EXHIBIT 10(e)
CODDLE CREEK FINANCIAL CORP.
STOCK OPTION PLAN AND TRUST AGREEMENT
(If Implemented Within One Year Of Conversion)
THIS IS THE CODDLE CREEK FINANCIAL CORP. STOCK OPTION PLAN ("Plan") AND
TRUST AGREEMENT (the "Trust") of Coddle Creek Financial Corp. (the
"Corporation"), a North Carolina corporation, with its principal office in
Mooresville, Iredell County, North Carolina, adopted by the Board of Directors
of the Corporation and effective upon the approval of the Plan by a majority of
the shareholders of the Corporation and the receipt of all necessary regulatory
approvals, under which options may be granted from time to time to eligible
directors and employees of the Corporation, Mooresville Savings Bank, Inc., SSB
(the "Bank") and of any corporation or other entity of which either the
Corporation or the Bank owns, directly or indirectly, not less than fifty
percent (50%) of any class of equity securities (a "Subsidiary"), to purchase
shares of common stock of the Corporation ("Common Stock"), subject to the
provisions set forth as follows:
1. PURPOSE OF THE PLAN. The purpose of the Plan is to aid the
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Corporation, the Bank and any Subsidiary in attracting and retaining capable
directors and employees and to provide a long range incentive for directors and
employees to remain in the management of the Corporation, the Bank or any
Subsidiary, to perform at increasing levels of effectiveness and to acquire a
permanent stake in the Corporation 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 the committee (the
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"Committee"), who are three members of the Board of Directors of the Corporation
(the "Board") who are "disinterested persons" as described in Rule 16b-
3(c)(2)(i) of the Rules and Regulations under the Securities Act of 0000 (xxx
"Xxxxxxxx Xxx"). 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 those members of the Board who are "disinterested
persons," and by the Board if there are less than three "disinterested persons."
The Committee may designate any officers or employees of the Corporation, the
Bank or any Subsidiary 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.
The Trust shall have three Trustees who shall be appointed by the Board and
shall serve at the pleasure of the Board.
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
(except for the options described in paragraph 6), the number of shares to be
subject to each option (except for the options described in paragraph 6), 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.
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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) or which do not qualify as
incentive stock options and which will be given tax treatment as "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.
3. STOCK AVAILABLE FOR OPTIONS. In the discretion of the Committee, the
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stock to be subject to options under the Plan shall be authorized but unissued
shares of Common Stock which are issued to and held by the Trust or which are
issued directly to optionees upon exercise of options and/or shares of Common
Stock which are acquired by the Trust in the open market either before or after
the exercise of options under this Plan. It is contemplated that shares of
Common Stock may be acquired by the Trust at any time following consummation of
the conversion of the Bank from a North Carolina mutual savings bank to a North
Carolina stock savings bank on __________________, 1997 (the "Conversion"), and
prior to the time options become vested under the terms of the Plan. The total
number of shares of Common Stock for which options may be granted under the Plan
is the number of shares equal to ten percent (10%) of the total number of shares
of Common Stock issued by the Corporation in connection with the Conversion.
Such 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 22,
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 Corporation, until the
Trust has acquired all shares of Common Stock necessary to satisfy options
granted under the Plan, will reserve and keep available a number of shares of
Common Stock sufficient to satisfy the requirements of the Plan.
4. CONTRIBUTIONS TO TRUST. The Board shall determine the amount (or the
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method of computing the amount) and timing of any contributions by the
Corporation, the Bank and any Subsidiary to the Trust established under this
Plan. Such amounts may be paid in cash or in shares of Common Stock and shall
be paid to the Trust at the designated time of contribution. No contributions
by participants under the Plan shall be permitted.
Except for amounts distributed to the Trust pursuant to Section 17 (which
shall be invested as set forth in Section 18), the Trustees shall, after paying
the expenses of the Trust, invest all of the Trust's assets primarily in Common
Stock. Upon the direction of the Committee, a number of shares up to the
aggregate number of shares of Common Stock available for distribution pursuant
to this Plan, as set forth in Section 3 above, shall be acquired by the Trustees
at any time following consummation of the Conversion. In the discretion of the
Committee, such shares may be acquired either before or upon the exercise of
options under this Plan. In the event that cash is contributed to the Trust and
it is necessary for the Trustees to acquire shares of Common Stock in the open
market, such shares shall be acquired on such terms as the Trustees deem
appropriate.
5. ELIGIBILITY. Options shall be granted only to individuals who meet all
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of the following eligibility requirements:
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(a) Such individual must be an employee or a member of the Board of
Directors of the Corporation, the Bank or a Subsidiary. For this purpose,
an individual shall be considered to be an "employee" only if there exists
between the Corporation, the Bank or a Subsidiary 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 5,
shall have been selected by the Committee as a person to whom an option
shall be granted under the Plan or shall have been designated in Section 6
hereof.
In determining the directors and employees 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 and
employees, their present and potential contributions to the success of the
Corporation, the Bank and any Subsidiary and such other factors as the Committee
shall deem relevant. A director or employee 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.
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
Corporation 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 or employee.
Notwithstanding anything in this Plan to the contrary, (i) no individual
optionee shall be granted options to acquire more than twenty-five (25) percent
of the shares of Common Stock to be issued pursuant to this Plan, (ii) no
optionee who is a non-employee director of the Corporation, the Bank or a
Subsidiary shall be granted options to acquire more than five (5) percent of the
shares of Common Stock to be issued pursuant to this Plan and (iii) all
optionees who are non-employee directors of the Corporation, the Bank or a
Subsidiary shall be granted options to acquire no more than thirty (30) percent
of the shares of Common Stock to be issued pursuant to this Plan.
6. INITIAL GRANTS. Subject to the provisions of this Plan, options shall
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be awarded to the directors and employees as set forth on Exhibit A. Such
options shall be granted after the date the Plan is approved by a majority of
the Corporation's shareholders and by all necessary regulatory authorities, and
after execution by the optionee of a Stock Option Grant and Agreement (the
"Option Agreement") in the form attached hereto as Exhibit B as modified by the
Committee to the extent it deems such modification to be necessary or desirable.
Such options shall be granted with the intention that they will be nonqualified
or incentive stock options as denominated in the 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.
7. OPTION PRICE.
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(a) The option price of each option granted under the Plan shall be
not less than one hundred percent (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 percent
(10%) of the total combined voting power of all classes of stock of the
Corporation, the Bank or a Subsidiary (a "ten percent shareholder"), the
option price of each option granted under the Plan shall not be less than
one hundred and ten percent (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 the NASDAQ National Market System) on the
date in question, then the market value per share shall be not 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 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 Corporation either (i)
in cash or by check, bank draft or money order payable to the order of the
Corporation, or (ii) at the discretion of the Committee, through the
delivery of shares of the common stock of the Corporation owned by the
optionee with a market value (determined in a manner consistent with (i)
above) equal to the option price, or (iii) at the discretion of the
Committee by a combination of (i) and (ii) above. No shares shall be
delivered until full payment has been made. The Committee may not approve
a reduction of such purchase price in any such option, or the cancellation
of any such options and the regranting thereof to the same optionee at a
lower purchase price, at a time when the market value of the shares is
lower than it was when such option was granted.
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8. EXPIRATION OF OPTIONS. The Committee shall determine the expiration
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date or dates of each option, but such expiration date shall be not later than
ten (10) years after the date such option is granted. In the event an incentive
stock option is granted to a ten percent shareholder, the expiration date or
dates of each option shall be not later than five (5) 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 8.
9. TERMS AND CONDITIONS OF OPTIONS.
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(a) All options must be granted within ten (10) years of the
Effective Date of this Plan as defined in Section 21.
(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. 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, except as provided in
Section 15.
(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 Corporation, the Bank or any
Subsidiary, 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 (2) years from the date of the granting of the option
or (ii) one (1) year after the transfer of the stock pursuant to the
exercise of the option. The stock shall be held by the Corporation 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 Corporation of a disqualifying
disposition of the stock within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and it shall be administered solely for
that purpose.
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10. EXERCISE OF OPTIONS.
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(a) An optionee receiving options by virtue of his position as a
director must remain continuously a member of the Board of Directors of the
Corporation, the Board of Directors of the Bank or the Board of Directors
of one or more of the Subsidiaries from the date of the grant until the
exercise of the option except as provided in Sections 11, 12 and 13 of this
Plan. An optionee receiving options by virtue of his position as an
employee must at all times be employed by the Corporation, the Bank or a
Subsidiary from the date of grant until the exercise of the options granted
except as provided in Sections 11, 12 and 13. All options granted under
the Plan shall be exercisable in annual installments in accordance with the
following schedule:
Twenty percent (20%) of the shares beginning 1 year after the date of
the grant of the options;
Twenty percent (20%) of the shares beginning 2 years after the date of
the grant of the options;
Twenty percent (20%) of the shares beginning 3 years after the date of
the grant of the options;
Twenty percent (20%) of the shares beginning 4 years after the date of
the grant of the options; and
Twenty percent (20%) of the shares beginning 5 years after the date of
the grant of the options.
Notwithstanding the foregoing, options shall become exercisable with
respect to all of the shares subject thereto upon the optionee's death or
upon the optionee's disability within the meaning of Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended.
The 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. The exercise of any option must be evidenced by
written notice to the Corporation that the optionee intends to exercise his
option.
In no event shall an option be deemed granted by the Corporation or
exercisable by a recipient prior to the mutual execution by the Corporation
and the recipient of an Option Agreement which comports with the
requirements of Section 6 and Section 9(c).
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(b) The inability of the Corporation or 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 Corporation and 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 Corporation 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.
(c) 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.
11. TERMINATION OF DIRECTORSHIP OR EMPLOYMENT - EXCEPT BY DISABILITY OR
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DEATH. If any optionee receiving the grant of an option by virtue of his
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position as a director ceases to be a director of at least one of the
Corporation, the Bank or any Subsidiary for any reason other than death or
disability (as defined in Section 12) or if any optionee receiving the grant of
an option by virtue of his position as an employee ceases to be an employee of
at least one of the Corporation, the Bank and any Subsidiary for any reason
other than death or disability (as defined in Section 12), he may, (i) at any
time within three (3) months after his date of termination, but not later than
the date of expiration of the option, exercise any option designated in the
Option Agreement as an incentive stock option and (ii) at any time prior to the
date of expiration of the option, exercise any option designated in the Option
Agreement as a nonqualified stock option. However, in either such event the
optionee may exercise any option only to the extent it was vested and he or she
was entitled to exercise the option on the date of termination. Any options or
portions of options of terminated directors or employees not so exercised shall
terminate and be forfeited.
12. TERMINATION OF DIRECTORSHIP OR EMPLOYMENT - DISABILITY. If any
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optionee receiving the grant of an option by virtue of his position as a
director ceases to be a director of at least one of the Corporation, the Bank or
any Subsidiary due to his becoming disabled within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended, or if any employee
receiving the grant of an option by virtue of his position as an employee ceases
to be employed by at least one of the Corporation, the Bank and any Subsidiary
due to his becoming disabled within the meaning of Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended, he may, (i) at any time within 12
months after his date of termination, but not later than the date of expiration
of the option, exercise any option designated in the Option Agreement as an
incentive stock option with respect to all shares subject thereto and (ii) at
any time prior to the date of expiration of the option, exercise any option
designated in the Option Agreement as a nonqualified stock option with respect
to all shares subject thereto. Any portions of options of terminated directors
or employees not so exercised shall terminate.
13. TERMINATION OF DIRECTORSHIP OR EMPLOYMENT - DEATH. If an optionee
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receiving the grant of an option by virtue of his position as a director dies
while a director of the Corporation, the Bank or any Subsidiary or if any
employee receiving the grant of an option by virtue of his position as an
employee dies while in the employment of the Corporation, the Bank or a
Subsidiary, the person or persons to whom the option is transferred by will or
by the laws of descent and distribution may exercise the option at any time
until the term of the option has expired, with respect to all shares subject
thereto, to the same extent and upon the same terms and conditions the optionee
would have been entitled to do so had he lived. Any options or portions of
options of deceased directors or employees not
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so exercised shall terminate.
14. RESTRICTIONS ON TRANSFER. An option granted under this Plan may not
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be transferred except by will or the laws of descent and distribution and,
during the lifetime of the optionee to whom it was granted, may be exercised
only by such optionee.
15. CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK.
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(a) If the outstanding shares of Common Stock of the Corporation are
increased, decreased, changed into or exchanged for a different number or
kind of shares or other securities of the Corporation or another entity as
a result of a recapitalization, reclassification, stock dividend, stock
split, amendment to the Corporation's Certificate of Incorporation, reverse
stock split, merger or consolidation, an appropriate adjustment shall be
made in the number and/or kind of securities allocated to the options
previously and subsequently granted under the Plan, without change in the
aggregate purchase price applicable to the unexercised portion of the
outstanding options but with a corresponding adjustment in the price for
each share or other unit of any security covered by the options.
(b) To the extent that the foregoing adjustments relate to particular
stock or securities of the Corporation subject to option under this Plan,
such adjustments shall be made by the Committee, whose determination in
that respect shall be final and conclusive.
(c) The grant of an option pursuant to this Plan shall not affect in
any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell,
or transfer all or any part of its business or assets.
(d) No fractional shares of stock shall be issued under the Plan for
any such adjustment.
(e) Any adjustment made pursuant to this Section 15, shall be made in
such manner as not to constitute a modification of any outstanding
incentive stock options within the meaning of Section 424(h) of the
Internal Revenue Code of 1986, as amended.
16. INVESTMENT PURPOSE. At the discretion of the Committee, any Option
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Agreement may provide that the optionee shall, by accepting the option,
represent and agree, for himself and his transferees by will or the laws of
descent and distribution, that all shares of stock purchased upon the exercise
of the option will be acquired for investment and not for resale or
distribution, and that upon each exercise of any portion of an option, the
person entitled to exercise the same shall furnish evidence of such facts which
is satisfactory to the Corporation. Certificates for shares of stock acquired
under the Plan may be issued bearing such restrictive legends as the Corporation
and its counsel may deem necessary to ensure that the optionee is not an
"underwriter" within the meaning of the regulations of the Securities Exchange
Commission.
17. DISTRIBUTION OF DIVIDENDS. Any cash dividends, returns of capital or
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other distributions paid or made in respect of any shares of Common Stock held
in the Trust, plus the earnings on such amounts shall be paid by the Trustees to
the Corporation.
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18. TRUST. The Trustees shall receive, hold, administer, invest and make
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distributions and disbursements from the Trust in accordance with the provisions
of the Plan and Trust and the applicable directions, rules, regulations,
procedures and policies established by the Committee pursuant to the Plan.
It is the intent of this Plan and Trust that the Trustees shall have
complete authority and discretion with respect to the arrangement, control and
investment of the Trust, and that the Trustees shall invest all assets of the
Trust, except for amounts received pursuant to Section 17 above, in Common Stock
to the fullest extent practicable, except (i) to the extent that the Trustees
determine that the holding of monies in cash or cash equivalents is necessary to
meet the obligations of the Trust and (ii) contributions to the Trust may be
temporarily invested in such interest-bearing account or accounts as the
Trustees shall determine to be appropriate. Amounts received by the Trustees
pursuant to Section 17 shall be invested in such interest-bearing accounts or in
other investments as the Trustees determine to be appropriate. In performing
their duties, the Trustees shall have the power to do all things and execute
such instruments as may be deemed necessary or proper, including the following
powers:
(a) To invest up to 100% of all Trust assets in Common Stock without
regard to any law now or hereafter in force limiting investments for
trustees or other fiduciaries. The investment authorized herein may
constitute the only investment of the Trust, except for the investment of
amounts received by the Trustees pursuant to Section 17, and in making such
investment, the Trustees are authorized to purchase Common Stock from the
Corporation or from any other source, and such Common Stock so purchased
may be outstanding or newly issued.
(b) To invest any Trust assets not otherwise invested in accordance
with (a) above, in such deposit accounts (including, without limitation,
deposit accounts at the Bank), certificates of deposit, obligations of the
United States Government or its agencies or such other investments as shall
be considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at any time
held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be registered in the
name of a nominee, without the addition of words indicating that such
security is an asset of the Trust (but accurate records shall be maintained
showing that such security is an asset of the Trust).
(e) To hold cash without interest in such amounts as may in the
opinion of the Trustees be reasonable for the proper operation of the Plan
and Trust.
(f) To employ brokers, agents, custodians, consultants and
accountants.
(g) To hire counsel to render advice with respect to its rights,
duties and obligations hereunder, and such other legal services or
representation as the Trustees deem desirable.
(h) To hold funds and securities representing the amounts to be
distributed to an optionee or his beneficiary as a consequence of a dispute
as to the disposition thereof, whether in a segregated account or held in
common with other assets of the Trust.
Notwithstanding anything herein contained to the contrary, the Trustees
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of a court for the
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exercise of any power herein contained, or to give any bond.
The Trustees shall maintain accurate and detailed records and accounts of
all transactions of the Trust, which shall be available at all reasonable times
for inspection by any legally entitled person or entity to the extent required
by applicable law, or any other person determined by the Committee.
After a stock option has been granted under this Plan, the optionee shall
be entitled to direct the Trustees as to the voting of the shares of Common
Stock held by the Trustees to satisfy the options which have been granted to
such optionee, regardless of whether or not such options have become vested and
nonforfeitable, subject to any rules and procedures adopted by the Committee for
this purpose. If any optionee does not direct the Trustees as to the voting of
the shares held to satisfy options granted to such optionee, such shares shall
not be voted by the Trustees. In the event a tender offer is made for shares of
Common Stock held to satisfy options granted to an optionee, the Trustees shall
tender shares held by the Trustees to satisfy options granted to such optionee
in accordance with instructions from such optionee. Any shares of Common Stock
held by the Trustees to satisfy options not granted to an optionee shall be
voted or tendered by the Trustees in their sole discretion.
It is intended that the trust established hereby be treated as a Grantor
Trust of the Corporation under the provisions of Section 671 et seq. of the
Internal Revenue Code of 1986, as amended.
Notwithstanding anything to the contrary in this Plan or Trust, the assets
of the Plan and Trust are subject to the payment of the claims of creditors of
the Corporation in the event of its insolvency or bankruptcy. The Corporation
is insolvent or bankrupt if it is the subject of a proceeding under the
Bankruptcy Code, 11 U.S.C. Section 101 et seq. or is unable to pay its debts.
The Board of Directors or the chief executive officer of the Corporation must
give written notice to the Trustees of the Corporation's bankruptcy or
insolvency as soon as practicable following the occurrence of such event. Upon
receipt of such notice or other written allegations of the Corporation's
bankruptcy or insolvency, or in the case of the Trustees' actual knowledge of or
determination of the Corporation's bankruptcy or insolvency, the Trustees shall
discontinue delivery of Trust assets to the optionees or the Corporation and
shall hold the assets of the Trust for the benefit of the Corporation's general
creditors and, upon a determination that the Corporation is bankrupt or
insolvent, shall distribute such assets to or for the benefit of the general
creditors. The Trustees shall resume delivery of Trust assets to the optionees
or the Corporation only after it is determined that the Corporation is no longer
bankrupt or insolvent. Determination of the bankruptcy or insolvency shall be
determined by a court of competent jurisdiction or by an arbitrator selected by
and pursuant to rules of the American Arbitration Association upon petition by
an interested party.
19. APPLICATION OF FUNDS. The proceeds received by the Corporation from
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the sale of Common Stock pursuant to options will be used for general corporate
purposes.
20. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall
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impose no obligation upon the optionee to exercise such option.
21. EFFECTIVE DATE OF PLAN. The Plan will become effective upon the
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approval of the Plan by a majority of the shareholders of the Corporation as
required by regulations of the FDIC and the receipt of all necessary regulatory
approvals.
22. TERM OF PLAN. Options may be granted pursuant to this Plan from time
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to time
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within ten (10) years from the effective date of the Plan.
23. TIME OF GRANTING OF OPTIONS. Nothing contained in the Plan or in any
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resolution adopted or to be adopted by the Committee or the shareholders of the
Corporation and no action taken by the Committee shall constitute the granting
of any option hereunder. The granting of an option pursuant to the Plan shall
take place only when an Option Agreement shall have been duly executed and
delivered by and on behalf of the Corporation at the direction of the Committee.
24. WITHHOLDING TAXES. Whenever the Corporation proposes or is required
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to issue or transfer shares of stock or other assets under the Plan, the
Corporation shall have the right to require the optionee to remit to the
Corporation an amount sufficient to satisfy any Federal, state and/or local
withholding tax requirements prior to the issuance of any certificate or
certificates for such shares or delivery of other assets. Alternatively, the
Corporation may issue or transfer such shares of stock or make other
distributions of assets net of the number of shares or other amounts sufficient
to satisfy the withholding tax requirements. For withholding tax purposes, the
shares of stock and other assets to be distributed shall be valued on the date
the withholding obligation is incurred.
25. TERMINATION AND AMENDMENT. The Board may at any time alter, suspend,
-------------------------
terminate or discontinue the Plan, but may not, without the consent of the
holder of an option previously granted, make any alteration which would deprive
the optionee of his rights with respect thereto; provided, however, that
-------- -------
shareholder approval of certain amendments may be necessary if it is desirable
for the Plan to continue to satisfy the requirements of Rule 16b-3 of the
Securities Exchange Commission; and provided further, that in no event shall
-------- -------
this Plan be terminated at the time of or following any merger or consolidation
of the Corporation or the Bank, unless and until the surviving entity shall have
made provision for an equivalent benefit for all the then current option
holders. Notwithstanding anything herein to the contrary, the Board may not
amend Section 6 hereof or any other provisions of this Plan described in Rule
16b-3(c)(2)(ii)(A) of the regulations promulgated pursuant to the Exchange Act
more than once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
26. CAPTIONS AND HEADINGS; GENDER AND NUMBER. Captions and paragraph
----------------------------------------
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part, and shall not serve as a basis
for interpretation or construction of, this Plan. As used herein, the masculine
gender shall include the feminine and neuter, and the singular number shall
include the plural, and vice versa, whenever such meanings are appropriate.
27. COST OF PLAN; EXCULPATION AND INDEMNIFICATION. All costs and expenses
---------------------------------------------
incurred in the operation and administration of the Plan and the Trust shall be
borne by the Corporation, the Bank and the Subsidiaries. In connection with
this Plan, no member of the Board, no member of the Board of Directors of the
Bank, and no member of the Board of Directors of any Subsidiary, no member of
the Committee and no Trustee shall be personally liable for any act or omission
to act, nor for any mistake in judgment made in good faith, unless arising out
of, or resulting from, such person's own bad faith, willful misconduct or
criminal acts. To the extent permitted by applicable law and regulation, the
Corporation shall indemnify, defend and hold harmless the members of the Board,
the members of the Board of Directors of the Bank and the members of the Board
of Directors of any Subsidiary, and members of the Committee, each Trustee, and
each other officer or employee of the Bank, the Corporation or of any Subsidiary
to whom any power or duty relating to the administration or
11
interpretation of this Plan may be assigned or delegated, from and against any
and all liabilities (including any amount paid in settlement of a claim with the
approval of the Board), and any costs or expenses (including counsel fees)
incurred by such persons arising out of or as a result of, any act or omission
to act, in connection with the performance of such person's duties,
responsibilities and obligations under this Plan, other than such liabilities,
costs, and expenses as may arise out of, or result from the bad faith, willful
misconduct or criminal acts of such persons.
28. GOVERNING LAW. Without regard to the principles of conflicts of laws,
-------------
the laws of the State of North Carolina shall govern and control the validity,
interpretation, performance, and enforcement of this Plan.
29. INSPECTION OF PLAN. A copy of this Plan, and any amendments thereto,
------------------
shall be maintained by the Secretary of the Corporation and shall be shown to
any proper person making inquiry about it.
30. OTHER PROVISIONS. The Option Agreements authorized under this Plan
----------------
shall contain such other provisions not inconsistent with the foregoing,
including, without limitation, increased restrictions upon the exercise of
options, as the Committee may deem advisable.
12
WITNESS the signatures of the undersigned, this the ____ day of
__________________, 1997.
CODDLE CREEK FINANCIAL CORP.
By:
----------------------------------------
President
----------------------------------------
Trustee
----------------------------------------
Trustee
----------------------------------------
Trustee
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EXHIBIT A
---------
Percentage of Total
Shares Subject to Option
Optionee Under Plan
-------- ------------------------
Xxxxxx X. Xxxxxxxx 5%
Xxxxxx X. Xxxx 5%
Xxxx X. Xxxxxx 5%
Xxxxxx X. Xxxxx 5%
Xxxxxx X. Xxxxx, Xx. 5%
Xxxxxx Xxxxxxx 25%
Xxxx Xxxxxxx 25%
Xxxxxx Xxxxx 6%
Xxxxxxx Xxxx 6%
Xxxxx X. Xxxxxxxx 6%
Remaining 7% to be held in reserve for future distribution.
EXHIBIT B
---------
STOCK OPTION GRANT AND AGREEMENT
THIS STOCK OPTION GRANT AND AGREEMENT ("Agreement"), being made according
to and subject to the terms and conditions of the STOCK OPTION PLAN of Coddle
Creek Financial Corp. ("Plan"), a copy of which is attached hereto as Annex A
and is hereby incorporated by reference and made a part of this Agreement, is
herein executed and effective the _______ day of _______________, _____, between
Coddle Creek Financial Corp. (the "Corporation") and ____________________
("Optionee"):
1. Grant. As of the above date, the Corporation hereby grants: (i) an
-----
incentive stock option (as that term is defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")) to purchase ________ shares of
Common Stock of the Corporation to the Optionee at the price stated in this
Agreement; and/or (ii) a nonqualified stock option to purchase __________ shares
of Common Stock of the Corporation to the Optionee at the price stated in this
Agreement.
The option(s) granted under this section and as described in this Agreement
is (are) in all respects subject to and conditioned by the terms, definitions,
and provisions of this Agreement and of the Plan. Capitalized terms in this
Agreement which are not otherwise defined but which are defined in the Plan
shall have the same meaning given to those terms in the Plan.
2. Price. The option price is $_____________ for each share.
-----
3. Exercise of Option. The option(s) granted under this Agreement shall
------------------
be exercisable pursuant to the terms and conditions of the Plan and as set forth
below:
(a) Right to Exercise: There are no other terms and conditions
-----------------
imposed on the Optionee's right to exercise his options other than those
imposed in the Plan, except as stated below:
-------------------------------------------------------------------------
------------------------------------------------------------------
(b) Annual Installments: Subject to the terms and conditions of the
-------------------
Plan, the incentive stock options can be exercised in annual installments
as follows:
__________________ shares beginning on ______________, 19__
__________________ shares beginning on ______________, 19__
__________________ shares beginning on ______________, 19__
__________________ shares beginning on ______________, 19__
__________________ shares beginning on ______________, 19__
The nonqualified options can be exercised in annual installments as
follows:
__________________ shares beginning on ______________, 19__
__________________ shares beginning on ______________, 19__
__________________ shares beginning on ______________, 19__
__________________ shares beginning on ______________, 19__
__________________ shares beginning on ______________, 19__
The right to exercise the option(s) in annual installments shall be
cumulative. In addition, the option(s) shall be exercisable upon
disability and death as set forth in the Plan.
(c) Method of Exercise: The options under this Agreement shall be
------------------
exercisable by a written notice to the Secretary of the Corporation which
shall include the following:
(1) State the election to exercise the option, the number of
shares in respect of which it is being exercised, the person in whose
name the stock certificate or certificates for such shares of Common
Stock is to be registered, his or her address, and social security
number;
(2) Contain any such representation and agreements as to
Optionee's investment intent with respect to such shares of Common
Stock as may be required by the Corporation;
(3) Be signed by the person entitled to exercise the option and,
if the option is being exercised by any person or persons other than
the Optionee, be accompanied by proof, satisfactory to the
Corporation, of the right of such person or persons to exercise the
option in accordance with the Plan; and
(4) Be accompanied by payment of the purchase price of any
shares with respect to which the option is being exercised which
payment shall be in form acceptable to the Committee pursuant to
Section 6(b) of the Plan.
(d) Representations and Warranties: In order to exercise an option,
------------------------------
the person exercising the option must make the representations and
warranties to the Corporation as may be required by any applicable law or
regulation, or as may otherwise be required pursuant to the Plan.
(e) Approvals. In order for an option to be exercised, all filings
---------
and approvals required by applicable law and regulations or pursuant to the
Plan must have been made and obtained.
4. Non-transferability of Option. This option may not be transferred in
-----------------------------
any manner otherwise than by will or the laws of descent and distribution and
may be exercised during the life of the Optionee only by him or her.
5. Investment Purpose. This option may not be exercised if the issuance
------------------
of shares upon such exercise would constitute a violation of any applicable
federal or state securities law or other law or valid regulation.
2
6. Expiration of Option. This option shall expire on _________,________.
--------------------
7. Escrow. All stock purchased pursuant to an incentive stock option
------
shall be held in escrow for a period which ends on the later of (i) two (2)
years from the date of the granting of the option or (ii) one (1) year after the
transfer of the stock pursuant to the exercise of the option. The stock shall
be held by the Corporation or its designee. The optionee who has exercised the
option shall have all rights of a stockholder, 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 Corporation of a disqualifying disposition of the
stock within the meaning of Section 422 of the Code, and it shall be
administered solely for this purpose.
8. Resolution of Disputes. Any dispute or disagreement which should arise
----------------------
under, or as a result of, or in any way relate to, the interpretation,
construction, or application of this Agreement will be determined by the
Committee designated in Section 2 of the Plan. Any determination made by such
Committee shall be final, binding, and conclusive for all purposes.
9. Construction Controlled by Plan. The options evidenced hereby shall be
-------------------------------
subject to all of the requirements, conditions and provisions of the Plan. This
Agreement shall be construed so as to be consistent with the Plan; and the
provisions of the Plan shall be deemed to be controlling in the event that any
provision should appear to be inconsistent therewith.
10. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such a manner as to be valid and enforceable under
applicable law, but if any provision of this Agreement is determined to be
unenforceable, invalid or illegal, the validity of any other provision or part
thereof shall not be affected thereby and this Agreement shall continue to be
binding on the parties hereto as if such unenforceable, invalid or illegal
provision or part thereof had not been included herein.
11. Modification of Agreement; Waiver. This Agreement may be modified,
---------------------------------
amended, suspended or terminated, and any terms, representations or conditions
may be waived, but only by a written instrument signed by each of the parties
hereto and only subject to the limitations set forth in the Plan. No waiver
hereunder shall constitute a waiver with respect to any subsequent occurrence or
other transaction hereunder or of any other provision.
12. Captions and Headings; Gender and Number. Captions and paragraph
----------------------------------------
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part, and shall not serve as a basis
for interpretation or construction, of this Agreement. As used herein, the
masculine gender shall include the feminine and neuter, and the singular number
shall include the plural, and vice versa, whenever such meanings are
appropriate.
13. Governing Law; Venue and Jurisdiction. Without regard to the
-------------------------------------
principles of conflicts of laws, the laws of the State of North Carolina shall
govern and control the validity, interpretation, performance, and enforcement of
this Agreement.
14. Binding Effect. This Agreement shall be binding upon and shall inure
--------------
to the benefit of the Corporation, and its successors and assigns, and shall be
binding upon and inure to the benefit of the Optionee, and his or her heirs,
legatees, personal representative, executor, administrator and permitted
assigns.
3
15. Entire Agreement. This Agreement and the Plan constitute and embody
----------------
the entire understanding and agreement of the parties hereto and, except as
otherwise provided hereunder, there are no other agreements or understandings,
written or oral, in effect between the parties hereto relating to the matters
addressed herein.
16. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when executed and delivered shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have set their hands and seals the day and
year first above written.
ATTEST: CODDLE CREEK FINANCIAL CORP.
By:
---------------------------------- --------------------------------
(Corporate Seal) President
OPTIONEE:
------------------------------(SEAL)
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