On the Effective Date of the Reorganization:
(a) The Company will assume sponsorship of, and shall be the successor to, the Bank with respect to all of the Bank’s rights, duties, and obligations under the First Landmark Bank 2007 Stock Option Plan (the “Stock Option Plan”) and the First Landmark Bank 2015 Long-Term Incentive Plan (the
“Long-Term Incentive Plan”). The assumption by the Company of the Long-Term Incentive Plan is subject to approval by the shareholders of the Bank of such plan.
(b) The Company will assume all outstanding options that may have been granted under the Stock Option Plan and Midtown Plans prior to the Reorganization. In addition, the Bank and the Company will amend the Stock Option Plan and the Long-Term Incentive Plan immediately prior to the Reorganization to substitute the Company as the successor corporation that maintains the Stock Option Plan and Long-Term Incentive Plan; to substitute Company Common Stock as the stock issuable under the Stock Option Plan and Long-Term Incentive Plan; and to provide for such other amendments as may be necessary or desirable to reflect the assumption of the Stock Option Plan and Long-Term Incentive Plan by the Company. The Bank and the Company will amend the Midtown Plans to allow the Company to assume those plans solely for the purpose of administering those options outstanding under the Midtown Plans immediately prior to the Reorganization and not for the purpose of grant any future awards under those plans. The Compensation Committee of the Company’s Board of Directors will administer the Stock Option Plan and Long-Term Incentive Plan, including the outstanding options previously granted under the Stock Option Plan. The Company will also administer the outstanding options under the Midtown Plans in accordance with the applicable terms of the Midtown Plans. The Company will assume any and all rights, obligations and duties of the Bank associated with each option outstanding under the Stock Option Plan and Midtown Plans immediately prior to the Reorganization.
(c) Following the Reorganization, the Company will have the authority to grant new awards pursuant to the assumed Stock Option Plan and the Long-Term Incentive Plan and to act as the sponsor of the Stock Option Plan and Long-Term Incentive Plan in all other respects. As the successor corporation, the Company, by action of its Board of Directors, also will have the authority to amend or terminate the Stock Option Plan and Long-Term Incentive Plan. The number of shares of Company Common Stock reserved for issuance pursuant to awards under the Stock Option Plan and the Long-Term Incentive Plan after the Reorganization will be the number of shares of Bank Common Stock reserved for issuance pursuant to awards, as specified below, under the Stock Option Plan and Long-Term Incentive Plan immediately prior to the Reorganization.
(d) Awards granted under the Stock Option Plan and Midtown Plans prior to the Reorganization will expire in accordance with their terms. The Stock Option Plan expires on May 22, 2018. However, the 10-year period will be extended to a date 10 years from the date of the approval of the adoption of the Stock Option Plan by the Company’s shareholder(s), assuming the Reorganization is
approved by the Bank’s shareholders. The Long-Term Incentive Plan has no specific expiration date;
however, its ability to grant incentive stock options will be similarly extended upon the approval of the adoption of the Long-Term Incentive Plan by the Company’s shareholder(s), assuming the Reorganization is approved by the Bank’s shareholders.
(e) The following is a description of the Stock Option Plan as currently maintained by the Bank.
(i) The Stock Option Plan permits the issuance of incentive and nonqualified stock options to purchase shares of Bank Common Stock (“Stock Options”) to full-time key employees and directors of the Bank. The Board of Directors of the Bank reserved 200,000 shares of Bank Common Stock for issuance pursuant to awards under the Stock Option Plan, any or all of which may be granted as incentive stock options. The number of shares reserved is subject to adjustment upon the occurrence of certain events described in the plan. Shares subject to awards that are forfeited or expire without being settled are returned to the pool of reserved shares available for issuance. As of the date of this Agreement, Stock Options to purchase 180,000 shares of Bank Common Stock were outstanding.
(ii) The Stock Option Plan provides for administration by a Compensation Committee to be established by the Board of Directors of the Bank (the “Committee”). Awards under the Stock Option Plan will be determined and granted by the Committee, subject to certain limitations specified in the Stock Option Plan. The Committee has the authority to interpret the Stock Option Plan, make grants pursuant to the Stock Option Plan, and determine the terms and conditions within the context of the Stock Option Plan.
(iii) Stock Options must be made exercisable at a price per share not less than the fair market value per share of the Bank’s Common Stock on the date that the option is awarded.
However, if the individual receiving an incentive stock option owns, at the time the incentive stock option is granted, more than ten percent (10%) of the combined voting power of all classes of stock of the Bank then outstanding; then the option price must be at least one hundred ten percent (110%) of the fair market value of the common stock subject to the incentive stock option and the incentive stock option, by its terms, must not be exercisable after the expiration of five (5) years from the date of the grant.
(iv) The Bank is not permitted to issue any incentive stock options that, by their terms, permit an optionee to purchase shares having a fair market value in excess of $100,000 (determined at the time of the grant of the incentive stock option) during the same calendar year as the date of the grant of the incentive stock option.
(v) At the time of exercise of any Stock Options, payment must be made in full with immediately available funds.
(vi) The period during which each Stock Option may be exercised is fixed by the Committee at the time the Stock Option is granted, but such period cannot exceed ten (10) years from the date the Stock Option is granted.
(vii) All unexercised Stock Options terminate upon the lapse of their stated terms and, in the case of incentive stock options, if occurring earlier, ninety (90) days after the termination of the optionee’s employment with the Bank by reason other than death. If an optionee of an incentive stock option should die while employed or within three (3) months after termination of employment, the optionee or his or her successor in interest has the right to exercise the Stock Option within twelve (12) months after the date of death. During such periods, all unexercised
Stock Options may be exercised by the optionee or his or her legal representative in the event of death or mental disability.
(viii) Stock Options issued pursuant to the Stock Option Plan are nontransferable except by will or by the law of descent and distribution.
(ix) All Stock Options issued pursuant to the Stock Option Plan under a single option agreement must vest in equal amounts over a vesting period not less than three (3) years in duration.
(x) An optionee has no rights as a shareholder until a stock certificate for Bank Common Stock is issued. Additionally, nothing in the Stock Option Plan or any Stock Options provides any right to continuation of employment.
(xi) The number of shares of Bank Common Stock reserved for the grant of Stock Options, the number of shares of Bank Common Stock underlying a Stock Option, and the exercise price of outstanding Stock Options are subject to adjustment or substitution in the event of certain capital adjustments, such as a stock dividend, stock split, spinoff, rights offering or recapitalization. In the event of certain corporate transactions, such as a merger or reorganization, the Committee may make such adjustments with respect to awards and take such other action as it deems necessary or appropriate.
(xii) The Board of Directors of the Bank may amend or terminate the Stock Option Plan subject to the requirement that shareholders must approve any amendment that: (1) increases the total number of shares for which Stock Options may be granted under the Stock Option Plan for all key employees (other than in connection with certain capital events, as described above); (2) changes the minimum purchase price for the optioned shares (other than in connection with certain capital events, as described above); (3) adversely affects outstanding Stock Options or any unexercised rights thereunder (other than in connection with certain capital events, as described above); or (4) extends the termination date of the Stock Option Plan.
(f) The following is a description of the Long-Term Incentive Plan as currently maintained by the Bank.
(i) The Long-Term Incentive Plan permits the issuance of incentive and nonqualified stock options, stock appreciation rights, other stock-based awards and other cash-based awards (collectively, the “Awards”) to officers, employees, directors, consultants and other service providers of the Bank. The Board of Directors of the Bank reserved 250,000 shares of Bank Common Stock for issuance pursuant to Awards, any or all of which may be granted as incentive stock options. The number of shares reserved is subject to adjustment upon the occurrence of certain events described in the plan. Shares subject to awards that are forfeited or expire without being settled are returned to the pool of reserved shares available for issuance. As of the record date, no Awards were outstanding.
(ii) The Long-Term Incentive Plan provides for administration by a committee to be established by the Board of Directors of the Bank or, in lieu of the establishment of a committee, by the Board of Directors (the “Committee”). The Committee may delegate its authority under the plan to the Chairman of the Committee or one or more officers of the Bank. Awards will be determined and granted by the Committee or any delegate, subject to certain limitations specified in the Long-Term Incentive Plan. The Committee and any delegate has the authority to interpret
the Long-Term Incentive Plan, make grants pursuant to the Long-Term Incentive Plan, and determine the terms and conditions within the context of the Long-Term Incentive Plan.
(iii) Stock options granted under the Long-Term Incentive Plan must be made exercisable at a price per share not less than the fair market value per share of the Bank’s Common Stock on the date that the option is awarded. However, if the individual receiving an incentive stock option owns, at the time the incentive stock option is granted, more than ten percent (10%) of the combined voting power of all classes of stock of the Bank then outstanding;
then the option price must be at least one hundred ten percent (110%) of the fair market value of the common stock subject to the incentive stock option and the incentive stock option, by its terms, must not be exercisable after the expiration of five (5) years from the date of the grant.
(iv) The Bank is not permitted to issue any incentive stock options that, by their terms, permit an optionee to purchase shares having a fair market value in excess of $100,000 (determined at the time of the grant of the incentive stock option) during the same calendar year as the date of the grant of the incentive stock option.
(v) At the time of exercise of any stock options, payment must be made in full with immediately available funds, by delivery of previously owned shares, in a cashless exercise utilizing a broker or through a net exercise or in any combination thereof. Other Awards are settled in cash or with shares of the Bank’s Common Stock, as the terms of the Awards may provide.
(vi) All unexercised stock options terminate upon the lapse of their stated terms and, in the case of incentive stock options, if occurring earlier, three (3) months after the termination of the optionee’s employment with the Bank by reason other than death. If an optionee of an incentive stock option should die while employed, the optionee or his or her successor in interest has the right to exercise the incentive stock option within twelve (12) months after the date of death. During such periods, all unexercised stock options may be exercised by the optionee or his or her legal representative in the event of death or disability. The Committee may provide for the continuation of an incentive stock option beyond such periods, in which case the option shall thereafter be treated as a non-statutory option.
(vii) Awards issued pursuant to the Long-Term Incentive Plan are generally nontransferable except by will or by the law of descent and distribution.
(viii) An Award recipient has no rights as a shareholder until a stock certificate for Bank Common Stock is issued pursuant to the terms of the Award. Additionally, nothing in the Long-Term Incentive Plan or any stock options provides any right to continuation of employment.
(ix) Awards may be cancelled, accelerated, paid or continued upon termination of the recipient’s service relationship, as provided in the applicable Award or as the Committee or its delegate may otherwise determine to the extent not prohibited by the terms of the Long-Term Incentive Plan.
(x) The Committee may grant the recipient of an Award a cash amount which is intended to reimburse the recipient for the income taxes resulting from the receipt, vesting or settlement of the Award.
(xi) The number of shares of Bank Common Stock reserved for the grant of Awards, the number and kind of shares reserved for issuance upon the settlement of Awards, the exercise price of outstanding stock options, the number and kind of shares to which each Award pertains, the total number of shares that may be subject to Awards granted by a delegate and the threshold price of stock appreciation rights are subject to adjustment or substitution in the event of certain capital adjustments, such as a stock dividend, stock split, spinoff, rights offering or recapitalization. In the event of certain corporate transactions, such as a merger or reorganization, the Committee may make such adjustments with respect to awards and take such other action as it deems necessary or appropriate.
(xii) The Board of Directors of the Bank may amend or terminate the Long-Term Incentive Plan without shareholder approval.
SECTION 5
EXISTENCE, RIGHTS, DUTIES, ASSETS