EXHIBIT 10.1

PARKWAY ACQUISITION CORP.

2020 EQUITY INCENTIVE PLAN

 

 

ARTICLE I

Establishment, Purpose and Duration

 

1.1       Establishment of the Plan.

 

(a)     Parkway Acquisition Corp., a Virginia banking corporation (the
“Company”), hereby establishes the Parkway Acquisition Corp. 2020 Equity
Incentive Plan (the “Plan”). Unless otherwise defined herein, all capitalized
terms shall have the meanings set forth in Section 2.1. The Plan permits the
grant of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, and Stock Awards to Key
Employees of the Company or its Subsidiaries and the grant of Nonqualified Stock
Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
and Stock Awards to Non-Employee Directors of the Company or its Subsidiaries.

 

(b)     The Plan was adopted by the Board of Directors of the Company on March
17, 2020 and shall become effective, subject to the approval of the Plan by the
Company’s shareholders, on August 18, 2020 (the shareholder approval date, the
“Effective Date”).

 

1.2       Purpose of the Plan. The purpose of the Plan is to promote the success
of the Company and its subsidiaries by providing incentives to Key Employees and
Non-Employee Directors that will promote the identification of their personal
interests with the long-term financial success of the Company and with growth in
shareholder value, consistent with the Company’s risk management practices. The
Plan is designed to provide flexibility to the Company, including its
Subsidiaries, in its ability to attract, retain the services of, and motivate
Key Employees and Non-Employee Directors upon whose judgment, interest, and
special effort the successful conduct of its operation is largely dependent.

 

1.3       Duration of the Plan. The terms of this Plan shall become effective on
the Effective Date, as described in Section 1.1(b). No Award may be granted
under the Plan after March 16, 2030. Awards outstanding on such date shall
remain valid in accordance with their terms. The Board shall have the right to
terminate the Plan at any time pursuant to Article XV.

 

ARTICLE II
Definitions

 

2.1       Definitions. The following terms shall have the meanings set forth
below:

 

(a)     “Affiliate” has the meaning ascribed to such term in Rule 12b-2 under
the Exchange Act.

 

(b)     “Agreement” means a written agreement or other instrument or document,
which may be in electronic format, implementing the grant of an Award and
setting forth the specific terms of an Award, and which is signed or
acknowledged (including a signature or acknowledgment in electronic format) by
an authorized officer of the Company and the Participant, except that no
signature will be required from the Participant in the case of a Stock Award
with no vesting conditions. The Company’s Chief Executive Officer, Chief
Financial Officer, Chairman of the Committee, Chairman of the Board, and such
other directors or officers of the Company as shall be designated by the
Committee are hereby authorized to execute or acknowledge Agreements on behalf
of the Company (including a signature or acknowledgment in electronic format)
and to cause Agreements to be delivered to each Participant (including delivery
in electronic format).

 

(c)     “Award” means a grant under this Plan of an Incentive Stock Option,
Nonqualified Stock Option, Restricted Stock, Restricted Stock Unit, Stock
Appreciation Right, or Stock Award.

 

(d)     “Award Date” means the date on which an Award is made (also referred to
as “granted”) by the Committee under this Plan.

 

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(e)     “Beneficiary” means the person designated by a Participant pursuant to
Section 16.11.

 

(f)     “Board” means the Board of Directors of the Company, unless otherwise
indicated.

 

(g)     “Cause” has the meaning set forth in any employment agreement, or, if
none, in any severance or change of control agreement, then in effect between
the Participant and the Company or a Subsidiary, if applicable, and, if the
Participant has no such agreement or if such agreement does not define the term,
“Cause” means the Participant’s (i) willful misconduct in connection with the
performance of the Participant’s duties, (ii) misappropriation or embezzlement
of funds or material property of the Company or any Affiliate, (iii) fraud or
dishonesty with respect to the Company or any Affiliate, (iv) failure to perform
any of the material duties and responsibilities of the Participant’s position
(other than by reason of Disability) or failure to follow reasonable
instructions or policies of the Company, in either case after being advised in
writing of such failure and being given a reasonable opportunity and period (as
determined by the Company in its reasonable business judgment) to remedy such
failure (if such failure is capable of being remedied), which period shall not
be less than 30 days, (v) conviction of, indictment for (or the procedural
equivalent), or entering of a guilty plea or plea of no contest with respect to
any felony or any misdemeanor involving moral turpitude, (vi) material violation
of any policy, code or standard of behavior or ethics generally applicable to
employees of the Company, after being advised in writing of such breach or
violation and being given a reasonable opportunity and period (as determined by
the Company in its reasonable business judgment) to remedy such breach or
violation (if such breach or violation is capable of being remedied), which
period shall be not less than 30 days, (vii) willful violation of any final
cease and desist order, (viii) knowing breach of any fiduciary duty owed to the
Company or its Affiliates, or (ix) engaging in conduct that, if it became known
by any regulatory or governmental agency or the public, would result or is
reasonably likely to result, in the good faith judgment of the Company, in
material injury to the Company, monetarily or otherwise.

 

(h)     “Change of Control” means any one of the following events occurring
after the Effective Date:

 

(i) any person or entity, including a “group” as defined in Section 13(d)(3) of
the  Securities  Exchange  Act  of  1934,  a  wholly-owned subsidiary thereof,
or any employee benefit plan of the Company or any of its Subsidiaries becomes
the beneficial owner of Company Stock having fifty percent (50%) or more of the
combined voting power of the then outstanding securities of the Company that may
be cast for the election of directors of the Company (other than as a result of
the issuance of securities initiated by the Company in the ordinary course of
business);

 

(ii) as the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or contested election, or
any combination of the foregoing transactions, the holders of all Company’s
securities entitled to vote generally in the election of directors of the
Company immediately prior to such transaction constitute, following such
transaction, less than a majority of the combined voting power of the
then-outstanding securities of the Company or any of their respective successor
corporations or entities entitled to vote generally in the election of the
directors of Company or such other corporation or entity after such
transactions; or

 

(iii) the date a majority of members of the Company’s Board is replaced during
any 12-month period by directors whose appointment or election is not endorsed
by a majority of the members of the Company’s Board before the date of the
appointment or election.

 

(i)     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations promulgated thereunder.

 

(j)     “Committee” means the committee of the Board appointed by the Company to
administer the Plan pursuant to Article III, which shall be the Compensation
Committee of the Board unless a subcommittee is required as provided below or
unless the Board determines otherwise. All members of the Committee shall be
“independent directors” under applicable listing standards of any national
securities exchange or system on which the Stock is then listed or reported, or,
if the Stock is not then listed or reported on a national securities exchange or
system, under the applicable independence standard selected by the Company’s
Board. For actions which require that all of the members of the Committee
constitute “non-employee directors” as defined in Rule 16b-3, or any similar or
successor rule, the Committee shall consist of a subcommittee of at least two
members of the Compensation Committee meeting such qualifications. In the event
the Board exercises the authority of the Committee in connection with the Plan
or an Award as contemplated by Section 3.1(a), the term “Committee” shall refer
to the Board in connection with the Plan or with regard to that Award.

 

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(k)     “Company” means Parkway Acquisition Corp., a Virginia corporation.

 

(l)      “Disability” or “Disabled” means with respect to an Incentive Stock
Option, a Disability within the meaning of Code Section 22(e)(3). As to all
other Awards, the Committee shall determine whether a Disability exists and such
determination shall be conclusive.

 

(m)     “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time.

 

(n)      “Fair Market Value” of a Share means (i) the per Share price at the
close of business on the applicable principal U.S. market or applicable
broker-dealer quotation service on the relevant date if it is a trading date,
or, if not, on the most recent date on which the Stock was traded prior to such
date, as reported by the national securities exchange or system for the
applicable principal U.S. market or the applicable broker-dealer quotation
service or such other source as the Committee deems reliable, provided, however,
the Committee may elect to use, subject to applicable requirements of the Code,
the average closing price over a designated number of up to thirty (30)
consecutive days to determine the Fair Market Value if the daily volume of
trading in the Stock is not, in the sole discretion of the Committee, sufficient
to be a reliable indicator of Fair Market Value, or (ii) if the Stock is not
then traded or quoted on an established U.S. market or broker-dealer quotation
service or listed or reported on a national securities exchange or system or if,
in the opinion of the Committee, the method set forth in (i) is otherwise
inapplicable or inappropriate for any reason, the fair market value as
determined pursuant to a reasonable application of a reasonable method adopted
by the Committee in good faith for such purpose, which shall be conclusive and
binding on all persons, provided, however, that the Fair Market Value of Stock
subject to an Incentive Stock Option shall be determined in good faith within
the meaning of Treasury Regulation § 1.422-2(e)(2) and the Fair Market Value of
Stock subject to a Nonqualified Stock Option shall be determined in accordance
with Treasury Regulation § 1.409A-1(b)(5)(iv).

 

(o)     “Incentive Stock Option” or “ISO” means an option to purchase Stock,
granted under Article VI, which is designated as an incentive stock option and
is intended to meet the requirements of, and qualify for favorable federal
income tax treatment under, Code Section 422.

 

(p)     “Key Employee” means an officer or other key employee of the Company or
its Subsidiaries, who, in the opinion of the Committee, can contribute
significantly to the growth and profitability of, or perform services of
importance to, the Company and its Subsidiaries.

 

(q)     “Non-Employee Director” means an individual who is a member of the board
of directors of the Company or any Subsidiary thereof or a member of an advisory
board of the Company or any Subsidiary thereof and, in either case, who is not
an employee of the Company or any Subsidiary thereof.

 

(r)      “Nonqualified Stock Option” means an option to purchase Stock, granted
under Article VI, which is not intended to be an Incentive Stock Option and is
so designated, or which, in whole or in part, does not satisfy the requirements
to qualify as an Incentive Stock Option.

 

(s)     “Option” means an Incentive Stock Option or a Nonqualified Stock Option.

 

(t)      “Participant” means a Key Employee or Non-Employee Director who has
been granted an Award under the Plan and whose Award remains outstanding.

 

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(u)      “Performance Goal” means one or more performance measures or goals set
by the Committee in its discretion for each grant of an Award subject to
performance-based conditions. The extent to which such performance measures or
goals are met will determine the amount or value of such Award that a
Participant is entitled to exercise, receive or retain. For purposes of the
Plan, a Performance Goal may be particular to a Participant, and may include,
but is not limited to, any one or more of the following performance criteria,
either individually, alternatively or in any combination, subset or component,
applied to the performance of the Company as a whole or to the performance of a
Subsidiary, division, strategic business unit, line of business or business
segment, measured either quarterly, annually or cumulatively over a period of
years or partial years, in each case as specified by the Committee in the Award:
(i) Stock value or increases therein, (ii) total shareholder return, (iii)
operating revenue, (iv) commodity revenue, (v) tangible book value or tangible
book value growth, tangible book value per share or growth in tangible book
value per share, (vi) earnings per share or earnings per share growth (before or
after one or more of taxes, interest, depreciation and/or amortization), (vii)
diluted earnings per share or earnings per share growth (before or after one or
more of taxes, interest, depreciation and/or amortization), including fully
diluted earnings per share after extraordinary events, (viii) net earnings, (ix)
earnings and/or earnings growth (before or after one or more of taxes, interest,
depreciation and/or amortization), operating earnings and/or operating earnings
growth, (x) profits or profit growth (net profit, gross profit, operating
profit, net operating profit, economic profit, profit margins or other corporate
profit measures), (xi) cash flow, operating cash flow or free cash flow (either
before or after dividends), (xii) cash from operations, (xiii) operating or
other expenses or growth thereof, (xiv) operating efficiency, (xv) return on
equity, (xvi) return on tangible equity or return on tangible common equity,
(xvii) return on assets, net assets, capital or investment (including return on
total capital or return on invested capital), (xviii) return on operating
revenue, (xix) sales or revenues or growth thereof, (xx) deposits, loan and/or
equity levels or growth thereof, (xxi) working capital targets, (xxii) assets
under management or growth thereof, (xxiii) cost control measures, (xxiv)
regulatory compliance, (xxv) gross, operating or other margins, (xxvi)
efficiency ratio (as generally recognized and used for bank financial reporting
and analysis), (xvii) operating ratio, (xxviii) income or net income, (xxix)
operating income, (xxx) interest income, (xxxi) net interest income, (xxxii) net
interest margin, (xxxiii) non-interest income, (xxxiv) non-interest expense,
(xxxv) credit quality, net charge-offs and/or non-performing assets (excluding
such loans or classes of loans as may be designated for exclusion), (xxxvi)
percentage of non-accrual loans to total loans or net charge-off ratio, (xxxvii)
provision expense, (xxxviii) productivity, (xxxix) customer satisfaction, (xl)
satisfactory internal or external audits, (xli) improvement of financial
ratings, (xlii) achievement of balance sheet or income statement objectives,
(xliii) quality measures, (xliv) regulatory exam results, (xlv) achievement of
risk management objectives, (xlvi) achievement of strategic performance
objectives, (xlvii) achievement of merger or acquisition objectives, (xlviii)
implementation, management or completion of critical projects or processes,
(xlix) market capitalization, (l) total enterprise value (market capitalization
plus debt), (li) economic value added, (lii) debt leverage (debt to capital),
(lii) market share, or (liv) any component or components of the foregoing
(including, without limitation, determination thereof, in the Committee’s sole
discretion, with or without the effect of discontinued operations and
dispositions of business units or segments, non-recurring items, material
extraordinary items that are both unusual and infrequent, non-budgeted items,
special charges, accruals for acquisitions, reorganization and restructuring
programs and/or changes in tax law, accounting principles or other such laws or
provisions affecting the Company’s reported results). Performance Goals may
include a threshold level of performance below which no payment or vesting may
occur, levels of performance at which specified payments or specified vesting
will occur, and a maximum level of performance above which no additional payment
or vesting will occur. Performance Goals may be absolute in their terms or
measured against or in relationship to a pre-established target, the Company’s
budget or budgeted results, previous period results, a market index, a
designated comparison group of other companies comparably, similarly or
otherwise situated, or any combination thereof. The Committee shall determine
the performance period during which a Performance Goal must be met, and
attainment of Performance Goals shall be subject to certification by the
Committee.

 

(v)     “Period of Restriction” means the period during which Shares of
Restricted Stock are subject to a substantial risk of forfeiture and/or subject
to limitations on transfer, pursuant to Article VII, or the period during which
Restricted Stock Units are subject to vesting requirements, pursuant to Article
VIII, or the period prior to an Option’s or SAR’s becoming exercisable under the
terms of an Award Agreement. The relevant restriction may lapse based on a
period of time or after meeting performance criteria specified by the Committee,
or both. The Period of Restriction shall be set by the Committee; provided,
however, that except as provided in the following sentence, when the Period of
Restriction lapses solely based on a period of time, the length of such period
of time shall not be less than one year, subject to applicable provisions
regarding accelerated vesting events. The foregoing minimum Period of
Restriction shall not be applicable to (x) Awards granted to Non-Employee
Directors as a retainer for service, including annual or other grants made
pursuant to a director compensation policy or arrangement; nor to (y) Awards to
Key Employees for a number of Shares (when added to the aggregate number of
unrestricted Stock Awards to Key Employees) that does not exceed 15% of the
Shares authorized for issuance hereunder.

 

(w)    “Restricted Stock” means an Award of Stock granted to a Participant
pursuant to Article VII, which is subject to a substantial risk of forfeiture
and/or subject to limitations on transferability until the designated conditions
for the lapse of such restrictions, which may include achievement or
satisfaction of one or more Performance Goals, are satisfied.

 

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(x)     “Restricted Stock Unit” or “RSU” means an Award designated as a
Restricted Stock Unit, which is a bookkeeping entry granted to a Participant
pursuant to Article VIII, valued by reference to the Fair Market Value of Stock
or valued as a fixed dollar amount, and subject to vesting requirements, which
may include achievement or satisfaction of one or more Performance Goals.
Restricted Stock Units are payable in cash, Stock or a combination thereof. Even
to the extent a Restricted Stock Unit is denoted by reference to Shares of Stock
and is payable in Stock, the receipt of a Restricted Stock Unit Award does not
constitute receipt of the underlying Shares.

 

(y)     “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act,
including any corresponding subsequent rule or any amendments enacted after the
Effective Date.

 

(z)     “Stock” or “Shares” means the common stock of the Company.

 

(aa)    “Stock Appreciation Right” or “SAR” means an Award, designated as a
stock appreciation right, granted to a Participant pursuant to Article IX, and
payable in cash, Stock or a combination thereof.

 

(bb)     “Stock Award” means an Award of Stock granted to a Participant pursuant
to Article X.

 

(cc)     “Subsidiary,” for purposes of Incentive Stock Options, shall mean a
corporation at least fifty percent (50%) of the total combined voting power of
all classes of stock of which is owned by the Company, either directly or
through one or more of its Subsidiaries. For purposes of all Awards other than
Incentive Stock Options, “Subsidiary” shall mean any entity that would be
considered a single employer with the Company within the meaning of Code Section
414(b) or Code Section 414(c), except to the extent a different definition is
required under Code Section 409A.

 

 

ARTICLE III
Administration

 

3.1       The Committee.

 

(a)     The Plan shall be administered by the Committee which shall have all
powers necessary or desirable for such administration. To the extent required by
Rule 16b-3, all Awards shall be made by members of the Committee who are
“non-employee directors” as that term is defined in Rule 16b-3, or by the Board.
In the event the Board determines that a member of the Committee (or any
applicable subcommittee) was not an “independent director” under applicable
listing standards of any national securities exchange or system on which the
Stock is then listed or reported or other independence standard selected by the
Company’s Board if the Stock is not then listed or reported and/or was not a
“non-employee director” as defined in Rule 16b-3, as applicable, on the Award
Date, such determination shall not invalidate the Award and the Award shall
remain valid in accordance with its terms. Any authority granted to the
Committee may also be exercised by the full Board.

 

(b)     The express grant in this Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. In
addition to any other powers and, subject to the provisions of the Plan, the
Committee shall have the following specific powers: (i) to determine the terms
and conditions upon which the Awards may be made and exercised; (ii) to
determine all terms and provisions of each Agreement, which need not be
identical; (iii) to construe and interpret the Agreements and the Plan,
including the ability to resolve any ambiguities and define any terms; (iv) to
establish, amend or waive rules or regulations for the Plan’s administration;
(v) to accelerate the exercisability of any Award or the termination of any
Period of Restriction or other restrictions imposed under the Plan; and (vi) to
make all other determinations and take all other actions necessary or advisable
for the administration of the Plan. The interpretation and construction of any
provisions of the Plan or an Agreement by the Committee shall be final and
conclusive. In the event of a conflict or inconsistency between the Plan and any
Agreement, the Plan shall govern, and the Agreement shall be interpreted to
minimize or eliminate any such conflict or inconsistency.

 

(c)     The Committee may consult with counsel, who may be counsel to the
Company, and shall not incur any liability for any action taken in good faith in
reliance upon the advice of counsel.

 

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(d)     The Committee, in its discretion, may delegate to the Chief Executive
Officer of the Company all or part of the Committee’s authority and duties with
respect to Awards to individuals who are not subject to the reporting and other
provisions of Section 16 of the Exchange Act. The Committee may revoke or amend
the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Committee’s delegee or delegees that were consistent with
the terms of the Plan.

 

3.2       Selection of Participants. The Committee shall have the authority to
grant Awards under the Plan, from time to time, to such Key Employees and
Non-Employee Directors as may be selected by the Committee. Each Award shall be
evidenced by an Agreement. The Committee may grant Awards, subject to the terms
of the Plan, as part of, or in settlement of incentive opportunities under one
or more incentive or performance-based bonus programs of the Company or a
Subsidiary, including those based on attainment of Performance Goals.

 

3.3       Decisions Binding. All determinations and decisions made by the Board
or the Committee pursuant to the provisions of the Plan shall be final,
conclusive and binding.

 

3.4       Rule l6b-3 Requirements. Notwithstanding any provision of the Plan to
the contrary, the Board or the Committee may impose such conditions on any
Award, and amend the Plan in any such respects, as may be required to satisfy
the requirements of Rule 16b-3.

 

3.5       Indemnification of Committee. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against
reasonable expenses, including attorneys’ fees, actually and reasonably incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Award granted or made hereunder, and against all amounts reasonably
paid by them in settlement thereof or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, if such members acted in good faith and
in a manner which they believed to be in, and not opposed to, the best interests
of the Company and its Subsidiaries; provided, that the Company shall be
entitled to conduct or direct any such defense or appeal and approve any
settlement.

 

ARTICLE IV
Stock Subject to the Plan

 

4.1     Number of Shares.

 

(a)     Subject to adjustment as provided in Article XIV, the maximum aggregate
number of Shares that may be issued pursuant to Awards made under the Plan shall
not exceed 300,000. Except as provided in Section 4.2, the issuance of Shares in
connection with the exercise of, or as other payment for, Awards under the Plan
shall reduce the number of Shares available for future Awards under the Plan.

 

(b)     Subject to adjustment as provided in Article XIV, all 300,000 Shares
issuable under the Plan may be issued pursuant to the exercise of Incentive
Stock Options granted under the Plan (including shares issued pursuant to the
exercise of Incentive Stock Options that are the subject of disqualifying
dispositions within the meaning of Code Sections 421 and 422).

 

4.2     Lapsed Awards or Forfeited Shares. If any Award granted under this Plan
terminates, expires, or lapses for any reason other than by virtue of exercise,
vesting, or settlement of the Award, or if Shares issued pursuant to Awards are
forfeited, any Stock subject to such Award again shall be available for the
grant of an Award under the Plan.

 

4.3     Use of Shares as Payment of Exercise Price or Taxes. Shares withheld by
the Company, delivered by the Participant, or otherwise used to pay the Option
Price pursuant to the exercise of an Option or the SAR Exercise Price pursuant
to the exercise of a SAR shall not be available for future Awards under the
Plan. Shares withheld by the Company, delivered by the Participant, or otherwise
used to satisfy payment of withholding taxes associated with an Award shall not
be available for future Awards under the Plan. To the extent Shares are
delivered or withheld pursuant to the exercise of an Option or a SAR, the number
of underlying Shares as to which the exercise related shall be counted against
the number of Shares available for future Awards under the Plan, as opposed to
counting only those Shares issued upon exercise.

 

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4.4     Per-Participant Annual Limit. The maximum number of Shares with respect
to which Awards may be granted in any calendar year to any Key Employee during
such calendar year shall be 20,000 in the aggregate and the maximum number of
Shares with respect to which Awards may be granted in any calendar year to any
Non-Employee Director during such calendar year shall be 10,000 in the
aggregate.

 

4.5     No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award thereunder. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional Shares or whether such fractional Shares or any rights thereto
shall be forfeited or otherwise eliminated.

 

ARTICLE V
Eligibility

 

Persons eligible to participate in the Plan include (i) all employees of the
Company and its Subsidiaries (including any entity that becomes a Subsidiary
after the Effective Date) who, in the opinion of the Committee, are Key
Employees and (ii) all Non-Employee Directors. The grant of an Award shall not
obligate the Company to pay a Key Employee or Non-Employee Director any
particular amount of remuneration, to continue the employment of a Key Employee
or the service of a Non-Employee Director, or to make further grants to a Key
Employee or Non-Employee Director at any time thereafter.

 

ARTICLE VI
Stock Options

 

6.1     Grants of Options. Subject to the terms and provisions of the Plan,
Options may be granted to such Key Employees and Non-Employee Directors at any
time and from time to time as shall be determined by the Committee. The
Committee shall have complete discretion in determining the number of Shares
subject to Options granted to each Participant, provided, however, that only
Nonqualified Stock Options may be granted to Non-Employee Directors.

 

6.2     Option Agreement. Each Option grant shall be evidenced by an Agreement
that shall specify the type of Option granted, the Option Price (as hereinafter
defined), the duration of the Option, the number of Shares to which the Option
pertains, any conditions imposed upon the exercisability of the Option, and such
other provisions as the Committee shall determine. The Agreement shall specify
whether the Option is intended to be an Incentive Stock Option or Nonqualified
Stock Option, provided, however, that if an Option is intended to be an
Incentive Stock Option but fails to be such for any reason, it shall continue in
full force and effect as a Nonqualified Stock Option. No Option may be exercised
after the expiration of its term or, except as set forth in the Participant’s
Agreement, after the termination of the Participant’s employment or service. The
Committee shall set forth in the Participant’s Agreement when, and under what
circumstances, an Option may be exercised after termination of the Participant’s
employment or period of service.

 

6.3     Option Price. The exercise price per share of Stock covered by an Option
(“Option Price”) shall be determined by the Committee subject to the limitations
described in this Section 6.3 and the Plan. The Option Price shall not be less
than 100% of the Fair Market Value of such Stock on the Award Date.

 

6.4     Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant, provided, however, that no
Option shall be exercisable on or after the tenth (10th) anniversary date of its
Award Date.

 

6.5     Exercisability.

 

(a)     Options granted under the Plan shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall determine,
which need not be the same for all Participants.

 

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(b)     An Incentive Stock Option, by its terms, shall be exercisable in any
calendar year only to the extent that the aggregate Fair Market Value
(determined at the Award Date) of the Stock with respect to which Incentive
Stock Options are exercisable by the Participant for the first time during the
calendar year does not exceed $100,000 (the “Limitation Amount”). Incentive
Stock Options granted under the Plan and all other plans of the Company and any
Subsidiary shall be aggregated for purposes of determining whether the
Limitation Amount has been exceeded. The Committee may impose such conditions as
it deems appropriate on an Incentive Stock Option to ensure that the foregoing
requirement is met. If Incentive Stock Options that first become exercisable in
a calendar year exceed the Limitation Amount, the excess Options will be treated
as Nonqualified Stock Options to the extent permitted by law.

 

6.6     Method of Exercise. Options shall be exercised by the delivery of a
written notice to the Company in the form (which may be electronic) prescribed
by the Committee (or its delegee) setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares and payment of (or an arrangement satisfactory to the Company for the
Participant to pay) any tax withholding required in connection with the Option
exercise. To the extent approved by the Committee from time to time, the Option
Price shall be payable to the Company in full either (a) in cash, (b) by
delivery of Shares of Stock that the Participant has previously acquired and
owned valued at Fair Market Value at the time of exercise, provided that such
method of payment is then permitted under applicable law or regulation, (c) by
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to deliver promptly to the Company, from the sale
proceeds with respect to the sale of Stock, the amount necessary to pay the
Option Price and, if necessary, applicable withholding taxes, (d) if provided in
an Agreement, and only for a Nonqualified Stock Option, by the Company
withholding Shares otherwise issuable upon the exercise valued at Fair Market
Value at the time of exercise, or (e) by a combination of the foregoing. As soon
as practicable, after receipt of written notice and payment of the Option Price
and completion of payment of (or an arrangement satisfactory to the Company for
the Participant to pay) any tax withholding required in connection with the
Option exercise, the Company shall, in the Committee’s discretion, either
deliver to the Participant stock certificates in an appropriate amount based
upon the number of Options exercised, issued in the Participant’s name, or
deliver the appropriate number of Shares in book-entry or electronic form.

 

6.7     Restrictions on Stock Transferability. The Committee shall impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under the applicable federal securities law, under the requirements of any
national securities exchange or system on which the Stock is then listed or
reported, and under any blue sky or state securities laws applicable to such
Shares.

 

6.8     Nontransferability of Options. No Option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than upon the death of the Participant in accordance with Section
16.11. Further, Options granted to a Participant under the Plan shall be
exercisable during his lifetime only by such Participant or his guardian or
legal representative.

 

6.9     Disqualifying Disposition of Shares Issued on Exercise of an ISO. If a
Participant makes a “disposition” (within the meaning of Code Section 424(c)) of
Shares issued upon exercise of an ISO within two (2) years from the Award Date
or within one (1) year from the date the Shares are transferred to the
Participant, the Participant shall, within ten (10) days of disposition, notify
the Committee (or its delegee).

 

6.10     Shareholder Rights. A Participant holding Options shall have no right
to vote the underlying Shares, no right to receive dividends on the underlying
Shares, and no other rights as a shareholder until after the exercise of the
Options and the issuance of the underlying Shares. In no event shall any Option
granted under the Plan include any right to dividend equivalents with respect to
such Option or the underlying Shares.

 

ARTICLE VII
Restricted Stock

 

7.1     Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Key Employees and Non-Employee Directors
and in such amounts as it shall determine. Participants receiving Restricted
Stock Awards are not required to pay the Company therefor (except for applicable
tax withholding) other than the rendering of services. If determined by the
Committee, custody of Shares of Restricted Stock may be retained by the Company
until the termination of the Period of Restriction pertaining thereto.

 

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7.2     Restricted Stock Agreement. Each Restricted Stock Award shall be
evidenced by an Agreement that shall specify the Period of Restriction, the
number of Restricted Stock Shares granted, and, if applicable, any Performance
Goal(s), and such other provisions as the Committee shall determine.

 

7.3     Transferability. Except as provided in this Article VII and subject to
the limitation in the next sentence, the Shares of Restricted Stock granted
hereunder may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the termination of the applicable Period of
Restriction or upon earlier satisfaction of other conditions as specified by the
Committee in its sole discretion and set forth in the Agreement. All rights with
respect to the Restricted Stock granted to a Participant under the Plan shall be
exercisable during his lifetime only by such Participant or his guardian or
legal representative.

 

7.4     Other Restrictions. The Committee shall impose such other restrictions
on any Shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, restrictions under applicable federal
or state securities laws, and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions or otherwise
denote the Restricted Stock as restricted, if issued in book-entry or electronic
form.

 

7.5     Certificate Legend. Shares of Restricted Stock issued in book-entry or
electronic form are made subject, pursuant to Section 7.4, any Award of
Restricted Stock issued in book-entry or electronic form shall be subject to
such legend, and any certificates representing shares of Restricted Stock
granted pursuant to the Plan shall bear such legend, as may be required by the
Company or the Committee.

 

7.6     Removal of Restrictions. Except as otherwise provided in this Article
VII, the Agreement, or applicable law or regulation, Shares of Restricted Stock
covered by each Restricted Stock Award made under the Plan shall become freely
transferable by the Participant after the last day of the Period of Restriction,
and, where applicable, after a determination of the satisfaction or achievement
of any applicable Performance Goal(s). Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Section 7.5 removed from his Stock certificate or similar notation removed from
such Shares if issued in book-entry or electronic form.

 

7.7     Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.

 

7.8     Dividends and Other Distributions. During the Period of Restriction, any
dividends or distributions with respect to Shares of Restricted Stock shall be
subject to the same restrictions, including satisfaction of Performance Goals,
as the Shares of Restricted Stock with respect to which they were paid. Any cash
dividends and Stock dividends with respect to Restricted Stock shall be withheld
by the Company for the Participant’s account unless and until the underlying
shares of Restricted Stock vest, and interest may be credited on the amount of
cash dividends withheld at a rate and subject to such terms as determined by the
Committee. The cash dividends or Stock dividends so withheld by the Committee
and attributable to any particular Share of Restricted Stock shall be
distributed to the Participant in cash or Stock, as applicable, upon the release
of restrictions on such Share and, if such share is forfeited, the Participant
shall have no right to such dividends.

 

ARTICLE VIII

Restricted Stock Units

 

8.1     Grant of Restricted Stock Units. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant Restricted
Stock Units under the Plan (with one Unit representing one Share) to such Key
Employees and Non-Employee Directors and in such amounts as it shall determine.
Participants receiving Restricted Stock Unit Awards are not required to pay the
Company therefor (except for applicable tax withholding) other than the
rendering of services.

 

8.2     Restricted Stock Unit Agreement. Each Restricted Stock Unit Award shall
be evidenced by an Agreement that shall specify the Period of Restriction, the
number of Restricted Stock Units granted, and if applicable, any Performance
Period and Performance Goal(s), and such other provisions as the Committee shall
determine.

 

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A participant holding Restricted Stock Units shall have no rights to deemed
dividends or other distributions with respect to such Restricted Stock Units
unless the Committee provides otherwise in the Agreement. The Committee may
provide in the Agreement for deemed dividends or distributions with respect to
Restricted Stock Units; provided, that any deemed cash dividends and Stock
dividends with respect to such Restricted Stock Units shall be accounted for by
the Company until such time, if any, as the related Restricted Stock Units vest
The deemed cash dividends or Stock dividends so accounted for shall be
distributed to the Participant in cash or Stock, as applicable, upon the release
of restrictions on such Restricted Stock Unit and, if such Restricted Stock Unit
is forfeited, the Participant shall have no right to such deemed dividends. A
Participant holding Restricted Stock Units shall have no right to vote the
Shares represented by such Restricted Stock Units unless and until the
underlying Shares are issued to the Participant.

 

8.3     Payment after Lapse of Restrictions. Subject to the provisions of the
Agreement, upon the lapse of restrictions with respect to a Restricted Stock
Unit, the Participant is entitled to receive, without any payment to the Company
(other than required tax withholding), an amount equal to the product of
multiplying (a) the number of Shares equal to the number of Restricted Stock
Units with respect to which the restrictions lapse by (b) the Fair Market Value
per Share on the date the restrictions lapse. Payment shall be made at the
time(s) specified in the Agreement.

 

Payment of the RSU Value to the Participant shall be made in Shares, in cash or
a combination thereof as determined by the Committee, either at the time of the
Award or thereafter, and as provided in the Agreement. To the extent payment of
the RSU Value or to the Participant is made in Shares, such Shares shall be
valued at the Fair Market Value on the date the restrictions therefor lapse in
the case of an immediate payment or at the Fair Market Value on the date of
settlement in the event of a delayed. The Committee may specify in a Restricted
Stock Unit Agreement that the Shares which are delivered upon payment of the RSU
Value may be Restricted Stock pursuant to Article VII and subject to such
further restrictions and vesting as provided in the Restricted Stock Unit
Agreement.

 

8.4     Nontransferability of Restricted Stock Units. No Restricted Stock Unit
granted under the Plan, and no right to receive payment in connection therewith,
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than upon the death of the Participant in accordance with
Section 16.11.

 

ARTICLE IX

Stock Appreciation Rights

 

9.1     Grant of Stock Appreciation Rights. Subject to the terms and provisions
of the Plan, the Committee, at any time and from time to time, may grant Stock
Appreciation Rights under the Plan to such Key Employees and Non-Employee
Directors and in such amounts as it shall determine.

 

9.2     SAR Agreement. Each SAR grant shall be evidenced by an Agreement that
shall specify its terms and conditions, which terms and conditions shall be
determined by the Committee, subject to the limitations set forth in this
Article IX. The per Share exercise price of a SAR (the “SAR Exercise Price”)
shall not be less than 100% of the Fair Market Value of a Share on the Award
Date.

 

9.3     Exercisability of SARs. SARs may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes upon such SARs,
subject to the limitations set forth in this Article IX.

 

9.4     Other Conditions Applicable to SARs. In no event shall the term of any
SAR granted under the Plan exceed ten (10) years from the Award Date. A SAR may
be exercised only when the Fair Market Value of a Share exceeds the SAR Exercise
Price. A SAR shall be exercised by delivery to the Committee (or its delegee) of
a written notice of exercise in the form (which may be electronic) prescribed by
the Committee (or its delegee).

 

9.5     Payment after Exercise of SARs. Subject to the provisions of the
Agreement, upon the exercise of a SAR, the Participant is entitled to receive,
without any payment to the Company therefor (except for required tax
withholding), an amount (the “SAR Value”) equal to the product of multiplying
(i) the number of Shares with respect to which the SAR is exercised by (ii) an
amount equal to the excess of (A) the Fair Market Value per Share on the date of
exercise of the SAR over (B) the SAR Exercise Price. Payment of the SAR Value to
the Participant shall be made at the time of exercise in Shares, in cash or in a
combination thereof as determined by the Committee.

 

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9.6     Nontransferability of SARs. No SAR granted under the Plan, and no right
to receive payment in connection therewith, may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than upon the death of
the Participant in accordance with Section 16.11.

 

9.7     Shareholder Rights. A Participant holding SARs shall have no right to
vote the underlying Shares, no right to receive dividends on the underlying
Shares, and no other rights as a shareholder until after the exercise of the
SARs and the issuance of the underlying Shares. In no event shall any SAR
granted under the Plan include any right to dividend equivalents with respect to
such SAR or the underlying Shares.

 

ARTICLE X

Stock Awards

 

Subject to the terms and provisions of the Plan, the Committee, at any time and
from time to time, may grant unrestricted Stock Awards under the Plan to such
Non-Employee Directors and to Key Employees (as limited herein) in such amounts
as it shall determine. Unless otherwise provided in the Agreement, Participants
receiving Stock Awards are not required to pay the Company therefor (except for
applicable tax withholding) other than the rendering of services. Unless
otherwise provided in the applicable Agreement, Stock Awards shall be fully
vested and freely transferable as of the Award Date, subject to restrictions
under applicable federal or state securities laws. No more than 15% of the
Shares authorized for issuance hereunder may be granted as unrestricted Stock
Awards to Key Employees.

 

 

ARTICLE XI

Employment or Service

 

11.1     Termination Generally. The Committee shall provide in an Agreement the
effect on the applicable Award of a Participant’s termination of employment or
service with the Company or a Subsidiary.

 

11.2     Termination for Cause. Unless otherwise provided in the Agreement, in
the event a Participant’s employment or service is terminated for Cause, the
unvested portion and the vested portion not yet paid or exercised of each Award
held by the Participant shall be automatically forfeited to the Company without
consideration therefor and no further exercise of an Option or a SAR shall be
allowed.

 

11.3     No Employment or Other Service Rights. Nothing in the Plan or any
instrument executed or Award granted under the Plan shall confer upon any
Participant any right to continue to serve the Company or a Subsidiary in the
capacity in effect at the time the Award was granted or shall affect the right
of the Company or a Subsidiary to terminate (i) the employment of an employee
with or without notice and with or without Cause, or (ii) the service of a
director pursuant to the bylaws of the Company or an Subsidiary, and any
applicable provisions of the corporate law of Virginia in the case of the
Company or the corporate law of the jurisdiction in which a Subsidiary is
incorporated, as the case may be. Further, the grant of an Award shall not
obligate the Company or any Subsidiary to pay a Key Employee any particular
amount of remuneration or to make further grants to any Key Employee or
Non-Employee Director at any time thereafter.

 

Article XII

Change in Capital Structure

 

12.1     Effect of Change in Capital Structure. In the event of a stock
dividend, stock split or combination of shares, spin-off, recapitalization or
merger in which the Company is the surviving corporation, or other change in the
Company’s capital stock (including, but not limited to, the creation or issuance
to shareholders generally of rights, options or warrants for the purchase of
common stock or preferred stock of the Company), the number and kind of Shares
or securities of the Company to be issued under the Plan (under outstanding
Awards and Awards to be granted in the future), the Option Price of Options
and/or SAR Exercise Price of SARs, the annual limits on and the aggregate number
and kind of Shares for which Awards thereafter may be made, and other relevant
provisions of the Plan and outstanding Awards shall be proportionately,
equitably and appropriately adjusted by the Committee, whose determination shall
be binding on all persons. If the adjustment would produce fractional shares
with respect to any Award, the Committee may adjust appropriately the number of
shares covered by the Award so as to eliminate the fractional shares. Where an
Award being adjusted is an ISO or is subject to or falls under an exemption from
Code Section 409A, the adjustment of any Option and/or SAR shall also be
effected so as to comply with Code Section 424(a) and not to constitute a
modification within the meaning of Code Section 424(h) or Code Section 409A, as
applicable.

 

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12.2     Authority. Notwithstanding any provision of the Plan to the contrary,
the Committee may take the foregoing actions without the consent of any
Participant, and the Committee’s determination shall be conclusive and binding
on all persons for all purposes.

 

12.3     Manner of Adjustment. Adjustments made by the Committee pursuant to
this Article XIV to outstanding Awards shall be made as appropriate to maintain
favorable tax and/or accounting treatment.

 

ARTICLE XIII
Change of Control

 

In the event of a Change of Control of the Company, the Committee, as
constituted before such Change of Control, in its sole discretion and without
the consent of the Participant, may, as to any outstanding Award, either at the
time the Award is made or any time thereafter, take any one or more of the
following actions: (i) provide for acceleration of the vesting, delivery and
exercisability of, and the lapse of time-based and/or performance-based vesting
restrictions with respect to, any such Award so that such Award may be exercised
or realized in full on or before a date initially fixed by the Committee; (ii)
provide for the purchase, settlement or cancellation of any such Award by the
Company, for an amount of cash equal to the amount which could have been
obtained upon the exercise of such Award or realization of such Participant’s
rights had such Award been currently exercisable or payable; (iii) provide for
the replacement of any such Stock-settled Award with a cash-settled Award; (iv)
make such adjustment to any such Award then outstanding as the Committee deems
appropriate to reflect such Change of Control and to retain the economic value
of the Award; or (v) cause any such Award then outstanding to be assumed, or new
rights substituted therefor, by the acquiring or surviving corporation in such
Change of Control.

 

ARTICLE XIV

Amendment, Modification, and Substitution of Awards

 

14.1     Amendment, Modification and Substitution. Subject to the terms and
provisions and within the limitations of the Plan, the Committee may amend or
modify the terms of any outstanding Award or accelerate the vesting thereof. In
addition, the Committee may cancel or accept the surrender of outstanding Awards
(to the extent not yet exercised) granted under the Plan or outstanding awards
granted under any other equity compensation plan of the Company and authorize
the granting of new Awards pursuant to the Plan in substitution therefor so long
as the new or substituted awards do not specify a lower exercise price than the
cancelled or surrendered Awards or awards, and otherwise the new Awards may be
of a different type than the cancelled or surrendered Awards or awards, may
specify a longer term than the cancelled or surrendered Awards or awards, may
provide for more rapid vesting and exercisability than the cancelled or
surrendered Awards or awards, and may contain any other provisions that are
authorized by the Plan. Notwithstanding the foregoing, however, but subject to
Article XII and Article XIII, no amendment or modification of an Award, shall,
without the consent of the Participant, adversely affect the rights or
obligations of the Participant.

 

14.2      Option and SAR Repricing. Notwithstanding any provision of the Plan to
the contrary, neither the Committee nor the Board shall have the right or
authority to amend or modify the Option Price of any outstanding Option or the
SAR Exercise Price of any outstanding SAR, or to cancel an outstanding Option or
SAR, at a time when the Option Price or SAR Exercise Price, as applicable, is
greater than the Fair Market Value of a Share in exchange for cash, another
Award, or other securities, except in connection with a corporate transaction
involving the Company in accordance with Article XII or Article XIII.

 

ARTICLE XV

Termination, Amendment and Modification of the Plan

 

15.1     Termination, Amendment and Modification. At any time and from time to
time, the Board may terminate, amend, or modify the Plan. Such amendment or
modification may be without shareholder approval except to the extent that such
approval is required under state law, by the Code, pursuant to the rules under
Section 16 of the Exchange Act, by any national securities exchange or system on
which the Stock is then listed or reported, by any regulatory body having
jurisdiction with respect thereto or under any other applicable laws, rules or
regulations.

 

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15.2     Awards Previously Granted. No termination, amendment or modification of
the Plan other than pursuant to Article XII or Article XIII shall in any manner
adversely affect any Award previously granted under the Plan, without the
written consent of the Participant.

 

ARTICLE XVI
General

 

16.1     Applicable Withholding Taxes. Each Participant shall agree, as a
condition of receiving an Award, to pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, all applicable federal,
state and local taxes (including the Participant’s FICA obligation) required by
law to be withheld with respect to any grant, exercise, or payment made under or
as a result of the Plan. The Company shall withhold only the minimum amount
necessary to satisfy applicable statutory withholding requirements, provided
that the Committee, in its discretion, may permit a Participant to elect to have
an additional amount (up to the maximum applicable statutory rate) withheld.
Until the applicable withholding taxes have been paid or arrangements
satisfactory to the Company have been made, no stock certificates (or, in the
case of Restricted Stock, no stock certificates free of a restrictive legend)
shall be issued to the Participant and no issuance in book-entry or electronic
form (or, in the case of Restricted Stock, no issuance in book-entry or
electronic form free of a restrictive legend or notation) shall be made for the
Participant. As an alternative to making a cash payment to the Company to
satisfy applicable withholding tax obligations, the Committee may permit
Participants to elect or the Committee may require Participants to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares of Stock having a Fair Market Value equal to the amount required to be
withheld, or by delivering to the Company Shares of Stock that the Participant
has previously acquired and owned having a Fair Market Value equal to the amount
required to be withheld. The value of any Shares so withheld or delivered shall
be based on the Fair Market Value of the Shares on the date that the amount of
tax to be withheld is to be determined. All elections by Participants shall be
irrevocable and be made in writing and in such manner as determined by the
Committee (or its delegee) in advance of the day that the transaction becomes
taxable.

 

16.2     Requirements of Law. The granting of Awards and the issuance of Shares
of Stock under this Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or self
regulatory organizations as may be required.

 

16.3     Effect of Plan. The establishment of the Plan shall not confer upon any
Key Employee or Non-Employee Director any legal or equitable right against the
Company, a Subsidiary or the Committee, except as expressly provided in the
Plan. The Plan does not constitute an inducement or consideration for the
employment or service of any Key Employee or Non-Employee Director, nor is it a
contract between the Company or any of its Subsidiaries and any Key Employee or
Non-Employee Director. Participation in the Plan shall not give any Key Employee
or Non-Employee Director any right to be engaged or retained in the service of
the Company or any of its Subsidiaries. No Key Employee or Non-Employee Director
shall have rights as a shareholder of the Company prior to the date Shares are
issued to him pursuant to the Plan.

 

16.4     Creditors. The interests of any Participant under the Plan or any
Agreement are not subject to the claims of creditors and may not, in any way, be
assigned, alienated or encumbered.

 

16.5     Successors. All obligations of the Company under the Plan, with respect
to Awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of the
business and/or assets of the Company.

 

16.6     Securities Law Restrictions.  The Committee may require each
Participant purchasing or acquiring Shares pursuant to an Option or other Award
to represent to and agree with the Company in writing that such Participant is
acquiring the Shares for investment and not with a view to the distribution
thereof and that he will make no transfer of the same except in compliance with
any rules and regulations in effect at the time of transfer under the Securities
Act of 1933, as amended from time to time, or any other applicable securities
law.  All Shares delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem advisable
under applicable rules, regulations, and other requirements of the Securities
and Exchange Commission, any national securities exchange or system on which the
Stock is then listed or reported, and any applicable federal or state securities
laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions or otherwise
denote the Shares as being subject to such restrictions, if issued in book-entry
or electronic form. No Shares shall be issued hereunder unless the Company shall
have determined that such issuance is in compliance with, or pursuant to an
exemption from, all applicable federal and state securities laws.

 

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16.7     Governing Law. The Plan, and all Agreements hereunder, shall be
construed and administered in accordance with and governed by the laws of the
Commonwealth of Virginia, excluding any choice of law rules or principles that
might otherwise refer construction or interpretation of any provision of the
Plan or an Agreement to the substantive law of another jurisdiction. The Plan
and Awards are subject to all present and future applicable provisions of the
Code and, to the extent applicable, they are subject to all present and future
rulings of the Securities and Exchange Commission with respect to Rule 16b-3. If
any provision of the Plan or an Award conflicts with any such Code provision or
ruling, the Committee shall cause the Plan to be amended, and shall modify the
Award, so as to comply, or if for any reason amendments cannot be made, that
provision of the Plan or the Award shall be void and of no effect.

 

16.8     Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

 

16.9     Unfunded Status of Plan. The Plan is intended to constitute an
“unfunded” plan for incentive compensation. With respect to any payments as to
which a Participant has a fixed and vested interest but which are not yet made
to a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general unsecured
creditor of the Company.

 

16.10     Share Certificates and Book Entry. To the extent that the Plan
provides for issuance of stock certificates to represent shares of Stock, the
issuance may be effected on a non-certificated basis to the extent permitted by
applicable law and the applicable rules of any national securities exchange or
system on which the Stock is then listed or reported. Notwithstanding any
provision of the Plan to the contrary, in its discretion the Committee may
satisfy any obligation to deliver Shares represented by stock certificates by
delivering Shares in book-entry or electronic form. If the Company issues any
Shares in book-entry or electronic form that are subject to terms, conditions
and restrictions on transfer, a notation shall be made in the records of the
transfer agent with respect to any such Shares describing all applicable terms,
conditions and restrictions on transfer.

 

16.11     Beneficiary Designations. A Participant may designate a Beneficiary to
receive any Options or SARs that may be exercised after his death or to receive
any other Award that may be paid after his death, as provided for in the
Agreement. Such designation and any change or revocation of such designation
shall be made in writing in the form and manner prescribed by the Committee (or
its delegee). In the event that the designated Beneficiary dies prior to the
Participant, or in the event that no Beneficiary has been designated, any Awards
that may be exercised or paid following the Participant’s death shall be
transferred or paid in accordance with the Participant’s will or the laws of
descent and distribution. If the Participant and his Beneficiary shall die in
circumstances that cause the Committee (or its delegee), in its discretion, to
be uncertain which shall have been the first to die, the Participant shall be
deemed to have survived the Beneficiary.

 

16.12     Electronic Transmissions and Records. Subject to limitations under
applicable law, the Committee (and its delegee) is authorized in its discretion
to issue Awards and/or to deliver and accept notices, elections, consents,
designations and/or other forms or communications to or from Participants by
electronic or similar means, including, without limitation, transmissions
through e-mail or specialized software, recorded messages on electronic
telephone systems, and other permissible methods, on such basis and for such
purposes as it determines from time to time, and all such communications will be
deemed to be “written” for purposes of the Plan.

 

16.13     Clawback. All Awards granted under the Plan (whether vested or
unvested) shall be subject to such recovery or clawback as may be required
pursuant to the terms of any repayment, clawback or similar policy of the
Company or any Subsidiary as such may be in effect from time to time or any
applicable federal or other law or regulation or any applicable listing standard
of any national securities exchange or system on which the Stock is then listed
or reported, which could in certain circumstances require repayment or
forfeiture of Awards or any Shares or other cash or property received with
respect to the Awards (including any value received from a disposition of the
Shares acquired upon payment of the Awards).

 

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16.14     Banking Regulatory Provision. All Awards shall be subject to any
condition, limitation or prohibition under any financial institution regulatory
policy or rule to which the Company or any Subsidiary is subject.

 

16.15     Section 409A. This Plan is intended to provide compensation that is
exempt from or that complies with Code Section 409A and Treasury Regulations
thereunder (“Section 409A”), and the Plan’s terms and the terms of any Agreement
shall be administered and construed accordingly. For purposes of Section 409A,
each payment under this Plan, including each payment in any series of
installments, shall be deemed to be a separate payment.

 

Notwithstanding any provision of this Plan or an Agreement to the contrary, to
the extent that any payment is subject to Section 409A, if the Participant is a
“specified employee” within the meaning of Section 409A as of the date of the
Participant’s termination of employment and the Company determines, in good
faith, that immediate payment of any amounts or benefits under this Plan would
cause a violation of Section 409A, then any amounts or benefits payable under
this Plan upon the Participant’s “separation from service” within the meaning of
Section 409A which (i) are subject to the provisions of Section 409A; (ii) are
not otherwise exempt from Section 409A; and (iii) would otherwise be payable
during the first six-month period following such separation from service, shall
be paid on the first business day next following the earlier of (1) the date
that is six (6) months and one day following the Participant’s separation from
service or (2) the date of the Participant’s death.

 

16.16     Tax Consequences. Nothing in this Plan or an Award Agreement shall
constitute a representation by the Company to a Participant regarding the tax
consequences of any Award received by a Participant under this Plan. Although
the Company may endeavor to (i) qualify an Award for favorable or particular
federal tax treatment (e.g., as an Incentive Stock Option) or (ii) avoid adverse
tax treatment (e.g., under Section 409A), the Company makes no representation to
that effect and expressly disavows any covenant to maintain favorable tax
treatment. The Company shall be unconstrained in its corporate activities
without regard to the potential negative tax impact on holders of Awards under
this Plan.

 

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