Document:

Exhibit

SOUTHSIDE BANCSHARES, INC.

RESTRICTED STOCK UNIT AWARD CERTIFICATE

Non-transferable

G R A N T  T O

_______________________________
(“Grantee”)

by Southside Bancshares, Inc. (the “Company”) of

[NUMBER]

restricted stock units convertible, on a one-for-one basis, into shares of its common stock, par value $1.25 per share (the “Units”).

The Units are granted pursuant to and subject to the provisions of the Southside Bancshares, Inc. 2017 Incentive Plan (the “Plan”) and to the terms and conditions set forth on page 2 hereof (“Terms and Conditions”).  By accepting the Units, Grantee shall be deemed to have agreed to the Terms and Conditions set forth in this Certificate and the Plan. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.

Unless vesting is accelerated as provided in Section 2 of the Terms and Conditions or otherwise in the discretion of the Committee, the Units shall vest (become non-forfeitable) in accordance with the following schedule, provided that the Grantee remains in Continuous Service on each applicable vesting date:  

	
			
	Continuous Service
after Grant Date
	 
	

Percent of Units Vested

	 
	 
	 

	 
	 
	 

	 
	 
	 

IN WITNESS WHEREOF, Southside Bancshares, Inc., acting by and through its duly authorized officers, has caused this Award Certificate to be duly executed.

	
		
	SOUTHSIDE BANCSHARES, INC.

By:  ___________________________
Its:  Authorized Officer
	Grant Date:

	
			
	TERMS AND CONDITIONS
1.  Vesting of Units.  The Units have been credited to a bookkeeping account on behalf of Grantee.  The Units shall vest (become non-forfeitable) in accordance with the schedule shown on the cover page of this Award Certificate.  Notwithstanding the vesting schedule, the Units shall become fully vested and exercisable upon (i) the termination of Grantee’s Continuous Status as a Participant due to death or Disability, (ii) a Change in Control, unless the Units are assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control, or (iii) if the Units are assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change in Control, the termination of Grantee’s employment without Cause (or Grantee‘s resignation for Good Reason as provided in any employment, severance or similar agreement, if applicable) within two years after the effective date of the Change in Control. 
If Grantee’s employment terminates prior to the vesting date, Grantee shall forfeit all right, title and interest in and to the Units as of the date of such termination and the Units will be reconveyed to the Company without further consideration or any act or action by Grantee.  
2.  Conversion to Stock.  Unless the Units are forfeited prior to the vesting date as provided in Section 1 above, the Units will be converted on the vesting date to actual shares of Stock, and such Shares will be registered on the books of the Company in the name of Grantee (or in street name to Grantee’s brokerage account) as of the vesting date and will be delivered to Grantee in certificated or uncertificated (book-entry) form.  
3.  Dividend Equivalents.  If any dividends or other distributions are paid with respect to the Shares while the Units or are outstanding, the dollar amount or fair market value of such dividends or distributions with respect to the number of Shares then underlying the Units shall be converted into additional restricted stock units in Grantee’s name, based on the Fair Market Value of the Stock as of the date such dividends or distributions were payable, and such additional stock units shall be subject to the same forfeiture and transfer restrictions and deferral terms as apply to the Units with respect to which they relate.  In other words, Dividend Equivalents credited to outstanding Units are only earned to the extent that the related Units are vested. 
4.  Changes in Capital Structure.  In the event the Stock shall be changed into or exchanged for a different number or class of shares of stock or securities of the Company or of another company, whether through reorganization, recapitalization, statutory share exchange, reclassification, stock split-up, combination of shares, merger or consolidation, or otherwise, there shall be substituted for each share of Stock then underlying a Unit subject to this Certificate the number and class of shares into which each outstanding share of Stock shall be so exchanged.  
5.  Restrictions on Transfer.  No right or interest of Grantee in the Units may be pledged, hypothecated or otherwise encumbered to or in favor of any party other than the Company or an Affiliate, or be subjected to any lien, obligation or liability of Grantee to any other party other than the Company or an Affiliate.  Units are not assignable or transferable by Grantee other than by will or the laws of descent and distribution; but the Committee may permit other transfers.  
6.  Limitation of Rights.  The Units do not confer to Grantee or Grantee’s beneficiary any voting rights or other rights of a stockholder of the Company unless and until shares of Stock are in fact issued to such person in connection with the Units.  Nothing in this Certificate shall 

	 
	interfere with or limit in any way the right of the Company or any Affiliate to terminate Grantee’s employment at any time, nor confer upon Grantee any right to continue in employment of the Company or any Affiliate.
7.  Payment of Taxes.  The Company or any Affiliate employing Grantee has the authority and the right to deduct or withhold, or require Grantee to remit to the employer, an amount sufficient to satisfy federal, state, and local taxes (including Grantee’s FICA obligation) required by law to be withheld with respect to any taxable event arising as a result of the vesting or settlement of the Units.  Unless the Committee determines otherwise, any such withholding requirement will be satisfied by the Company withholding from the Units upon settlement a number of shares of Stock having a Fair Market Value on the date of withholding, equal to the amount required to be withheld for tax purposes. The obligations of the Company under this Certificate will be conditional on such payment or arrangements, and the Company, and, where applicable, its Affiliates will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Grantee.
8.  Amendment.  The Committee may amend, modify or terminate this Certificate without approval of Grantee; provided, however, that such amendment, modification or termination shall not, without Grantee’s consent, reduce or diminish the value of this award determined as if it had been fully vested (i.e., as if all restrictions on the Units hereunder had expired) on the date of such amendment or termination.
9.  Plan Controls.  The terms contained in the Plan shall be and are hereby incorporated into and made a part of this Certificate and this Certificate shall be governed by and construed in accordance with the Plan.  In the event of any actual or alleged conflict between the provisions of the approved Plan and the provisions of this Certificate, the provisions of the Plan shall be controlling and determinative.
10.  Notice.  Notices hereunder must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid.  Notices to the Company must be addressed to Southside Bancshares, Inc., 1201 S. Beckham, Tyler, Texas 75701; Attn: Secretary, or any other address designated by the Company in a written notice to Grantee. Notices to Grantee will be directed to the address of Grantee then currently on file with the Company, or at any other address given by Grantee in a written notice to the Company.
11.  Code Section 409A.  This Certificate shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code).

                -2 -Exhibit

SOUTHSIDE BANCSHARES, INC.

NONSTATUTORY STOCK OPTION AWARD CERTIFICATE

Non-transferable

G R A N T   T O

_______________________________
(“Optionee”)

the right to purchase from Southside Bancshares, Inc. (the “Company”)

___________ shares of its common stock, $1.25 par value, at the price of $_____ per share (the “Option”)

pursuant to and subject to the provisions of the Southside Bancshares, Inc. 2017 Incentive Plan (the “Plan”) and to the terms and conditions set forth on the following pages (the “Terms and Conditions”).  By accepting the Option, Optionee shall be deemed to have agreed to the Terms and Conditions set forth in this Award Certificate and the Plan.  Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.

Unless vesting is accelerated as provided in Section 1 of the Terms and Conditions, the Option shall vest (become exercisable) in accordance with the following schedule, provided that Optionee remains in Continuous Service on each applicable vesting date:  

	
			
	Continuous Service
after Grant Date
	 
	

Percent of Option Shares Vested

	 
	 
	 

	 
	 
	 

	 
	 
	 

IN WITNESS WHEREOF, Southside Bancshares, Inc., acting by and through its duly authorized officers, has caused this Award Certificate to be duly executed.

	
		
	SOUTHSIDE BANCSHARES, INC.

By: ________________________________
Its:  Authorized Officer
	Grant Date:

-  -

	
			
	TERMS AND CONDITIONS

1.  Vesting of Option.  The Option shall vest (become exercisable) in accordance with the schedule shown on the cover page of this Award Certificate.  Notwithstanding the vesting schedule, the Option shall become fully vested and exercisable upon (i) the termination of Optionee’s Continuous Status as a Participant due to death or Disability, (ii) a Change in Control, unless the Option is assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control, or (iii) if the Option is assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change in Control, the termination of Optionee’s employment without Cause (or Optionee‘s resignation for Good Reason as provided in any employment, severance or similar agreement, if applicable) within two years after the effective date of the Change in Control. 

2.  Term of Option and Limitations on Right to Exercise.  The term of the Option will be for a period of ten years, expiring at 5:00 p.m., Eastern Time, on the tenth anniversary of the Grant Date (the “Expiration Date”).  To the extent not previously exercised, the vested Option will lapse prior to the Expiration Date upon the earliest to occur of the following circumstances:

(a) Three (3) months after the date of termination of Optionee’s Continuous Service for any reason other than (i) for Cause, or (ii) by reason of Optionee’s death or Disability.

(b) Twelve (12) months after the date of termination of Optionee’s Continuous Service by reason of Optionee’s Disability or Retirement.

(c) Twelve (12) months after the date of Optionee’s death, if Optionee dies while employed, or during the three-month period described in subsection (a) above or during the twelve-month period described in subsection (b) above and before the Option otherwise expires.  

(d) Immediately upon the date of termination of Optionee’s Continuous Service by the Company for Cause.

If Optionee or his or her beneficiary exercises an Option after termination of service, the Option may be exercised only with respect to the Shares that were
	 
	otherwise vested on Optionee’s termination of service, including Option Shares vested by acceleration under Section 1.

3.  Exercise of Option.  The Option shall be exercised by (a) written notice directed to the Secretary of the Company or his or her designee at the address and in the form specified by the Secretary from time to time and (b) payment to the Company in full for the Shares subject to such exercise (unless the exercise is a broker-assisted cashless exercise, as described below).  If the person exercising an Option is not Optionee, such person shall also deliver with the notice of exercise appropriate proof of his or her right to exercise the Option.  Payment for such Shares shall be (a) in cash, (b) by delivery (actual or by attestation) of Shares previously acquired by the purchaser, (c) by withholding of Shares from the Option, or (d) any combination thereof, for the number of Shares specified in such written notice.  The value of Shares surrendered or withheld for this purpose shall be the Fair Market Value as of the last trading day immediately prior to the exercise date.  To the extent permitted under Regulation T of the Federal Reserve Board, and subject to applicable securities laws and any limitations as may be applied from time to time by the Committee (which need not be uniform), the Option may be exercised through a broker in a so-called “cashless exercise” whereby the broker sells the Option Shares on behalf of Optionee and delivers cash sales proceeds to the Company in payment of the exercise price.  

4.  Withholding.  The Company or any employer Affiliate has the authority and the right to deduct or withhold, or require Optionee to remit to the employer, an amount sufficient to satisfy federal, state, and local taxes (including Optionee’s FICA obligation) required by law to be withheld with respect to any taxable event arising as a result of the exercise of the Option.  Unless the Committee determines otherwise, the withholding requirement will be satisfied by withholding from the Option Shares having a Fair Market Value on the date of withholding equal to the amount required to be withheld for tax purposes.  The obligations of the Company under this Award Certificate will be conditional on such payment or arrangements, and the Company, and, where applicable, its Affiliates will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Optionee.

5.  Limitation of Rights.  The Option does not confer to Optionee or Optionee’s beneficiary designated pursuant to the Plan any rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection

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	with the exercise of the Option.  Nothing in this Award Certificate shall interfere with or limit in any way the right of the Company or any Affiliate to terminate Optionee’s service at any time, nor confer upon Optionee any right to continue in the service of the Company or any Affiliate.

6.  Restrictions on Transfer and Pledge.  No right or interest of Optionee in the Option may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or an Affiliate, or shall be subject to any lien, obligation, or liability of Optionee to any other party other than the Company or an Affiliate.  The Option is not assignable or transferable by Optionee other than by will or the laws of descent and distribution; provided, however, that the Committee may (but need not) permit other transfers.  The Option may be exercised during the lifetime of Optionee only by Optionee or any permitted transferee.  

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

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

9.  Successors.  This Award Certificate shall be binding upon any successor of the Company, in accordance with the terms of this Award Certificate and the Plan.

10.  Notice.  Notices hereunder must be in writing, delivered personally or sent by registered or certified U.S. mail, return receipt requested, postage prepaid.  Notices to the Company must be addressed to Southside Bancshares, Inc., 1201

	 
	S. Beckham, Tyler, Texas 75701; Attn: Secretary, or any other address designated by the Company in a written notice to Optionee.  Notices to Optionee will be directed to the address of Optionee then currently on file with the Company, or at any other address given by Optionee in a written notice to the Company.

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