Document:

exv10w17

 

EXHIBIT
10.17

2005 INCENTIVE STOCK OPTION PLAN

FOR

RELIANCE BANCSHARES, INC.

     STATEMENT of the 2005 Incentive Stock Option Plan dated November 16, 2005 for Reliance
Bancshares, Inc. (herein called the “Company”).

     WHEREAS, the Board of Directors of the Company (herein called the “Board”) deems it in the
best interests of the Company that certain management personnel employed by the Company and by its
subsidiaries be given an opportunity to acquire a proprietary interest in the success and growth of
the Company as a means of assuring their maximum effort and continued association with the Company;
and

     WHEREAS, the Board believes that the Company can best obtain these and other benefits by
granting stock options to designated employees from time to time pursuant to Section 422 and
related Sections of the Internal Revenue Code of 1986, as amended.

     NOW, THEREFORE, the Board has adopted this 2005 Incentive Stock Option Plan (the “Plan”)
effective upon approval by the affirmative vote of the holders of a majority of all classes of
shares of the Company entitled to vote:

     1. Policy. The Company shall, from time to time but in no event after November 16,
2015, grant options for sales of shares to management personnel employed by it, and by subsidiary
corporations of the Company, pursuant to the terms of this Plan. The term “subsidiary corporation”
means any corporation or legal entity in which the Company owns at least 80 percent of the voting
shares or interests or any corporation or legal entity in a chain of corporations or legal entities
connected with the Company through ownership of at least 80 percent of its voting shares or
interests by any corporation or legal entity in the chain.

     2. Option Stock. Options under this Plan shall pertain to authorized and unissued
shares of Class A Common Stock, $0.50 par value of the Company (hereinafter sometimes called
“option shares”). The total number of shares available for options under this Plan shall not
exceed 400,000 in the aggregate. The limitation established by the preceding sentence shall be
subject to adjustment as provided in paragraph 8. The Company shall at all times while this Plan
is in force reserve such number of shares of Class A Common Stock, $0.50 par value as will be
sufficient to satisfy the requirements of this Plan.

     3. Participants. For the purposes of this Agreement, the term “management personnel”
shall be deemed to include only officers and key employees who are full-time employees of the
Company or its subsidiary corporations. The Board, on recommendations of the Chairman and/or Chief
Executive Officer of the Company, or by its own initiative, shall from time to time designate from
among the management personnel employed by the Company and by its subsidiary corporations the
persons to whom stock options shall be granted. Such designations shall be made in the absolute
discretion of the Board and shall be final without approval of the shareholders. Directors of
the

1

 

Company who are otherwise engaged as officers and key employees and full-time employees of the
Company, or any of its subsidiary corporations, may be designated as participants. On the occasion
of any designation of participants, the Board may grant additional options to participants then
holding options, or to some of them, or may grant options solely or partially to new participants.
In designating participants, the Board shall fix the number of shares to be optioned to designees
in its absolute discretion.

     4. Price. The option price or prices of the Company’s Class A Common Stock, $0.50
par value offered to any participant under this Plan shall be determined by the Board in its
absolute discretion at the time of granting an option, provided, however, that such price or prices
shall in no event be less than 100 percent of the fair market value of the Class A Common Stock,
$0.50 par value on the date of granting the option. In the case of options granted to a person who
owns more than 10 percent of the voting power of the shares of the Company, or of the parent or any
subsidiary of the Company, the option price for the Class A Common Stock, $0.50 par value shall in
no event be less than 110 percent of the fair market value thereof on the date of the granting of
the option. For purposes hereof, the fair market value of the Class A Common Stock, $0.50 par
value shall be the mean between the bid and asked prices quoted at the close of the date preceding
the granting of the option as determined by the Board; except that if the Class A Common Stock ,
$0.50 par value is then listed on any organized exchange, fair market value shall be the mean
between the high and low sales on the date nearest preceding the granting of the option. If there
are no such markets for Class A Common Stock, $0.50 par value, as aforesaid, then the Board may
also determine fair market value based upon the price which the Company offers and sells its Class
A Common Stock, $0.50 par value to the public from time to time, using a pricing formula similar
to that used by the Company to price said shares for sale to the public. If there are no sales by
which to judge fair market value, the option price shall not be less than the book value as of the
date of the granting of the option. In no event shall an option for Class A Common Stock, $0.50
par value granted under this Plan be deemed not to qualify as an incentive stock option, within the
meaning of Section 422 of the Internal Revenue Code, by reason of the determination of the purchase
price for said shares, so long as the establishment of the fair market value of such shares on the
date of grant of the option shall have been determined in good faith by the Board.

     5. Time of Exercise.

          (a) In General. Any option granted under this Plan may be exercised immediately after
the date of the granting of such option to the particular participant, subject to the vesting
provisions outlined in paragraphs 5(b) and 5(c) hereof. The option may itself be exercised in
whole or in part at any time, or from time to time thereafter, until the expiration of the option,
subject to the provisions of paragraphs 5(b) and 5(c). An option shall not be exercisable after
the expiration of 10 years from the date such option is granted, unless an earlier date is
specified by the Board. Options issued to persons who own more than 10 percent of the voting
shares of the Company shall not be exercisable after the expiration of 5 years from the date such
option is granted, unless an earlier date is specified by the Board.

          (b) Vesting. Subject to the provisions of paragraph 10 hereof, options granted will
be exercisable as follows: Whenever possible, the shares included in each option shall be divided
into three (3) installments, each installment to be approximately equal in size. The right to
exercise each

2

 

installment shall be determined by the length of service that the participant has
accumulated since the participant was first employed by the Company or its subsidiaries. For each
full year of continuous service after November 16, 2005 the participant may exercise one
installment or a portion thereof of his/her option shares provided that all other requirements for
vesting have been met. When the right to exercise any installment occurs, the shares included in
that installment may be purchased at that time or from time to time thereafter during the option
period. Transfer to the employ of a subsidiary or a different subsidiary or to the Company shall
not affect the accumulated service of a participant. The Board may, in its discretion, provide for
a longer vesting period, up to five (5) years and may vary the number of options for each year in
the vesting period. The Board in its sole discretion may also waive the vesting requirements
contained herein.

          (c) Transfer of Ownership. In the event that there is a transfer of ownership
of the Company, the limitations provided in paragraph 5(b) shall become null and void and all
options shall become immediately exercisable in full. A transfer of ownership shall occur upon the
change in ownership or control of at least 51% of the issued and outstanding shares of Class A
Common Stock, $0.50 par value, of the Company, or upon the execution of an agreement by the Company
or its controlling shareholders providing for the merger, consolidation, reorganization or other
form of business combination of the Company, or the sale or exchange of all or substantially all of
the assets of the Company unless the current business of the Company is continued following any
such transaction by a resulting entity (which may be, but need not be, the Company) and the
shareholders of the Company immediately prior to such transaction hold directly or indirectly at
least two-thirds of the voting power of the resulting entity. There is also a transfer of
ownership if the shareholders of the Company adopt a plan of complete or substantial liquidation or
an agreement providing for the distribution of all or substantially all of its assets.

     6. Method of Granting. Whenever the Board shall designate a person for the receipt
of an option, the Secretary or the Chairman of the Company shall forthwith send notice thereof to
the designee, in such form as the Board shall approve, stating the number of shares optioned to
such designee and the price per share, and attaching a true copy of the Statement of the 2005
Incentive Stock Option Plan. The date of such Board action shall be the date of granting the
option to such participant for all purposes of the Plan unless another date is specified by the
Board. The notice may be accompanied by an Option Agreement to be signed by the Company and by the
participant if the Board shall so direct, which shall be in such form and shall contain such
provisions as the Board shall deem advisable.

     7. Stock Appreciation Rights (SARs).

          (a) In General. Subject to the terms and conditions of the Plan, the Board may, in
its sole and absolute discretion, grant to a participant the right (which right shall be referred
to as an “SAR”) to surrender an option to the Company, in whole or in part, and to receive in
exchange therefore payment by the Company of an amount equal to the excess of the Fair Market Value
of the shares subject to such option, or portion thereof, so surrendered (determined in the manner
described in paragraph 4 as of the date the SARs are exercised) over the exercise price to acquire
such shares.
Except as may otherwise be provided in an Option Agreement, such payment may be made, as
determined by the Board in accordance with paragraph 7(c) below and set forth in the Option
Agreement, either in Shares or in cash or in any combination thereof.

3

 

          (b) Grant. Each SAR shall relate to a specific option granted under the Plan and
shall be granted to the participant concurrently with the grant of such option by inclusion of
appropriate provisions in the Option Agreement pertaining thereto or any time thereafter during the
term of the option. The number of SARs granted to a participant shall not exceed the number of
shares in which such participant is entitled to purchase pursuant to the related option. The
number of SARs held by a participant shall be reduced by (i) the number of SARs exercised under the
provisions of the Plan pertaining to the related option and (ii) the number of shares purchased
pursuant to the exercise of the related option.

          (c) Payment. The Board shall have sole discretion to determine whether payment in
respect of SARs exercised by a participant shall be made in shares of Class A Common Stock, $0.50
par value, in cash, or in a combination thereof. If payment is made in Class A Common Stock, the
number of shares which shall be issued pursuant to the exercise of SARs shall be determined by
dividing (i) the total number of SARs being exercised, multiplied by the amount by which the Fair
Market Value (as determined under paragraph 4) of a share of Class A Common Stock on the exercise
date exceeds the exercise price for shares covered by the related option, by (ii) the Fair Market
Value of a share of Class A Common Stock on the exercise date of the SARs. No fractional share of
Class A Common Stock shall be issued on exercise of an SAR; cash may be paid by the Company to the
person exercising an SAR in lieu of any such fractional share, if the Board so determines. If
payment on exercise of an SAR is to be made in cash, the person exercising the SAR shall receive,
in respect of each SAR to which such exercise relates an amount of money equal to the difference
between the Fair Market Value of a share of Class A Common Stock on the exercise date and the then
applicable exercise price for shares covered by the related option.

          (d) Limitations. SARs shall be exercisable at such times and under such terms and
conditions as the Board, in its sole and absolute discretion, shall determine; provided, however,
that an SAR may be exercised only at such times and by such individuals as the related option may
be exercised under the Plan and the Option Agreement.

     8. Adjustments of Option Stock.

          (a) If at any time, or from time to time, after the grant but prior to the exercise of
all or any part of an option under this Plan, the Company shall effect a subdivision or combination
of its Class A Common Stock, par value, or other option shares as that term is used below, into a
greater or smaller number of shares, or a reclassification of such Class A Common Stock, $0.50 par
value or other option shares into shares of another class or into other securities, or the Company
shall be consolidated or merged with any other corporation, then there shall be thereafter
deliverable by the Company, or by the corporation surviving a merger or consolidation, upon any
exercise of such option, in lieu of each Class A Common Stock, $0.50 par value or other option
share and for the same price, such shares or securities or such shares and securities as shall have
been substituted for such Class A Common Stock, $0.50 par value or other option share in
connection with such
subdivision, combination, reclassification, consolidation, or merger. Such substituted shares
or securities or such substituted shares and securities shall be deemed option shares for the
purpose of this Plan.

4

 

          (b) Notwithstanding anything stated above to the contrary, upon the occasion of a merger or
consolidation of the Company with any other corporation, any options previously granted upon this
Plan which shall not have been exercised in the manner described below shall be deemed canceled,
unless the surviving corporation shall assume the options under this Plan or shall issue substitute
options in place of them.

          (c) If at any time, or from time to time, after the grant but prior to the exercise of all or
any part of an option under this Plan, the Board shall declare in respect of the Company’s Class A
Common Stock, $0.50 par value or other option shares any dividend payable in shares of the Company
of any class or stock split, then there shall be deliverable upon any exercise thereafter of any
option under this Plan, in addition to each option share and for no additional price, such
additional share or shares as shall have been distributable as a result of such share dividend in
respect of an option share; except that fractional shares shall not be so deliverable. Any such
share dividend or split shall be deemed part of the option shares for the purposes of this Plan.

     9. Assignments. Any option granted under this Plan shall be exercisable only by the
participant to whom granted during his or her lifetime and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.

     10. Severance, Death.

          (a) In the event that a participant shall cease to be employed by the Company or by any
of its subsidiary corporations for any reason except death, any option or options theretofore
granted to him under this Plan shall not have been then exercised in the manner described below,
shall be deemed at that time canceled, except that the Board may in its absolute discretion extend
the privilege to such participant to exercise any options previously granted to him or her, which
have not then expired, within three months after severance. Furthermore, if any such cessation of
employment is caused by the participant’s retirement at age 65 or any other age by the Company or
by any subsidiary corporation employing the participant at such time, the participant shall have
the right to exercise such option or options, which have not then expired, at any time within three
months after such retirement. The transfer of a participant from the employ of the Company to a
subsidiary corporation, or vice versa, or from one subsidiary corporation to another, shall not be
deemed to constitute a cessation of employment for purposes of this Plan.

          (b) In the event that a participant shall die while employed by the Company or by any
subsidiary corporation, or shall die within three months after his or her retirement by the Company
or by any subsidiary corporation, any option or options granted to him or her under this Plan which
shall not have been exercised in the manner described below at the time of his or her death shall
be exercisable by the estate of the participant, or any person who acquired such option by bequest
or inheritance from the participant, within six months after the death of the participant, or until
the expiration of the option as provided in paragraph 5(a), if that be sooner. References to the
“participant” that follow shall be deemed to include any person entitled to exercise the
option after the death of the participant under the terms of this paragraph.

     11. Limitation on Annual Exercise. The value of the Class A Common Stock, $0.50 par
value for which an employee may be granted options under this Plan shall not be limited; provided,

5

 

however, that the aggregate fair market value of stock for which options are exercisable for the
first time under the terms of all plans of the Company by an employee during any calendar year
shall not exceed $100,000. This rule is applied by taking options that meet the requirements of
Section 422 of the Internal Revenue Code and that are exercisable for the first time in the
calendar year into account in the order granted.

     12. Forfeiture of Options. If the capital of the Company or any subsidiary bank of
the Company falls below the minimum capital requirements, as determined from time to time by its
state or primary federal regulator, then the primary federal regulator may direct the Company or
its banking subsidiary to require the Plan participant to immediately exercise their stock options
or forfeit their right to the same.

     13. Manner of Exercise and Consideration.

          (a) Whenever an option is granted under this Plan for the purchase of option shares, such
shares may be purchased by written notice of election delivered prior to the expiration of the
option to the Company at its principal office either in person or by registered or certified mail,
stating the number of shares with respect to which the option is being exercised and specifying a
date, not less that five nor more than 15 days after the date of such notice subject to Board
approval of the date of closing, on which the shares will be taken and payment made for them, all
subject to compliance with the provisions of paragraph 5 hereof.

          (b) The Board in its sole discretion shall determine the acceptable form of consideration for
payment for option shares, at the time of exercise, which shall consist of (1) cash; (2) other
shares of Class A Common Stock, $0.50 par value which have a Fair Market Value (as determined under
paragraph 4) on the date of closing equal to the aggregate exercise price of the shares as to which
said option shall be exercised (which may include shares of Class A Common Stock owned or
controlled by the participant or shares that would otherwise be issued pursuant to the option or
other options for Class A Common Stock held by the participant); or (3) any combination of the
foregoing methods of payment.

     14. Closing. On the date specified in the notice of election referred to
above, or an adjourned date provided for later in this paragraph, the Company shall deliver or
cause to be delivered to the participant certificates for the number of shares with respect to
which the option is being exercised, against payment for them as prescribed by paragraph 13(b) and
delivery to the Company of the certificate described in paragraph 15 below. Delivery of the shares
may be made at the principal office of the Company or at the office of a transfer agent appointed
for the shares of the Company. Shares shall be registered in the name of the participant unless
the participant otherwise directs in the notice of election. No shares shall be issued until full
payment for them has been made by cash or certified check or delivery of Class A Common Stock or
options as provided by paragraph 13(b); and
a participant has none of the rights of a shareholder until shares are issued as herein
provided. In the event of any failure to take up and pay for the number of shares specified in the
notice of election on the date stated on it, or an adjourned date, the option shall become
inoperative as to such remaining shares covered by the option and not yet acquired pursuant to it.
If any law or any regulation of the Securities and Exchange Commission or of any other body having
jurisdiction shall require the Company or the participant to take any action in connection with the

6

 

shares specified therein, the delivery of the shares shall be adjourned until the completion of the
necessary action. The foregoing provisions shall not apply to any payment made or shares delivered
under paragraph 7 which permits such payment of cash or delivery of shares for Stock Appreciation
Rights granted under this Plan.

     15. Securities Registration. At the closing provided for above, the participant
shall agree to hold the shares acquired by his exercise of the option for investment and not with a
view to resale or distribution thereof to the public, and he shall deliver to the Company a
certificate to that effect. In the event that the Company shall nevertheless deem it necessary to
register under the Securities Act of 1933 or other applicable statutes any shares with respect to
which an option shall have been exercised or to qualify any such shares for exemption from the
Securities Act of 1933 under Regulation A of the rules and Regulations of the Securities and
Exchange Commission, then the Company shall take such action at its own expense before delivery of
such shares. In the event the shares of the Company shall be listed on any national stock exchange
at the time of the exercise of an option under this Plan, then, whenever required, the Company
shall register the shares with respect to which such option is exercised under the Securities
Exchange Act of 1934 and shall make prompt application for the listing on such stock exchange of
such shares at the sole expense of the company.

     16. Use of Proceeds. The proceeds from the sale of option shares shall be used
exclusively for the corporate purposes of the Company.

     17. Conditions of Employment. Each participant to whom an option is granted under
this Plan, in consideration of granting of such option, shall agree that he will remain in the
employ of the Company or a subsidiary corporation for a period of not less than two years from the
date of the granting of each option. Nevertheless, the granting of an option under this Plan shall
impose no obligation on the Company or on any of its subsidiary corporations to continue the
employment of any participant and shall not lessen or affect the right to terminate such employment
of the participant. Participation under this Plan shall not affect eligibility for any
profit-sharing, bonus, insurance, pension, or other extra-compensation plan which the Company or
its subsidiary corporations have previously adopted or may at any time adopt for employees.

     18. Amendment and Discontinuance. The Board may alter, amend, suspend or discontinue
this Plan; provided, however, that the Board shall not, without the written consent of the holders
of options, alter or impair unexercised options that may have previously been granted under this
Plan, except insofar as a merger or consolidation of the Company, or a termination of employment of
a participant, or a liquidation or dissolution shall affect a cancellation of an option under the
terms of paragraphs 8(b), 10 or 19 hereof.

     19. Liquidation. Upon the complete liquidation of the Company, any unexercised
option
previously granted under this Plan shall be deemed canceled, except as otherwise provided in
paragraph 8(b) above on the occasion of a merger or consolidation. In the event of the complete
liquidation of a subsidiary corporation, or in the event that such corporation ceases to be a
subsidiary corporation as that term is defined in paragraph 1 above, any unexercised options shall
be deemed

7

 

canceled until such participants shall become employed by the Company or by any other
subsidiary corporation on the occurrence of any such event.

     20. Withholding of Taxes. In connection with any event relating to an option or
award, Company shall have the right to (a) require the recipient to remit or otherwise make
available to Company an amount sufficient to satisfy any federal, state and/or local withholding
tax requirements prior to the delivery or transfer of any certificates for such shares or (b) take
whatever other action it deems necessary to protect its interests with respect to tax liabilities,
including, without limitation, withholding any shares, funds or other property otherwise due to the
participant or grantee. The Company’s obligations under the Plan shall be conditioned on the
participant’s or grantee’s compliance, to Company’s satisfaction, with any withholding requirement.

     21. Stockholder approval. This Plan is subject to the approval of the shareholders
of the Company by an affirmative vote of the holders of a majority of all classes of shares of the
Company entitled to vote, provided such approval is voted prior to twelve months from the date of
approval by the Board.

Approved by the Board of Directors: November 16, 2005.

Approved by the Shareholders: May 9, 2006.

8exv10w18

 

EXHIBIT
10.18

2005 NON-QUALIFIED STOCK OPTION PLAN

FOR

RELIANCE BANCSHARES, INC.

STATEMENT of the 2005 Non-Qualified Stock Option Plan dated August 1, 2005 for Reliance
Bancshares, Inc (herein called the “Company”).

     1. Purpose. This 2005 Non-Qualified Stock Option Plan (the “Plan”) is intended to advance
the interests of the Company and its subsidiary banks and thrifts by rewarding the directors and
advisory directors of each of the Company and its subsidiary banks and thrifts for past service and
to induce said directors upon whose judgment, initiative and effort the Company is partially
dependent for its successful operation, to agree to serve or to continue to serve in that capacity
and to make themselves available for re-election or reappointment as directors and advisory
directors and to encourage their attendance at meetings and other functions of the Company and its
subsidiary banks and thrifts. The Board of Directors of the Company has increased the frequency of
its meetings and is aware of the increased responsibilities and duties of the Company directors and
the bank and thrift directors and advisory directors, all resulting from the rapid expansion of the
Company and its subsidiary banks and thrifts. For these reasons, the Board has concluded that
additional compensation should be provided the directors and advisory directors and it is of the
opinion that stock options are the most desirable means of accomplishing this objective. Options
granted under the Plan are intended to be options which do not meet the requirements of Section 422
of the Internal Revenue Code of 1986.

     2. Option Stock. Options under this Plan shall pertain to authorized and unissued shares of
$0.50 par value, Class A common stock of the Company (hereinafter sometimes called “option
shares”). The total number of shares available for options under this Plan shall not exceed 50,000
in the aggregate. The limitations established by the preceding sentence shall be subject to
adjustment as provided in paragraph 8. The Company shall at all times while this Plan is in force
reserve such number of shares of $0.50 par value, Class A common stock as will be sufficient to
satisfy the requirements of this Plan.

     3. Participants. The Board of Directors of the Company (the “Board”) is hereby authorized to
grant options to purchase shares of $.50 par value, Class A common stock of the Company to
designated legal directors and advisory directors of the Company and its subsidiary banks and
thrifts (the “participants”) in amounts, at prices and subject to the terms and conditions provided
herein. The Board shall also have the right to grant options to new legal directors and new
advisory directors in different amounts and upon terms, conditions and prices as determined by the
Board from time to time, if it concludes that the same are appropriate for the participants to whom
they are granted.

     4. Price. The option price of the Company’s $0.50 par value, Class A common stock granted to
participants under this Plan as described in paragraph 3 shall be $0.75 per share over the fair
market price as determined by the Board at the time a grant is made, all as recorded in the minutes
of the Board.

     5. Time of Exercise. There shall be a delay in vesting of any options initially granted
under this Plan until the following conditions are satisfied, including (a) any participant shall
have served as a director or advisory director for a minimum of two (2) years after election or
appointment as a director or advisory director or after the Company obtains control of a subsidiary
bank or thrift; (b) the participant holds $0.50 par value Class A common stock equal to the number
of option shares granted hereunder in his or her name or in joint names or in the name of an
affiliate or with a beneficial interest in the participant, in addition to required qualifying
shares applicable to the Company’s 2001, 2003 and 2004 Non-Qualified Stock Option Plans, if

 

 

any; and (c) the participant achieves an attendance record over a two-year period, namely the
two-year period starting August 1, 2005 and ending July 31, 2007, or two-years after his or her
first election or appointment, that complies with the following:

	 	(i)	 	Subsidiary Banks and Thrifts – Legal directors may miss not more than
two (2) regularly scheduled directors meetings in either period of twelve (12)
consecutive months following the beginning date as determined by the Board; if a third
meeting is missed in either period, then 25% of the options shall not vest; and if a
fourth meeting is missed in either period, then 100% of the options shall not vest;
	 
	 	(ii)	 	Subsidiary Banks and Thrifts  — Advisory directors may miss not more
than two (2) regularly scheduled advisory directors meetings in either period of
twelve (12) consecutive months following the beginning date as determined by the
Board, since only nine (9) meetings are scheduled; and if a third meeting is missed in
either period, then 100% of the options shall not vest;
	 
	 	(iii)	 	Reliance Bancshares, Inc. – Legal directors may miss not more than
two (2) regularly scheduled directors meetings in either period of twelve (12)
consecutive months following the beginning date as determined by the Board; if a third
meeting is missed in either period, then 25% of the options shall not vest; and if a
fourth meeting is missed in either period, then 100% of the options shall not vest;
and

Attendance for purposes of vesting shall begin August 1, 2005, or at a later date as determined by
the Board and only the Board may grant excused meetings under the Plan. When fully vested, the
options may be exercised in whole or in part at any time, or from time to time thereafter until the
expiration or termination of the options. All options hereunder shall expire on August 1, 2015.

     6. Transfer of Ownership. In the event that there is a transfer of ownership of the
Company, the limitations provided in paragraphs 5(a) and 5(c) shall become null and void and all
options shall become immediately exercisable in full, provided the limitations imposed in paragraph
5(b) have been met. A transfer of ownership shall occur upon the change in ownership or control of
at least 51% of the issued and outstanding shares of Class A common stock, $0.50 par value, of the
Company, or upon the execution of an agreement by the Company or its controlling shareholders
providing for the merger, consolidation, reorganization or other form of business combination of
the Company, or the sale or exchange of all or substantially all of the assets of the Company
unless the current business of the Company is continued following any such transaction by a
resulting entity (which may be, but need not be, the Company) and the shareholders of the Company
immediately prior to such transaction hold directly or indirectly at least 60% of the voting power
of the resulting entity. There is also a transfer of ownership if the shareholders of the Company
adopt a plan of complete or substantial liquidation or an agreement providing for the distribution
of all or substantially all of its assets.

     7. Method of Granting. The Secretary or President of the Company shall forthwith send notice
thereof to each of the participants, in such form as the Board of Directors shall approve, stating
the number of shares optioned to such participant and the price per share, and attaching a copy of
this Statement of the 2005 Non-Qualified Stock Option Plan. The date indicated in the notice shall
be the date of granting the option to such participant for all purposes of this Plan. The notice
may be accompanied by an option agreement to be signed by the Company and by the participant if the
Board shall so direct, which shall be in such form and shall contain such provisions as the Board
shall deem advisable.

 - 2 - 

 

     8. Adjustments of the Option Stock.

     (a) If, at any time, or from time to time, after the grant but prior to the exercise of all
the or any part of an option under this Plan, the Company shall effect a subdivision or
combination of its $0.50 par value, Class A common stock, or other option shares as that term is
used below, into a greater or smaller number of shares, or a reclassification of such $0.50 par
value, Class A common stock or other option shares into shares of another class or into securities,
or the Company shall be consolidated or merged with any other corporation, then there shall be
thereafter deliverable by the Company, or by the corporation surviving a merger or consolidation,
upon any exercise of such option, in lieu of each $0.50, par value Class A common stock or other
option shares and for the same price, such shares or securities as shall have been substituted for
such $0.50 par value, Class A common stock or other option shares in connection with such
subdivision, combination, reclassification, consolidation, or merger. Such substituted shares or
securities shall be deemed option shares for the purpose of this Plan.

     (b) Notwithstanding anything stated above to the contrary, upon the occasion of a merger or
consolidation of the Company with any other corporation, any options previously granted under this
Plan which shall not have been exercised in the manner described below shall be deemed canceled,
unless the surviving corporation shall assume the options under this Plan or shall issue substitute
options in place of them.

     (c) If at any time, or from time to time, after the grant but prior to the exercise of all or
any part of the options under this Plan, the Board shall declare in respect of the Company’s $0.50
par value, Class A common stock or other option shares any dividend payable in shares of the
Company of any class or any stock split, then there shall be deliverable upon any exercise
thereafter of any option under this Plan, in addition to each option share and for no additional
price, such additional share or shares as shall have been distributable as a result of such share
dividend or split in respect of an option share; except that fractional shares shall not be so
deliverable. Any such share dividend or split shall be deemed part of the option shares for the
purposes of this Plan.

     9. Assignments. Any option granted under this Plan shall be exercisable only by the
participant to whom granted during his or her lifetime and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution, provided, however, that any
participant may assign to or designate that the option shares or a portion of the same shall be
titled in the name of a trust, employee benefit plan, individual retirement account or other entity
in which the participant is the sole beneficiary, owner or designee or in joint names with a
spouse.

     10. Severance, Death.

     (a) In the event that a participant shall cease to be a director or advisory director of the
Company or of a subsidiary bank or thrift of the Company for any reason except death or dismissal
for cause, any vested option granted to him or her under this Plan which shall not have been then
exercised in the manner described below, shall be exercisable by the participant within one (1)
year after severance, or until the expiration of the option as provided in paragraph 5, if that be
sooner except that the Board may in its absolute discretion extend the privilege to such
participant to exercise any options previously granted to him or her which have not then expired.

     (b) In the event that a participant shall die while a director or advisory director of the
Company or of a subsidiary bank or thrift of the Company, any vested option granted to him or her
under this Plan which shall not have been exercised in the manner described below, at the time of
his or her death, shall be exercisable by the estate of the participant or by any person who
acquired such option by bequest or inheritance from the participant, within three (3) years after
the death of the participant, or until the expiration of the option as provided in paragraph 5, if
that

 - 3 - 

 

be sooner. References to the “participant” that follow shall be deemed to include any person
entitled to exercise the option after the death of the participant under the terms of this
paragraph. Upon death an option shall be deemed fully vested.

     (c) In the event that a legal director of the Company shall cease to be such a director and
shall remain or immediately thereafter become a legal or advisory director of a subsidiary bank or
thrift or if a legal director of a subsidiary bank or thrift of the Company shall cease to be such
a director and shall immediately become an advisory director of a subsidiary bank or thrift of the
Company or if an advisory director of either shall become a legal director of either or the
Company, such a participant shall not forfeit his or her stock options granted under this Plan,
whether fully or partially vested under this Plan and such a participant shall continue to have or
own said stock options in his or her new capacity as a legal or advisory director regardless of the
number of options, subject to the terms and conditions of this Plan and prior service and
attendance as a legal or advisory director shall carry over to the new position of said participant
with regard to vesting.

     11. Manner of Exercise. Any option shares granted under this Plan may be purchased by
written notice of election delivered prior to the expiration of the option to the Company at its
principal office by hand delivery, telecopier, electronic messaging system or certified mail,
stating the number of shares with respect to which the option is being exercised and specifying a
date, not less than five nor more than 15 days after the date of such notice, on which the shares
will be taken and payment made for them.

     12. Closing. On the date specified in the notice of election referred to above, or an
adjourned date provided for later in this paragraph, the Company shall deliver or cause to be
delivered to the participant certificates for the number of shares with respect to which the option
is being exercised, against payment for them and delivery to the Company of the certificate
described in paragraph 13 below. Delivery of the shares may be made at the principal office of the
company or at the office of a transfer agent appointed for shares of the Company. Shares shall be
registered in the name of the participant unless the participant otherwise directs in his or her
notice of election. No shares shall be issued until full payment for them has been made by cash or
certified check; and a participant has none of the rights of a shareholder until shares are issued
as herein provided. In the event of any failure to take up and pay for the number of shares
specified in the notice of election on the date stated on it, or an adjourned date, the option
shall become inoperative as to such number of shares, but shall continue with respect to any
remaining shares covered by the option and not yet acquired pursuant to it. If any law or any
regulation of the Securities and Exchange Commission or of any other body having jurisdiction shall
require the Company or the Participant to take any action in connection with the shares specified
in a notice of election, then the date specified therein for the delivery of the shares shall be
adjourned until the completion of the necessary action.

     13. Securities Registration. At the closing provided for above, the participant shall agree
to hold the shares acquired by his exercise of the option for investment and not with a view to
resale or distribution thereof to the public, and he or she shall deliver to the Company a
certificate to that effect. In the event that the Company shall nevertheless deem it necessary to
register under the Securities Act of 1933 or other applicable statutes any shares with respect to
which an option shall have been exercised or to qualify any such shares for exemption from the
Securities Act of 1933 under regulations of the Securities and Exchange Commission, then the
Company shall take such action at its own expense before delivery of such shares. In the event
the shares of the Company shall be listed on any national stock exchange at the time of the
exercise of an option under this Plan, then, whenever required, the Company shall register the
shares with respect to which such option is exercised under the Securities Exchange Act of 1934

 - 4 - 

 

and shall make prompt application for the listing on such shares at the sole expense of the
Company.

     14. Use of Proceeds. The proceeds from the sale of option shares shall be used exclusively
for the general corporate purposes of the Company and shall not be used for other purposes.

     15. Amendment and Discontinuance. The Board may alter, amend, suspend or discontinue this
Plan; provided, however, that the Board shall not, without the written consent of the holders of
the options, alter or impair unexercised options that may have been previously granted under this
Plan, except insofar as a merger or consolidation of the Company, or a termination of employment of
a participant, or a liquidation or dissolution shall affect a cancellation of an option under the
terms of paragraphs 8(b), 10 or 16, hereof.

     16. Liquidation. Upon the complete liquidation of the Company, any options previously
granted under this Plan shall be deemed canceled, except as otherwise provided in paragraph 8(b)
above on the occasion of a merger or consolidation.

     17. Concurrent Operation. This Plan shall operate concurrently with the 2004 Non-Qualified
Stock Option Plan of the Company for the period through August 31, 2006 and the fulfillment of the
attendance requirements described herein shall satisfy the requirements of both Plans, if
applicable to a particular legal or advisory director.

     18. Director Approval. This Plan has been approved by the Board of Directors of the Company
on July 15, 2005 and ratified on September 28, 2005 and is effective as of August 1, 2005.

 - 5 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}]]