment, control and
disbursement of the Trust Fund, and such other provisions not inconsistent with
the Plan as may be prescribed by or under the authority of the
Board.  No bond or security shall be required of any Funding Agent at
any time in office.

     

    Section
5.3                    Investments.

     

    The
Funding Agent shall invest the Trust Fund in Shares and in such other
investments as may be permitted under the Funding Agreement, including savings
accounts, time or other interest bearing deposits in or other interest bearing
obligations of the Company, in such proportions as shall be determined by the
Committee; provided,
however, that in no event shall the Fund be used to purchase more than
283,177 Shares (subject to adjustment pursuant to section
8.3).  Notwithstanding the immediately preceding sentence, the Funding
Agent may temporarily invest the Fund in short-term obligations of, or
guaranteed by, the U.S. Government or an agency thereof, or the Funding Agent
may retain the Trust Fund uninvested or may sell assets of the Fund to provide
amounts required for purposes of the Plan.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Article VI

     

    Awards

     

    Section
6.1                    To
Eligible Directors.

     

    Subject
to the limitations of the Plan and such limitations as the Board may from time
to time impose, the number of Shares as to which an Eligible Director may be
granted an Award shall be determined by the Committee in its discretion; provided,
however, that in no event shall the number of Shares allocated to an
Eligible Director in an Award exceed the number of Shares then held in the Fund
and not allocated in connection with other Awards.

     

    Section
6.2                    To
Eligible Employees.

     

    Subject
to the limitations of the Plan and such limitations as the Board may from time
to time impose, the number of Shares as to which an Eligible Employee may be
granted an Award shall be determined by the Committee in its discretion; provided,
however, that in no event shall the number of Shares allocated to an
Eligible Employee in an Award exceed the number of Shares then held in the Trust
and not allocated in connection with other Awards.

     

    Section
6.3                    Awards
in General.

     

    Any Award
shall be evidenced by an Award Notice issued by the Committee to the Eligible
Director or Eligible Employee, which notice shall:

     

    (a)           specify
the number of Shares covered by the Award;

     

    (b)           specify
the date of grant of the Award;

     

    (c)           specify
the dates on which such Shares shall become vested; and

     

    (d)           contain
such other terms and conditions not inconsistent with the Plan as the Board or
Committee may, in its discretion, prescribe.

     

    Section
6.4                    Share
Allocations.

     

    Upon the
grant of an Award to an Eligible Director or Eligible Employee, the Committee
shall notify the Funding Agent of the Award and of the number of Shares subject
to the Award.  Thereafter, until such time as the Shares subject to
such Award become vested or are forfeited, the books and records of the Funding
Agent shall reflect that such number of Shares have been awarded to such Award
recipient.

     

    Section
6.5                    Dividend
Rights.

     

    (a)           Unless
the Committee determines otherwise with respect to any Award and specifies such
determination in the relevant Award Notice, any cash dividends or distributions
declared and paid with respect to Shares subject to the Award that are, as of
the record date for such dividend, allocated to an Eligible Director or Eligible
Employee in connection with such Award shall be subject to the same vesting and
other restrictions as the Shares to which the Award relates and shall be
invested for the benefit of the Eligible Director or Eligible Employee in money
market accounts or certificates of deposit.  Any cash dividends
declared and paid with respect to Shares that are not, as of the record date for
such dividend, allocated to any Eligible Director or Eligible Employee in
connection with any Award shall, at the direction of the Committee, be held in
the Trust or used to pay the administrative expenses of the Plan, including any
compensation due to the Funding Agent.

     

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

     

    (b)           Unless
the Committee determines otherwise with respect to any Award and specifies such
determination in the relevant Award Notice, any dividends or distributions
declared and paid in property other than cash with respect to Shares shall be
subject to the same vesting and other restrictions as the Shares to which the
Award relates.  Any such dividends declared and paid with respect to
Shares that are not, as of the record date for such dividend, allocated to any
Eligible Director or Eligible Employee in connection with any Award shall, at
the direction of the Committee, be held in the Trust or used to pay the
administrative expenses of the Plan, including any compensation due to the
Funding Agent or, in the case of a stock dividend, used for future
Awards.

     

    Section
6.6                    Voting
Rights.

     

    All
voting rights appurtenant to unvested Shares related to an Award or to Shares
that are contained in the Fund and not allocated in connection with an Award
shall be exercised by the Funding Agent in such manner as to reflect the voting
directions given for all other outstanding Shares except for Shares voted by
First Charter, MHC.

     

    Section
6.7                    Tender
Offers.

     

    (a)           Each
Eligible Director or Eligible Employee to whom an Award has been made that is
not fully vested shall have the right to respond, or  to direct the
response, with respect to the Shares related to such Award, to any tender offer,
exchange offer or other offer made to the holders of Shares.  Such a
direction for any Shares as to which the Eligible Director or Eligible Employee
is not the record owner shall be given by completing and filing, with the
inspector of elections, the Funding Agent or such other person who shall be
independent of the Company as the Committee shall designate in the direction, a
written direction in the form and manner prescribed by the
Committee.  If no such direction is given by an Eligible Director or
Eligible Employee, then the Shares shall not be tendered or
exchanged.

     

    (b)           To
the extent that the Fund contains Shares that are not allocated in connection
with an Award, all responses to tender, exchange and other offers appurtenant to
such Shares shall be given by the Funding Agent in such manner as the Committee
shall direct to reflect the responses given by Eligible Directors or Eligible
Employees with respect to Shares allocated in connection with their
Awards.

     

    (c)           The
Committee shall furnish, or cause to be furnished, to each Eligible Director or
Eligible Employee, all information furnished by the offeror to the holders of
Shares.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    Section
6.8                    Limitations
on Awards.

     

    (a)           No
Award shall be granted under the Plan prior to the later of (i) the date on
which the Plan is approved by shareholders pursuant to section 9.9 or (ii) six
months after the date of the Reorganization;

     

    (b)           No
Award granted under the Plan shall become vested more rapidly than under the
following schedule:

     

    (i)           prior
to the first anniversary of the Effective Date, no part of any Award shall be
vested in the absence of the death or Disability of the Award
recipient;

     

    (ii)           on
and after the first anniversary of the Effective Date and prior to the second
anniversary of the Effective Date, an Award will be vested as to a maximum of
twenty percent (20%) of the Shares subject to the Award when granted in the
absence of the death or Disability of the Award recipient;

     

    (iii)           on
and after the second anniversary of the Effective Date and prior to the third
anniversary of the Effective Date, an Award may be vested as to a maximum of
forty percent (40%) of the Shares subject to the Award when granted in the
absence of the death or Disability of the Award recipient;

     

    (iv)           on
and after the third anniversary of the Effective Date and prior to the fourth
anniversary of the Effective Date, an Award may be vested as to a maximum
of  sixty percent (60%) of the Shares subject to the Award when
granted in the absence of the death or Disability of the Award
recipient;

     

    (v)           on
and after the fourth anniversary of the Effective Date and prior to the fifth
anniversary of the Effective Date, an Award may be vested as to a maximum of
eighty  percent (80%) of the Shares subject to the Award when granted
in the absence of the death or Disability of the Award recipient;
and

     

    (vi)           on
and after the fifth anniversary of the date on which the Plan is approved by
shareholders pursuant to section 9.9, the Award may be vested as to one hundred
percent (100%) of the Shares subject to the Award when granted; and

     

    (vii)           an
Award may become fully vested on the date of the Award holder’s death or
Disability without regard to the time expired from and after the Effective
Date.

     

    (c)           An
Award by its terms shall not be transferable by the Eligible Director or
Eligible Employee other than by will or by the laws of descent and distribution,
and the Shares granted pursuant to such Award and held in the Trust shall be
distributable, during the lifetime of the Recipient, only to the
Recipient.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Article VII

     

    Vesting

     

    Section
7.1                    Vesting
of Awards.

     

    Subject
to the terms and conditions of the Plan, unless otherwise determined by the
Committee and specified in the Award Notice relating to an Award, Shares subject
to each Award granted to an Eligible Director or Eligible Employee under the
Plan shall become vested as follows:  (i) twenty percent (20%) of such
Shares shall become vested twenty (20) calendar days after the end of the
calendar quarter that includes the first anniversary of the date of grant; (ii)
an additional twenty percent (20%) of such Shares shall become vested twenty
(20) calendar days after the end of the calendar quarter that includes the
second anniversary of the date of grant; (iii) an additional twenty percent
(20%) of such Shares shall become vested twenty (20) calendar days after the end
of the calendar quarter that includes the third anniversary of the date of
grant; (iv) an additional twenty percent (20%) of such Shares shall become
vested twenty (20) calendar days after the end of the calendar quarter that
includes the fourth anniversary of the date of grant; (v) an additional twenty
percent (20%) of such Shares shall become vested twenty (20) calendar days after
the end of the calendar quarter that includes the fifth anniversary of the date
of grant; and
provided, further, an Award shall become 100% vested upon the Award
recipient’s death or Disability.

     

    Section
7.2                    Designation
of Beneficiary.

     

    An
Eligible Director or Eligible Employee who has received an Award may designate a
Beneficiary to receive any undistributed Shares that are, or become, available
for distribution on, or after, the date of his death.  Such
designation (and any change or revocation of such designation) shall be made in
writing in the form and manner prescribed by the Committee.  In the
event that the Beneficiary designated by an Eligible Director or Eligible
Employee dies prior to the Eligible Director or Eligible Employee, or in the
event that no Beneficiary has been designated, any undistributed Shares that
are, or become, available for distribution on, or after, the Eligible Director’s
or Eligible Employee’s death shall be paid to the executor or administrator of
the Eligible Director’s or Eligible Employee’s estate, or if no such executor or
administrator is appointed within such time as the Committee, in its sole
discretion, shall deem reasonable, to such one or more of the spouse and
descendants and blood relatives of such deceased person as the Committee may
select.

     

    Section
7.3                    Manner
of Distribution.

     

    (a)           As  soon
as practicable following the date any Shares granted pursuant to an Award become
vested pursuant to sections 7.1, the Committee shall take such actions as are
necessary to cause the transfer of record ownership of the Shares that have
become vested from the Funding Agent to the Award holder and shall cause the
Funding Agent to distribute to the Award holder all property other than Shares
then being held in connection with the Shares being distributed.

     

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    

     

    (b)           The
Company’s obligation to deliver Shares with respect to an Award shall, if the
Committee so requests, be conditioned upon the receipt of a representation as to
the investment intention of the Eligible Director or Eligible Employee or
Beneficiary to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of applicable federal, state or local law.  It may be
provided that any such representation shall become inoperative upon a
registration of the Shares or upon the occurrence of any other event eliminating
the necessity of such representation.  The Company shall not be
required to deliver any Shares under the Plan prior to (i) the admission of such
Shares to listing on any stock exchange on which Shares may then be listed, or
(ii) the completion of such registration or other qualification under any state
or federal law, rule or regulation as the Committee shall determine to be
necessary or advisable.

     

    Section
7.4                    Taxes.

     

    The
Company, the Committee or the Funding Agent shall have the right to require any
person entitled to receive Shares pursuant to an Award to pay the amount of any
tax which is required to be withheld with respect to such Shares, or, in lieu
thereof, to retain, or to sell without notice, a sufficient number of Shares to
cover the amount required to be withheld.

     

    Article VIII

     

    Amendment
and Termination

     

    Section
8.1                    Termination.

     

    The Board
may suspend or terminate the Plan in whole or in part at any time by giving
written notice of such suspension or termination to the Committee; provided,
however, that the Plan may not be terminated while there are outstanding
Awards that may thereafter become vested.  Upon the termination of the
Plan, the Funding Agent shall make distributions from the Fund in such amounts
and to such persons as the Committee may direct and shall return the remaining
assets of the Fund, if any, to Charter Financial Corporation.

     

    Section
8.2                    Amendment.

     

    The Board
may amend or revise the Plan in whole or in part at any time.

     

    Section
8.3                    Adjustments
in the Event of a Business Reorganization.

     

    (a)           In
the event of any merger, consolidation, or other business reorganization
(including but not limited to a Change of Control) in which Charter Financial
Corporation is the surviving entity, and in the event of any stock split, stock
dividend or other event generally affecting the number of Shares held by each
person who is then a holder of record of Shares, the number of Shares held or
permitted to be held in the Fund, the number of Shares covered by outstanding
Awards, and the number of Shares available as Awards in total or to particular
individuals or groups shall be adjusted to account for such
event.  Such adjustment shall be effected by multiplying such number
of Shares by an amount equal to the number of Shares that would be owned after
such event by a person who, immediately prior to such event, was the holder of
record of one Share, unless the Committee, in its discretion, establishes
another appropriate method of adjustment.

     

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

     

    (b)           In
the event of any merger, consolidation, or other business reorganization
(including but not limited to a Change of Control) in which Charter Financial
Corporation is not the surviving entity, the Funding Agent shall hold in the
Fund any money, stock, securities or other property received by holders of
record of Shares in connection with such merger, consolidation, or other
business reorganization.  Any Award with respect to which Shares had
been allocated to an Eligible Director or Eligible Employee shall be adjusted by
allocating to the Eligible Director or Eligible Employee receiving such Award
the amount of money, stock, securities or other property received by the Funding
Agent for the Shares allocated to such Eligible Director or Eligible Employee,
and such money, stock, securities or other property shall be subject to the same
terms and conditions of the Award that applied to the Shares for which it has
been exchanged.

     

    Article IX

     

    Miscellaneous

     

    Section
9.1                    Status
as an Employee Benefit Plan.

     

    This Plan
is not intended to satisfy the requirements for qualification under section
401(a) of the Code or to satisfy the definitional requirements for an “employee
benefit plan” under section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended.  It is intended to be a non-qualified incentive
compensation program that is exempt from the regulatory requirements of the
Employee Retirement Income Security Act of 1974, as amended.  The Plan
shall be construed and administered so as to effectuate this
intent.

     

    Section
9.2                    No
Right to Continued Employment.

     

    Neither
the establishment of the Plan nor any provisions of the Plan nor any action of
the Board or the Committee with respect to the Plan shall be held or construed
to confer upon any Eligible Director or Eligible Employee any right to continue
in the service of any Employer.  The Employers reserve the right to
dismiss any Eligible Director or Eligible Employee or otherwise deal with any
Eligible Director or Eligible Employee to the same extent as though the Plan had
not been adopted.

     

    Section
9.3                    Construction
of Language.

     

    Whenever
appropriate in the Plan, words used in the singular may be read in the plural,
words used in the plural may be read in the singular, and words importing the
masculine gender may be read as referring equally to the feminine or the
neuter.  Any reference to an Article or section number shall refer to
an Article or section of this Plan unless otherwise indicated.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    Section
9.4                    Governing
Law.

     

    The Plan
shall be construed and enforced in accordance with the laws of the State of
Georgia without giving effect to the conflict of laws principles thereof, except
to the extent that such laws are preempted by the federal laws of the United
States of America.  The Plan shall be construed to comply with
applicable OTS Regulations.

     

    Section
9.5                    Headings.

     

    The
headings of Articles and sections are included solely for convenience of
reference.  If there is any conflict between such headings and the
text of the Plan, the text shall control.

     

    Section
9.6                    Non-Alienation
of Benefits.

     

    The right
to receive a benefit under the Plan shall not be subject in any manner to
anticipation, alienation or assignment, nor shall such right be liable for or
subject to debts, contracts, liabilities, engagements or torts;  provided,
however, that any recipient of an Award who makes an election pursuant to
section 83(b) of the Code to include the value of the Shares subject to such
Award in gross income for federal income purposes when granted rather than when
vested shall have the right to margin such Shares to finance the payment of
taxes.  Any Shares so margined shall nevertheless remain subject to
the forfeiture provisions and other terms and conditions of the
Award.

     

    Section
9.7                    Notices.

     

    Any
communication required or permitted to be given under the Plan, including any
notice, direction, designation, comment, instruction, objection or waiver, shall
be in writing and shall be deemed to have been given at such time as it is
personally delivered or 5 days after mailing if mailed, postage prepaid, by
registered or certified mail, return receipt requested, addressed to such party
at the address listed below, or at such other address as one such party may by
written notice specify to the other:

     

    (a)           If
to the Committee:

     

    Charter
Financial Corporation

    600 Third
Avenue

    West
Point, Georgia  31833

     

    Attention:           Corporate
Secretary

     

    (b)           If
to an Eligible Director or Eligible Employee, to the Eligible Director’s or
Eligible Employee’s address as shown in the Employer’s records.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    Section
9.8                    Required
Regulatory Provisions.

     

    The
making and payment of Awards under this Plan shall be conditioned upon and
subject to compliance with section 18(k) of the Federal Deposit Insurance Act,
12 U.S.C. 1828(k), and the rules and regulations promulgated
thereunder.

     

    
Section
9.9            
        Approval
of Shareholders.

     

    The Plan
shall not be effective prior to its approval by a majority of the total votes
cast by purchasers (other than First Charter, MHC) in the stock offering
conducted in conjunction with the Reorganization who become holders of
Shares.  If not effective due to the vote of purchasers in the
Reorganization, the Plan shall be effective upon the date of its approval by a
majority of the total votes eligible to be cast at any duly called annual or
special meeting of the Company.  If not effective prior to the one
year anniversary of the date of the Reorganization, the Plan shall be effective
on such later date as is specified by the Board.  No Award shall be
made prior to the date on which the Plan becomes effective nor shall any Award
be granted within six months of the date of the Reorganization.

     

    Article X

     

    Additional
Provisions Subject to Further Shareholder Approval

     

    Section
10.1                  Accelerated
Vesting Upon Retirement or Change in Control.

     

    Notwithstanding
anything in the Plan to the contrary, but subject to section 10.3, unless
otherwise determined by the Committee and specified in the Award Notice relating
to an Award: (a) in the event that any Eligible Employee terminates service as
an Employee of all Employers, or in the event that an Eligible Director
terminates service as a voting member of all Employers’ boards of directors, and
such termination constitutes a Retirement, all Awards outstanding to such holder
on the date of his Retirement shall, to the extent not already vested, become
vested upon Retirement; and (b) in the event of a Change of Control, all Awards
outstanding under the Plan on the date of the Change of Control shall, to the
extent not already vested, become vested on the date of the Change of
Control.

     

    Section
10.2                  Discretion
to Establish Vesting Schedules.

     

    Notwithstanding
anything in the Plan to the contrary, but subject to section 10.3, section 7.1
shall apply in determining the vesting of Awards only if no different vesting
schedule is established by the Committee and specified in the Award
Notice.

     

    Section
10.3                  No
Effect Prior to Stockholder Approval.

     

    Notwithstanding
anything contained in this Article X to the contrary, the provisions of this
Article X shall not be applied, and shall be of no force or effect, unless and
until the shareholders of the Company shall have approved such provisions by
affirmative vote of the holders of a majority of the Shares represented in
person or by proxy and entitled to vote at a meeting of shareholders duly called
and held on or after October 16, 2002.

     

     

    14

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