Document:

<PAGE>

                                                                    EXHIBIT 10.6

                            Charter Financial Corp.

                      2001 Recognition and Retention Plan

                        ______________________________

                Effective as of the Date of the Reorganization
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                                Table of Contents                             Page
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                                   Article I

                                    Purpose

Section 1.1   General Purpose of the Plan....................................    1

                                   Article II

                                   Definitions

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.................................................    4
Section 2.13  Eligible Director..............................................    4
Section 2.14  Eligible Employee..............................................    4
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.....................................................    5
Section 2.24  Share..........................................................    5

                                   Article III

                            Shares Available Under Plan

Section 3.1   Shares Available Under Plan....................................    5
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                                   Article IV

                                 Administration

Section 4.1   Committee...............................................................        5
Section 4.2   Committee Action........................................................        6
Section 4.3   Committee Responsibilities..............................................        6

                                    Article V

                                    The Fund

Section 5.1   Contributions...........................................................        6
Section 5.2   The Fund................................................................        7
Section 5.3   Investments.............................................................        7

                                   Article VI

                                     Awards

Section 6.1   To Eligible Directors...................................................        8
Section 6.2   To Eligible Employees...................................................        8
Section 6.3   Awards in General.......................................................        8
Section 6.4   Share Allocations.......................................................        8
Section 6.5   Dividend Rights.........................................................        9
Section 6.6   Voting Rights...........................................................        9
Section 6.7   Tender Offers...........................................................       10
Section 6.8   Limitations on Awards...................................................       10

                                   Article VII

                                     Vesting

Section 7.1   Vesting of Awards.......................................................       11
Section 7.2   Designation of Beneficiary..............................................       12
Section 7.3   Manner of Distribution..................................................       12
Section 7.4   Taxes...................................................................       13
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                                  Article VIII

                            Amendment and Termination

Section 8.1   Termination.............................................................       13
Section 8.2   Amendment...............................................................       13
Section 8.3   Adjustments in the Event of a Business Reorganization...................       13

                                   Article IX

                                  Miscellaneous

Section 9.1   Status as an Employee Benefit Plan......................................       14
Section 9.2   No Right to Continued Employment........................................       14
Section 9.3   Construction of Language................................................       15
Section 9.4   Governing Law...........................................................       15
Section 9.5   Headings................................................................       15
Section 9.6   Non-Alienation of Benefits..............................................       15
Section 9.7   Notices.................................................................       15
Section 9.8   Required Regulatory Provisions..........................................       16
Section 9.9   Approval of Shareholders................................................       16

                                    Article X

          Additional Provisions Subject to Further Shareholder Approval

Section 10.1  Accelerated Vesting Upon Retirement.....................................       16
Section 10.2  No Effect Prior to Stockholder Approval.................................       17
</TABLE>
<PAGE>

                            Charter Financial Corp.
                            -----------------------
                      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 Corp. and its affiliated companies and to provide eligible
directors, certain key officers and employees of Charter Financial Corp. 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 Corp. 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.
                         -----

<PAGE>

                                      -2-

           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
<PAGE>

                                      -3-

               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;

          (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 Corp., 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
<PAGE>

                                      -4-

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").

          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.

          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 Corp.

          Section 2.20   Funding Agreement means the agreement between Charter
                         -----------------
Financial Corp. 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 Corp. 2001 Recognition
                         ----
and Retention Plan, as amended from time to time.
<PAGE>

                                      -5-

          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 2.2   Share means a share of common stock of Charter
                         -----
Financial Corp., par value $.01 per share.

                                  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 1.96% of the total number of Shares issued in the Reorganization,
subject to adjustment pursuant to section 8.3.

          (b) An aggregate maximum of 0.588% of the total number of Shares
issued in the Reorganization (subject to adjustment pursuant to section 8.3) may
be granted as Awards to Eligible Directors, and a maximum of 0.098% of the total
number of Shares issued in the Reorganization (subject to adjustment pursuant to
section 8.3) may be granted as Awards to any one Eligible Director.

          (c) A maximum of 0.49% of the total number of Shares issued in the
Reorganization (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 Corp. 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
<PAGE>

                                      -6-

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:

          (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.
<PAGE>

                                      -7-

                                   Article V
                                   ---------

                                   The Fund
                                   --------

          Section 5.1   Contributions.
                        -------------

          Charter Financial Corp. 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 1.96% of the total number of Shares issued in the
Reorganization (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.
<PAGE>

                                      -8-

                                  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.
<PAGE>

                                      -9-

          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
promptly paid to and retained by such Eligible Director or Eligible Employee.
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.

          (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.
                        -------------

          (a) Each Eligible Director or Eligible Employee to whom an Award has
been made that is not fully vested shall have the right to exercise, or direct
the exercise of, all voting rights appurtenant to unvested Shares related to
such Award.  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 voting rights appurtenant to the Shares allocated to him
shall not be exercised.

          (b) To the extent that the Fund contains Shares that are not allocated
in connection with an Award, all voting rights appurtenant to such Shares shall
be exercised by the Funding Agent in such manner as the Committee shall direct
to reflect the voting directions 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 who is not the record holder of the
Shares relating to his or her Award all annual reports, proxy materials and
other information furnished by Charter Financial Corp., or by any proxy
solicitor, to the holders of Shares.
<PAGE>

                                      -10-

          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.

          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 or the occurrence of a Change of Control;

          (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 or the occurrence of a Change of Control;

          (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 or the occurrence of a Change of Control;
<PAGE>

                                      -11-

          (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 or the occurrence of a Change of Control;

          (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 or the occurrence of a Change of Control; 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 or on the date of a Change of Control 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.

                                  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
<PAGE>

                                      -12-

Award shall become 100% vested upon the Award recipient's death or Disability or
on the date of a Change of Control.

          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) Except as provided in section 7.3(b), 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.

          (b) The Committee may, in its discretion, cause the transfer to an
Award recipient of record ownership of the Shares subject to such Award that
have not yet vested.  Any such Shares shall be held in certificated form only,
and the certificate therefor shall bear the following or a substantially similar
legend:

          The securities evidenced hereby are subject to the
          terms of an Award Notice dated [date] between the
          issuer and [name of Award recipient] pursuant to
          the Charter Financial Corp. 2001 Recognition and
          Retention Plan, a copy of which is on file with
          the issuer and may be inspected at the issuer's
          executive offices at 600 Third Avenue, West Point,
          Georgia 31833. No sale, transfer, hypothecation or
          other disposition of these securities may be made
          except in compliance with the terms of such Award
          Notice and the terms of the Plan.

          (c)  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
<PAGE>

                                      -13-

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 Corp.

          Section 8.2   Amendment.
                        ---------

          The Board may amend or revise the Plan in whole or in part at any
time; provided, however, that no such amendment or revision shall alter the
stockholder approval standard set forth in Article X as a condition precedent to
the effectiveness of Article X or otherwise directly or indirectly give effect
to the substance of the provisions of Article X without compliance with the
stockholder approval requirement set forth therein.

          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 Corp. 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
<PAGE>

                                      -14-

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.

          (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 Corp. 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.
<PAGE>

                                      -15-

           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.

           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:
<PAGE>

                                      -16-

          (a)  If to the Committee:

               Charter Financial Corp.
               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.

           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.
                        -----------------------------------

          Notwithstanding anything in the Plan to the contrary, unless otherwise
determined by the Committee and specified in the Award Notice relating to an
Award 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.
<PAGE>

                                      -17-

          Section 10.2  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 after the one year anniversary of the date of
the Reorganization.<PAGE>

                                                                    EXHIBIT 10.7

                           Charter Financial Corp.

                            2001 Stock Option Plan

                          ___________________________

                Effective as of the Date of the Reorganization
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
<S>                                                                         <C>
                                   Article I

                                    Purpose

Section 1.1    General Purpose of the Plan.................................  1

                                  Article II

                                  Definitions

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 2.9   Effective Date...............................................  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

Section 3.1   Available Shares.............................................  5

                                  Article IV

                                Administration

Section 4.1   Committee....................................................  6
Section 4.2   Committee Action.............................................  6
</TABLE>

                                      (i)
<PAGE>

<TABLE>
<CAPTION>
                                                                          Page
<S>                                                                       <C>
Section 4.3   Committee Responsibilities..................................   7

                                   Article V

                              Stock Option Grants

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

Section 6.1   Method of Exercise..........................................  11
Section 6.2   Limitations on Options......................................  12

                                  Article VII

                           Amendment and Termination

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

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....................................  15
Section 8.4   Governing Law...............................................  15
Section 8.5   Headings....................................................  15
Section 8.6   Non-Alienation of Benefits..................................  15
Section 8.7   Taxes.......................................................  15
Section 8.8   Notices.....................................................  16
Section 8.9   Required Regulatory Provisions..............................  16
Section 8.10  Approval of Shareholders....................................  16

                                  Article IX

         Additional Provisions Subject to Further Shareholder Approval

Section 9.1   Accelerated Vesting Upon Retirement.........................  17
Section 9.2   No Effect Prior to Shareholder Approval.....................  17
</TABLE>

                                     (ii)
<PAGE>

                 Charter Financial Corp. 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 Corp., to provide eligible directors, certain key officers and
employees of Charter Financial Corp. 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 Corp.

                                  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%
<PAGE>

                                      -2-

          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; 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.
<PAGE>

                                      -3-

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.

          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 Corp., 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").

          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
<PAGE>

                                      -4-

Employer or Eligible Director, the Employer shall mean the entity which employs
such person or upon whose board of directors such person serves.

          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.
<PAGE>

                                      -5-

          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 Corp. 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 Corp.

          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)  4.9% of the total number of Shares issued in the Reorganization;
     over

           (ii) the sum of:
<PAGE>

                                      -6-

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

               (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 1.47% of the total
number of Shares issued in the Reorganization (subject to adjustment pursuant to
section 7.3) may be granted to Eligible Directors, and Options to purchase a
maximum of 0.245% of the total number of Shares issued in the Reorganization
(subject to adjustment pursuant to section 7.3) may be granted to any one
Eligible Director.

          (c)  Options to purchase a maximum of 1.225% of the total number of
Shares issued in the Reorganization (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 Corp. 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 meet  ing 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
<PAGE>

                                      -7-

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:

          (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;
<PAGE>

                                      -8-

          (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.

          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:
<PAGE>

                                      -9-

               (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.

           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;
<PAGE>

                                      -10-

     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 or on the date of a Change in Control.

          (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 be  come 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
<PAGE>

                                      -11-

     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;

          (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:
<PAGE>

                                      -12-

          (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.

          (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
<PAGE>

                                      -13-

Employee other than by will or the laws of descent and distribution, and is
exercisable, during his lifetime, solely by him.

          (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
<PAGE>

                                      -14-

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.

          (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.
<PAGE>

                                      -15-

           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.

           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 re  quired to be withheld under applicable law.
<PAGE>

                                      -16-

           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 Corp.
               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.

           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 8.1   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.
<PAGE>

                                      -17-

                                  Article IX
                                  ----------

         Additional Provisions Subject to Further Shareholder Approval
         -------------------------------------------------------------

           Section 9.1   Accelerated Vesting Upon Retirement.
                         -----------------------------------

          Notwithstanding anything in the Plan to the contrary, but subject to
section 9.2:  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.

           Section 9.2   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 the one year anniversary of the date of
the Reorganization.

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