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Exhibit
10(vii)
BANK OF OAK
RIDGE
SECOND AMENDED AND
RESTATED
DIRECTOR STOCK OPTION
PLAN
THIS IS THE DIRECTOR STOCK
OPTION PLAN (“Plan”) of the Bank of Oak Ridge (the
“Bank”), a North Carolina bank, with its principal
office in Oak Ridge, Guilford County, North Carolina, adopted by
the Board of Directors of the Bank, under which options may be
granted from time to time to eligible directors of the Bank to
purchase shares of common stock of the Bank (“Common
Stock”), subject to the provisions set forth
below:
1. PURPOSE OF THE
PLAN . The purpose of the Plan is to aid the Bank in
attracting and retaining capable directors and to provide a long
range incentive for directors to remain in the management of the
Bank, to perform at increasing levels of effectiveness and to
acquire a permanent stake in the Bank with the interest and outlook
of an owner. These objectives will be promoted through the granting
of options to acquire shares of Common Stock pursuant to the terms
of this Plan.
2. ADMINISTRATION
. The Plan shall be administered by a committee (the
“Committee”), which shall consist of not less than two
members of the Board of Directors of the Bank (the
“Board”) who are “Non-Employee Directors”
as defined in Rule 16b-3(b)(3) of the Rules and Regulations under
the Securities Exchange Act of 1934, as amended, (the
“Exchange Act”). Members of the Committee shall serve
at the pleasure of the Board. In the absence at any time of a duly
appointed Committee, this Plan shall be administered by the Board.
The Committee may designate any officers or employees of the Bank
to assist in the administration of the Plan and to execute
documents on behalf of the Committee and perform such other
ministerial duties as may be delegated to them by the
Committee.
Subject to the provisions of
the Plan, the determinations or the interpretation and construction
of any provision of the Plan by the Committee shall be final and
conclusive upon all persons affected thereby. By way of
illustration and not of limitation, the Committee shall have the
discretion (a) to construe and interpret the Plan and all
options granted hereunder and to determine the terms and provisions
(and amendments thereof) of the options granted under the Plan
(which need not be identical); (b) to define the terms used in
the Plan and in the options granted hereunder; (c) to
prescribe, amend and rescind the rules and regulations relating to
the Plan; (d) to determine the individuals to whom and the
time or times at which such options shall be granted, the number of
shares to be subject to each option, the option price, and the
determination of leaves of absence which may be granted to
participants without constituting a termination of their employment
for the purposes of the Plan; and (e) to make all other
determinations necessary or advisable for the administration of the
Plan.
It shall be in the discretion
of the Committee to grant options which qualify as “incentive
stock options,” as that term is defined in Section 422
of the Internal Revenue Code of 1986, as amended (the
“Code”) (“Incentive Stock Options”) or
which do not qualify as Incentive Stock Options
(“Nonqualified Stock Options”) (herein referred to
collectively as “Options;” however, whenever reference
is specifically made only to “Incentive Stock Options”
or “Nonqualified Stock Options,” such reference shall
be deemed to be made to the exclusion of the other). Any options
granted which fail to satisfy the requirements for Incentive Stock
Options shall become Nonqualified Stock Options.
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3. STOCK AVAILABLE FOR
OPTIONS . In the discretion of the Committee, the stock to
be subject to Options under the Plan shall be authorized but
unissued shares of Common Stock which are issued directly to
optionees upon exercise of options and/or shares of Common Stock
which are acquired by the Plan or the Bank in the open market. The
total number of shares of Common Stock for which Options may be
granted under the Plan is 143,150 shares, which is 10% of the total
number of shares of Common Stock issued by the Bank in connection
with its initial and second public offerings. Such total number of
shares is subject to any capital adjustments as provided in
Section 15. In the event that an Option granted under the Plan
is forfeited, released, expires or is terminated unexercised as to
any shares covered thereby, such shares thereafter shall be
available for the granting of Options under the Plan; however, if
the forfeiture, expiration, release or termination date of an
Option is beyond the term of existence of the Plan as described in
Section 20, then any shares covered by forfeited, unexercised,
released or terminated options shall not reactivate the existence
of the Plan and therefore may not be available for additional
grants under the Plan. The Bank, during the term of the Plan, will
reserve and keep available a number of shares of Common Stock
sufficient to satisfy the requirements of the Plan. In the
discretion of the Committee, the shares of Common Stock necessary
to be delivered to satisfy exercised options may be from authorized
and unissued shares of Common Stock or may be purchased in the open
market.
4. ELIGIBILITY
. Options shall be granted only to individuals who meet all of
the following eligibility requirements:
(a) Such individual must be a
member of the Board of Directors of the Bank. For this purpose, an
individual shall be considered to be an “employee” only
if there exists between the Bank and the individual the legal and
bona fide relationship of employer and employee. In determining
whether such relationship exists, the regulations of the United
States Treasury Department relating to the determination of such
relationship for the purpose of collection of income tax at the
source on wages shall be applied.
(b) Such individual must have
such knowledge and experience in financial and business matters
that he or she is capable of evaluating the merits and risks of the
investment involved in the exercise of the Options.
(c) Such individual, being
otherwise eligible under this Section 4, shall have been
selected by the Committee as a person to whom an Option shall be
granted under the Plan.
In determining the directors
to whom Options shall be granted and the number of shares to be
covered by each Option, the Committee shall take into account the
nature of the services rendered by respective directors, their
present and potential contributions to the success of the Bank and
such other factors as the Committee shall deem relevant. A director
who has been granted an Option under the Plan may be granted an
additional Option or Options under the Plan if the Committee shall
so determine.
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If, pursuant to the terms of
the Plan, it is necessary that the percentage of stock ownership of
any individual be determined, stock ownership in the Bank or of a
related corporation which is owned (directly or indirectly) by or
for such individual’s brothers and sisters (whether by the
whole or half blood), spouse, ancestors, and lineal descendants or
by or for any corporation, partnership, estate or trust of which
such employee is a shareholder, partner or beneficiary shall be
considered as owned by such director.
5. OPTION GRANTS
. Subject to the provisions of this Plan, Options shall be
awarded to the directors in such amounts as are determined by the
Committee. The proper officers on behalf of the Bank and each
Optionee shall execute a Stock Option Grant and Agreement (the
“Option Agreement”) which shall set forth the total
number of shares of Common Stock to which it pertains, the exercise
price, whether it is a Nonqualified Stock Option or an Incentive
Stock Option, and such other terms, conditions, restrictions and
privileges as the Committee in each instance shall deem
appropriate, provided they are not inconsistent with the terms,
conditions and provisions of this Plan. Each Optionee shall receive
a copy of his executed Option Agreement. Any Option granted with
the intention that it will be an Incentive Stock Option but which
fails to satisfy a requirement for Incentive Stock Options shall
continue to be valid and shall be treated as a Nonqualified Stock
Option.
6. OPTION PRICE
.
(a) The option price of each
Option granted under the Plan shall be not less than 100% of the
market value of the stock on the date of grant of the Option. In
the case of incentive stock options granted to a shareholder who
owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Bank (a “ten percent
shareholder”), the option price of each Option granted under
the Plan shall not be less than 110% of the market value of the
stock on the date of grant of the Option. If the Common Stock is
listed on a national securities exchange (including for this
purpose the Nasdaq Stock Market, Inc. National Market) on the date
in question, then the market value per share shall not be less than
the average of the highest and lowest selling price on such
exchange on such date, or if there were no sales on such date, then
the market price per share shall be equal to the average between
the bid and asked price on such date. If the Common Stock is traded
otherwise than on a national securities exchange (including for
this purpose the Nasdaq Stock Market, Inc. National Market) on the
date in question, then the market price per share shall be equal to
the average between the bid and asked price on such date, or, if
there is no bid and asked price on such date, then on the next
prior business day on which there was a bid and asked price. If no
such bid and asked price is available, then the market value per
share shall be its fair market value as determined by the
Committee, in its sole and absolute discretion. The Committee shall
maintain a written record of its method of determining such
value.
(b) The option price shall be
payable to the Bank in cash or by check, bank draft or money order
payable to the order of the Bank. No shares shall be delivered
until full payment has been made.
7. EXPIRATION OF
OPTIONS . The Committee shall determine the expiration date
or dates of each Option, but such expiration date shall not be
later than ten years after the date such Option is granted. In the
event an Incentive Stock Option is granted
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to a ten percent shareholder, the
expiration date or dates of each Option shall be not later than
five years after the date such Option is granted. The Committee, in
its discretion, may extend the expiration date or dates of an
Option after such date was originally set; however, such expiration
date may not exceed the maximum expiration date described in this
Section 7.
8. TERMS AND CONDITIONS
OF OPTIONS .
(a) All Options must be
granted within ten years of the Effective Date of this Plan as
defined in Section 19.
(b) The Committee may grant
Options which are intended to be Incentive Stock Options and
Nonqualified Stock Options, either separately or jointly, to an
eligible employee.
(c) The grant of Options
shall be evidenced by a written instrument (an Option Agreement)
containing terms and conditions established by the Committee
consistent with the provisions of this Plan.
(d) Not less than 100 shares
may be purchased at any one time unless the number purchased is the
total number at that time purchasable under the Plan.
(e) The recipient of an
Option shall have no rights as a shareholder with respect to any
shares covered by his Option until payment in full by him for the
shares being purchased. Except as provided in Section 15, no
adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or
other rights for which the record date is prior to the date such
stock is fully paid for.
(f) The aggregate fair market
value of the stock (determined as of the time the Option is
granted) with respect to which Incentive Stock Options are
exercisable for the first time by any participant during any
calendar year (under all benefit plans of the Bank, if applicable)
shall not exceed $100,000; provided, however, that such $100,000
limit of this subsection (f) shall not apply to the grant of
Nonqualified Stock Options. The Committee may grant Options which
are exercisable in excess of the foregoing limitations, in which
case Options granted which are exercisable in excess of such
limitation shall be Nonqualified Stock Options.
(g) All stock obtained
pursuant to an option which qualifies as an Incentive Stock Option
shall be held in escrow for a period which ends on the later of
(i) two years from the date of the granting of the Option or
(ii) one year after the transfer of the stock pursuant to the
exercise of the Option. The stock shall be held by the Bank or its
designee. The employee who has exercised the Option shall during
such holding period have all rights of a shareholder, including but
not limited to the rights to vote, receive dividends and sell the
stock. The sole purpose of the escrow is to inform the Bank of a
disqualifying disposition of the stock within the meaning of
Section 422 of the Code, as amended, and it shall be
administered solely for that purpose.
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(h) No more than 40% of the
shares which have been set aside for option may be allocated to any
one participant under the Plan.
9. EXERCISE OF OPTIONS
.
(a) Options granted to an
optionee by virtue of his position as a director of the Bank (as
stated in the Option Agreement) shall become vested and exercisable
at the times, at the rate and subject to such limitations as may be
set forth in the Option Agreement executed in connection therewith;
provided, however, that all outstanding and nonforfeited options
shall be exercisable, if not sooner, on the day prior to the
expiration date thereof.
(b) Unless the Committee
shall specifically state otherwise at the time an Option is
granted, all Options granted hereunder shall become vested and
exercisable upon the optionee’s death or disability within
the meaning of Section 22(e)(3) of the Code, and in the event
of a change in control as set forth in Section 12 of this
Plan.
(c) The exercise of any
Option must be evidenced by written notice to the Bank that the
optionee intends to exercise his Option. In no event shall an
Option be deemed granted by the Bank or exercisable by a recipient
prior to the mutual execution by the Bank and the recipient of an
Option Agreement which comports with the requirements of
Section 5 and Section 8(c).
(d) Any right to exercise
Options in annual installments shall be cumulative and any vested
installments may be exercised, in whole or in part, at the election
of the optionee.
(e) The inability of the Bank
to obtain approval from any regulatory body or authority deemed by
counsel to be necessary to the lawful issuance and sale of any
shares of Common Stock hereunder shall relieve the Bank of any
liability in respect of the non-issuance or sale of such shares. As
a condition to the exercise of an option, the Bank may require the
person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an
exemption from the registration requirements of federal or state
securities laws.
(f) The Committee shall have
the discretionary authority to impose in the Option Agreements such
restrictions on shares of Common Stock as it may deem appropriate
or desirable, including but not limited to the authority to impose
a right of first refusal or to establish repurchase rights or both
of these restrictions.
(g) Notwithstanding anything
to the contrary herein, an optionee receiving the grant of an
Option by virtue of his position as a director of the Bank (as
stated in the Option Agreement), shall be
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