TABLE OF AMENDMENT
Summary
The Reliant Bancorp board of directors is proposing an amendment to the Company’s charter which, if approved by our shareholders, will (i) declassify the board of directors and (ii) establish a majority vote standard for uncontested director elections. If our shareholders approve the proposed amendment to the charter, all directors elected after the annual meeting will be elected for one-year terms, and a nominee for director in an uncontested election will be elected if the number of votes cast “for” the nominee at the meeting of shareholders exceeds the number of votes cast “against” the nominee.
The complete text of the proposed Articles of Amendment to Reliant Bancorp, Inc. Amended and Restated Charter of Incorporation (which we refer to as the “amendment”) is included at Appendix A to this proxy statement. The following summary of the amendment is qualified in its entirety by reference to the text of the amendment. You are urged to read the amendment in its entirety.
Declassification of the Board of Directors
Our charter currently divides members of the board of directors into three classes, with each director serving until the date of the third annual meeting following the annual meeting at which the director was elected and until the director’s successor is duly elected and qualified. As a result, approximately one-third of the board of directors stands for election each year – an arrangement commonly known as a “classified” or “staggered” board.
Based on the board of director’s evaluation of the Company’s corporate governance practices and after due consideration of the interests of the Company and its shareholders, the board of directors has approved the proposed amendment, which will declassify the board of directors and establish annual terms for directors elected after the 2018 annual meeting.
The board of directors carefully considered the advantages of both classified and declassified board structures. A classified board of directors can promote continuity and enhance the stability of the board, encourage a long-term perspective on the part of directors and reduce a company’s vulnerability to coercive takeover tactics. The board of directors recognized these advantages but concluded that they were outweighed by the advantages of the shareholders’ ability to evaluate all directors annually. Consequently, the board of directors concluded that an amendment to the Company’s charter to declassify the board of directors is in the best interests of the Company and its shareholders.
If the Company’s shareholders approve the proposed amendment to the charter, the elimination of the classified structure of the board of directors will be phased in beginning with the 2019 annual meeting of shareholders, and all nominees for election as directors will be elected to serve for one-year terms beginning in 2019. During the phase-in period, the nominees for election as Class II directors at the 2019 annual meeting of shareholders will each be elected to serve for a one-year term expiring at the 2020 annual meeting, and the nominees for election as Class III directors at the 2020 annual meeting will be elected to serve for one-year terms expiring at the 2021 annual meeting. Beginning with the 2021 annual meeting, the board of directors will no longer be classified, and all director nominees will be elected for one-year terms. No term of an existing director will be shortened or otherwise modified as a result of adoption of the amendment.
If our shareholders do not approve the amendment, the board of directors will remain classified and directors will continue to be elected for three-year terms.
Majority Voting Standard for Board Elections
Under Tennessee law, directors are normally elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. A voting standard other than a plurality may only be used if it is specified in a corporation’s charter. In addition to declassifying the board as described above, the proposed amendment will also amend the Company’s charter so that a nominee for director in an uncontested election will be elected if the number of votes cast “for” the nominee exceeds the number of votes cast “against” the nominee. An “abstain” vote will have no effect on the outcome of the election, but will be counted for purposes of determining whether a quorum is present at a meeting of shareholders. For contested elections in which there are more director candidates than director positions to be elected, the voting standard will continue to be a plurality of votes cast.
CONTENTS
Under Tennessee law, an incumbent director nominee who is not re-elected at a meeting of shareholders continues to serve on the board of directors until his or her successor is elected and qualified or until there is a decrease in the number of directors. The board of directors believes that it needs an orderly process to address the ongoing composition of the board of directors if one or more directors receive a majority of votes cast “against” their reelection. Accordingly, if the proposed amendment is adopted, the board of directors intends to maintain the Company’s existing majority voting/director resignation policy in the Corporate Governance Guidelines. The current policy requires any incumbent director nominee who receives more “against” or withheld votes than “for” votes in an uncontested director election to tender his or her resignation.
If the proposed amendment is approved, the majority vote standard would be applicable to the election of directors at the 2019 annual meeting of shareholders. In the event the shareholders do not approve this proposal, the charter will remain unchanged and director nominees in uncontested elections will continue to be elected by a plurality of the votes cast, but will be subject to the majority voting/director resignation policy in the Corporate Governance Guidelines.
Vote Required and Board Recommendation
The proposed amendment to declassify the board of directors and adopt a majority vote standard in director elections has been unanimously approved by the board of directors. The proposed amendment requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock. Contingent on the requisite number of shares voting in favor of this proposal, the board of directors has approved an amendment to the Company’s bylaws to similarly provide for the elimination of a classified board structure and to reflect the majority vote standard for director elections. If this proposal is not approved by the requisite vote of the Company’s shareholders, the amendment to the Company’s charter will not become effective, the board of directors will not be declassified, and directors will continue to be elected by a plurality of votes.
The board of directors recommends a vote “FOR” approval of the charter amendment proposal.
ITEM FOUR
RELIANT BANCORP, INC. 2018 EMPLOYEE STOCK PURCHASE PLAN
We are asking our shareholders to approve the adoption of the Reliant Bancorp Inc. 2018 Employee Stock Purchase Plan (the “employee stock purchase plan” or the “plan”).
The board believes that an employee stock purchase plan encourages the Company’s employees to acquire shares of common stock, thereby fostering broad alignment of employees’ interests with the interests of our shareholders. Additionally, the board has determined that a stock purchase plan fosters good employee relations, and provides the Company with an improved ability to recruit, retain, and reward employees in an extremely competitive environment. To provide this valuable element of the Company’s compensation program, the board recommends that the shareholders approve the employee stock purchase plan.
The board of directors adopted the employee stock purchase plan on March 27, 2018, subject to and effective as of receipt of shareholder approval of the employee stock purchase plan proposal at the annual meeting. The board believes that approval of the employee stock purchase plan is in the best interests of the Company and its shareholders.
If the shareholders approve the employee stock purchase plan proposal, the plan will become effective as of the date of the annual meeting, with the first offering period under the plan to commence on January 1, 2019 and to end on June 28, 2019 (the last trading day of June). If the shareholders do not approve the employee stock purchase plan proposal, the plan will not become effective.
Key Features of the Employee Stock Purchase Plan
As described further below, the employee stock purchase plan generally:
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| Reserves 200,000 shares of common stock for issuance pursuant to the employee stock purchase plan;
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| Unless otherwise determined by the Administrator, permits a participant to contribute a whole percentage up to 15% of his or her eligible compensation each pay period through after-tax payroll deductions;
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| Unless otherwise determined by the Administrator, establishes six-month offering periods commencing on the first trading day of January and July of each calendar year and ending on the last trading day of June and December, respectively;
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| Permits participants to purchase shares of common stock at up to a 15% discount; and
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| Limits the value of shares that a participant may accrue in a calendar year to $25,000 and, unless otherwise determined by the Administrator, the number of shares that a participant may purchase in an offering period to 2,500 shares of common stock.
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Summary of Material Provisions of Employee Stock Purchase Plan
A summary of the material terms of the employee stock purchase plan is set forth below. This summary is qualified in its entirety by the detailed provisions of the employee stock purchase plan, a copy of which is attached as Appendix B to this proxy statement and which is incorporated by reference into this plan description. We encourage shareholders to read and refer to the complete plan document in Appendix B for a more complete description of the plan.
Interpretation. The employee stock purchase plan and the options granted under the employee stock purchase plan are intended to satisfy the requirements for an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986 (the “Code”). Notwithstanding the foregoing, the Company is not obligated to, and is not promising that it will, maintain the qualified status of the employee stock purchase plan or any options granted thereunder. Options that do not satisfy the requirements for an “employee stock purchase plan” under Section 423 of the Code may be granted under the employee stock purchase plan pursuant to the rules, procedures, or sub-plans adopted by the Administrator for certain eligible employees.
Share Reserve. Subject to adjustment in connection with certain corporate transactions, the maximum number of shares of common stock that may be purchased under the employee stock purchase plan, consisting of authorized but unissued shares, will be 200,000 shares of common stock.
Administration. The employee stock purchase plan will be administered, at the Company’s expense, under the direction of the board of directors, the compensation committee, or any other committee designated by the board from time to time (any such entity, the “Administrator”). The Administrator will have the authority to take any actions it deems necessary or advisable for the administration of the employee stock purchase plan, including, without limitation, (i) interpreting and construing the employee stock purchase plan and options granted thereunder, (ii) prescribing, adopting, amending, waiving, and rescinding rules and regulations it deems appropriate to implement the employee stock purchase plan, (iii) correcting any defect or supplying any omission or reconciling any inconsistency in the employee stock purchase plan or options granted thereunder, (iv) establishing the timing and length of offering periods, (v) establishing minimum and maximum contribution rates, and (vi) establishing new or changing existing limits on the number of shares of common stock a participant may elect to purchase with respect to any offering period. The Administrator’s determinations will be final and binding upon all persons.
Eligibility. Generally, natural persons who are employees of the Company or any subsidiary of the Company designated by the Administrator from time to time may be eligible to participate in the plan. But, the following employees are ineligible to participate in the employee stock purchase plan: (i) employees whose customary employment is 20 hours or less per week; (ii) employees whose customary employment is for not more than five months in any calendar year; and (iii) employees who, after exercising their options to purchase common stock under the employee stock purchase plan, would own, directly or indirectly, shares of common stock (including shares that may be acquired under any outstanding options under the employee stock purchase plan) representing five percent or more of the total combined voting power of all classes of the Company’s stock.
Notwithstanding the foregoing, for purposes of an offering under the employee stock purchase plan that is not intended to satisfy the requirements of Section 423 of the Code, the Administrator will have the authority to establish a different definition of eligible employee as it may deem advisable or necessary. In addition, the Administrator may determine that highly compensated employees (within the meaning of Section 414(q) of the Code) will not be eligible to participate in an offering period.
Participation Election. An eligible employee may become a participant for an offering period under the plan by completing and submitting an enrollment form to the Company or its designee, in the format and pursuant to the process as prescribed by the Administrator, during the enrollment period prior to the offering period to which it relates. Such enrollment form will authorize the Company to make after-tax payroll deductions up to 15% of the participant’s eligible compensation on each pay period following enrollment in the offering period under the employee stock purchase plan. The Administrator will credit the deductions or contributions to the participant’s account under the employee stock purchase plan.
Subject to certain exceptions, a participant may cease his or her contributions during an offering period by properly completing and timely submitting a new enrollment form at any time prior to the last day of such offering period. A participant may increase or decrease his or her contributions to take effect for the next offering period, by properly completing and timely submitting a new enrollment form.
Once an eligible employee becomes a participant in the employee stock purchase plan, the participant will automatically be re-enrolled in the next offering period until such time as the participant ceases his or her employment relationship with the Company or its affiliate for any reason or is no longer eligible to participate in the employee stock purchase plan or a specific offering period under the employee stock purchase plan.
Offering Periods. The Administrator will determine the length and duration of the periods during which contributions will accumulate to purchase shares of common stock, which period will not exceed 27 months. Each of these periods is known as an “offering period.” Unless otherwise established by the Administrator prior to the start of an Offering Period, the employee stock purchase plan will have two six-month offering periods commencing on the first trading day of January and July of each calendar year and ending on the last trading day of June and December, respectively.
Purchase Price. The Administrator will determine from time to time the purchase price per share of common stock under the employee stock purchase plan for an offering period. Unless otherwise determined by the Administrator before the start of an offering period, the purchase price per share of common stock under the employee stock purchase plan will be (and may not be less than) 85% of the lesser of the closing price of our common stock on (i) the first trading day of the relevant offering period or (ii) the last trading day of the relevant offering period.
Purchase of Shares. On the last trading day of the offering period, unless a participant’s participation in the employee stock purchase plan has otherwise been terminated, a participant is deemed to automatically exercise his or her option to purchase the maximum number of whole shares of common stock that may be purchased at the purchase price with the participant’s account balance at that time, adjusted as necessary in accordance with the terms of the employee stock purchase plan. The Administrator will cause the amount credited to each participant’s account to be applied to such purchase, and the amount applied to purchase shares of common stock pursuant to an option will be deducted from the applicable participant’s account.
Purchase Limitations. No participant may be granted an option to purchase shares of common stock under the employee stock purchase plan and under all other “employee stock purchase plans” of the Company and its subsidiaries which permits the participant’s right to purchase shares to accrue at a rate in excess of $25,000 for each calendar year in which the options are outstanding, determined as of the first trading day of the offering period. In addition, no participant may purchase more than 2,500 shares of common stock in any one offering period; provided, however, that prior to the start of an offering period, the Administrator may impose a different limit on the number of shares of common stock a participant may purchase during the offering period. The fair market value for this purpose will be equal to the closing price per share as reported on the Nasdaq Capital Market
If the Administrator determines that the total number of shares of common stock remaining available under the employee stock purchase plan is insufficient to permit all participants to exercise their options to purchase shares, the Administrator will make a participation adjustment and proportionately and uniformly reduce the number of shares purchasable by all participants. After such adjustment, the Administrator will refund in cash all affected participants’ account balances for such offering period as soon as practicable thereafter.
Termination of Participation. If a participant’s employment relationship terminates for any reason other than death prior to the last trading day of the offering period, then participant’s outstanding options to purchase shares of common stock will automatically terminate, and the Administrator will refund in cash the participant’s account balance as soon as practicable thereafter.
If a participant is no longer eligible to participate in the employee stock purchase plan for any reason, the Administrator will refund in cash the affected participant’s account balance as soon as practicable thereafter. Once terminated, participation may not be reinstated for the then-current offering period, but, if otherwise eligible, the eligible employee may elect to participate in a subsequent offering period.
Shareholder Rights. A participant will not be a shareholder or have any rights as a shareholder with respect to shares of common stock subject to the participant’s options under the employee stock purchase plan until the shares of common stock are purchased pursuant to the options and such shares of common stock are transferred into the participant’s name on the Company’s books and records. No adjustment will be made for dividends or other rights for which the record date is prior to such time. Following purchase and transfer of shares of common stock into the participant’s name on the Company’s books and records, a participant will become a shareholder with respect to the shares of common stock purchased and will thereupon have all dividend, voting, and other ownership rights incident thereto.
Transferability. A participant’s options to purchase shares of common stock under the employee stock purchase plan may not be pledged, assigned, or transferred in any manner, whether voluntarily, by operation of law, or otherwise. If a participant pledges, assigns, or transfers his or her options to purchase shares of common stock in violation of the employee stock purchase plan, such options will immediately terminate and the participant will immediately receive a refund of the amount then credited to the participant’s account. Any payment of cash or issuance of shares of common stock under the employee stock purchase plan may be made only to the participant (or, in the event of the participant’s death, to the participant’s estate or beneficiary or beneficiaries most recently designated by the participant prior to his or her death). During a participant’s lifetime, only such participant may exercise his or her options to purchase shares of common stock under the employee stock purchase plan.
Term. If approved by the Company’s shareholders at the annual meeting, the employee stock purchase plan will become effective as of the date of the annual meeting. The employee stock purchase plan will terminate on the earliest of (i) the day before the 10th anniversary of the date of adoption of the employee stock purchase plan by the Board, (ii) the date on which all shares of common stock reserved for issuance under the employee stock purchase plan have been issued, (iii) the date the employee stock purchase plan is terminated in connection with certain corporate transactions set forth above, and (iv) the date the Administrator terminates the employee stock purchase plan.
Amendment, Suspension, or Termination. The Administrator may, at any time and from time to time, amend, suspend, or terminate the employee stock purchase plan or an offering period under the employee stock purchase plan; provided, however, that no amendment, suspension, or termination will, without the consent of the participant, materially impair any then-vested rights of a participant. The effectiveness of any amendment to the employee stock purchase plan shall be contingent on approval of such amendment by the Company’s shareholders to the extent provided by the Board or required by applicable law.
The board of directors recommends a vote “FOR” approval of employee stock purchase plan proposal.
OTHER MATTERS
We know of no other matters to be submitted to theour shareholders at the annual meeting.Meeting. If any other matters properly come before the annual meeting,Meeting, it is the intention of the persons named in the enclosed proxy to vote the shares they represent as our board of directors may recommend, or, in the absence of a recommendation, as such persons deem advisable.accordance with their judgment. Discretionary authority with respect to such matters is granted by execution of the enclosed proxy.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR 2018 ANNUAL MEETING
Shareholders who, in accordance with SEC Rule 14a-8, wish to present proposals for inclusion in our proxy statement and form of proxy for our next annual meeting must submit their proposals so that they are received by us at our principal executive offices, addressed to our Corporate Secretary, no later than December 11, 2018.
Although information received after such date will not be included in the proxy materials sent to shareholders, a shareholder proposal may still be presented at the annual meeting if such proposal complies with the Company’s bylaws. In accordance with our bylaws, shareholder proposals may be brought before an annual meeting only if such proposal is made pursuant to written notice timely given to the Company’s Corporate Secretary accompanied by certain information required by our bylaws. To be timely, a shareholders’ written notice must be received by the Company no earlier than 120 days and no later than 90 days prior to the first anniversary of the preceding year’s annual meeting, provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 70 days after such anniversary date, then to be timely such notice must be received by the Company no earlier than 120 days prior to such annual meeting and no later than the later of 90 days prior to the date of the meeting. For shareholder proposals for the 2019 annual meeting of shareholders, written notice must be received between January 17, 2019 and February 16, 2019.
ANNUAL REPORT
A copy of our annual report for our fiscal year ended December 31, 2017 has been mailed2018, is being made available concurrently with this proxy statement to all shareholders entitled to notice of and to vote at the annual meeting.Meeting. The annual report is not incorporated into this proxy statement and is not considered proxy solicitation material.
FOrm 10-K
FORM 10-K
We filed an annual report on Form 10-K with the SEC on March 16, 2018. Shareholders may obtainOn request, we will provide, without charge, a copy of our annual report including any amendments thereto, without charge, by writing to our Corporate Secretary at our principal executive offices, located at 1736 Carothers Parkway, Suite 100, Brentwood, Tennessee 37027.
Appendix A
Articles of Amendment
[see attached]
ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED CHARTER
OF
RELIANT BANCORP, INC.
Pursuant to and in accordance with applicable provisions ofon Form 10-K for the Tennessee Business Corporation Act, Tennessee Code Annotated § 48-11-101 et seq., the undersigned corporation adopts the following articles of amendment to its amended and restated charter,year ended December 31, 2018, as previously amended:
1. The name of the corporation is Reliant Bancorp, Inc.
2. The amended and restated charter of the corporation, as previously amended, is hereby amended by deleting current Section 7 thereof in its entirety and replacing itfiled with the following:
Section 7. Terms of Directors; Voting for Directors.
(a) The classification ofSEC (including a list briefly describing the Board of Directors of the Company into three classes shall be phased out beginningexhibits thereto), to any shareholder. Please contact us at the 2018 annual meeting of Company shareholders in accordance with the terms of this Section 7(a). Prior(615) 221-2020, or write to the 2018 annual meeting of Company shareholders, the terms of the directors of the Company shall be staggered by dividing the total number of directors into three classes, designated as Class I, Class II, and Class III, with the number of directors in each class to be as equal in number as possible. Each director elected prior to the 2018 annual meeting of Company shareholders shall serve for the full term for which such director was elected and until the election and qualification of his or her successor, subject, however, to his or her earlier death, retirement, resignation, or removal from office. At the 2018 annual meeting of Company shareholders, (i) Class I directors (including any Class I directors elected by the Board of Directors since the 2017 annual meeting of Company shareholders to fill a vacancy who are up for electionJ. Dan Dellinger, our Chief Financial Officer, at the 2018 annual meeting of Company shareholders) shall be elected for a term expiring at the next annual meeting of shareholders of the Company, (ii) any Class II directors elected by the Board of Directors since the 2017 annual meeting of Company shareholders to fill a vacancy who are up for election at the 2018 annual meeting of Company shareholders shall be elected for a term expiring at the 2019 annual meeting of Company shareholders, and (iii) any Class III directors elected by the Board of Directors since the 2017 annual meeting of Company shareholders to fill a vacancy who are up for election at the 2018 annual meeting of Company shareholders shall be elected for a term expiring at the 2020 annual meeting of Company shareholders, provided in each case that the term of each such director shall continue until the election and qualification of his or her successor and shall be subject to such director’s earlier death, retirement, resignation, or removal from office. At each annual meeting of Company shareholders following the 2018 annual meeting, directors shall be elected for terms expiring at the next annual meeting of shareholders of the Company, provided that the term of each such director shall continue until the election and qualification of his or her successor and shall be subject to the director’s earlier death, retirement, resignation, or removal from office. Commencing with the 2020 annual meeting of Company shareholders, the classification of the Company’s Board of Directors into three classes will be fully phased out and all directors shall be elected at each annual meeting of Company shareholders for terms expiring at the annual meeting of Company shareholders next following their election.
(b) Prior to the 2019 annual meeting of Company shareholders, directors shall be elected by a plurality of the votes cast by shares entitled to vote in the election at a meeting at which a quorum is present. Commencing at the 2019 annual meeting of Company shareholders, and thereafter, a nominee for director shall be elected to the Board of Directors only if a majority of the votes cast with respect to the nominee are in favor of the nominee’s election, except that, if the number of nominees for director exceeds the number of directors to be elected, directors shall instead be elected by a plurality of the votes cast by shares entitled to vote in the election at a meeting at which a quorum is present.
3. The foregoing amendment(s) to the amended and restated charter of the corporation, as previously amended, were duly adopted by the board of directors of the corporation on March 26, 2018, and by the shareholders of the corporation on May 17, 2018.
4. These articles of amendment shall be effective on the date and at the time filed by the6100 Tower Circle, Suite 120, Franklin, Tennessee Secretary of State.
Dated this 17th day of May, 2018.
| RELIANT BANCORP, INC.
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| By:
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| | DeVan D. Ard, Jr.
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| | President and Chief Executive Officer
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Appendix B
Reliant Bancorp, Inc. Employee Stock Purchase Plan
[see attached]
RELIANT BANCORP, INC.
2018 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Plan is to provide employees of the Company and its Subsidiaries with an opportunity to purchase Common Stock through accumulated Contributions. The Company intends for the Plan to qualify as an “employee stock purchase plan” under Section 423 of the Code. Accordingly, the Plan will be construed so as to extend and limit Plan participation in a uniform and nondiscriminatory basis consistent with the requirements of Section 423 of the Code.
2. Definitions.
(a) “Administrator”means the Board or any Committee designated by the Board to administer the Plan pursuant to Section 19.
(b) “Applicable Laws” means the requirements relating to the administration of equity-based awards and the related issuance of shares of Common Stock under U.S. state corporate laws, U.S. federal and state securities laws, the Code, and any stock exchange or quotation system on which the Common Stock is listed or quoted.
(c) “Board” means the Board of Directors of the Company.
(d) “Code” means the U.S. Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or U.S. Treasury Regulation thereunder will include such section or regulation, any valid regulation or other official applicable guidance promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(e) “Committee” means the Compensation Committee of the Board, or such other committee of the Board as the Board may designate from time to time.
(f) “Common Stock” means the common stock, par value $1.00 per share, of the Company.
(g) “Company” means Reliant Bancorp, Inc., a Tennessee corporation, or any successor thereto.
(h) “Compensation” means,37067, for any Eligible Employee, for any Offering Period, the Participant’s total cash compensation received during the respective period, including salary and commissions where applicable, and bonuses or cash incentive awards that pay out during the Offering Period; provided, however, that Compensation does not include (i) any cash payments in settlement of units granted under the Equity Incentive Plans, or (ii) items such as non-cash compensation, reimbursement of moving, travel, trade or business expenses, or cash payments in lieu of vacation, sick or personal days.request.
(i) “Contributions” means the payroll deductions and other additional payments that the Company may permit to be made by a Participant to fund the exercise of options granted pursuant to the Plan.
(j) “Corporate Transaction” means a merger, consolidation, acquisition of property or stock, separation, reorganization or other corporate event described in Section 424 of the Code.
(k) “Designated Company” means any Subsidiary that has been designated by the Administrator from time to time in its sole discretion as eligible to participate in the Plan. As of the Effective Date, the Company and Reliant Bank are Designated Companies.
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(l) “Designated Percent” means the percentage of Fair Market Value determined by the Administrator for purposes of determining the Purchase Price.
(m) “Effective Date” means the date as of which this Plan is adopted by the Board, subject to the Plan obtaining shareholder approval in accordance with Section 20(k) hereof.
(l) “Eligible Employee” means any individual who is an employee providing services to the Company or a Designated Company and is customarily employed for at least 20 hours per week and more than five months in any calendar year by the Employer. For purposes of the Plan, the employment relationship will be treated as continuing intact while the individual is on sick leave or other leave of absence that the Employer approves or is legally protected under Applicable Laws. Where the period of leave exceeds three months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated three months and one day following the commencement of such leave. The Administrator, in its discretion, from time to time may, prior to an Offering Date for all options to be granted on such Offering Date in an Offering, determine (on a uniform and nondiscriminatory basis or as otherwise permitted by TreasuryRegulation Section 1.423-2) that the definition of Eligible Employee will or will not include an individual if he or she: (i) has not completed at least two years of service since his or her last hire date (or such lesser period of time as may be determined by the Administrator in its discretion), (ii) customarily works not more than 20 hours per week (or such lesser period of time as may be determined by the Administrator in its discretion), (iii) customarily works not more than five months per calendar year (or such lesser period of time as may be determined by the Administrator in its discretion), or (iv) is a highly compensated employee within the meaning of Section 414(q) of the Code, provided the exclusion is applied with respect to each Offering in an identical manner to all highly compensated individuals of the Employer whose employees are participating in that Offering. Each exclusion shall be applied with respect to an Offering in a manner complying with U.S. Treasury Regulation Section 1.423-2(e)(2)(ii).
(m) “Employer” means the employer of the applicable Eligible Employee(s).
(n) “Enrollment Form” means an agreement pursuant to which an Eligible Employee may elect to enroll in the Plan, to authorize a new level of payroll deductions, or to stop payroll deductions and withdraw from an Offering Period.
(o) “Equity Incentive Plans” means: (i) Commerce Union Bancshares, Inc. Amended and Restated Stock Option Plan, (ii) Commerce Union Bancshares, Inc. 2015 Equity Incentive Plan; and (iii) such other equity compensation plans as may be adopted by the Board and/or shareholders of the Company during the term of the Plan.
(p) “ESPP Share Account” means an account into which Common Stock purchased with Contributions at the end of an Offering Period are held on behalf of a Participant.
(q) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.
(r) “Fair Market Value” means, as of any date and unless the Administrator determines otherwise, the closing sales price for the Common Stock as quoted on the Nasdaq Stock Market LLC on the date of determination (or the closing bid, if no sales were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable. Notwithstanding the foregoing, if the determination date for the Fair Market Value occurs on a weekend or holiday, the Fair Market Value will be the price as determined in accordance with the above on the immediately preceding business day, unless otherwise determined by the Administrator.
(s) “Offering” means an offer under the Plan of an option that may be exercised during an Offering Period as further described in Section 4.
(t) “Offering Date” means the first Trading Day of each Offering Period.
(u) “Offering Period” or “Offering Periods” means the approximately six-month period or periods beginning on the first Trading Day on or after January 1 and July 1 of each year. The duration and timing of Offering Periods may be changed pursuant to Section 4.
(v) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(w) “Participant” means an Eligible Employee who is actively participating in the Plan.
(x) “Plan” means this Reliant Bancorp, Inc. Employee Stock Purchase Plan.
(y) “Purchase Date” means the last Trading Day of the Offering Period.
(z) “Purchase Price” means the Designated Percent of the Fair Market Value of a share of Common Stock on the Offering Date or on the Purchase Date, whichever is lower. Unless otherwise determined by the Administrator, the Designated Percent for purposes of the foregoing sentence is 85%. The Administrator may change the Designated Percent for any Offering Period but in no event shall the Designated Percent be less than 85%.
(aa) “Securities Act” means the Securities Act of 1933, as amended from time to time.
(bb) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(cc) “Trading Day” means a day on which the Nasdaq Stock Market, LLC is open for trading.
(dd) “U.S. Treasury Regulations” means the Treasury regulations of the Code. Reference to a specific Treasury Regulation or Section of the Code shall include such Treasury Regulation or Section, any valid regulation promulgated under such Section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such Section or regulation.
3. Eligibility. Unless otherwise determined by the Committee in a manner that is consistent with Section 423 of the Code, any individual who is an Eligible Employee as of the first day of the enrollment period designated by the Committee for a particular Offering Period shall be eligible to participate in such Offering Period, subject to the requirements of Section 423 of the Code.
Notwithstanding any provision of the Plan to the contrary, no Eligible Employee shall be granted an option under the Plan if (i) immediately after the grant of the option, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company or hold outstanding options to purchase stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or any Subsidiary or (ii) such option would permit his or her rights to purchase stock under all employee stock purchase plans (described in Section 423 of the Code) of the Company and/or any Subsidiary to accrue at a rate that exceeds $25,000 of the Fair Market Value of such stock (determined at the time the option is granted) for each calendar year in which such option is outstanding at any time.
4. Offering Periods. The Plan will be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after January 1 and July 1 of each year, or on such other date as the Administrator will determine. The Administrator will have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future Offering Periods without shareholder approval. Any such change shall be announced prior to the scheduled beginning of the first Offering Period to be affected thereafter. Notwithstanding anything in the Plan to the contrary, no Offering Period may last more than 27 months.
5. Participation.
(a) Enrollment; Payroll Deductions. An Eligible Employee may elect to participate in the Plan by properly completing an Enrollment Form, which may be electronic, and submitting it to the Company, in accordance with the enrollment procedures established by the Administrator. Participation in the Plan is entirely voluntary. By submitting an Enrollment Form, the Eligible Employee authorizes payroll deductions from his or her pay check in an amount equal to at least 1%, but not more than 15% of his or her Compensation on each pay day occurring during an Offering Period (or such other maximum percentage as the Committee may establish from time to time before an Offering Period begins). Payroll deductions shall commence on the first payroll date following the Offering Date and end on the last payroll date on or before the Purchase Date. The Company shall maintain records of all payroll deductions but shall have no obligation to pay interest on payroll deductions or to hold such amounts in a trust or in any segregated account. Unless expressly permitted by the Administrator, a Participant may not make any separate contributions or payments to the Plan.
(b) Election Changes. During an Offering Period, a Participant may decrease (but not increase) his or her rate of payroll deductions applicable to such Offering Period. To make such a change, the Participant must submit a new Enrollment Form authorizing the new rate of payroll deductions at least fifteen days before the Purchase Date, or such other date as the Administrator may determine. A Participant may decrease or increase his or her rate of payroll deductions for future Offering Periods by submitting a new Enrollment Form authorizing the new rate of payroll deductions at least fifteen days before the start of the next Offering Period.
(c) Automatic Re-enrollment. The deduction rate selected in the Enrollment Form shall remain in effect for subsequent Offering Periods unless the Participant (i) submits a new Enrollment Form authorizing a new level of payroll deductions in accordance with Section 5(b), (ii) withdraws from the Plan in accordance with Section 10, or (iii) terminates employment or otherwise becomes ineligible to participate in the Plan.
7. Grant of Option. On each Offering Date, each Participant in the applicable Offering Period shall be granted an option to purchase, on the Purchase Date, a number of shares of Common Stock determined by dividing the Participant’s accumulated payroll deductions by the applicable Purchase Price; provided, however, that in no event shall any Participant purchase more than 2,500 shares of Common Stock during an Offering Period (subject to adjustment in accordance with Section 18 and the limitations set forth in Section 13 of the Plan).
8. Exercise of Option/Purchase of Shares. A Participant’s option to purchase shares of Common Stock will be exercised automatically on the Purchase Date of each Offering Period. The Participant’s accumulated payroll deductions will be used to purchase the maximum number of whole shares that can be purchased with the amounts in the Participant’s notional account. No fractional shares may be purchased but notional fractional shares of Common Stock will be allocated to the Participant’s ESPP Share Account to be aggregated with other notional fractional shares of Common Stock on future Purchase Dates, subject to earlier withdrawal by the Participant in accordance with Section 10 or termination of employment in accordance with Section 11.
9. Delivery; Holding Period. As soon as reasonably practicable after each Purchase Date on which a purchase of shares of Common Stock occurs, the Company will arrange the delivery to each Participant of the Common Stock purchased upon exercise of his or her option in a form determined by the Administrator (in its sole discretion) and pursuant to rules established by the Administrator. The Company may permit or require that shares be deposited directly with a broker designated by the Company or to a designated agent of the Company, and the Company may utilize electronic or automated methods of share transfer. The Company may require that shares be retained with such broker or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares. No Participant will have any voting, dividend, or other rights as a shareholder with respect to shares of Common Stock subject to any option granted under the Plan until such shares have been purchased and delivered to the Participant as provided in this Section 9.
10.Withdrawal.
(a) Withdrawal Procedure. A Participant may withdraw all but not less than all the Contributions credited to his or her notional account and not yet used to exercise his or her option under the Plan at any time by (i) submitting to the Company’s stock administration office (or its designee) a written notice of withdrawal in the form determined by the Administrator for such purpose, or (ii) following an electronic or other withdrawal procedure determined by the Administrator. All of the Participant’s Contributions credited to his or her notional account will be paid to such Participant promptly after receipt of notice of withdrawal and such Participant’s option for the Offering Period will be automatically terminated, and no further Contributions for the purchase of shares will be made for such Offering Period. If a Participant withdraws from an Offering Period, Contributions will not resume at the beginning of the succeeding Offering Period, unless the Participant re-enrolls in the Plan in accordance with the provisions of Section 5.
(b) Effect on Succeeding Offering Periods. A Participant’s withdrawal from an Offering Period will not have any effect upon his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or in succeeding Offering Periods that commence after the termination of the Offering Period from which the Participant withdraws.
11.Termination of Employment. Upon termination of a Participant’s employment for any reason, including death, disability or retirement, or a change in the Participant’s employment status following which the Participant is no longer an Eligible Employee, which in either case occurs at least 30 days before the Purchase Date, he or she will be deemed to have elected to withdraw from the Plan and the Contributions credited to such Participant’s account during the Offering Period but not yet used to purchase shares of Common Stock under the Plan will be returned to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 17, and such Participant’s option will be automatically terminated. Unless determined otherwise by the Administrator in a manner that is permitted by, and compliant with, Section 423 of the Code, a Participant whose employment transfers between entities through a termination with an immediate rehire (with no break in service) by the Company or a Designated Company shall not be treated as terminated under the Plan.
12.Interest. No interest will accrue on the Contributions of a participant in the Plan.
13.Common Stock Reserved for Plan.
(a) Number of Shares. Subject to adjustment upon changes in capitalization of the Company as provided in Section 18 hereof, the maximum number of shares of Common Stock that will be made available for sale under the Plan will be 200,000 shares of Common Stock.
(b) Over-subscribed Offerings. The number of shares of Common Stock which a Participant may purchase in an Offering under the Plan may be reduced if the Offering is over-subscribed. No option granted under the Plan shall permit a Participant to purchase shares of Common Stock which, if added together with the total number of shares of Common Stock purchased by all other Participants in such Offering would exceed the total number of shares of Common Stock remaining available under the Plan. If the Committee determines that, on a particular Purchase Date, the number of shares of Common Stock with respect to which options are to be exercised exceeds the number of shares of Common Stock then available under the Plan, the Company shall make a pro rata allocation of the shares of Common Stock remaining available for purchase in as uniform a manner as practicable and as the Committee determines to be equitable.
14.Transferability. No payroll deductions credited to a Participant, nor any rights with respect to the exercise of an option or any rights to receive Common Stock hereunder may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 17 hereof) by the Participant. Any attempt to assign, transfer, pledge or otherwise dispose of such rights or amounts shall be without effect.
15.Application of Funds. All Contributions received or held by the Company under the Plan may be used by the Company for any corporate purpose to the extent permitted by Applicable Laws, and the Company shall not be required to segregate such Contributions.
16.Statements. Participants will be provided with statements at least annually which shall set forth the Contributions made by the Participant to the Plan, the Purchase Price of any shares of Common Stock purchased, the number of shares of Common Stock purchased, and any Contributions remaining in the Participant’s notional account.
17.Designation of Beneficiary. A Participant may file, on forms supplied by the Administrator, a written designation of beneficiary who is to receive any shares of Common Stock and cash in respect of any fractional shares of Common Stock, if any, from the Participant’s ESPP Share Account under the Plan in the event of such Participant’s death. In addition, a Participant may file a written designation of beneficiary who is to receive any cash withheld through payroll deductions and credited to the Participant’s notional account in the event of the Participant’s death prior to the Purchase Date of an Offering Period.
18.Adjustments Upon Changes in Capitalization; Dissolution or Liquidation; Corporate Transactions.
(a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Common Stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, or other change in the Company’s structure affecting the Common Stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, the Administrator will, in such manner as it deems equitable, adjust the number of shares and class of Common Stock that may be delivered under the Plan, the Purchase Price per share and the number of shares of Common Stock covered by each outstanding option under the Plan, and the numerical limits of Section 7 and Section 13.
(b) Dissolution or Liquidation. Unless otherwise determined by the Administrator, in the event of a proposed dissolution or liquidation of the Company, any Offering Period then in progress will be shortened by setting a new Purchase Date and the Offering Period will end immediately prior to the proposed dissolution or liquidation. The new Purchase Date will be before the date of the Company’s proposed dissolution or liquidation. Before the new Purchase Date, the Committee will provide each Participant with written notice, which may be electronic, of the new Purchase Date and that the Participant’s option will be exercised automatically on such date, unless before such time, the Participant has withdrawn from the Offering in accordance with Section 10.
(c) Corporate Transaction. In the event of a Corporate Transaction, each outstanding option will be assumed or an equivalent option substituted by the successor corporation or a parent or Subsidiary of such successor corporation. If the successor corporation refuses to assume or substitute the option, the Offering Period with respect to which the option relates will be shortened by setting a new Purchase Date on which the Offering Period will end. The new Purchase Date will occur before the date of the Corporate Transaction. Prior to the new Purchase Date, the Committee will provide each Participant with written notice, which may be electronic, of the new Purchase Date and that the Participant’s option will be exercised automatically on such date, unless before such time, the Participant has withdrawn from the Offering in accordance with Section 10.
19. Administration. Unless otherwise designated by the Board, the Committee shall serve as the Administrator. The Administrator will have full and exclusive discretionary authority to construe, interpret, and apply the terms of the Plan, to designate separate Offerings under the Plan, to designate Subsidiaries as participating in the Plan, to determine eligibility, to adjudicate all disputed claims filed under the Plan and to establish such procedures that it deems necessary for the administration of the Plan. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt rules and procedures regarding eligibility to participate, the definition of Compensation, handling of Contributions, making of Contributions to the Plan (including, without limitation, in forms other than payroll deductions), establishment of bank or trust accounts to hold Contributions, payment of interest, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures and handling of stock certificates that vary with applicable local requirements. The Committee may correct any defect or supply any omission or reconcile any inconsistency or ambiguity in the Plan. All expenses of administering the Plan shall be borne by the Company. Every finding, decision and determination made by the Administrator will, to the full extent permitted by law, be final and binding upon all parties.
20. General Provisions.
(a) Equal Rights and Privileges. Notwithstanding any provision of the Plan to the contrary and in accordance with Section 423 of the Code, all Eligible Employees who are granted options under the Plan shall have the same rights and privileges.
(b) No Right to Continued Employment. Neither the Plan nor any compensation paid hereunder will confer on any Participant the right to continue as an Employee or in any other capacity.
(c) Rights as Shareholder. A Participant will become a shareholder with respect to the shares of Common Stock that are purchased pursuant to options granted under the Plan when the shares are transferred to the Participant’s ESPP Share Account. A Participant will have no rights as a shareholder with respect to shares of Common Stock for which an election to participate in an Offering Period has been made until such Participant becomes a shareholder as provided above.
(d) Successors and Assigns. The Plan shall be binding on the Company and its successors and assigns.
(e) Entire Plan. This Plan constitutes the entire plan with respect to the subject matter hereof and supersedes all prior plans with respect to the subject matter hereof.
(f) Compliance with Law. The obligations of the Company with respect to payments under the Plan are subject to compliance with all Applicable Laws. Common Stock shall not be issued with respect to an option granted under the Plan unless the exercise of such option and the issuance and delivery of the shares of Common Stock pursuant thereto shall comply with all applicable provisions of law, including, without limitation, the Securities Act, the Exchange Act, and the requirements of any stock exchange upon which the shares may then be listed.
(g) Notice of Disqualifying Dispositions. Each Participant shall give the Company prompt written notice of any disposition or other transfer of shares of Common Stock acquired pursuant to the exercise of an option acquired under the Plan, if such disposition or transfer is made within two years after the Offering Date or within one year after the Purchase Date.
(h) Term of Plan. The Plan shall become effective on the Effective Date and, unless terminated earlier pursuant to Section 20(i), shall have a term of 10 years.
(i) Amendment or Termination. The Administrator may, in its sole discretion, amend, suspend or terminate the Plan at any time and for any reason. If the Plan is terminated, the Administrator may elect to terminate all outstanding Offering Periods either immediately or once shares of Common Stock have been purchased on the next Purchase Date (which may, in the discretion of the Committee, be accelerated) or permit Offering Periods to expire in accordance with their terms (and subject to any adjustment in accordance with Section 18). If any Offering Period is terminated before its scheduled expiration, all amounts that have not been used to purchase shares of Common Stock will be returned to Participants (without interest, except as otherwise required by law) as soon as administratively practicable
(j) Applicable Law. The laws of the State of Tennessee shall govern all questions concerning the construction, validity and interpretation of the Plan, without regard to such state’s conflict of law rules.
(k) Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within 12 months before or after the date the Plan is adopted by the Board.
(l) Section 423. The Plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. Any provision of the Plan that is inconsistent with Section 423 of the Code shall be reformed to comply with Section 423 of the Code.
(m) Withholding. To the extent required by applicable federal, state, or local law, a Participant must make arrangements satisfactory to the Company for the payment of any withholding or similar tax obligations that arise in connection with the Plan.
(n) Severability. If any provision of the Plan shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and the Plan shall be construed as if such invalid or unenforceable provision were omitted.
(o) Headings. The headings of sections herein are included solely for convenience and shall not affect the meaning of any of the provisions of the Plan.
(p)
