Filed by the
Registrant ☒ Filed by a Party other than the
Registrant ☐
We cordially invite you to attend a special meeting of stockholders of Community First Bancshares, Inc. The special
meeting will be held at 8460 Martin Luther King Jr. Avenue, Covington, Georgia on August 23, 2018, at 2:00 p.m., local time.
The enclosed Notice of Special Meeting and Proxy Statement describe the formal business to be transacted. Our directors and officers will be
present to respond to any questions that stockholders may have. The business to be conducted at the special meeting consists of the approval of our 2018 Equity Incentive Plan.
The Board of Directors has determined that the matter to be considered at the special meeting is in the best interest of Community First
Bancshares, Inc. and its stockholders, and the Board of Directors unanimously recommends a vote FOR the approval of the 2018 Equity Incentive Plan.
On behalf of the Board of Directors, we urge you to sign, date and return the enclosed proxy card as soon as possible, even if you currently
plan to attend the special meeting. This will not prevent you from voting in person, but will assure that your vote is counted if you are unable to attend the special meeting. Your vote is important, regardless of the number of shares that you own.
Notice is hereby given that a special meeting of stockholders of Community First Bancshares, Inc. will be held at 8460 Martin Luther King Jr.
Avenue, Covington, Georgia on August 23, 2018 at 2:00 p.m., local time.
A Proxy Card and Proxy Statement for the special meeting are enclosed. The
special meeting is for the purpose of considering and acting upon:
1. the approval of the Community First Bancshares, Inc. 2018 Equity
Incentive Plan; and
Any action may be taken on the foregoing proposal at the special meeting
on the date specified above, or on the date or dates to which the special meeting may be adjourned. Stockholders of record at the close of business on July 2, 2018 are the stockholders entitled to vote at the special meeting, and any
adjournments thereof.
DIRECTOR COMPENSATION
The following table sets forth for the year ended September 30, 2017 certain information as to the total remuneration we paid to our
directors. Mr. Smith received director fees of $22,750 for the year ended September 30, 2017, which is included in All Other Compensation in the Summary Compensation Table.
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Director Compensation Table For the Year Ended September 30, 2017
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Name
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Fees Earned or
Paid in Cash
($)
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Nonqualified
Deferred
Compensation
Earnings ($)(1)
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All Other
Compensation ($)
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Total
($)
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Troy B. Brooks
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25,850
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4,270
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30,120
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William D. Fortson, Jr.
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55,800
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63,478
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119,278
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Marshall L. Ginn
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24,800
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25,840
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50,640
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Bob W. Richardson
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29,300
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72,839
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102,139
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Howard G. Roberts
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22,720
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22,750
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Mark J. Ross
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22,750
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22,750
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Edward P. Stone
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27,850
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37,810
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65,660
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(1)
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Reflects above-market earnings under the Directors Deferred Compensation Plan, described below.
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Director Fees.
Directors of Community First Bancshares, Inc. currently only earn fees in his or her capacity as a board or
committee member of Newton Federal Bank. Directors of Newton Federal Bank earn an annual fee of $21,000, and our chairman receives an additional chairman fee of $21,000 per year. Directors currently receive fees of $150 per meeting for service on
the Audit, Compensation and Asset/Liability Management Committees and $100 per meeting for service on the Loan Committee.
Directors Deferred Compensation Plan
.
Newton Federal Bank sponsors a deferred compensation plan under which
eligible directors were previously able to defer the receipt of compensation that otherwise would have been payable to them for their service as a director. Effective June 30, 2015, the plan has been frozen with respect to further deferral
contributions and any new participants. However, directors who previously deferred compensation under the plan maintain a benefit under the plan until the deferred compensation is distributed to them in accordance with their previous elections and
the terms of the plan. Until their benefits are distributed under the plan, the deferred compensation will be credited with earnings, compounded quarterly, at a rate equal to the average
pre-tax
return for the
immediately preceding
ten-year
period on shares in the Vanguard Balanced Index Fund Admiral Shares, as published in the funds annual report for December 31 of the immediately preceding calendar
year.
PROPOSAL IAPPROVAL OF THE COMMUNITY FIRST BANCSHARES, INC.
2018 EQUITY INCENTIVE PLAN
The Board of Directors has adopted, subject to stockholder approval, the Community First Bancshares, Inc. 2018 Equity Incentive Plan (the
2018 Equity Incentive Plan), to provide officers, employees and directors of Community First Bancshares, Inc. and Newton Federal Bank with additional incentives to promote the growth and performance of Community First Bancshares, Inc.
and Newton Federal Bank. The Board of Directors believes that the adoption of the 2018 Equity Incentive Plan is in the best interests of Community First Bancshares, Inc. and its stockholders as a means of providing Community First Bancshares, Inc.
and Newton Federal Bank with the ability to retain, reward and, to the extent necessary, attract and incentivize its employees, officers and directors to promote growth, improve performance and further align their interests with those of Community
First Bancshares, Inc.s stockholders through the ownership of additional common stock of Community First Bancshares, Inc.
Why We Are Seeking Approval of the 2018 Equity Incentive Plan
Many companies with which we compete for directors and management-level employees are stockholder-owned companies that offer equity
compensation as part of their overall director and officer compensation programs. By approving the 2018 Equity Incentive Plan, our stockholders will give us the flexibility we need to continue to attract and retain highly-qualified officers and
directors by offering a competitive compensation program linked to the performance of our common stock. In addition, the 2018 Equity Incentive Plan further aligns the interests of our directors and management with the interests of our stockholders
by potentially increasing the ownership interests of directors and officers in the common stock of Community First Bancshares, Inc.
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We completed our mutual holding company reorganization and related minority stock offering in
April, 2017. As part of the mutual holding company reorganization and minority stock offering, we issued a total of 7,538,250 shares of common stock, including 4,070,655 issued to Community First Bancshares, MHC, our mutual holding company. We
raised approximately $34.7 million in gross proceeds from the minority stock offering. A substantial majority of financial institutions that complete a mutual holding company reorganization and related minority stock offering or a
mutual-to-stock
conversion have adopted an equity-based incentive plan following the transaction. Our prospectus made clear our intent to adopt an equity incentive plan and
described the regulatory requirements potentially applicable to a plan. Our prospectus also included the pro forma effect of awards granted under an equity incentive plan.
Highlights of the 2018 Equity Incentive Plan
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Share Reserve and Terms Generally Consistent with Industry Standards
. In determining the size and terms of the 2018 Equity Incentive Plan, the Board of Directors and Compensation Committee considered a number of
factors, including: (1) industry practices related to the adoption of equity-incentive plans by financial institutions following a mutual holding company reorganization or
mutual-to-stock
conversion; and (2) applicable regulations related to the adoption of equity-incentive plans by converted financial institutions in certain
circumstances. In this regard (and as described below), the maximum number of shares of common stock that may delivered pursuant to the exercise of stock options is 4.9% of the number of shares of common stock issued in the reorganization and
minority stock offering, as well as the shares issued to the mutual holding company, and the maximum number of shares of common stock that may be issued as restricted stock or restricted stock units is 1.96% of the number of shares of common stock
issued in the reorganization and minority stock offering, as well as the shares issued to the mutual holding company.
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Minimum Vesting Periods for Awards
. Subject to limited exceptions in the event of death, disability or involuntary termination without cause following a change in control, the 2018 Equity Incentive Plan requires
that awards may not vest more rapidly than over a period of one year.
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Limits on Grants to Directors and Employees
. The maximum number of shares of common stock, in the aggregate, that may be delivered to any one
non-employee
director pursuant
to the exercise of stock options and pursuant to the award of restricted stock or restricted stock units under the 2018 Equity Incentive Plan is 5% (30% in the aggregate for all
non-employee
directors) of the
shares available under the plan for grant or award, respectively. The maximum number of shares of common stock that may be delivered to any one employee pursuant to the exercise of stock options and pursuant to an award of restricted stock or
restricted stock units is 25% of the shares available under the plan for grant or award, respectively.
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Share Counting
. The 2018 Equity Incentive Plan provides that, if an option or award is forfeited or expires, the shares covered by the award will be available for future grant. Shares withheld to cover taxes or
used to pay the exercise price of stock options will not be available for future grants.
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No Repricing
. The 2018 Equity Incentive Plan prohibits repricing and exchange of underwater options for cash or shares without stockholder approval.
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No Single-Trigger Vesting of Time-Based Awards.
The 2018 Equity Incentive Plan does not provide for vesting of time-based equity awards solely upon the occurrence of a change in control, without an accompanying
involuntary termination of service (including a termination for good reason).
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General
The following is a summary of the material features of the 2018 Equity Incentive Plan, which is qualified in its entirety by reference to the
provisions of the 2018 Equity Incentive Plan, attached hereto as Appendix A. In the event of conflict between the terms of this disclosure and the terms of the 2018 Equity Incentive Plan, the terms of the 2018 Equity Incentive Plan will control.
Subject to permitted adjustments for certain corporate transactions, the 2018 Equity Incentive Plan authorizes the issuance or delivery
to participants of up to 517,123 shares of Community First Bancshares, Inc. common stock pursuant to grants of incentive and
non-qualified
stock options, restricted stock awards and restricted stock units. Of
this number, the maximum number of shares of Community First Bancshares, Inc. common stock that may be issued under the 2018 Equity Incentive Plan pursuant to the exercise of stock options is 369,374 shares, and the maximum number of shares of
Community First Bancshares, Inc. common stock that may be issued as restricted stock awards or restricted stock units is 147,749 shares. These amounts represent 4.9% and 1.96%, respectively, of the number of shares of common stock issued in the
mutual holding company reorganization of Newton Federal Bank and the stock offering of Community First Bancshares, Inc., including the shares issued to the Community First Bancshares, MHC.
The 2018 Equity Incentive Plan will be administered by the members of the Compensation Committee (the Committee) who are
Disinterested Board Members, as defined in the 2018 Equity Incentive Plan. If the Compensation Committee consists of fewer than three members, the Board of Directors will appoint an additional Disinterested Board Member to the Committee.
The Committee has full and exclusive power within the limitations set forth in the 2018 Equity Incentive Plan to make all decisions and determinations regarding: (1) the selection of participants and the granting of awards;
(2) establishing the terms and conditions relating to each award; (3) adopting rules, regulations and guidelines for carrying out the purposes of the 2018 Equity Incentive Plan; and (4) interpreting the provisions of the 2018 Equity
Incentive Plan and any award agreement. The 2018 Equity Incentive Plan also permits the Committee to delegate all or part of its responsibilities and powers to any person or persons selected by it. The Committee may, subject to the limitations set
forth in the 2018 Equity Incentive Plan, grant stock options and awards of restricted stock or restricted stock units to themselves and other members of the Board of Directors, as well as to employees of Community First Bancshares, Inc. and its
subsidiaries.
Except for accelerating the vesting of awards to avoid the minimum requirements specified in the plan or accelerating the
vesting requirements applicable to an award as a result of or in connection with a change in control, the Compensation Committee has the authority to reduce, eliminate or accelerate any restrictions or vesting requirements applicable to an award at
any time after the grant of the award or to extend the time period to exercise a stock option, provided that such extension is consistent with Section 409A of the Internal Revenue Code.
Eligibility
All employees and directors
of Community First Bancshares, Inc. and its subsidiaries are eligible to receive awards under the 2018 Equity Incentive Plan, except that
non-employees
may not be granted incentive stock options under the
plan.
Types of Awards
The Committee
may determine the type and terms and conditions of awards under the 2018 Equity Incentive Plan. Awards will be evidenced by award agreements approved by the Committee and delivered to participants. The award agreements will set forth the terms and
conditions of each award. Awards may be granted as incentive and
non-qualified
stock options, restricted stock awards and restricted stock units.
Stock Options
.
A stock option gives the recipient or optionee the right to purchase shares of common stock at
a specified price for a specified period of time. The exercise price may not be less than the fair market value of the common stock on the date of grant. Fair Market Value for purposes of the 2018 Equity Incentive Plan means, if the
common stock of Community First Bancshares, Inc. is listed on a securities exchange, the closing sales price of the common stock on the date of grant (or any other applicable date), or if the common stock was not traded on that date, then on the
immediately preceding date on which sales were reported. If the common stock is not
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traded on a securities exchange, the Committee will determine the fair market value in good faith and on the
basis of objective criteria consistent with the requirements of Section 422 of the Internal Revenue Code and the applicable requirements of Section 409A of the Internal Revenue Code. Stock Options may not have a term longer than 10 years
from the date of grant.
Stock options are either incentive stock options or
non-qualified
stock options. Incentive stock options have certain tax advantages and must comply with the requirements of Section 422 of the Internal Revenue Code. Only employees are eligible
to receive incentive stock options. Shares of common stock purchased upon the exercise of a stock option must be paid for in full at the time of exercise: (1) either in cash or with stock valued at fair market value as of the day of exercise;
(2) by a cashless exercise through a third party; (3) by a net settlement of the stock option using a portion of the shares obtained on exercise in payment of the exercise price of the stock option; (4) by personal,
certified or cashiers check; (5) by other property deemed acceptable by the Committee; or (6) by a combination of the foregoing. Stock options are subject to vesting conditions and restrictions as determined by the Committee.
Restricted Stock
.
A restricted stock award is a grant of common stock, subject to vesting requirements, to a participant
for no consideration, or any minimum consideration that may be required by applicable law. Restricted stock awards under the 2018 Equity Incentive Plan will be granted only in whole shares of common stock and are subject to vesting conditions and
other restrictions established by the Committee consistent with the 2018 Equity Incentive Plan. Prior to awards vesting, unless otherwise determined by the Committee, the recipient of a restricted stock award may exercise any voting rights with
respect to the common stock subject to the award. Unless otherwise determined by the Committee, dividends paid on unvested awards will be retained any distributed to the participant within 30 days of the vesting of the award.
Restricted Stock Units
. Restricted stock units are similar to restricted stock awards in that the value of a restricted stock
unit is denominated in shares of stock. However, unlike a restricted stock award, no shares of stock are transferred to the participant until certain requirements or conditions associated with the award are satisfied. The limitation on the number of
restricted stock awards available described in the paragraph above is also applicable to restricted stock units.
Limitations on Awards Under the 2018
Equity Incentive Plan
The following limits apply to awards under the 2018 Equity Incentive Plan:
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The maximum number of shares of common stock that may be available for awards under the 2018 Equity Incentive Plan is 517,123 shares, of which up to 369,374 shares of common stock may be delivered pursuant to the
exercise of stock options and 147,749 shares of common stock may be issued pursuant to restricted stock awards or restricted stock units.
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The maximum number of shares of common stock that may be delivered to any one employee pursuant to the exercise of stock options and pursuant to restricted stock awards or restricted stock units is 92,343 shares and
36,937 shares, respectively (all of which may be granted in any one calendar year). These maximum amounts represent 25% of the maximum number of shares of common stock that may be delivered pursuant to the exercise of stock options and 25% of the
number of shares of common stock that may be issued pursuant to restricted stock awards or restricted stock units.
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The maximum number of shares of common stock that may be delivered to any one
non-employee
director pursuant to the exercise of stock options and the issuance of restricted stock
awards or restricted stock units is 18,468 shares and 7,387 shares, respectively (all of which may be granted in any one calendar year). These maximum amounts represent 5% of the maximum number of shares of common stock that may be delivered
pursuant to the exercise of stock options and 5% of the maximum number of shares of common stock that may be issued pursuant to restricted stock awards or restricted stock units. The Committee may, up to, but subject to these limitations and the
other applicable limitations set forth in the 2018 Equity Incentive Plan, grant stock options and awards of restricted stock or restricted stock units to themselves and other members of the Board of Directors.
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The maximum number of shares of common stock that may be delivered to all
non-employee
directors, in the aggregate, pursuant to the exercise of stock options and the issuance of
restricted stock awards or restricted stock units is 110,812 shares and 44,324 shares, respectively (all of which may be granted in any one calendar year). These maximum amounts represent 30% of the maximum number of shares of common stock that may
be delivered pursuant to the exercise of stock options and 30% of the maximum number of shares of common stock that may be issued pursuant to restricted stock awards or restricted stock units. The Committee may, up to, but subject to these
limitations and the other applicable limitations set forth in the 2018 Equity Incentive Plan, grant stock options and awards of restricted stock or restricted stock units to themselves and other members of the Board of Directors.
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In the event of a corporate transaction involving the stock of Community First Bancshares, Inc. (including, without limitation, any stock
dividend, stock split or other special and nonrecurring dividend or distribution, recapitalization, reorganization, merger, consolidation,
spin-off,
combination or exchange of shares), the Committee will, in
an equitable manner, adjust the number and kind of securities available for grants of stock options, restricted stock awards or restricted stock units, the number and kind of securities that may be delivered or deliverable with respect to
outstanding stock options, restricted stock awards and restricted stock units, and the exercise price of stock options.
In addition, the
Committee is authorized to make certain other adjustments to the terms and conditions of stock options, restricted stock awards and restricted stock units consistent with the terms of the plan.
Prohibition Against Repricing of Options
. The 2018 Equity Incentive Plan provides that neither the Committee nor the Board of
Directors may make any adjustment or amendment to the plan or an award that reduces or would have the effect of reducing the exercise price of a previously granted stock option.
Prohibition on Transfer
. Generally, all awards, except
non-qualified
stock options,
granted under the 2018 Equity Incentive Plan will be nontransferable except by will or in accordance with the laws of intestate succession. Awards may be transferable pursuant to a qualified domestic relations order. At the Committees sole
discretion,
non-qualified
stock options may be transferred for valid estate planning purposes in a manner consistent with the Internal Revenue Code and federal securities laws. During the life of the
participant, awards may be exercised only by the participant. The Committee may permit a participant to designate a beneficiary to exercise stock options or receive any rights that may exist upon a participants death with respect to awards
granted under the 2018 Equity Incentive Plan.
Performance Measures
The Committee may use performance measures for vesting purposes with respect to awards granted under the 2018 Equity Incentive Plan. The
performance measures may include one or more of the following: book value or tangible book value per share; basic earnings per share; basic cash earnings per share; diluted earnings per share; diluted cash earnings per share; return on equity; net
income or net income before taxes; cash earnings; net interest income;
non-interest
income;
non-interest
expense to average assets ratio; cash general and administrative
expense to average assets ratio; efficiency ratio; cash efficiency ratio; return on average assets; cash return on average assets; return on average stockholders equity; cash return on average stockholders equity; return on average
tangible stockholders equity; cash return on average tangible stockholders equity; core earnings; operating income; operating efficiency ratio; net interest rate margin or net interest rate spread; growth in assets, loans, or deposits;
loan production volume;
non-performing
loans; total stockholder return; cash flow; strategic business objectives consisting of one or more objectives based upon meeting specified cost targets, business
expansion goals, and goals relating to acquisitions or divestitures, or goals relating to capital raising and capital management; any other measure determined by the Committee or any combination of the foregoing performance measures.
Performance measures may be based on the performance of Community First Bancshares, Inc. as a whole or of any one or more subsidiaries or
business units of Community First Bancshares, Inc. or a subsidiary, may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures. In establishing the performance measures,
the Committee may provide for the inclusion or exclusion of certain items.
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Dividend Equivalents
The Committee is authorized to grant dividend equivalents with respect to restricted stock units available under the Plan. Dividend equivalents
confer on the participant the right to receive payments equal to cash dividends or distributions with respect to all or a portion of the number of shares of stock subject to the award
.
Unless otherwise determined by the Committee, the
dividend equivalent right will be paid at the same time as the shares subject to the restricted stock unit are distributed to the participant.
Vesting
of Awards
The Committee will specify the vesting schedule or conditions of each award. Unless the Committee specifies a different
vesting schedule at the time of grant, awards under the 2018 Equity Incentive Plan, other than performance awards, must be granted with a vesting rate not exceeding 20% per year, with the initial installment vesting no earlier than the
one-year
anniversary of the date of grant. If the vesting of an award under the 2018 Equity Incentive Plan is conditioned on the completion of a specified period of service with Community First Bancshares, Inc. or
its subsidiaries, without the achievement of performance measures or objectives, then the required period of service for full vesting will be determined by the Committee and evidenced in an award agreement. Notwithstanding anything to the contrary
in the 2018 Equity Incentive Plan, awards under the plan may not vest more rapidly than over a period of one year, unless accelerated due to death, disability or involuntary termination of employment or service following a change in control. Vesting
may be accelerated in the event of death, disability, or upon involuntary termination of employment or service following a change in control or, subject to the foregoing requirements and in a manner consistent with the plan, at the discretion of the
Committee.
Change in Control
Unless
otherwise stated in an award agreement, at the time of an involuntary termination of employment or service following a change in control, all stock options then held by the participant will become fully earned and exercisable (subject to the
expiration provisions otherwise applicable to the stock option). All stock options may be exercised for a period of one year following the participants involuntary termination, provided, however, that no stock option will be eligible for
treatment as an incentive stock option in the event such stock option is exercised more than three months following involuntary termination of employment. At the time of an involuntary termination of employment or service following a change in
control, all awards of restricted stock and restricted stock units will immediately become fully earned and vested. In the event of a change in control, any performance measures will be deemed satisfied at the target level as of the date
of the change in control, unless data supports and the Committee certifies that the performance measures have been achieved at a level higher than the target level as of the effective date of the change in control, in which case, the performance
award will vest at the higher level.
Amendment and Termination
The Board of Directors may, at any time, amend or terminate the 2018 Equity Incentive Plan or any award granted under the 2018 Equity Incentive
Plan, provided that, except as provided in the 2018 Equity Incentive Plan, no amendment or termination may adversely impair the rights of a participant or beneficiary under an award without the participants (or the affected beneficiarys)
written consent. The Board of Directors may not amend the 2018 Equity Incentive Plan to materially increase the benefits accruing to participants under the plan, materially increase the aggregate number of securities that may be issued under the
plan (other than as provided in the 2018 Equity Incentive Plan), or materially modify the requirements for participation in the plan, without approval of stockholders. Notwithstanding the foregoing, the Committee may amend the 2018 Equity Incentive
Plan or any award agreement, to take effect retroactively or otherwise, to conform the plan or an award agreement to current or future law or to avoid an accounting treatment resulting from an accounting pronouncement or interpretation issued by the
Securities and Exchange Commission or Financial Accounting Standards Board subsequent to the adoption of the 2018 Equity Incentive Plan, or the making of the award affected thereby, which, in the sole discretion of the Committee, may materially and
adversely affect the financial condition or results of operations of Community First Bancshares, Inc.
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Duration of Plan
The 2018 Equity Incentive Plan will become effective upon approval by the stockholders at this meeting. The 2018 Equity Incentive Plan will
remain in effect as long as any award under it is outstanding; however, no awards may be granted under the 2018 Equity Incentive Plan on or after the
10-year
anniversary of the effective date of the plan. At
any time, the Board of Directors may terminate the 2018 Equity Incentive Plan. However, any termination of the 2018 Equity Incentive Plan will not affect outstanding awards.
Federal Income Tax Considerations
The
following is a summary of the current federal income tax consequences with respect to awards under the 2018 Equity Incentive Plan:
Non-Qualified
Stock Options
. The grant of a
non-qualified
option will not result in taxable income to the participant. Except as described below, the participant will
recognize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares acquired over the exercise price for those shares, and Community First Bancshares, Inc. will be entitled to a corresponding
deduction for tax purposes. Gains or losses realized by the participant upon disposition of the acquired shares will be treated as capital gains and losses, with the cost basis in the shares equal to the fair market value of the shares at the time
of exercise.
Incentive Stock Options
. The grant of an incentive stock option will not result in taxable income to the
participant. The exercise of an incentive stock option also will not result in taxable income to the participant, provided the participant was, without a break in service, an employee of Community First Bancshares, Inc. or a subsidiary during the
period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant becomes disabled, as that term is defined in the Internal Revenue
Code).
The excess of the fair market value of the shares at the time of the exercise of an incentive stock option over the exercise price
is an adjustment that is included in the calculation of the participants alternative minimum taxable income for the tax year in which the incentive stock option is exercised. For purposes of determining the participants alternative
minimum tax liability for the year of disposition of the shares acquired pursuant to the incentive stock option exercise, the participant will have a basis in those shares equal to the fair market value of the shares at the time of exercise.
If the participant does not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option
or within one year after the exercise of the stock option, then, upon disposition of the acquired shares, any amount realized in excess of the exercise price will be taxed as a capital gain. A capital loss will be recognized to the extent that the
amount realized is less than the exercise price.
If the foregoing holding period requirements are not met, the participant will generally
recognize ordinary income at the time of the disposition of the shares, in an amount equal to the lesser of: (1) the excess of the fair market value of the shares on the date of exercise over the exercise price; or (2) the excess, if any,
of the amount realized upon disposition of the shares over the exercise price, and Community First Bancshares, Inc., Inc. will be entitled to a corresponding deduction. If the amount realized exceeds the value of the shares on the date of exercise,
any additional amount will be a capital gain. If the amount realized is less than the exercise price, the participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized
upon the disposition of the shares.
Restricted Stock
. A participant will not realize taxable income at the time of the
grant of restricted stock, provided that the stock subject to the award is not delivered at the time of grant, or if the stock is delivered, it is subject to restrictions that constitute a substantial risk of forfeiture for federal
income tax purposes. Upon the later of delivery or vesting of shares subject to an award, the holder will recognize ordinary income in an amount equal to the then fair market value of those shares and Community First Bancshares, Inc. will be
entitled to a corresponding
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deduction for tax purposes. Gains or losses realized by the participant upon disposition of such shares will be
treated as capital gains and losses, with the basis in the shares equal to the fair market value of the shares at the time of delivery or vesting. Dividends paid to the holder during the restriction period, if so provided, will also be compensation
income to the participant, and Community First Bancshares, Inc. will be entitled to a corresponding deduction for tax purposes. A participant who makes an election under Section 83(b) of the Internal Revenue Code will include the full fair
market value of the restricted stock award in taxable income in the year of grant at the grant date fair market value.
Restricted
Stock Unit
. A participant who has been granted a restricted stock unit will not realize taxable income as long as the award remains in the form of a restricted stock unit. When the restricted stock unit is extinguished and a stock award is
issued, the tax consequences for restricted stock awards (see paragraph above) will be recognized. A restricted stock unit does not have voting rights or dividend rights. Since no stock is transferred to the participant on the grant date of the
restricted stock unit, an election to have the restricted stock unit taxed at the grant date cannot be made since Section 83(b) of the Internal Revenue Code requires a transfer of stock.
Withholding of Taxes
. Community First Bancshares, Inc. may withhold amounts from participants to satisfy withholding tax
requirements. Except as otherwise provided by the Committee, participants may have shares withheld from awards to satisfy the tax withholding requirements, provided such withholding does not trigger adverse accounting consequences.
Change in Control
. Any acceleration of the vesting or payment of awards under the 2018 Equity Incentive Plan in the event of a
change in control or termination of employment or service following a change in control may cause part or all of the consideration involved to be treated as an excess parachute payment under Section 280G of the Internal Revenue
Code, which may subject the participant to a 20% excise tax and preclude a deduction by Community First Bancshares, Inc. with respect to the awards.
Deduction Limits
. Section 162(m) of the Internal Revenue Code generally limits our ability to deduct for tax purposes
compensation in excess of $1.0 million per year for each of our chief executive officer and other executive officers named in the summary compensation table (each, a covered employee) of our annual proxy statement, as well as any
employee who has been designated a covered employee for any fiscal year beginning after December 31, 2016. Compensation resulting from awards under the 2018 Equity Incentive Plan will be counted toward the $1.0 million limit.
Tax Advice
. The preceding discussion is based on federal tax laws and regulations currently in effect, which are subject to
change, and the discussion does not purport to be a complete description of the federal income tax aspects of the 2018 Equity Incentive Plan. A participant may also be subject to state and local taxes in connection with the grant of awards under the
2018 Equity Incentive Plan. Community First Bancshares, Inc. suggests participants consult with their individual tax advisors to determine the applicability of the tax rules to the awards granted to them.
Accounting Treatment
Under Financial
Accounting Standards Board Accounting Standards Codification Topic 718, Community First Bancshares, Inc. is required to recognize compensation expense on its income statement over the requisite service period or performance period based on the grant
date fair value of stock options and other equity-based compensation (such as restricted stock).
Awards to be Granted
The Board of Directors has adopted the 2018 Equity Incentive Plan. If the 2018 Equity Incentive Plan is approved by stockholders, the Committee
intends to meet promptly after stockholder approval to determine the specific terms of the awards, including the allocation of awards to executive officers, employees, and
non-employee
directors. At the
present time, no specific determination has been made as to the grant or allocation of awards.
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Clawback Policy
The 2018 Equity Incentive Plan provides that if Community First Bancshares, Inc. is required to prepare an accounting restatement due to its
material noncompliance, as a result of misconduct, with any financial reporting requirement under the federal securities laws, any participant who is subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 or who is
subject to clawback under Section 954 of the Dodd-Frank Act must reimburse Community First Bancshares, Inc. with the required amount of any payment in settlement of an award earned or accrued during the
12-month
period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurred) of the financial document embodying such financial reporting requirement. In
addition, awards granted under the 2018 Equity Incentive Plan are subject to any clawback policy adopted by the Board of Directors.
Required Vote and
Recommendation of the Board of Directors
In order to approve the 2018 Equity Incentive Plan, the proposal must receive the affirmative
vote of (x) a majority of the votes represented at the special meeting and entitled to vote on the matter, as well as (y) a majority of the votes cast by stockholders other than Community First Bancshares, MHC. For purposes of the vote
required in clause (x), above, abstentions will have the same effect as votes against the proposal, and for purposes of the vote required in clause (y), above, abstentions will not affect the outcome of the vote. Broker
non-votes
will not affect the outcome of the vote under either clause (x) or clause (y).
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2018 EQUITY INCENTIVE PLAN.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the special meeting other than the matters described above in the Proxy
Statement. However, if any matters should properly come before the special meeting, it is intended that the Board of Directors, as holders of the proxies, will act as determined by a majority vote.
13
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
Community First Bancshares, Inc.s Proxy Statement, including the Notice of the Special Meeting of Stockholders, are each
available on the Internet at
www.cstproxy.com/communityfirstbancshares/sm2018
.
|
By Order of the Board of Directors
|
|
Gregory J. Proffitt
|
Corporate Secretary
|
Covington, Georgia
July 18, 2018
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APPENDIX A
COMMUNITY FIRST BANCSHARES, INC.
2018 EQUITY INCENTIVE PLAN
ARTICLE 1 GENERAL
Section
1.1
Purpose, Effective Date and Term
. The purpose of the Community First Bancshares, Inc. 2018 Equity
Incentive Plan (the
Plan
) is to promote the long-term financial success of Community First Bancshares, Inc. (the
Company
), and its Subsidiaries, including Newton Federal Bank (the
Bank
), by
providing a means to attract, retain and reward individuals who contribute to that success and to further align their interests with those of the Companys stockholders through the ownership of additional common stock of the Company. The
Effective Date
of the Plan shall be the date on which the Plan satisfies the applicable stockholder approval requirements. The Plan shall remain in effect as long as any Awards are outstanding;
provided, however,
that no
Awards may be granted under the Plan after the day immediately prior to the
ten-year
anniversary of the Effective Date.
Section
1.2
Administration
. The Plan shall be administered by the Compensation Committee of the Board of
Directors (the
Committee
) or, subject to the limitation set forth in Section 5.1, by the Board of Directors.
Section
1.3
Participation
. Each Employee or Director of the Company or any Subsidiary who is granted an Award
in accordance with the terms of the Plan shall be a Participant in the Plan. The grant of Awards shall be limited to Employees and Directors of the Company or any Subsidiary.
Section
1.4
Definitions
. Capitalized terms used in this Plan are defined in Article 8 and elsewhere in this
Plan.
ARTICLE 2 - AWARDS
Section
2.1
General
. Any Award under the Plan may be granted singularly or in combination with another Award
or other Awards. Each Award under the Plan shall be subject to the terms and conditions of the Plan and any additional terms, conditions, limitations and restrictions as the Committee shall provide with respect to the Award and as evidenced in the
Award Agreement. Subject to the provisions of Section 2.8, an Award may be granted as an alternative to or replacement of an existing Award under the Plan or any other plan of the Company or any Subsidiary or as the form of payment for grants
or rights earned or due under any other compensation plan or arrangement of the Company or any Subsidiary, including without limitation the plan of any entity acquired by the Company or any Subsidiary. The types of Awards that may be granted under
the Plan include:
(a)
Stock Options
. A Stock Option means a grant under Section 2.2 that represents the right to
purchase shares of Stock at an Exercise Price established by the Committee. Any Stock Option may be either an Incentive Stock Option that is intended to satisfy the requirements applicable to an Incentive Stock Option described in Code
Section 422(b), or a
Non-Qualified
Option that is not intended to be an ISO; provided, however, that no ISOs may be granted: (i) after the day immediately prior to the
ten-year
anniversary of the Effective Date or the date the Plan is approved by the Board of Directors, whichever is earlier; or (ii) to a
non-Employee.
Unless
otherwise specifically provided by its terms, any Stock Option granted to an Employee under this Plan shall be an ISO to the maximum extent permitted. Any ISO granted under this Plan that does not qualify as an ISO for any reason (whether at the
time of grant or as the result of a subsequent event) shall be deemed to be a
Non-Qualified
Option. In addition, any ISO granted under this Plan may be unilaterally modified by the Committee to disqualify it
from ISO treatment such that it shall become a
Non-Qualified
Option; provided, however, that any such modification shall be ineffective if it causes the Award to be subject to Code Section 409A (unless,
as modified, the Award complies with Code Section 409A).
(b)
Restricted Stock Awards.
A Restricted Stock Award means a grant of a share of Stock
under Section 2.3 for no consideration or such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan, subject to a vesting schedule or the satisfaction of market
conditions or performance conditions.
(c)
Restricted Stock Units
. A Restricted Stock Unit means a grant under Section 2.4
denominated in shares of Stock that is similar to a Restricted Stock Award except no shares of Stock are actually awarded on the date of grant of a Restricted Stock Unit. A Restricted Stock Unit is subject to a vesting schedule or the satisfaction
of market conditions or performance conditions and shall be settled in shares of Stock, provided, however, that in the sole discretion of the Committee, determined at the time of settlement, a Restricted Stock Unit may be settled in cash based on
the Fair Market Value of a share of the Stock multiplied by the number of Restricted Stock Units being settled, or a combination of shares of Stock and cash.
(d)
Performance Awards
. A Performance Award means Restricted Stock or Restricted Stock Units that will vest upon the achievement of one
or more specified performance measures set forth in Section 2.5.
Section
2.2
Stock Options
.
(a)
Grant of Stock Options
. Each Stock Option shall be evidenced by an Award Agreement that shall: (i) specify the number of
Stock Options covered by the Award; (ii) specify the date of grant of the Stock Option and the Exercise Price; (iii) specify the vesting period or conditions to vesting; and (iv) contain any other terms and conditions not inconsistent
with the Plan, including the effect of termination of a Participants employment or Service, as the Committee may, in its discretion, prescribe.
(b)
Terms and Conditions
. A Stock Option shall be exercisable in accordance with its terms and conditions and during such periods as may
be established by the Committee. In no event, however, shall a Stock Option expire later than ten (10) years after the date of its grant (or five (5) years with respect to ISOs granted to a 10% Stockholder). The Exercise Price of each
Stock Option shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant (or, if greater, the par value of a share of Stock);
provided, however,
that the Exercise Price of an ISO shall not be less than 110%
of Fair Market Value of a share of Stock on the date of grant if granted to a 10% Stockholder;
provided further,
that the Exercise Price may be higher or lower in the case of Stock Options granted or exchanged in replacement of existing
Awards held by an Employee or Director of, or service provider to, an acquired entity. The payment of the Exercise Price shall be by cash or, subject to limitations imposed by applicable law, by any other means as the Committee may from time to time
permit, including: (i) by tendering, either actually or constructively by attestation, shares of Stock valued at Fair Market Value as of the day of exercise; (ii) by irrevocably authorizing a third party, acceptable to the Committee, to
sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and to remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from the
exercise; (iii) by a net settlement of the Stock Option, using a portion of the shares obtained on exercise in payment of the Exercise Price (and if applicable, any tax withholding); (iv) by personal, certified or cashiers check;
(v) by other property deemed acceptable by the Committee; or (vi) by any combination thereof. The total number of shares that may be acquired upon the exercise of a Stock Option shall be rounded down to the nearest whole share, with
cash-in-lieu
paid by the Company, at its discretion, for the value of any fractional share.
(c)
Prohibition of Cash
Buy-Outs
of Underwater Stock Options
. Under no circumstances will any
underwater Stock Options which were granted under the Plan be bought back by the Company without stockholder approval.
Section
2.3
Restricted Stock
.
(a)
Grant of Restricted Stock
. Each Restricted Stock Award shall be evidenced by an Award Agreement that shall: (i) specify the
number of shares of Stock covered by the Restricted Stock Award; (ii) specify the date of grant of the Restricted Stock Award; (iii) specify the vesting period; and (iv) contain any other terms and conditions not inconsistent with the
Plan, including the effect of termination of a Participants employment or Service. All Restricted Stock Awards shall be in the form of issued and outstanding shares of Stock that, at the discretion of the Committee, shall be either:
(x) registered in the name of the Participant and held by or on behalf of the Company, together with a stock power executed by the Participant in favor of the Company, pending the vesting or forfeiture of the Restricted Stock; or
(y) registered in the name of, and delivered to, the Participant. In any event, the certificates evidencing the Restricted Stock Award shall at all times prior to the applicable vesting date bear the following legend:
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The Stock evidenced hereby is subject to the terms of an Award Agreement with Community First
Bancshares, Inc. dated [Date], made pursuant to the terms of the Community First Bancshares, Inc. 2018 Equity Incentive Plan, copies of which are on file at the executive offices of Community First Bancshares, Inc., and may not be sold, encumbered,
hypothecated or otherwise transferred except in accordance with the terms of the Plan and Award Agreement,
or such other restrictive legend as the
Committee, in its discretion, may specify. Notwithstanding the foregoing, the Company may in its sole discretion issue Restricted Stock in any other approved format (
e.g., electronically
) in order to facilitate the paperless transfer of the
Awards. In the event Restricted Stock is not issued in certificate form, the Company and the transfer agent shall maintain appropriate bookkeeping entries that evidence Participants ownership of the Awards. Restricted Stock that is not issued
in certificate form shall be subject to the same terms and conditions of the Plan as certificated shares, including the restrictions on transferability and the provision of a stock power executed by the Participant in favor of the Company, until the
satisfaction of the conditions to which the Restricted Stock Award is subject.
(b)
Terms and Conditions.
Each Restricted Stock
Award shall be subject to the following terms and conditions:
(i)
Dividends.
Unless the Committee determines
otherwise, cash dividends or distributions, if any, declared with respect to shares of Stock subject to a Restricted Stock Award shall be retained by the Company and only distributed to a Participant within thirty (30) days after the vesting
date of the underlying Restricted Stock Award. If the underlying Stock does not vest, the dividends held by the Company with respect to such Stock shall be forfeited by the Participant. No dividends shall be paid with respect to a Restricted Stock
Awards subject to performance-based vesting conditions unless and until the Participant vests in the Restricted Stock Award. Upon the vesting of a performance-based Restricted Stock Award under Section 2.5, any dividends declared but not paid
to the Participant during the vesting period shall be paid within thirty (30) days following the vesting date. Any stock dividends declared on shares of Stock subject to a Restricted Stock Award, whether or not performance-based, shall be
subject to the same restrictions and shall vest at the same time as the shares of Restricted Stock from which the dividends were derived.
(ii)
Voting Rights.
Unless the Committee determines otherwise with respect to any Restricted Stock Award and specifies
its determination in the relevant Award Agreement, a Participant shall have voting rights related to the unvested,
non-forfeited
Restricted Stock and the voting rights shall be exercised by the Participant in
his discretion.
(iii)
Tender Offers and Merger Elections.
Each Participant to whom a Restricted Stock Award is
granted shall have the right to respond, or to direct the response, with respect to the related shares of Restricted Stock, to any tender offer, exchange offer, cash/stock merger consideration election or other offer made to, or elections made by,
the holders of shares of Stock. The direction for any the shares of Restricted Stock shall be given by proxy or ballot (if the Participant is the beneficial owner of the shares of Restricted Stock for voting purposes) or by completing and filing,
with the inspector of elections, the trustee or such other person who shall be independent of the Company as the Committee shall designate in the direction (if the Participant is not such a beneficial owner), a written direction in the form and
manner prescribed by the Committee. If no direction is given, then the shares of Restricted Stock shall not be tendered.
(iv) The Committee may, in connection with the grant of Restricted Stock Awards, condition the vesting thereof upon the
attainment of one or more performance measures set forth in Section 2.5(a). Regardless of whether Restricted Stock Awards are subject to the attainment of one or more performance measures, the Committee may also condition the vesting thereof
upon the continued Service of the Participant. The conditions for grant or vesting and the other provisions of Restricted Stock Awards (including without limitation any applicable performance measures) need not be the same with respect to each
recipient.
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Section
2.4
Restricted Stock Units
.
(a)
Grant of Restricted Stock Unit Awards
. Each Restricted Stock Unit shall be evidenced by an Award Agreement which shall:
(i) specify the number of Restricted Stock Units covered by the Award; (ii) specify the date of grant of the Restricted Stock Units; (iii) specify the Restriction Period and the vesting period or market conditions or performance
conditions that must be satisfied in order to vest in the Award; (iv) the effect of a Participants termination of employment or Service; and (v) contain any other terms and conditions not inconsistent with the Plan, including the
effect of termination of a Participants employment or Services.
(b)
Terms and Conditions
. Each Restricted Stock Unit Award
shall be subject to the following terms and conditions:
(i) The Committee shall impose any other conditions and/or
restrictions on any Restricted Stock Unit Award as it may deem advisable, including, without limitation, a requirement that Participants pay a stipulated purchase price for each Restricted Stock Unit, time-based restrictions and vesting following
the attainment of performance measures, restrictions under applicable laws or under the requirements of any Exchange or market upon which shares of Stock may be listed, or holding requirements or sale restrictions placed by the Company upon vesting
of Restricted Stock Units.
(ii) The Committee may, in connection with the grant of Restricted Stock Units, condition the
vesting thereof upon the attainment of one or more performance measures set forth in Section 2.5(a). Regardless of whether Restricted Stock Units are subject to the attainment of one or more performance measures, the Committee may also
condition the vesting thereof upon the continued Service of the Participant. The conditions for grant or vesting and the other provisions of Restricted Stock Units (including without limitation any applicable performance measures) need not be the
same with respect to each recipient. An Award of Restricted Stock Units shall be settled as and when the Restricted Stock Units vest or, in the case of Restricted Stock Units subject to performance measures, after the Committee has determined that
the performance goals have been satisfied.
(iii) Subject to the provisions of the Plan and the applicable Award Agreement,
during the period, if any, set by the Committee, commencing with the date of such Restricted Stock Unit for which the Participants continued Service is required (the
Restriction Period
), and until the later of (A) the
expiration of the Restriction Period and (B) the date the applicable performance measures (if any) are satisfied, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Restricted Stock Units.
(iv) A Participant shall have no voting rights with respect to any Restricted Stock Units. No dividends shall be paid on
Restricted Stock Units. In the sole discretion of the Committee, exercised at the time of grant, Dividend Equivalent Rights may be assigned to Restricted Stock Units. In such case, the Dividend Equivalent Right shall be paid at the same time as the
shares or cash subject to the Restricted Stock Unit are distributed to the Participant.
Section
2.5
Performance
Awards
. The vesting of a Performance Award consisting of a Restricted Stock Award or a Restricted Stock Unit Award may be conditioned on the achievement of one or more objective performance measures set forth in
sub-section
(a) below, as may be determined by the Committee. At the discretion of the Committee, the vesting of any Stock Option also may be subject to the achievement of one or more objective performance
measures.
(a)
Performance Measures
. Performance measures may be based on any one or more of the following:
(i) book value or tangible book value per share;
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(ii) basic earnings per share;
(iii) basic cash earnings per share;
(iv) diluted earnings per share;
(v) diluted cash earnings per share;
(vi) return on equity;
(vii) net income or net income before taxes;
(viii) cash earnings;
(ix) net interest income;
(x)
non-interest
income;
(xi)
non-interest
expense to average assets ratio;
(xii) cash general and administrative expense to average assets ratio;
(xiii) efficiency ratio;
(xiv) cash efficiency ratio;
(xv) return on average assets;
(xvi) cash return on average assets;
(xvii) return on average stockholders equity;
(xviii) cash return on average stockholders equity;
(xix) return on average tangible stockholders equity;
(xx) cash return on average tangible stockholders equity;
(xxi) core earnings;
(xxii) operating income;
(xxiii) operating efficiency ratio;
(xxiv) net interest rate margin or net interest rate spread;
(xxv) growth in assets, loans, or deposits;
(xxvi) loan production volume;
(xxvii)
non-performing
loans;
(xxviii) total stockholder return;
(xxix) cash flow;
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(xxx) strategic business objectives, consisting of one or more objectives based
upon meeting specified cost targets, business expansion goals, and goals relating to acquisitions or divestitures, or goals relating to capital raising and capital management;
(xxxi) any other measure(s) determined by the Committee; or
(xxxii) any combination of the foregoing.
Performance measures may be based on the performance of the Company as a whole or on any one or more Subsidiaries or business units of the
Company or a Subsidiary and may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures. The terms of an Award may provide that partial achievement of performance measures
may result in partial payment or vesting of the Award or that the achievement of the performance measures may be measured over more than one period or fiscal year. In establishing any performance measures, the Committee may provide for the exclusion
of the effects of the following items, to the extent the exclusion is set forth in the Participants Award Agreement and identified in the audited financial statements of the Company, including footnotes, or in the Managements Discussion
and Analysis section of the Companys annual report or in the Compensation Discussion and Analysis section, if any, of the Companys annual proxy statement: (i) extraordinary, unusual, and/or nonrecurring items of gain or loss;
(ii) gains or losses on the disposition of a business; (iii) changes in tax or accounting principles, regulations or laws; or (iv) expenses incurred in connection with a merger, branch acquisition or similar transaction. To the extent
not specifically excluded, such effects shall be included in any applicable performance measure.
(b)
Adjustments
. If the Committee
determines that a change in the business, operations, corporate structure or capital structure of the Company or Subsidiary or the manner in which the Company or its Subsidiaries conducts its business or other events or circumstances render current
performance measures to be unsuitable, the Committee may modify the performance measures, in whole or in part, as the Committee deems appropriate. Notwithstanding anything to the contrary herein, performance measures relating to any Award will be
modified, to the extent applicable, to reflect a change in the outstanding shares of Stock of the Company by reason of any stock dividend or stock split, or a corporate transaction, such as a merger of the Company into another corporation, any
separation of a corporation or any partial or complete liquidation by the Company or a Subsidiary. If a Participant is promoted, demoted or transferred to a different business unit during a performance period, the Committee may determine that the
selected performance measures or applicable performance period are no longer appropriate, in which case, the Committee, in its sole discretion, may: (i) adjust, change or eliminate the performance measures or change the applicable performance
period; or (ii) cause to be made a cash payment to the Participant in an amount determined by the Committee.
Section
2.6
Vesting of Awards
.
Unless the Committee specifies a different vesting schedule at the time
of grant, Awards under the Plan (other than Performance Awards shall be granted with a vesting rate not exceeding twenty percent (20%) per year, with the initial installment vesting no earlier than the
one-year
anniversary of the date of grant, unless accelerated due to death, Disability or Involuntary Termination following a Change in Control. Notwithstanding the foregoing sentence, Awards under the Plan
shall not vest more rapidly than in equal installments over a period of one (1) year, unless accelerated due to death, Disability or Involuntary Termination following a Change in Control. If the right to become vested in an Award (including the
right to exercise a Stock Option) is conditioned on the completion of a specified period of Service, without achievement of performance measures or other performance objectives being required as a condition of vesting, and without it being granted
in lieu of, or in exchange for, other compensation, then the required period of Service for full vesting shall be evidenced in the Award Agreement (subject to acceleration of vesting, to the extent permitted by the Plan, the Committee (subject to
the limitations set forth in this Section) or set forth in the Award Agreement, in the event of the Participants death, Disability or Involuntary Termination following a Change in Control).
Section
2.7
Deferred Compensation
. If any Award would be considered deferred compensation as
defined under Code Section 409A (
Deferred Compensation
), the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the Award Agreement, without the consent of the
Participant, to maintain exemption from, or to comply with, Code Section 409A. Any amendment by the Committee to the Plan or an Award Agreement pursuant to this Section 2.7 shall maintain, to the extent practicable, the original intent of
the applicable provision without violating Code Section 409A. A Participants
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acceptance of any Award under the Plan constitutes acknowledgement and consent to the rights of the Committee, without further consideration or action. Any discretionary authority retained by the
Committee pursuant to the terms of this Plan or pursuant to an Award Agreement shall not be applicable to an Award which is determined to constitute Deferred Compensation, if the discretionary authority would contravene Code Section 409A.
Section
2.8
Prohibition Against Option Repricing
. Except for adjustments pursuant to Section 3.4, and
reductions of the Exercise Price approved by the Companys stockholders, neither the Committee nor the Board of Directors shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing
the Exercise Price of a Stock Option previously granted under the Plan, whether through amendment, cancellation (including cancellation in exchange for a cash payment in excess of the Stock Options
in-the-money
value or in exchange for Options or other Awards) or replacement grants, or other means.
Section
2.9.
Effect of Termination of Service on Awards
.
The Committee shall establish the effect of a
Termination of Service on the continuation of rights and benefits available under an Award and, in so doing, may make distinctions based upon, among other things, the cause of Termination of Service and type of Award. Unless otherwise specified by
the Committee and set forth in an Award Agreement between the Company and the Participant or as set forth in an employment or severance agreement entered into by and between the Company and/or the Bank or other Subsidiary and an Employee, the
following provisions shall apply to each Award granted under this Plan:
(a) Upon a Participants Termination of Service for any
reason other than due to Disability, death, Retirement or termination for Cause, Stock Options shall be exercisable only as to those shares that were immediately exercisable by the Participant at the date of termination, and the Stock Options may be
exercised only for a period of three (3) months following termination and any Restricted Stock Award and Restricted Stock Unit that has not vested as of the date of Termination of Service shall expire and be forfeited.
(b) In the event of a Termination of Service for Cause, all Stock Options granted to a Participant that have not been exercised and all
Restricted Stock Awards and Restricted Stock Units granted to a Participant that have not vested shall expire and be forfeited.
(c) Upon
Termination of Service for reason of Disability or death, all Stock Options shall be exercisable as to all shares subject to an outstanding Award, whether or not then exercisable, and all Restricted Stock Awards and Restricted Stock Units shall vest
as to all shares subject to an outstanding Award, whether or not otherwise immediately vested, at the date of Termination of Service. Unless the Committee specifies otherwise, Stock Options may be exercised for a period of one year following
Termination of Service due to death or Disability or the remaining unexpired term of the Stock Option, if less;
provided, however
, that no Stock Option shall be eligible for treatment as an ISO in the event the Stock Option is exercised more
than one year following Termination of Service due to Disability and
provided, further
, in order to obtain ISO treatment for Stock Options exercised by heirs or devisees of an optionee, the optionees death must have occurred while
employed or within three months of Termination of Service. Unless the Committee specifies otherwise, in the event of Termination of Service due to Retirement, a Participants vested Stock Options shall be exercisable for one year following
Termination of Service. No Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three months following Termination of Service due to Retirement and any Stock Option, Restricted Stock Award or
Restricted Stock Unit that has not vested as of the date of Termination of Service shall expire and be forfeited.
(d) Notwithstanding
anything herein to the contrary, no Stock Option shall be exercisable beyond the last day of the original term of the Stock Option.
(e)
Notwithstanding the provisions of this Section 2.9, the effect of a Change in Control on the vesting/exercisability of Stock Options, Restricted Stock Awards and Restricted Stock Units is as set forth in Article 4.
Section
2.10
Holding Period for Vested Awards
. As a condition of receipt of an Award, the Award Agreement may
require a Participant to agree to hold a vested Award or Stock received upon exercise of a Stock Option for some period of time. The foregoing limitation shall not apply to the extent that an Award vests due to death, Disability or Involuntary
Termination at or following a Change in Control, or to the extent that (i) a
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Participant directs the Company to withhold or the Company elects to withhold with respect to the vesting or
exercise, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of shares of Stock to cover the minimum amount required to be withheld or (ii) a Participant exercises a Stock Option by a net settlement, and in the case
of (i) and (ii) herein, only to the extent of the shares withheld for tax purposes or for purposes of the net settlement.
ARTICLE 3 - SHARES SUBJECT TO PLAN
Section
3.1
Available Shares
. The shares of Stock with respect to which Awards may be made under the Plan
shall be shares currently authorized but unissued, currently held or, to the extent permitted by applicable law, subsequently acquired by the Company, including shares purchased in the open market or in private transactions.
Section
3.2
Share Limitations
.
(a)
Share Reserve
. Subject to the following provisions of this Section 3.2, the maximum number of shares of Stock that may be
delivered to Participants and their beneficiaries under the Plan shall be equal to Five Hundred Seventeen Thousand One Hundred Twenty-Three (517,123) shares of Stock. The maximum number of shares of Stock that may be delivered pursuant to the
exercise of Stock Options (all of which may be granted as ISOs) is Three Hundred Sixty-Nine Thousand Three Seventy-Four (369,374) shares of Stock, which represents 4.9% of the number of shares issued in connection with the reorganization of the Bank
from the mutual to the stock form and the Companys related minority stock issuance on April 27, 2017 (the
Reorganization
). The maximum number of shares of Stock that may be issued as Restricted Stock Awards and
Restricted Stock Units is One Hundred Forty-Seven Thousand Seven Hundred Forty-Nine (147,749) shares of Stock, which represents 1.96% of the number of shares issued in the Reorganization. The aggregate number of shares available for grant under this
Plan and the number of shares of Stock subject to outstanding awards shall be subject to adjustment as provided in Section 3.4.
(b)
Computation of Shares Available.
For purposes of this Section 3.2, the number of shares of Stock available for the grant of additional Stock Options, Restricted Stock Awards or Restricted Stock Units shall be reduced by the number of
shares of Stock previously granted, subject to the following: to the extent any shares of Stock covered by an Award (including Restricted Stock Awards and Restricted Stock Units) under the Plan are not delivered to a Participant or beneficiary for
any reason, including because the Award is forfeited or canceled or because a Stock Option is not exercised, then such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Stock available for
delivery under the Plan. To the extent: (i) a Stock Option is exercised by using an actual or constructive exchange of shares of Stock to pay the Exercise Price; or (ii) shares of Stock are withheld to satisfy withholding taxes upon
exercise or vesting of an Award granted hereunder; or (iii) shares are withheld to satisfy the exercise price of Stock Options in a net settlement of Stock Options, then the number of shares of Stock available shall be reduced by the gross
number of Stock Options exercised rather than by the net number of shares of Stock issued.
Section
3.3
Limitations on Grants to Individuals
.
(a)
Employee Awards
.
(i)
Stock Options - Employees.
The maximum number of shares of Stock, in the aggregate, that may be covered by a Stock Option granted to
any one Employee under the Plan shall be
Ninety-Two
Thousand, Three Hundred Forty-Three (92,343) shares, all of which may be granted during any calendar year. This maximum amount represents approximately
twenty-five percent (25%) of the maximum number of shares of Stock that may be delivered pursuant Stock Options under Section 3.2.
(ii)
Restricted Stock Awards and Restricted Stock Units - Employees
.
The maximum number of shares of Stock, in the aggregate,
that may be subject to Restricted Stock Awards and Restricted Stock Units granted to any one Employee Participant under the Plan shall be
Thirty-Six
Thousand, Nine Hundred Thirty-Seven (36,937) shares, all of
which may be granted during any calendar year. This maximum amount represents approximately twenty-five percent (25%) of the maximum number of shares of Stock that may be issued as Restricted Stock Awards and Restricted Stock
Units.
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(b)
Director Awards.
(i) Stock Options Individual
non-Employee
Directors may be granted Stock Options of up to
Eighteen Thousand, Four Hundred Sixty-Eight (18,468) shares, in the aggregate, all of which may be granted during any calendar year and, in addition, all
non-employee
Directors, in the aggregate, may be
granted up to One Hundred Ten Thousand, Eight Hundred Twelve (110,812) shares all of which may be granted during any calendar year. These maximum amounts represent approximately five percent (5%) and thirty percent (30%), respectively, of the
maximum number of shares of Stock that may be delivered pursuant to Stock Options under Section 3.2.
(ii) Restricted Stock/Restricted
Stock Units Individual
non-Employee
Directors may be granted Restricted Stock and/or Restricted Stock Units of up to Seven Thousand, Three Hundred Eighty-Seven (7,387) shares, in the aggregate, all of
which may be granted during any calendar year and, in addition, all
non-employee
Directors, in the aggregate, may be granted up to Forty-Four Thousand, Three Hundred Twenty-Four (44,324) shares all of which
may be granted during any calendar year. These maximum amounts represent approximately five percent (5%) and thirty percent (30%), respectively, of the maximum number of shares of Stock that may be delivered pursuant to Restricted Stock and
Restricted Stock Units under Section 3.2.
(c) The aggregate number of shares available for grant under this Plan and the number of
shares subject to outstanding Awards, including the limit on the number of Awards available for grant under this Plan described in this Section 3.3, shall be subject to adjustment as provided in Section 3.4.
Section
3.4
Corporate Transactions
.
(a)
General.
In the event any recapitalization, reclassification, forward or reverse stock split, reorganization, merger, consolidation,
spin-off,
combination, or exchange of shares of Stock or other securities, stock dividend or other special and nonrecurring dividend or distribution (whether in the form of cash, securities or other property),
liquidation, dissolution, or increase or decrease in the number of shares of Stock without consideration, or similar corporate transaction or event, affects the shares of Stock such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Participants under the Plan and/or under any Award granted under the Plan, then the Committee shall, in an equitable manner, adjust any or all of: (i) the number and kind of securities deemed to be available
thereafter for grants of Stock Options, Restricted Stock Awards and Restricted Stock Units in the aggregate to all Participants and individually to any one Participant; (ii) the number and kind of securities that may be delivered or deliverable
in respect of outstanding Stock Options, Restricted Stock Awards and Restricted Stock Units; and (iii) the Exercise Price. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included
in, Stock Options, Restricted Stock Awards and Restricted Stock Units (including, without limitation, cancellation of Stock Options, Restricted Stock Awards and Restricted Stock Units in exchange for the
in-the-money
value, if any, of the vested portion thereof, or substitution or exchange of Stock Options, Restricted Stock Awards and Restricted Stock Units using stock of a successor or other entity) in
recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any parent or Subsidiary or the financial statements of the Company or any parent or Subsidiary, or in
response to changes in applicable laws, regulations, or accounting principles.
(b)
Merger in which Company is Not Surviving Entity.
In the event of any merger, consolidation, or other business reorganization (including, but not limited to, a Change in Control) in which the Company is not the surviving entity, unless otherwise determined by the Committee at any time at or
after grant and prior to the consummation of such merger, consolidation or other business reorganization, any Stock Options granted under the Plan which remain outstanding shall be converted into Stock Options to purchase voting common equity
securities of the business entity which survives such merger, consolidation or other business reorganization having substantially the same terms and conditions as the outstanding Stock Options under this Plan and reflecting the same economic benefit
(as measured by the difference between the aggregate Exercise Price and the value exchanged for outstanding shares of Stock in such merger, consolidation or other business reorganization), all as determined by the Committee prior to the consummation
of such merger; provided, however, that the Committee may, at any time prior to the consummation of such merger, consolidation or other business reorganization, direct that all, but not less
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than all, outstanding Stock Options be canceled as of the effective date of such merger, consolidation or other
business reorganization in exchange for a cash payment per share of Stock equal to the excess (if any) of the value exchanged for an outstanding share of Stock in such merger, consolidation or other business reorganization over the Exercise Price of
the Stock Option being canceled; provided, further, that in the event the Exercise Price of outstanding Stock Options exceed the value to be exchanged for an outstanding share of Stock (an
Underwater Stock Option
) in such merger,
consolidation or other business reorganization, the Committee may, in its discretion, cancel and terminate such Underwater Stock Options without the consent of the holder of the Stock Option and without any payment to such holder.
Section
3.5
Delivery of Shares
. Delivery of shares of Stock or other amounts under the Plan shall be subject
to the following:
(a)
Compliance with Applicable Laws.
Notwithstanding any other provision of the Plan, the Company shall have no
obligation to deliver any shares of Stock or make any other distribution of benefits under the Plan unless the delivery or distribution complies with all applicable laws (including, the requirements of the Securities Act), and the applicable
requirements of any Exchange or similar entity.
(b)
Certificates.
To the extent that the Plan provides for the issuance of shares
of Stock, the issuance may be effected on a
non-certificated
basis, to the extent not prohibited by applicable law or the applicable rules of any Exchange.
ARTICLE 4 - CHANGE IN CONTROL
Section
4.1
Consequence of a Change in Control
. Subject to the provisions of Section 2.6 (relating to
vesting and acceleration) and Section 3.4
(relating to the adjustment of shares), and except as otherwise provided in the Plan:
(a)
At the time of a Participants Involuntary Termination at or following a Change in Control, all Stock Options then held by the
Participant shall become fully earned and exercisable (subject to the expiration provisions otherwise applicable to the Stock Option). All Stock Options may be exercised for a period of one year following the Participants Involuntary
Termination, provided, however, that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three (3) months following such Involuntary Termination. To the extent not specified herein or
in the Award Agreement, the Committee shall have the discretion to determine the treatment of outstanding unvested Stock Options, provided, however, that any such Awards will be deemed earned and shall vest if not assumed by a successor entity.
(b)
At the time of a Participants Involuntary Termination at or following a Change in Control, all Awards of Restricted Stock and
Restricted Stock Units shall become fully earned and vested immediately. Notwithstanding the above, any Awards, the vesting of which are based on satisfaction of performance-based conditions will be vested as specified in subsection (c) of this
Section 4.1.
(c) In the event of a Change in Control, Performance Awards under the Plan shall vest
pro-rata
based on the portion of the performance period elapsed at the date of the Change in Control and at the actual level of the performance measures that have been achieved, however, if the performance
measures are not reasonably determinable as of the date of the Change in Control, the performance measures will be assumed to have been achieved at target.
(d) With respect to Awards other than Awards the vesting of which is subject to performance-based conditions, in the event of a Change in
Control, if the acquiring corporation fails to assume the Awards granted hereunder or to convert the Awards to awards for the acquirors stock options, restricted stock or restricted stock units, such awards shall vest immediately upon the
effective time of such Change in Control.
Section
4.2
Definition of Change in Control
. For purposes of
this Agreement, the term
Change in Control
shall mean the consummation by the Company or the Bank, in a single transaction or series of related transactions, of any of the following:
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(a)
Merger
: The Company or the Bank merges into or consolidates with another entity, or
merges another bank or corporation into the Company or the Bank, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders
of the Company or the Bank immediately before the merger or consolidation;
(b)
Acquisition of Significant Share Ownership
: There is
filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than a Schedule 13G) required under Sections 13(d) or 14(d) of the Exchange Act, if the schedule discloses that the filing person or persons acting in
concert has or have become the beneficial owner of 25% or more of a class of the Companys or Banks voting securities; provided, however, this clause (b) shall not apply to beneficial ownership of the Companys or the
Banks voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding Voting Securities;
(c)
Change in Board Composition
: During any period of two consecutive years, individuals who constitute the Companys or the
Banks board of directors at the beginning of the
two-year
period cease for any reason to constitute at least a majority of the Companys or the Banks board of directors; provided, however,
that for purposes of this clause (c), each director who is first elected by the board of directors (or first nominated by the board of directors for election by the stockholders) by a vote of at least
two-thirds
(2/3) of the directors who were directors at the beginning of the
two-year
period shall be deemed to have also been a director at the beginning of such period
or who is appointed as a director as a result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation shall be deemed to have also been a
director at the beginning of such period; or
(d)
Sale of Assets
: The Company or the Bank sells to a third party all or
substantially all of its assets.
Notwithstanding the foregoing, in the event that an Award constitutes Deferred
Compensation, and the settlement of, or distribution of benefits under, such Award is to be triggered solely by a Change in Control, then with respect to the Award, a Change in Control shall be defined as required under Code Section 409A, as in
effect at the time of such transaction.
In addition, in no event shall a reorganization of Community First Bancshares, MHC (i.e., the
mutual holding company), the Company and the Bank solely within its corporate structure or a second-step conversion constitute a Change in Control for purposes of the Plan.
ARTICLE 5 - COMMITTEE
Section
5.1
Administration
. The Plan shall be administered by the members of the Compensation Committee of
the Company who are Disinterested Board Members. If the Committee consists of fewer than three Disinterested Board Members, then the Board of Directors shall appoint to the Committee additional Disinterested Board Members as shall be necessary to
provide for a Committee consisting of at least three Disinterested Board Members. Any members of the Committee who do not qualify as Disinterested Board Members shall abstain from participating in any discussion or decision to make or administer
Awards that are made to Participants who at the time of consideration for such Award are persons subject to the short-swing profit rules of Section 16 of the Exchange Act. The Board of Directors (or if necessary to maintain compliance with the
applicable listing standards, those members of the Board of Directors who are independent directors under the corporate governance statutes or rules of any national Exchange on which the Company lists, has listed or seeks to list its
securities) may, in their discretion, take any action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force and effect under the Plan as if done or exercised by the Committee.
Section
5.2
Powers of Committee
. The administration of the Plan by the Committee shall be subject to the
following:
(a) the Committee will have the authority and discretion to select those persons who shall receive Awards, to determine the
time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, features (including automatic exercise in accordance with Section 7.17), performance criteria,
restrictions (including without limitation, provisions relating to
non-competition,
non-solicitation
and confidentiality), and other provisions of such Awards (subject
to the restrictions imposed by Article 6), to cancel or suspend Awards and, except with respect to:
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(i) outstanding unvested Awards on the date of a Change in Control (which are
subject to vesting in accordance with Section 4.1) or
(ii) any Award within the first year after grant, or in
violation of any minimum vesting requirements set forth in Section 2.6 hereof,
to reduce, eliminate or accelerate any restrictions or vesting
requirements applicable to an Award at any time after the grant of the Award, or to extend the time period to exercise a Stock Option, provided that the extension is consistent with Code Section 409A.
(b)
The Committee will have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.
(c)
The Committee will have the authority to define terms not otherwise defined herein.
(d)
In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms
to the charter and bylaws of the Company and applicable corporate law.
(e) The Committee will have the authority to: (i) suspend a
Participants right to exercise a Stock Option during a blackout period (or similar restricted period) or to exercise in a particular manner (i.e., such as a cashless exercise or broker-assisted exercise) to the extent
that the Committee deems it necessary or in the best interests of the Company in order to comply with the securities laws and regulations issued by the SEC (the
Blackout Period
); and (ii) to extend the period to exercise a
Stock Option by a period of time equal to the Blackout Period, provided that such extension does not violate Section 409A of the Code, the Incentive Stock Option requirements or applicable laws and regulations.
Section
5.3
Delegation by Committee
. Except to the extent prohibited by applicable law, the applicable rules
of an Exchange upon which the Company lists its shares or the Plan, or as necessary to comply with the exemptive provisions of Rule
16b-3
promulgated under the Exchange Act, the Committee may allocate all or
any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including: (a) delegating to a committee of one or
more members of the Board of Directors who are not
non-employee
directors, within the meaning of Rule
16b-3,
the authority to grant Awards under the Plan to
eligible persons who are not then subject to Section 16 of the Exchange Act; or (b) delegating to a committee of one or more members of the Board of Directors who would be eligible to serve on the Compensation Committee of the Company
pursuant to the listing requirements imposed by any national securities exchange on which the Company lists, has listed or seeks to list its securities, the authority to grant awards under the Plan. The acts of such delegates shall be treated
hereunder as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any Awards so granted. Any such allocation or delegation may be revoked by the Committee at any
time.
Section
5.4
Information to be Furnished to Committee
. As may be permitted by applicable law, the
Company and its Subsidiaries shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties. The records of the Company and its Subsidiaries as to a Participants employment,
termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons entitled to
benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.
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Section
5.5
Committee Action
. The Committee shall hold meetings,
and may make administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is
present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. Subject to Section 5.1, all actions of the Committee,
including interpretations of provisions of the Plan, shall be final and conclusive and shall be binding upon the Company, Participants and all other interested parties. Any person dealing with the Committee shall be fully protected in relying upon
any written notice, instruction, direction or other communication signed by a member of the Committee or by a representative of the Committee authorized to sign the same in its behalf.
ARTICLE 6 - AMENDMENT AND TERMINATION
Section
6.1
General
. The Board of Directors may, as permitted by law, at any time, amend or terminate the
Plan, and may amend any Award Agreement, provided that no amendment or termination (except as provided in Sections 2.7, 3.4 and 6.2) may cause the Award to violate Code Section 409A, may cause the repricing of a Stock Option, or, in the absence
of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely impair the rights of any Participant or beneficiary under any Award prior to the date the amendment is
adopted by the Board of Directors;
provided, however
, that, no amendment may (a) materially increase the benefits accruing to Participants under the Plan, (b) materially increase the aggregate number of securities which may be
issued under the Plan, other than pursuant to Section 3.4, or (c) materially modify the requirements for participation in the Plan, unless the amendment is approved by the Companys stockholders.
Section
6.2
Amendment to Conform to Law and Accounting Changes
. Notwithstanding any provision in this Plan or
any Award Agreement to the contrary, the Committee may amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of: (i) conforming the Plan or the Award Agreement to any
present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A); or (ii) avoiding an accounting treatment resulting from an accounting pronouncement or interpretation thereof issued by
the SEC or Financial Accounting Standards Board subsequent to the adoption of the Plan or the making of the Award affected thereby, which, in the sole discretion of the Committee, may materially and adversely affect the financial condition or
results of operations of the Company. By accepting an Award under this Plan, each Participant agrees and consents to any amendment made pursuant to this Section 6.2 to any Award granted under the Plan without further consideration or action.
ARTICLE 7 - GENERAL TERMS
Section
7.1
No Implied Rights
.
(a)
No Rights to Specific Assets.
Neither a Participant nor any other person shall by reason of participation in the Plan acquire any
right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a
liability under the Plan. A Participant shall have only a contractual right to the shares of Stock or amounts, if any, payable or distributable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the
Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.
(b)
No Contractual Right to Employment or Future Awards.
The Plan does not constitute a contract of employment, and selection as a
Participant will not give any participating Employee the right to be retained in the employ of the Company or any Subsidiary or any right or claim to any benefit under the Plan, unless the right or claim has specifically accrued under the terms of
the Plan. No individual shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to receive a future Award under the Plan.
(c)
No Rights as a Stockholder
. Except as otherwise provided in the Plan or in the Award Agreement, no Award shall confer upon the
holder thereof any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.
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Section
7.2
Transferability
. Except as otherwise so provided by
the Committee, Stock Options under the Plan are not transferable except: (i) as designated by the Participant by will or by the laws of descent and distribution; (ii) to a trust established by the Participant, if under Code
Section 671 and applicable state law, the Participant is considered the sole beneficial owner of the Stock Option while held in trust; or (iii) between spouses incident to a divorce or pursuant to a domestic relations order, provided,
however, in the case of a transfer within the meaning of Section 7.2(iii), the Stock Option shall not qualify as an ISO as of the day of such transfer. The Committee shall have the discretion to permit the transfer of vested Stock Options
(other than ISOs) under the Plan; provided, however, that such transfers shall be limited to Immediate Family Members of Participants, trusts and partnerships established for the primary benefit of such family members or to charitable organizations,
and; provided, further, that such transfers are not made for consideration to the Participant.
Section
7.3
Designation of Beneficiaries
. A Participant may file with the Company a written designation of a beneficiary or beneficiaries under this Plan and may from time to time revoke or amend any such designation. Any designation of beneficiary under
this Plan shall be controlling over any other disposition, testamentary or otherwise (unless such disposition is pursuant to a domestic relations order);
provided, however,
that if the Committee is in doubt as to the entitlement of any such
beneficiary to any Award, the Committee may determine to recognize only the legal representative of the Participant, in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone.
Section
7.4
Non-Exclusivity
. Neither the adoption of this Plan by the
Board of Directors nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board of Directors or the Committee to adopt such other incentive arrangements as
may deem desirable, including, without limitation, the granting of Restricted Stock Awards, Restricted Stock Units or Stock Options and such arrangements may be either generally applicable or applicable only in specific cases.
Section
7.5
Eligibility for Form and Time of Elections/Notification Under Code Section 83(b)
. Unless
otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, shall be filed with the Company at such times,
in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require. Notwithstanding anything herein to the contrary, the Committee may, on the date of grant or at a later date,
as applicable, prohibit an individual from making an election under Code Section 83(b). If the Committee has not prohibited an individual from making this election, an individual who makes this election shall notify the Committee of the
election within ten (10) days of filing notice of the election with the Internal Revenue Service or as otherwise required by the Committee. This requirement is in addition to any filing and notification required under the regulations issued
under the authority of Code Section 83(b).
Section
7.6
Evidence
. Evidence required of anyone under
the Plan may be by certificate, affidavit, document or other information upon which the person is acting considers pertinent and reliable, and signed, made or presented by the proper party or parties.
Section
7.7
Tax Withholding
. Where a Participant is entitled to receive shares of Stock upon the vesting or
exercise of an Award, the Company shall have the right to require the Participant to pay to the Company the amount of any tax that the Company is required to withhold with respect to the vesting or exercise, or, in lieu thereof, to retain, or to
sell without notice, a sufficient number of shares of Stock to cover the minimum amount required to be withheld. To the extent determined by the Committee and specified in an Award Agreement, a Participant shall have the right to direct the Company
to satisfy the amount required for federal, state and local tax withholding by: (i) with respect to a Stock Option, reducing the number of shares of Stock subject to the Stock Option (without issuance of such shares of Stock to the Stock Option
holder) by a number equal to the quotient of (a) the amount of required tax withholding divided by (b) the excess of the Fair Market Value of a share of Stock on the exercise date over the Exercise Price per share of Stock; and
(ii) with respect to Restricted Stock Awards and Restricted Stock Units, withholding a number of shares (based on the Fair Market Value on the vesting date) otherwise vesting that would satisfy the amount of required tax withholding. Provided
there are no adverse accounting consequences to the Company (a requirement to have liability classification of an award under FASB ASC Topic 718 is an adverse consequence), a Participant who is not required to have taxes withheld may require the
Company to withhold in accordance with the preceding sentence as if the Award were subject to tax withholding requirements.
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Section
7.8
Action by Company or Subsidiary
. Any action required
or permitted to be taken by the Company or any Subsidiary shall be by resolution of its board of directors, or by action of one or more members of the board of directors (including a committee of the board of directors) who are duly authorized to
act for the board of directors, or (except to the extent prohibited by applicable law or applicable rules of the Exchange on which the Company lists its securities) by a duly authorized officer of the Company or such Subsidiary.
Section
7.9
Successors
. All obligations of the Company under the Plan shall be binding upon and inure to the
benefit of any successor to the Company, whether the existence of the successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business, stock, and/or assets of the Company.
Section
7.10
Indemnification
. To the fullest extent permitted by law and the Companys governing
documents, each person who is or shall have been a member of the Committee, or of the Board of Directors, or an officer of the Company to whom authority was delegated in accordance with Section 5.3, or an Employee of the Company, shall be
indemnified and held harmless by the Company against and from any loss (including amounts paid in settlement), cost, liability or expense (including reasonable attorneys fees) that may be imposed upon or reasonably incurred by him in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts
paid by him in settlement thereof, with the Companys approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him, provided he or she shall give the Company an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle and defend it on his own behalf, unless such loss, cost, liability, or expense is a result of his own willful misconduct or except as expressly provided by statute or regulation. The
foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Companys charter or bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless. The foregoing right to indemnification shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition, provided, however,
that, if required by applicable law, an advancement of expenses shall be made only upon delivery to the Company of an undertaking, by or on behalf of such persons to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that such person is not entitled to be indemnified for such expenses.
Section
7.11
No Fractional Shares
. Unless otherwise permitted by the Committee, no fractional shares of Stock
shall be issued or delivered pursuant to the Plan or any Award Agreement. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether the fractional shares or any rights thereto shall
be forfeited or otherwise eliminated by rounding down.
Section
7.12
Governing Law
. The Plan, all Awards
granted hereunder, and all actions taken in connection herewith shall be governed by and construed in accordance with the laws of the State of Georgia without reference to principles of conflict of laws, except as superseded by applicable federal
law. The federal and state courts located in the State of Georgia, shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any Award, each Participant and any other person
claiming any rights under the Plan agrees to submit himself and any legal action that brought with respect to the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.
Section
7.13
Benefits Under Other Plans
. Except as otherwise provided by the Committee or as set forth in a
Qualified Retirement Plan,
non-qualified
plan or other benefit plan, Awards to a Participant (including the grant and the receipt of benefits) under the Plan shall be disregarded for purposes of determining
the Participants benefits under, or contributions to, any Qualified Retirement Plan,
non-qualified
plan and any other benefit plans maintained by the Participants employer. The term
Qualified Retirement Plan
means any plan of the Company or a Subsidiary that is intended to be qualified under Code Section 401(a).
Section
7.14
Validity
. If any provision of this Plan is determined to be illegal or invalid for any reason,
said illegality or invalidity shall not affect the remaining parts of the Plan, but this Plan shall be construed and enforced as if such illegal or invalid provision has never been included herein.
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Section
7.16
Notice
. Unless otherwise provided in an Award
Agreement, all written notices and all other written communications to the Company provided for in the Plan or in any Award Agreement, shall be delivered personally or sent by registered or certified mail, return receipt requested, postage
prepaid
(provided that international mail shall be sent via overnight or
two-day
delivery), or sent by facsimile, email or prepaid overnight courier to the Company at its principal executive office.
Such notices, demands, claims and other communications shall be deemed given:
(a)
in the case of delivery by overnight service with
guaranteed next day delivery, the next day or the day designated for delivery;
(b)
in the case of certified or registered U.S.
mail, five days after deposit in the U.S. mail; or
(c)
in the case of facsimile or email, the date upon which the transmitting
party received confirmation of receipt;
provided, however,
that in no event shall any such communications be deemed to be given later than the date they are actually received, provided they are actually received.
In the event a communication is not received, it shall only be deemed received upon the showing of an original of the applicable receipt,
registration or confirmation from the applicable delivery service. Communications that are to be delivered by U.S. mail or by overnight service to the Company shall be directed to the attention of the Companys Corporate Secretary, unless
otherwise provided in the Award Agreement.
Section
7.16
Forfeiture Events
.
(a) The Committee may specify in an Award Agreement that the Participants rights, payments, and benefits with respect to an Award shall
be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events include, but are not limited to,
termination of employment for Cause, termination of the Participants provision of Services to the Company or any Subsidiary, violation of material Company or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive
covenants that may apply to the Participant, or other conduct of the Participant that is detrimental to the business or reputation of the Company or any Subsidiary.
(b) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of
misconduct, with any financial reporting requirement under the federal securities laws, any Participant who is subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 or who is subject to clawback under
Section 954 of the Dodd-Frank Act shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the twelve-month period following the first public issuance or filing with the SEC (whichever first
occurred) of the financial document embodying such financial reporting requirement.
In addition, Awards granted hereunder are subject to
any clawback policy adopted by the Board of Directors, as may be amended from time to time.
Section
7.17
Automatic Exercise
. In the sole discretion of the Committee exercised in accordance with Section 5.2(a) above, any Stock Options that are exercisable but unexercised as of the day immediately before the tenth anniversary of the
date of grant may be automatically exercised, in accordance with procedures established for this purpose by the Committee, but only if the exercise price is less than the Fair Market Value of a share of Stock on such date and the automatic exercise
will result in the issuance of at least one (1) whole share of Stock to the Participant after payment of the exercise price and any applicable tax withholding requirements. Payment of the exercise price and any applicable tax withholding
requirements shall be made by a net settlement of the Stock Option whereby the number of shares of Stock to be issued upon exercise are reduced by a number of shares having a Fair Market Value on the date of exercise equal to the Exercise Price and
any applicable tax withholding.
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Section
7.18
Regulatory Requirements
.
(a) The grant and settlement of Awards shall be conditioned upon and subject to compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. 1828(k), and the rules and regulations promulgated thereunder.
ARTICLE 8 - DEFINED TERMS; CONSTRUCTION
Section
8.1
In addition to the other definitions contained herein, unless otherwise specifically
provided in an Award Agreement, the following definitions shall apply:
(a)
10% Stockholder means an individual who, at
the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company.
(b)
Award means any Stock Option, Restricted Stock, Restricted Stock Unit, Performance Award or any or all of them, or any other right or interest relating to stock or cash, granted to a Participant under the Plan.
(c)
Award Agreement means the document (in whatever medium prescribed by the Committee) that evidences the terms and
conditions of an Award. A copy of the Award Agreement shall be provided (or made available electronically) to the Participant. Any document is referred to as an Award Agreement, regardless of whether a Participants signature is required.
(d)
Board of Directors means the Board of Directors of the Company.
(e)
If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a
Subsidiary that provides a definition of termination for Cause, then, for purposes of this Plan, the term Cause shall have meaning set forth in such agreement. In the absence of such a definition, Cause means
termination because of a Participants personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Banks Code of Ethics, material violation of the Sarbanes-Oxley
requirements for officers of public companies that in the reasonable opinion of the Chief Executive Officer of the Bank or the Board of Directors will likely cause substantial financial harm or substantial injury to the reputation of the Bank or the
Company, willfully engaging in actions that in the reasonable opinion of the Board of Directors will likely cause substantial financial harm or substantial injury to the business reputation of the Bank or the Company, intentional failure to perform
stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final
cease-and-desist
order, or material
breach of any provision of the contract.
(f)
Change in Control has the meaning ascribed to it in Section 4.2.
(g)
Code means the Internal Revenue Code of 1986, as amended, and any rules, regulations and guidance promulgated
thereunder, as modified from time to time.
(h) Director means a member of the Board of Directors or the board of directors of
a Subsidiary.
(i)
If the Participant is subject to a written employment agreement (or other similar written agreement) with the
Company or a Subsidiary that provides a definition of Disability or Disabled, then, for purposes of this Plan, the terms Disability or Disabled shall have meaning set forth in that agreement. In the
absence of such a definition, Disability shall be defined in accordance with the Banks long-term disability plan. To the extent that an Award is subject to Code Section 409A, Disability or Disabled
shall mean that a Participant: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than
twelve months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering Employees. Except to the extent prohibited under Code Section 409A, if applicable, the Committee shall
have discretion to determine if a Disability has occurred.
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(j) Disinterested Board Member means a member of the Board of Directors who:
(i) is not a current Employee of the Company or a Subsidiary; (ii) is not a former employee of the Company or a Subsidiary who receives compensation for prior Services (other than benefits under a
tax-qualified
retirement plan) during the taxable year; (iii) has not been an officer of the Company or a Subsidiary; (iv) does not receive compensation from the Company or a Subsidiary, either
directly or indirectly, for services as a consultant or in any capacity other than as a Director except in an amount for which disclosure would not be required pursuant to Item 404 of SEC Regulation
S-K
in
accordance with the proxy solicitation rules of the SEC, as amended or any successor provision thereto; and (v) does not possess an interest in any other transaction, and is not engaged in a business relationship for which disclosure would be
required pursuant to Item 404(a) of SEC Regulation
S-K
under the proxy solicitation rules of the SEC, as amended or any successor provision thereto. The term Disinterested Board Member shall be interpreted in
such manner as shall be necessary to conform to the requirements of Rule
16b-3
promulgated under the Exchange Act and the corporate governance standards imposed on compensation committees under the listing
requirements imposed by any Exchange on which the Company lists or seeks to list its securities.
(k) Dividend Equivalent
Rights means the right, associated with a Restricted Stock Unit, to receive a payment, in cash or Stock, as applicable, equal to the amount of dividends paid on a share of the Companys Stock, as specified in the Award Agreement.
(l) Employee means any person employed by the Company or a Subsidiary. Directors who are also employed by the Company or a
Subsidiary shall be considered Employees under the Plan.
(m)
Exchange means any national securities exchange on which
the Stock may from time to time be listed or traded.
(n)
Exchange Act means the Securities Exchange Act of 1934, as
amended from time to time.
(o)
Exercise Price means the price established with respect to a Stock Option pursuant to
Section 2.2.
(p)
Fair Market Value on any date, means: (i) if the Stock is listed on an Exchange, the closing
sales price on that Exchange or over such system on that date or, in the absence of reported sales on that date, the closing sales price on the immediately preceding date on which sales were reported; or (ii) if the Stock is not listed on a
securities exchange, Fair Market Value shall mean a price determined by the Committee in good faith on the basis of objective criteria consistent with the requirements of Code Section 422 and applicable provisions of Code
Section 409A.
(q) A termination of employment by an Employee Participant shall be deemed a termination of employment for Good
Reason
as a result of the Participants resignation from the employ of the Company or any Subsidiary upon the occurrence of any of the following events:
(i) a material diminution in Participants base compensation;
(ii) a material diminution in Participants authority, duties or responsibilities;
(iii) a change in the geographic location at which Participant must perform his duties that is more than thirty-five
(35) miles from the location of Participants principal workplace on the date of this Agreement; or
(iv) in the
event a Participant is a party to an employment, change in control, severance or similar agreement that provides a definition for Good Reason or a substantially similar term, then the occurrence of any event set forth in such definition.
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(r) Immediate Family Member means with respect to any Participant: (i) any of
the Participants children, stepchildren, grandchildren, parents, stepparents, grandparents, spouses, former spouses, siblings, nieces, nephews,
mothers-in-law,
fathers-in-law,
sons-in-law,
daughters-in-law,
brothers-in-law
or
sisters-in-law,
including relationships created by adoption; (ii) any natural person sharing the Participants household (other than as a tenant or employee, directly or indirectly, of the
Participant); (iii) a trust in which any combination of the Participant and persons described in section (i) and (ii) above own more than fifty percent (50%) of the beneficial interests; (iv) a foundation in which any combination of the
Participant and persons described in sections (i) and (ii) above control management of the assets; or (v) any other corporation, partnership, limited liability company or other entity in which any combination of the Participant and persons
described in sections (i) and (ii) above control more than fifty percent (50%) of the voting interests.
(s)
Involuntary
Termination means the Termination of Service of a Participant by the Company or Subsidiary (other than termination for Cause) or termination of employment by an Employee Participant for Good Reason.
(t) Incentive Stock Option or ISO has the meaning ascribed to it in Section 2.1(a).
(u)
Non-Qualified
Option means the right to purchase shares of Stock that is either:
(i) granted to a Participant who is not an Employee; or (ii) granted to an Employee does not satisfy the requirements of Section 422 of the Code.
(v) Participant means any individual who has received, and currently holds, an outstanding Award under the Plan.
(w) Performance Award has the meaning ascribed to it in Sections 2.1(d).
(x) Restricted Stock or Restricted Stock Award has the meaning ascribed to it in Sections 2.1(b).
(y) Restricted Stock Unit has the meaning ascribed to it in Sections 2.1(c).
(z) Restriction Period has the meaning set forth in Section 2.4(b)(iii).
(aa) Retirement means, unless otherwise specified in an Award Agreement, retirement from employment or service on or after the
attainment of age 65. An Employee who is also a Director shall not be deemed to have terminated due to Retirement for purposes of vesting of Awards and exercise of Stock Options until both Service as an Employee and Service as a Director has ceased.
A
non-employee
Director will be deemed to have terminated due to Retirement under the provisions of this Plan only if the
non-employee
Director has terminated Service on
the board(s) of directors of the Company and any Subsidiary or affiliate in accordance with applicable Company policy, following the provision of written notice to such board(s) of directors of the
non-employee
Directors intention to retire. A
non-employee
Director who continues in Service as a director emeritus or advisory director shall be deemed to be in
Service of the Company or a Subsidiary for purposes of vesting of Awards and exercise of Stock Options.
(bb)
SEC means the United States Securities and Exchange Commission.
(cc) Securities Act means the Securities Act of
1933, as amended from time to time.
(dd) Service means service as an Employee or
non-employee
Director of the Company or a Subsidiary, as the case may be, and shall include service as a director emeritus or advisory director. Service shall not be deemed interrupted in the case of sick
leave, military leave or any other absence approved by the Company or a Subsidiary, in the case of transferees between payroll locations or between the Company, a Subsidiary or a successor.
(ee) Stock means the common stock of the Company, $0.01 par value per share.
A-19
(ff) Stock Option has the meaning ascribed to it in Section 2.1(a).
(gg)
Subsidiary means any corporation, affiliate, bank or other entity which would be a subsidiary corporation with respect
to the Company as defined in Code Section 424(f) and, other than with respect to an ISO, shall also mean any partnership or joint venture in which the Company and/or other Subsidiary owns more than 50% of the capital or profits interests.
(hh)
Termination of Service means the first day occurring on or after a grant date on which the Participant ceases to be an
Employee or Director (including a director emeritus or advisory director) of the Company or any Subsidiary, regardless of the reason for such cessation, subject to the following:
(i)
The Participants cessation as an Employee shall not be deemed to occur by reason of the transfer of the
Participant between the Company and a Subsidiary or between two Subsidiaries.
(ii)
The Participants cessation
as an Employee shall not be deemed to occur by reason of the Participants being on a bona fide leave of absence from the Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the Participants Services,
provided such leave of absence does not exceed six months, or if longer, so long as the Employee retains a right to reemployment with the Company or Subsidiary under an applicable statute or by contract. For these purposes, a leave of absence
constitutes a bona fide leave of absence only if there is a reasonable expectation that the Employee will return to perform Services for the Company or Subsidiary. If the period of leave exceeds six months and the Employee does not retain a right to
reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following such six month period. For purposes of this
sub-section,
to
the extent applicable, an Employees leave of absence shall be interpreted by the Committee in a manner consistent with Treasury Regulation
Section 1.409A-1(h)(1).
(iii)
If, as a result of a sale or other transaction, the Subsidiary for whom Participant is employed (or to whom the
Participant is providing Services) ceases to be a Subsidiary, and the Participant is not, following the transaction, an Employee of the Company or an entity that is then a Subsidiary, then the occurrence of such transaction shall be treated as the
Participants Termination of Service caused by the Participant being discharged by the entity for whom the Participant is employed or to whom the Participant is providing Services.
(iv) Except to the extent Code Section 409A may be applicable to an Award, and subject to the foregoing paragraphs of this
sub-section,
the Committee shall have discretion to determine if a Termination of Service has occurred and the date on which it occurred.
In the event that any Award under the Plan constitutes Deferred
Compensation (as defined in Section 2.7), the term Termination of Service shall be interpreted by the Committee in a manner consistent with the definition of
Separation from Service
as defined under Code Section 409A and
under Treasury Regulation
Section 1.409A-1(h)(ii).
For purposes of this Plan, a Separation from Service shall have occurred if the employer and Participant reasonably anticipate that no
further Services will be performed by the Participant after the date of the Termination of Service (whether as an employee or as an independent contractor) or the level of further Services performed will be less than 50% of the average level of bona
fide Services in the 36 months immediately preceding the Termination of Service. If a Participant is a Specified Employee, as defined in Code Section 409A and any payment to be made hereunder shall be determined to be subject to
Code Section 409A, then if required by Code Section 409A, the payment or a portion of the payment (to the minimum extent possible) shall be delayed and shall be paid on the first day of the seventh month following Participants
Separation from Service.
(v) With respect to a Participant who is a Director, cessation as a Director will not be deemed
to have occurred if the Participant continues as a director emeritus or advisory director. With respect to a Participant who is both an Employee and a Director, termination of employment as an Employee shall not constitute a Termination of Service
for purposes of the Plan so long as the Participant continues to provide Service as a Director or director emeritus or advisory director.
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(ii)
Voting Securities means any securities which ordinarily possess the power
to vote in the election of directors without the happening of any
pre-condition
or contingency.
Section
8.2
In this Plan, unless otherwise stated or the context otherwise requires, the following uses apply:
(a)
actions permitted under this Plan may be taken at any time and from time to time in the actors
reasonable discretion;
(b)
references to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or
implementing the statute or its successor, as in effect at the relevant time;
(c)
in computing periods from a specified date to a
later specified date, the words from and commencing on (and the like) mean from and including, and the words to, until and ending on (and the like) mean to, but
excluding;
(d)
references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a
regulatory body that succeeds to the functions of the agency, authority or instrumentality;
(e)
indications of time of day mean
Eastern Time;
(f) including means including, but not limited to;
(g)
all references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Plan unless otherwise
specified;
(h)
all words used in this Plan will be construed to be of the gender or number as the circumstances and context
require;
(i)
the captions and headings of articles, sections, schedules and exhibits appearing in or attached to this Plan have
been inserted solely for convenience of reference and shall not be considered a part of this Plan nor shall any of them affect the meaning or interpretation of this Plan or any of its provisions;
(j) any reference to a document or set of documents in this Plan, and the rights and obligations of the parties under any such documents, shall
mean such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof; and
(k) all accounting terms not specifically defined herein shall be construed in accordance with GAAP.
A-21
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
Vote by Internet or
Telephone Q U I CK
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E A SY
IMMEDIATE 24 Hours a Day, 7 Days a Week or by Mail
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COMMUNITY FIRST
BANCSHARES, INC.
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Your phone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and
returned your proxy card. Votes submitted electronically over the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on August 22, 2018.
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INTERNET/MOBILE
www.cstproxyvote.com
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Use the Internet to vote your proxy.
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Have your proxy card available when
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you access the above website. Follow
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the prompts to vote your shares.
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PHONE 1 (866)
894-0536
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Use a touch-tone telephone to vote
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your proxy. Have your proxy card
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available when you call. Follow the
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voting instructions to vote your shares.
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PLEASE DO NOT RETURN THE PROXY CARD
IF YOU ARE VOTING ELECTRONICALLY OR BY PHONE.
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MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope provided.
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FOLD HERE
DO NOT SEPARATE INSERT IN ENVELOPE PROVIDED
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PROXY
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Please mark your votes like this
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
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1.
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The approval of the Community First Bancshares, Inc. 2018 Equity Incentive Plan; and
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FOR
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AGAINST
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ABSTAIN
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such other business as may properly come before the
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Special Meeting.
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Check Box if you plan to attend Special Meeting
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CONTROL NUMBER
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Signature
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Signature, if held jointly
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Date
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, 2018
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Note: Please sign exactly as name appears hereon. When shares are held by joint owners, both should sign, but only one
signature is required. When signing as attorney, executor, administrator, trustee, guardian, or corporate officer, please give title as such.
Important Notice Regarding the Internet Availability of Proxy Materials
Community First Bancshares, Inc.s proxy statement, including the notice of the annual meeting of stockholders, is available on the internet at:
www.cstproxy.com/communityfirstbancshares/sm2018
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FOLD HERE DO NOT SEPARATE INSERT IN ENVELOPE PROVIDED
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
COMMUNITY FIRST BANCSHARES, INC.
The undersigned hereby appoints the official proxy committee, consisting of all members of the Board of Directors, with full powers of
substitution, to act as attorneys and proxies for the undersigned to vote all shares of common stock of the Company which the undersigned is entitled to vote at the Special Meeting of Stockholders (Annual Meeting) to be held at 8460
Martin Luther King Jr. Avenue, Covington, Georgia on August 23, 2018 at 2:00 p.m. local time. The official proxy committee is authorized to cast all votes to which the undersigned is entitled as indicated below.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH SPECIAL MEETING, THIS PROXY WILL BE VOTED AS DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE SPECIAL MEETING.
(Continued, and to be marked, dated and signed, on the other side)
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