EXHIBIT 10.33

2003 STOCK INCENTIVE PLAN

OF

RF MICRO DEVICES, INC.

 

--------------------------------------------------------------------------------

 

2003 STOCK INCENTIVE PLAN
OF
RF MICRO DEVICES, INC.

1. Purpose

     The purpose of the 2003 Stock Incentive Plan of RF Micro Devices, Inc. (the
“Plan”) is to encourage and enable selected employees, directors and independent
contractors of RF Micro Devices, Inc. (RF Micro Devices, Inc., together with any
successor corporation thereto, being referred to herein as the “Corporation”)
and its related entities to acquire or to increase their holdings of common
stock of the Corporation (the “Common Stock”) and other proprietary interests in
the Corporation in order to promote a closer identification of their interests
with those of the Corporation and its shareholders, thereby further stimulating
their efforts to enhance the efficiency, soundness, profitability, growth and
shareholder value of the Corporation. This purpose will be carried out through
the granting of benefits (collectively referred to herein as “awards”) to
selected employees, independent contractors and directors, including the
granting to selected participants of incentive stock options (“incentive
options”) intended to qualify under Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”), nonqualified stock options (“nonqualified
options”), stock appreciation rights (“SARs”), restricted awards in the form of
restricted stock awards (“restricted stock awards”) and restricted stock units
(“restricted stock units”), and performance awards in the form of performance
shares (“performance shares”) and performance units (“performance units”).
Incentive options and nonqualified options shall be referred to herein
collectively as “options.” Restricted stock awards and restricted stock units
shall be referred to herein collectively as “restricted awards.” Performance
shares and performance units shall be referred to herein collectively as
“performance awards.”

2. Administration of the Plan

     (a) The Plan shall be administered by the Board of Directors of the
Corporation (the “Board” or the “Board of Directors”) or, upon its delegation,
by the Compensation Committee of the Board of Directors (the “Committee”).
Unless the Board determines otherwise, the Committee shall be comprised solely
of two or more “non-employee directors,” as such term is defined in Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
as may otherwise be permitted under Rule 16b-3. Further, to the extent required
by Section 162(m) of the Code and related regulations, the Plan shall be
administered by a committee comprised of two or more “outside directors” (as
such term is defined in Section 162(m) or related regulations) or as may
otherwise be permitted under Section 162(m) and related regulations. For the
purposes herein, the term “Administrator” shall refer to the Board and, upon its
delegation to the Committee of all or part of its authority to administer the
Plan, to the Committee.

     (b) In addition to action by meeting in accordance with applicable laws,
any action of the Administrator with respect to the Plan may be taken by a
written instrument signed by all of the members of the Board or Committee, as
appropriate, and any such action so taken by written consent shall be as fully
effective as if it had been taken by a majority of the members at a meeting duly
held and called. Subject to the provisions of the Plan, the Administrator shall
have full and final authority in its discretion to take any action with respect
to the Plan including, without limitation, the authority (i) to determine all
matters relating to awards, including selection of individuals to be granted
awards, the types of awards, the number of shares of the Common Stock, if any,
subject to an award,

 

--------------------------------------------------------------------------------

 

and all terms, conditions, restrictions and limitations of an award; (ii) to
prescribe the form or forms of the agreements evidencing any awards granted
under the Plan; (iii) to establish, amend and rescind rules and regulations for
the administration of the Plan; and (iv) to construe and interpret the Plan,
awards and award agreements made under the Plan, to interpret rules and
regulations for administering the Plan and to make all other determinations
deemed necessary or advisable for administering the Plan. The Administrator
shall also have authority, in its sole discretion, to accelerate the date that
any award which was not otherwise exercisable, vested or earned shall become
exercisable, vested or earned in whole or in part without any obligation to
accelerate such date with respect to any other award granted to any recipient.
In addition, the Administrator shall have the authority and discretion to
establish terms and conditions of awards (including but not limited to the
establishment of subplans) as the Administrator determines to be necessary or
appropriate to conform to the applicable requirements or practices of
jurisdictions outside of the United States. No member of the Board or Committee,
as applicable, shall be liable while acting as Administrator for any action or
determination made in good faith with respect to the Plan, an award or an award
agreement. The members of the Board or Committee, as applicable, shall be
entitled to indemnification and reimbursement in the manner provided in the
Corporation’s articles of incorporation.

     (c) Notwithstanding the other provisions of Section 2, the Administrator
may delegate to one or more officers of the Corporation the authority to grant
awards, and to make any or all of the determinations reserved for the
Administrator in the Plan and summarized in Section 2(b) herein with respect to
such awards (subject to any restrictions imposed by applicable laws, rules and
regulations and such terms and conditions as may be established by the
Administrator); provided, however, that, to the extent required by Section 16 of
the Exchange Act or Section 162(m) of the Code, the participant, at the time of
said grant or other determination, (i) is not deemed to be an officer or
director of the Corporation within the meaning of Section 16 of the Exchange
Act; and (ii) is not deemed to be a “covered employee” as defined under Section
162(m) of the Code and related regulations. To the extent that the Administrator
has delegated authority to grant awards pursuant to this Section 2(c) to one or
more officers of the Corporation, references to the Administrator shall include
references to such officer or officers, subject, however, to the requirements of
the Plan, Rule 16b-3, Section 162(m) of the Code and other applicable laws,
rules and regulations.

3. Effective Date

     The effective date of the Plan shall be July 22, 2003 (the “Effective
Date”). Awards may be granted under the Plan on and after the Effective Date,
but no awards will be granted after July 21, 2013. Awards which are outstanding
on July 21, 2013 (or such earlier termination date as may be established by the
Board pursuant to Section 16(a) herein) shall continue in accordance with their
terms, unless otherwise provided in the Plan or an award agreement.

4. Shares of Stock Subject to the Plan; Award Limitations

     (a) Shares Available for Awards: Subject to adjustments as provided in this
Section 4(c), the aggregate number of shares of Common Stock that may be issued
pursuant to awards granted under the Plan shall not exceed the sum of
(i) 9,250,000 shares, plus (ii) any shares of Common Stock (A) remaining
available for issuance as of the Effective Date of the Plan under the
Corporation’s 1999 Stock Incentive Plan, Key Employees’ 1997 Stock Option Plan,
1992 Stock Option Plan and any other stock incentive plans maintained by the
Corporation (collectively, the “Prior Plans”), and/or (B) subject to an award
granted under a Prior Plan, which award is forfeited,

2

--------------------------------------------------------------------------------

 

cancelled, terminated, expires or lapses for any reason. Shares delivered under
the Plan shall be authorized but unissued shares or shares purchased on the open
market or by private purchase. The Corporation hereby reserves sufficient
authorized shares of Common Stock to meet the grant of awards hereunder.
Notwithstanding any provision herein to the contrary, the following limitations
shall apply to awards granted under the Plan, in each case subject to adjustment
pursuant to Section 4(c):

     (i) The maximum number of shares of Common Stock that may be issued under
the Plan pursuant to the grant of incentive stock options shall not exceed
9,250,000 shares; and

     (ii) No participant may be granted awards in any 12-month period for more
than 800,000 shares of Common Stock (or the equivalent value thereof based on
the fair market value per share of the Common Stock on the date of grant of an
award).

     (b) Shares not subject to limitations: The following will not be applied to
the share limitations of Section 4(a) above: (i) dividends, including dividends
paid in shares, or dividend equivalents paid in cash in connection with
outstanding awards, (ii) awards which by their terms are settled in cash,
(iii) shares and any awards that are granted through the assumption of, or in
substitution for, outstanding awards previously granted as the result of a
merger, consolidation, or acquisition of the employing company (or an affiliate)
pursuant to which it is merged with the Corporation or becomes a related entity
of the Corporation, (iv) any shares subject to an award under the Plan which
award is forfeited, cancelled, terminated, expires or lapses for any reason, and
(v) any shares surrendered by a participant or withheld by the Corporation to
pay the option price for an option or used to satisfy any tax withholding
requirement in connection with the exercise, vesting or earning of an award if,
in accordance with the terms of the Plan, a participant pays such option price
or satisfies such tax withholding by either tendering previously owned shares or
having the Corporation withhold shares.

     (c) Adjustments: If there is any change in the outstanding shares of Common
Stock because of a merger, consolidation or reorganization involving the
Corporation or a related entity, or if the Board of Directors of the Corporation
declares a stock dividend, stock split distributable in shares of Common Stock,
reverse stock split, combination or reclassification of the Common Stock, or if
there is a similar change in the capital stock structure of the Corporation or a
related entity affecting the Common Stock, the number of shares of Common Stock
reserved for issuance under the Plan shall be correspondingly adjusted, and the
Administrator shall make such adjustments to awards and to any provisions of
this Plan as the Administrator deems equitable to prevent dilution or
enlargement of awards or as may be otherwise advisable.

5. Eligibility

     An award may be granted only to an individual who satisfies the following
eligibility requirements on the date the award is granted:

     (a) The individual is either (i) an employee of the Corporation or a
related entity, (ii) a director of the Corporation or a related entity, or
(iii) an independent contractor, consultant or advisor (collectively,
“independent contractors”) providing services to the Corporation or a related
entity. For this purpose, an individual shall be considered to be an “employee”
only if there exists

3

--------------------------------------------------------------------------------

 

between the individual and the Corporation or a related entity the legal and
bona fide relationship of employer and employee.

     (b) With respect to the grant of incentive options, the individual does not
own, immediately before the time that the incentive option is granted, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Corporation or a related corporation. Notwithstanding the
foregoing, an individual who owns more than 10% of the total combined voting
power of the Corporation or a related corporation may be granted an incentive
option if the option price is at least 110% of the fair market value of the
Common Stock (as defined in Section 6(c)(ii) herein), and the option period (as
defined in Section 6(d)(i) herein) does not exceed five years. For this purpose,
an individual will be deemed to own stock which is attributable to him under
Section 424(d) of the Code.

     (c) With respect to the grant of substitute awards or assumption of awards
in connection with a merger, consolidation, acquisition, reorganization or
similar business combination involving the Corporation or a related entity, the
recipient is otherwise eligible to receive the award and the terms of the award
are consistent with the Plan and applicable laws, rules and regulations
(including, to the extent necessary, the federal securities laws registration
provisions and Section 424(a) of the Code).

     (d) The individual, being otherwise eligible under this Section 5, is
selected by the Administrator as an individual to whom an award shall be granted
(a “participant”).

6. Options

     (a) Grant of Options: Subject to the limitations of the Plan, the
Administrator may in its sole and absolute discretion grant options to such
eligible individuals in such numbers, subject to such terms and conditions, and
at such times as the Administrator shall determine. Both incentive options and
nonqualified options may be granted under the Plan, as determined by the
Administrator; provided, however, that incentive options may only be granted to
employees of the Corporation or a related corporation. To the extent that an
option is designated as an incentive option but does not qualify as such under
Section 422 of the Code, the option (or portion thereof) shall be treated as a
nonqualified option.

     (b) Option Price: The price per share at which an option may be exercised
(the “option price”) shall be established by the Administrator and stated in the
award agreement evidencing the grant of the option; provided, that (i) the
option price of an option shall be no less than the fair market value per share
of the Common Stock, as determined in accordance with Section 6(c)(ii) on the
date the option is granted (or 110% of the fair market value with respect to
incentive options granted to an employee who owns stock possessing more than 10%
of the total voting power of all classes of stock of the Corporation or a
related corporation, as provided in Section 5(b) herein); and (ii) in no event
shall the option price per share of any option be less than the par value per
share, if any, of the Common Stock.

(c) Date of Grant; Fair Market Value

     (i) An incentive option shall be considered to be granted on the date that
the Administrator acts to grant the option, or on any later date specified by
the Administrator as the effective date of the option. A nonqualified option
shall be considered to be granted on

4

--------------------------------------------------------------------------------

 

the date the Administrator acts to grant the option or any other date specified
by the Administrator as the date of grant of the option.

     (ii) For the purposes of the Plan, the fair market value per share of the
Common Stock shall be established in good faith by the Administrator and, except
as may otherwise be determined by the Administrator, the fair market value shall
be determined in accordance with the following provisions: (A) if the shares of
Common Stock are listed for trading on the New York Stock Exchange or the
American Stock Exchange, the fair market value shall be the closing sales price
per share of the shares on the New York Stock Exchange or the American Stock
Exchange (as applicable) on the date immediately preceding the date the option
is granted or other determination is made (each, a “valuation date”), or, if
there is no transaction on such date, then on the trading date nearest preceding
the valuation date for which closing price information is available, and,
provided further, if the shares are quoted on the Nasdaq National Market or the
Nasdaq SmallCap Market of the Nasdaq Stock Market but are not listed for trading
on the New York Stock Exchange or the American Stock Exchange, the fair market
value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such system on the date immediately or nearest
preceding the valuation date for which such information is available; or (B) if
the shares of Common Stock are not listed or reported in any of the foregoing,
then the fair market value shall be determined by the Administrator in
accordance with the applicable provisions of Section 20.2031-2 of the Federal
Estate Tax Regulations, or in any other manner consistent with the Code and
accompanying regulations.

     (iii) In no event shall there first become exercisable by an employee in
any one calendar year incentive options granted by the Corporation or any
related corporation with respect to shares having an aggregate fair market value
(determined at the time an incentive option is granted) greater than $100,000.

(d) Option Period and Limitations on the Right to Exercise Options

     (i) The term of an option (the “option period”) shall be determined by the
Administrator at the time the option is granted and shall be stated in the
individual award agreement. With respect to incentive options, the option period
shall not extend more than 10 years from the date on which the option is granted
(or five years with respect to incentive options granted to an employee who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Corporation or a related corporation, as provided in Section
5(b) herein). Any option or portion thereof not exercised before expiration of
the option period shall terminate. The period or periods during which, and
conditions pursuant to which, an option may become exercisable shall be
determined by the Administrator in its discretion, subject to the terms of the
Plan.

     (ii) An option may be exercised by giving written notice to the Corporation
in form acceptable to the Administrator at such place and subject to such
conditions as may be established by the Administrator or its designee. Such
notice shall specify the number of shares to be purchased pursuant to an option
and the aggregate purchase price to be paid therefor and shall be accompanied by
payment of such purchase price. Unless an individual award agreement provides
otherwise, such payment shall be in the form of cash or cash equivalent;
provided that, where permitted by the Administrator and applicable laws, rules

5

--------------------------------------------------------------------------------

 

and regulations (including but not limited to Section 402 of the Sarbanes-Oxley
Act of 2002), payment may also be made:

     (A) By delivery (by either actual delivery or attestation) of shares of
Common Stock owned by the participant at the time of exercise for a period of at
least six months and otherwise acceptable to the Administrator;

     (B) By shares of Common Stock withheld upon exercise;

     (C) By delivery of written notice of exercise to the Corporation and
delivery to a broker of written notice of exercise and irrevocable instructions
to promptly deliver to the Corporation the amount of sale or loan proceeds to
pay the option price;

     (D) By such other payment methods as may be approved by the Administrator
and which are acceptable under applicable law; or

     (E) By any combination of the foregoing methods.

Shares tendered or withheld in payment on the exercise of an option shall be
valued at their fair market value on the date of exercise, as determined by the
Administrator by applying the provisions of Section 6(c)(ii).

     (iii) Unless the Administrator determines otherwise, no option granted to a
participant who was an employee at the time of grant shall be exercised unless
the participant is, at the time of exercise, an employee as described in
Section 5(a), and has been an employee continuously since the date the option
was granted, subject to the following:

     (A) An option shall not be affected by any change in the terms, conditions
or status of the participant’s employment, provided that the participant
continues to be an employee of the Corporation or a related entity.

     (B) The employment relationship of a participant shall be treated as
continuing intact for any period that the participant is on military or sick
leave or other bona fide leave of absence, provided that the period of such
leave does not exceed 90 days, or, if longer, as long as the participant’s right
to reemployment is guaranteed either by statute or by contract. The employment
relationship of a participant shall also be treated as continuing intact while
the participant is not in active service because of disability. The
Administrator shall have sole authority to determine whether a participant is
disabled and, if applicable, the date of a participant’s termination of
employment or service for any reason (the “termination date”).

     (C) Unless the Administrator determines otherwise, if the employment of a
participant is terminated because of disability or death, the option may be
exercised only to the extent exercisable on the participant’s termination date,
except that the Administrator may in its discretion accelerate the date for
exercising all or any part of the option which was not

6

--------------------------------------------------------------------------------

 

otherwise exercisable on the termination date. The option must be exercised, if
at all, prior to the first to occur of the following, whichever shall be
applicable: (X) the close of the period of 12 months next succeeding the
termination date (or such other period stated in the applicable award
agreement); or (Y) the close of the option period. In the event of the
participant’s death, such option shall be exercisable by such person or persons
as shall have acquired the right to exercise the option by will or by the laws
of intestate succession.

     (D) Unless the Administrator determines otherwise, if the employment of the
participant is terminated for any reason other than disability, death or for
“cause,” his option may be exercised to the extent exercisable on his
termination date, except that the Administrator may in its discretion accelerate
the date for exercising all or any part of the option which was not otherwise
exercisable on the termination date. The option must be exercised, if at all,
prior to the first to occur of the following, whichever shall be applicable:
(X) the close of the period of 90 days next succeeding the termination date (or
such other period stated in the applicable award agreement); or (Y) the close of
the option period. If the participant dies following such termination of
employment and prior to the earlier of the dates specified in (X) or (Y) of this
subparagraph (D), the participant shall be treated as having died while employed
under subparagraph (C) immediately preceding (treating for this purpose the
participant’s date of termination of employment as the termination date). In the
event of the participant’s death, such option shall be exercisable by such
person or persons as shall have acquired the right to exercise the option by
will or by the laws of intestate succession.

     (E) Unless the Administrator determines otherwise, if the employment of the
participant is terminated for “cause,” his option shall lapse and no longer be
exercisable as of his termination date, as determined by the Administrator. For
purposes of the Plan, unless the Administrator determines otherwise, a
participant’s termination shall be for “cause” if such termination results from
the participant’s (X) termination for “cause” under the participant’s
employment, consulting or other agreement with the Corporation or a related
entity, if any, or (Y) if the participant has not entered into any such
employment, consulting or other agreement, then the participant’s termination
shall be for “cause” if termination results due to the participant’s
(i) dishonesty; (ii) refusal to perform his duties for the Corporation; or
(iii) engaging in conduct that could be materially damaging to the Corporation
without a reasonable good faith belief that such conduct was in the best
interest of the Corporation. The determination of “cause” shall be made by the
Administrator and its determination shall be final and conclusive.

     (F) Notwithstanding the foregoing, the Administrator may, in its
discretion, accelerate the date for exercising all or any part of an option
which was not otherwise exercisable on the termination date, extend the period
during which an option may be exercised, modify the terms and conditions to
exercise, or any combination of the foregoing.

7

--------------------------------------------------------------------------------

 

     (iv) Unless the Administrator determines otherwise, an option granted to a
participant who was a non-employee director of the Corporation or a related
entity at the time of grant may be exercised only to the extent exercisable on
the date of the participant’s termination of service to the Corporation or a
related entity (unless the termination was for cause), and must be exercised, if
at all, prior to the first to occur of the following, as applicable: (X) the
close of the period of 24 months next succeeding the termination date (or such
other period stated in the applicable award agreement); or (Y) the close of the
option period. If the services of such a participant are terminated for cause
(as defined in Section 6(a)(iii)(E) herein), his option shall lapse and no
longer be exercisable as of his termination date, as determined by the
Administrator. Notwithstanding the foregoing, the Administrator may in its
discretion accelerate the date for exercising all or any part of an option which
was not otherwise exercisable on the termination date, extend the period during
which an option may be exercised, modify the other terms and conditions to
exercise, or any combination of the foregoing.

     (v) Unless the Administrator determines otherwise, an option granted to a
participant who was an independent contractor of the Corporation or a related
entity at the time of grant (and who does not thereafter become an employee, in
which case he shall be subject to the provisions of Section 6(d)(iii) herein)
may be exercised only to the extent exercisable on the date of the participant’s
termination of service to the Corporation or a related entity (unless the
termination was for cause), and must be exercised, if at all, prior to the first
to occur of the following, as applicable: (X) the close of the period of 90 days
next succeeding the termination date (or such other period stated in the
applicable award agreement); or (Y) the close of the option period. If the
services of such a participant are terminated for cause (as defined in
Section 6(d)(iii)(E) herein), his option shall lapse and no longer be
exercisable as of his termination date, as determined by the Administrator.
Notwithstanding the foregoing, the Administrator may in its discretion
accelerate the date for exercising all or any part of an option which was not
otherwise exercisable on the termination date, extend the period during which an
option may be exercised, modify the other terms and conditions to exercise, or
any combination of the foregoing.

     (vi) A participant or his legal representative, legatees or distributees
shall not be deemed to be the holder of any shares subject to an option and
shall not have any rights of a shareholder unless and until certificates for
such shares have been issued and delivered to him or them under the Plan. A
certificate or certificates for shares of Common Stock acquired upon exercise of
an option shall be issued in the name of the participant (or his beneficiary)
and distributed to the participant (or his beneficiary) as soon as practicable
following receipt of notice of exercise and payment of the purchase price
(except as may otherwise be determined by the Corporation in the event of
payment of the option price pursuant to Section 6(d)(ii)(C) herein).

     (vii) If shares of Common Stock acquired upon exercise of an incentive
option are disposed of within two years following the date of grant or one year
following the transfer of such shares to a participant upon exercise, the
participant shall, promptly following such disposition, notify the Corporation
in writing of the date and terms of such disposition and provide such other
information regarding the disposition as the Administrator may reasonably
require.

8

--------------------------------------------------------------------------------

 

     (e) Nontransferability of Options: Incentive options shall not be
transferable (including by sale, assignment, pledge or hypothecation) other than
by will or the laws of intestate succession. Nonqualified options shall not be
transferable (including by sale, assignment, pledge or hypothecation) other than
by will or the laws of intestate succession, except as may be permitted by the
Administrator in a manner consistent with the registration provisions of the
Securities Act of 1933, as amended (the “Securities Act”). Except as may be
permitted by the preceding sentence, an option shall be exercisable during the
participant’s lifetime only by him or by his guardian or legal representative.
The designation of a beneficiary does not constitute a transfer.

7. Stock Appreciation Rights

     (a) Grant of SARs: Subject to the limitations of the Plan, the
Administrator may in its sole and absolute discretion grant SARs to such
eligible individuals, in such numbers, upon such terms and at such times as the
Administrator shall determine. SARs may be granted to the holder of an option
(hereinafter called a “related option”) with respect to all or a portion of the
shares of Common Stock subject to the related option (a “tandem SAR”) or may be
granted separately to an eligible individual (a “freestanding SAR”). Subject to
the limitations of the Plan, upon the exercise of an SAR, a participant shall be
entitled to receive from the Corporation, for each share of Common Stock with
respect to which the SAR is being exercised, consideration equal in value to the
excess of the fair market value of a share of Common Stock on the date of
exercise over the base price per share of such SAR. The base price per share of
an SAR shall be no less than the fair market value per share of the Common Stock
(as determined in accordance with Section 6(c)(ii)) on the date the SAR is
granted.

     (b) Tandem SARs: A tandem SAR may be granted either concurrently with the
grant of the related option or (if the related option is a nonqualified option)
at any time thereafter prior to the complete exercise, termination, expiration
or cancellation of such related option. Tandem SARs shall be exercisable only at
the time and to the extent that the related option is exercisable (and may be
subject to such additional limitations on exercisability as the Administrator
may provide in the agreement), and in no event after the complete termination or
full exercise of the related option. For purposes of determining the number of
shares of Common Stock that remain subject to such related option and for
purposes of determining the number of shares of Common Stock in respect of which
other awards may be granted, a related option shall be considered to have been
surrendered upon the exercise of a tandem SAR to the extent of the number of
shares of Common Stock with respect to which such tandem SAR is exercised. Upon
the exercise or termination of a related option, the tandem SARs with respect
thereto shall be canceled automatically to the extent of the number of shares of
Common Stock with respect to which the related option was so exercised or
terminated.

     (c) Freestanding SARs: An SAR may be granted without relationship to an
option (as defined above, a “freestanding SAR”) and, in such case, will be
exercisable upon such terms and subject to such conditions as may be determined
by the Administrator, subject to the terms of the Plan.

     (d) Exercise of SARs:

     (i) Subject to the terms of the Plan, SARs shall be exercisable in whole or
in part upon such terms and conditions as may be established by the
Administrator and stated in the applicable award agreement. The period during
which an SAR may be exercisable shall not exceed 10 years from the date of grant
or, in the case of tandem SARs, such shorter option

9

--------------------------------------------------------------------------------

 

period as may apply to the related option. Any SAR or portion thereof not
exercised before expiration of the exercise period established by the
Administrator shall terminate.

     (ii) SARs may be exercised by giving written notice to the Corporation in
form acceptable to the Administrator at such place and subject to such terms and
conditions as may be established by the Administrator or its designee. The date
of exercise of an SAR shall mean the date on which the Corporation shall have
received proper notice from the participant of the exercise of such SAR.

     (iii) Each participant’s award agreement shall set forth the extent to
which the participant shall have the right to exercise an SAR following
termination of the participant’s employment or service with the Corporation.
Such provisions shall be determined in the sole discretion of the Administrator,
shall be included in the award agreement entered into with a participant, need
not be uniform among all SARs issued pursuant to this Section 7, and may reflect
distinctions based on the reasons for termination of employment. Notwithstanding
the foregoing, unless the Administrator determines otherwise, no SAR may be
exercised unless the participant is, at the time of exercise, an eligible
participant, as described in Section 5, and has been a participant continuously
since the date the SAR was granted, subject to the provisions of Sections
6(d)(iii), (iv) and (v) herein.

     (e) Consideration: The consideration to be received upon the exercise of
the SAR by the participant shall be paid in cash, shares of Common Stock (valued
at fair market value on the date of exercise of such SAR in accordance with
Section 6(c)(ii) herein) or a combination of cash and shares of Common Stock, as
elected by the Administrator. The Corporation’s obligation arising upon the
exercise of the SAR may be paid currently or on a deferred basis with such
interest or earnings equivalent, if any, as the Administrator may determine. A
certificate or certificates for shares of Common Stock acquired upon exercise of
an SAR for shares shall be issued in the name of the participant (or his
beneficiary) and distributed to the participant (or his beneficiary) as soon as
practicable following receipt of notice of exercise. A participant or his legal
representative, legatees or distributees shall not be deemed to be the holder of
any shares subject to an SAR and shall not have any rights as a shareholder
unless and until certificates for such shares have been issued and delivered to
him or them under the Plan. No fractional shares of Common Stock will be
issuable upon exercise of the SAR and, unless otherwise provided in the
applicable award agreement, the participant will receive cash in lieu of
fractional shares.

     (f) Limitations: The applicable award agreement shall contain such terms,
conditions and limitations consistent with the Plan as may be specified by the
Administrator. Unless otherwise provided in the applicable award agreement or
the Plan, any such terms, conditions or limitations relating to a tandem SAR
shall not restrict the exercisability of the related option.

     (g) Nontransferability: Unless the Administrator determines otherwise, SARs
shall not be transferable (including by sale, assignment, pledge or
hypothecation) other than by will or the laws of intestate succession, and SARs
may be exercised during the participant’s lifetime only by him or by his
guardian or legal representative. The designation of a beneficiary does not
constitute a transfer.

10

--------------------------------------------------------------------------------

 

8. Restricted Awards

     (a) Grant of Restricted Awards: Subject to the limitations of the Plan, the
Administrator may in its sole and absolute discretion grant restricted awards to
such individuals in such numbers, upon such terms and at such times as the
Administrator shall determine. Such restricted awards may be in the form of
restricted stock awards and/or restricted stock units that are subject to
certain conditions, which conditions must be met in order for the restricted
award to vest and be earned (in whole or in part) and no longer subject to
forfeiture. Restricted awards shall be payable in cash or whole shares of Common
Stock (including restricted stock), or partly in cash and partly in whole shares
of Common Stock, in accordance with the terms of the Plan and the sole and
absolute discretion of the Administrator. The Administrator shall determine the
nature, length and starting date of the period, if any, during which a
restricted award may be earned (the “restriction period”), and shall determine
the conditions which must be met in order for a restricted award to be granted
or to vest or be earned (in whole or in part), which conditions may include, but
are not limited to, attainment of performance objectives, continued service or
employment for a certain period of time (or a combination of attainment of
performance objectives and continued service), retirement, displacement,
disability, death, or any combination of such conditions. In the case of
restricted awards based upon performance criteria, or a combination of
performance criteria and continued service, the Administrator shall determine
the performance objectives to be used in valuing restricted awards, which
performance objectives may vary from participant to participant and between
groups of participants and shall be based upon such corporate, business unit or
division and/or individual performance factors and criteria as the Administrator
in its sole discretion may deem appropriate; provided, however, that, with
respect to restricted awards payable to covered employees which are intended to
be eligible for the compensation deduction limitation exception available under
Section 162(m) of the Code and related regulations, such performance factors
shall be limited to one or more of the following (as determined by the
Administrator in its discretion): sales goals, earnings per share, return on
equity, return on assets and total return to shareholders. The Administrator
shall have sole authority to determine whether and to what degree restricted
awards have vested and been earned and are payable and to establish and
interpret the terms and conditions of restricted awards and the provisions
herein. The Administrator shall also determine the form and terms of payment of
restricted awards. The Administrator, in its sole and absolute discretion, may
accelerate the date that any restricted award granted to the participant shall
be deemed to be vested or earned in whole or in part, without any obligation to
accelerate such date with respect to other restricted awards granted to any
participant.

     (b) Forfeiture of Restricted Awards: Unless the Administrator determines
otherwise, if the employment or service of a participant shall be terminated for
any reason and all or any part of a restricted award has not vested or been
earned pursuant to the terms of the Plan and the individual award agreement,
such award, to the extent not then vested or earned, shall be forfeited
immediately upon such termination and the participant shall have no further
rights with respect thereto.

     (c) Dividend and Voting Rights; Share Certificates: The Administrator shall
have sole discretion to determine whether a participant shall have dividend
rights, voting rights or other rights as a shareholder with respect to shares
subject to a restricted award which has not yet vested or been earned. Unless
the Administrator determines otherwise, a certificate or certificates for shares
of Common Stock subject to a restricted award shall be issued in the name of the
participant (or his beneficiary) and distributed to the participant (or his
beneficiary) as soon as practicable after the shares subject to the award (or
portion thereof) have vested and been earned. Notwithstanding the foregoing, the
Administrator shall have the right to retain custody of certificates evidencing
the

11

--------------------------------------------------------------------------------

 

shares subject to a restricted award and to require the participant to deliver
to the Corporation a stock power, endorsed in blank, with respect to such award,
until such time as the restricted award vests (or is forfeited).

     (d) Nontransferability: Unless the Administrator determines otherwise,
restricted awards that have not vested shall not be transferable (including by
sale, assignment, pledge or hypothecation) other than by will or the laws of
intestate succession, and the recipient of a restricted award shall not sell,
transfer, assign, pledge or otherwise encumber shares subject to the award until
the restriction period has expired and until all conditions to vesting have been
met.

9. Performance Awards

     (a) Grant of Performance Awards: Subject to the terms of the Plan,
performance awards may be granted to participants upon such terms and conditions
and at such times as shall be determined by the Administrator. Such performance
awards may be in the form of performance shares and/or performance units. An
award of a performance share is a grant of a right to receive shares of Common
Stock or the cash value thereof (or a combination thereof) which is contingent
upon the achievement of performance or other objectives during a specified
period and which has a value on the date of grant equal to the fair market value
(as determined in accordance with Section 6(c)(iii) herein) of a share of Common
Stock. An award of a performance unit is a grant of a right to receive shares of
Common Stock or a designated dollar value amount of Common Stock which is
contingent upon the achievement of performance or other objectives during a
specified period, and which has an initial value established by the
Administrator at the time of grant. Subject to Section 4(a), above, the
Administrator shall have complete discretion in determining the number of
performance units and/or performance shares granted to any participant. The
Administrator shall determine the nature, length and starting date of the period
during which a performance award may be earned (the “performance period”), and
shall determine the conditions which must be met in order for a performance
award to be granted or to vest or be earned (in whole or in part), which
conditions may include but are not limited to specified performance objectives,
continued service or employment for a certain period of time, or a combination
of such conditions. The Administrator shall determine the performance objectives
to be used in valuing performance awards, which performance objectives may vary
from participant to participant and between groups of participants and shall be
based on such corporate, business unit or division and/or individual performance
factors and criteria as the Administrator in its sole discretion may deem
appropriate; provided, however, that, with respect to performance awards payable
to covered employees which are intended to be eligible for the compensation
deduction limitation exception available under Section 162(m) of the Code and
related regulations, such performance factors shall be limited to one or more of
the following (as determined by the Administrator in its discretion): sales
goals, earnings per share, return on equity, return on assets and total return
to shareholders. The Administrator shall have sole authority to determine
whether and to what degree performance awards have been earned and are payable
and to interpret the terms and conditions of performance awards and the
provisions herein. The Administrator also shall determine the form and terms of
payment of performance awards. The Administrator, in its sole and absolute
discretion, may accelerate the date that any performance award granted to a
participant shall be deemed to be earned in whole or in part, without any
obligation to accelerate such date with respect to other awards granted to any
participant.

     (b) Form of Payment: Payment of the amount to which a participant shall be
entitled upon earning a performance award shall be made in cash, shares of
Common Stock, or a combination of cash and shares of Common Stock, as determined
by the Administrator in its sole

12

--------------------------------------------------------------------------------

 

discretion. Payment may be made in a lump sum or in installments upon such terms
as may be established by the Administrator.

     (c) Forfeiture of Performance Awards: Unless the Administrator determines
otherwise, if the employment or service of a participant shall terminate for any
reason and the participant has not earned all or part of a performance award
pursuant to the terms of the Plan and individual award agreement, such award, to
the extent not then earned, shall be forfeited immediately upon such termination
and the participant shall have no further rights with respect thereto.

     (d) Dividend and Voting Rights; Share Certificates: The Administrator shall
have sole discretion to determine whether a participant shall have dividend
rights, voting rights, or other rights as a shareholder with respect to shares,
if any, which are subject to a performance award prior to the time the
performance award has been earned. Unless the Administrator determines
otherwise, a certificate or certificates for shares of Common Stock, if any,
subject to a performance award shall be issued in the name of the participant
(or his beneficiary) and distributed to the participant (or his beneficiary) as
soon as practicable after the award has been earned. Notwithstanding the
foregoing, the Administrator shall have the right to retain custody of
certificates evidencing the shares subject to a performance award and the right
to require the participant to deliver to the Corporation a stock power, endorsed
in blank, with respect to such award, until such time as the award is earned (or
forfeited).

     (e) Nontransferability: Unless the Administrator determines otherwise,
performance awards which have not been earned shall not be transferable
(including by sale, assignment, pledge or hypothecation) other than by will or
the laws of intestate succession, and the recipient of a performance award shall
not sell, transfer, assign, pledge or otherwise encumber any shares subject to
the award until the performance period has expired and until the conditions to
earning the award have been met.

10. Withholding

     The Corporation shall withhold all required local, state, federal, foreign
and other taxes from any amount payable in cash with respect to an award. Prior
to the delivery or transfer of any certificate for shares or any other benefit
conferred under the Plan, the Corporation shall require any recipient of an
award to pay to the Corporation in cash the amount of any tax or other amount
required by any governmental authority to be withheld and paid over by the
Corporation to such authority for the account of such recipient. Notwithstanding
the foregoing, the Administrator may establish procedures to permit a recipient
to satisfy such obligation in whole or in part, and any local, state, federal,
foreign or other income tax obligations relating to such an award, by electing
(the “election”) to have the Corporation withhold shares of Common Stock from
the shares to which the recipient is entitled. The number of shares to be
withheld shall have a fair market value as of the date that the amount of tax to
be withheld is determined as nearly equal as possible to (but not exceeding) the
amount of such obligations being satisfied. Each election must be made in
writing to the Administrator in accordance with election procedures established
by the Administrator.

11. Dividends and Dividend Equivalents

     The Administrator may, in its sole discretion, provide that the awards
granted under the Plan earn dividends or dividend equivalents. Such dividends or
dividend equivalents may be paid currently or may be credited to a participant’s
account. Any crediting of dividends or dividend

13

--------------------------------------------------------------------------------

 

equivalents may be subject to such restrictions and conditions as the
Administrator may establish, including reinvestment in additional shares of
Common Stock or share equivalents.

12. Section 16(b) Compliance

     To the extent that any participants in the Plan are subject to Section
16(b) of the Exchange Act, it is the general intention of the Corporation that
transactions under the Plan shall comply with Rule 16b-3 under the Exchange Act
and that the Plan shall be construed in favor of the Plan transactions meeting
the requirements of Rule 16b-3 or any successor rules thereto. Notwithstanding
anything in the Plan to the contrary, the Administrator, in its sole and
absolute discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to participants who are officers
or directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other participants.

13. Code Section 162(m) Performance-Based Compensation

     To the extent to which Section 162(m) of the Code is applicable, the
Corporation intends that compensation paid under the Plan to covered employees
(as such term is defined in Section 162(m) and related regulations) will, to the
extent practicable, constitute qualified “performance-based compensation” within
the meaning of Section 162(m) and related regulations, unless otherwise
determined by the Administrator. Accordingly, the provisions of the Plan shall
be administered and interpreted in a manner consistent with Section 162(m) and
related regulations to the extent practicable to do so.

14. No Right or Obligation of Continued Employment or Service

     Nothing in the Plan shall confer upon the participant any right to continue
in the service of the Corporation or a related entity as an employee, director
or independent contractor or to interfere in any way with the right of the
Corporation or a related entity to terminate the participant’s employment or
service at any time. Except as otherwise provided in the Plan or an award
agreement, awards granted under the Plan to employees of the Corporation or a
related entity shall not be affected by any change in the duties or position of
the participant, as long as such individual remains an employee of, or in
service to, the Corporation or a related entity.

15. Unfunded Plan; Retirement Plans

     (a) Neither a participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of the
Corporation or any related entity, including, without limitation, any specific
funds, assets or other property which the Corporation or any related entity, in
their discretion, may set aside in anticipation of a liability under the Plan. A
participant shall have only a contractual right to the Common Stock or amounts,
if any, payable under the Plan, unsecured by any assets of the Corporation or
any related entity. Nothing contained in the Plan shall constitute a guarantee
that the assets of such corporations shall be sufficient to pay any benefits to
any person.

     (b) The amount of any compensation deemed to be received by a participant
pursuant to an award shall not constitute compensation with respect to which any
other employee benefits of such participant are determined, including, without
limitation, benefits under any bonus, pension,

14

--------------------------------------------------------------------------------

 

profit sharing, life insurance or salary continuation plan, except as otherwise
specifically provided by the terms of such plan or as may be determined by the
Administrator.

     (c) The adoption of the Plan shall not affect any other stock incentive or
other compensation plans in effect for the Corporation or any related entity,
nor shall the Plan preclude the Corporation from establishing any other forms of
stock incentive or other compensation for employees or service providers of the
Corporation or any related entity.

16. Amendment and Termination of the Plan

     (a) General: The Plan and any award granted under the Plan may be amended
or terminated at any time by the Board of Directors of the Corporation;
provided, that (i) approval of an amendment to the Plan by the shareholders of
the Corporation shall be required to the extent, if any, that shareholder
approval of such amendment is required by applicable law, rule or regulation;
and (ii) amendment or termination of an award shall not, without the consent of
a recipient of an award, materially adversely affect the rights of the recipient
with respect to an outstanding award. Notwithstanding clause (i) of the
preceding sentence, except for adjustments made pursuant to Section 4(c), the
option price for any outstanding option or base price of any outstanding SAR
granted under the Plan may not be decreased after the date of grant, nor may any
outstanding option or SAR granted under the Plan be surrendered to the
Corporation as consideration for the grant of a new option or SAR with a lower
exercise or base price than the original option or SAR, as the case may be,
without shareholder approval of any such action.

     (b) Adjustment of Awards upon the Occurrence of Certain Unusual or
Nonrecurring Events: The Administrator shall have authority to make adjustments
to the terms and conditions of awards in recognition of unusual or nonrecurring
events affecting the Corporation or any related entity, or the financial
statements of the Corporation or any related entity, or of changes in applicable
laws, regulations or accounting principles, if the Administrator determines that
such adjustments are appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan
or necessary or appropriate to comply with applicable laws, rules or
regulations.

     (c) Cash Settlement: Notwithstanding any provision of the Plan, an award or
an award agreement to the contrary, the Administrator may cause any award
granted under the Plan to be canceled in consideration of an alternative award
or cash payment of an equivalent cash value, as determined by the Administrator,
made to the holder of such canceled award.

17. Restrictions on Awards and Shares

     The Corporation may impose such restrictions on awards and shares
representing awards hereunder as it may deem advisable, including without
limitation restrictions under the federal securities laws, the requirements of
any stock exchange or similar organization and any blue sky or state securities
laws applicable to such securities. Notwithstanding any other Plan provision to
the contrary, the Corporation shall not be obligated to issue, deliver or
transfer shares of Common Stock under the Plan, make any other distribution of
benefits under the Plan, or take any other action, unless such delivery,
distribution or action is in compliance with all applicable laws, rules and
regulations (including but not limited to the requirements of the Securities
Act). The Corporation may cause a restrictive legend to be placed on any
certificate issued pursuant to an award hereunder

15

--------------------------------------------------------------------------------

 

in such form as may be prescribed from time to time by applicable laws and
regulations or as may be advised by legal counsel.

18. Change of Control

     (a) Notwithstanding any other provision of the Plan to the contrary, and
unless an individual award agreement provides otherwise, in the event of a
change of control (as defined in Section 18(c) herein):

     (i) All options and SARs outstanding as of the date of such change of
control shall become fully exercisable, whether or not then otherwise
exercisable.

     (ii) Any restrictions including but not limited to the restriction period,
performance period and/or performance criteria applicable to any restricted
award and any performance award shall be deemed to have been met, and such
awards shall become fully vested, earned and payable to the fullest extent of
the original grant of the applicable award.

     (b) Notwithstanding the foregoing, in the event of a merger, share
exchange, reorganization or other business combination affecting the Corporation
or a related entity, the Administrator may, in its sole and absolute discretion,
determine that any or all awards granted pursuant to the Plan shall not vest or
become exercisable on an accelerated basis, if the Corporation or the surviving
or acquiring corporation, as the case may be, shall have taken such action,
including but not limited to the assumption of awards granted under the Plan or
the grant of substitute awards (in either case, with substantially similar terms
or equivalent economic benefits as awards granted under the Plan), as in the
opinion of the Administrator is equitable or appropriate to protect the rights
and interests of participants under the Plan. For the purposes herein, if the
Committee is acting as the Administrator authorized to make the determinations
provided for in this Section 18(b), the Committee shall be appointed by the
Board of Directors, two-thirds of the members of which shall have been directors
of the Corporation prior to the merger, share exchange, reorganization or other
business combinations affecting the Corporation or a related entity.

     (c) For the purposes herein, a “change of control” shall be deemed to have
occurred on the earliest of the following dates:

     (i) The date any entity or person shall have become the beneficial owner
of, or shall have obtained voting control over, fifty-one percent (51%) or more
of the outstanding Common Stock of the Corporation;

     (ii) The date the shareholders of the Corporation approve a definitive
agreement (A) to merge or consolidate the Corporation with or into another
corporation or other business entity (each, a “corporation”), in which the
Corporation is not the continuing or surviving corporation or pursuant to which
any shares of Common Stock of the Corporation would be converted into cash,
securities or other property of another corporation, other than a merger or
consolidation of the Corporation in which holders of Common Stock immediately
prior to the merger or consolidation have the same proportionate ownership of
Common Stock of the surviving corporation immediately after the merger as
immediately before, or (B) to sell or otherwise dispose of all or substantially
all the assets of the Corporation; or

16

--------------------------------------------------------------------------------

 

     (iii) The date there shall have been a change in a majority of the Board of
Directors of the Corporation within a 12-month period unless the nomination for
election by the Corporation’s shareholders of each new director was approved by
the vote of two-thirds of the directors then still in office who were in office
at the beginning of the 12-month period.

(For purposes herein, the term “person” shall mean any individual, corporation,
partnership, group, association or other person, as such term is defined in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, other than the
Corporation, a subsidiary of the Corporation or any employee benefit plan(s)
sponsored or maintained by the Corporation or any subsidiary thereof, and the
term “beneficial owner” shall have the meaning given the term in Rule 13d-3
under the Exchange Act.)

19. Applicable Law

     The Plan shall be governed by and construed in accordance with the laws of
the State of North Carolina, without regard to the conflict of laws provisions
of any state.

20. Shareholder Approval

     The Plan is subject to approval by the shareholders of the Corporation,
which approval must occur, if at all, within 12 months of the Effective Date of
the Plan. Awards granted prior to such shareholder approval shall be conditioned
upon and shall be effective only upon approval of the Plan by such shareholders
on or before such date.

21. Deferrals

     The Administrator may permit or require a participant to defer receipt of
the delivery of shares of Common Stock or other benefit that would otherwise be
due pursuant to the exercise, vesting or earning of an award. If any such
deferral is required or permitted, the Administrator shall, in its discretion,
establish rules and procedures for such deferrals.

22. Beneficiary Designation

     The Administrator may permit a participant to designate in writing a person
or persons as beneficiary, which beneficiary shall be entitled to receive
settlement of awards (if any) to which the participant is otherwise entitled in
the event of death. In the absence of such designation by a participant, and in
the event of the participant’s death, the estate of the participant shall be
treated as beneficiary for purposes of the Plan, unless the Administrator
determines otherwise. The Administrator shall have sole discretion to approve
and interpret the form or forms of such beneficiary designation.

23. Gender and Number

     Where the context admits, words in any gender shall include any other
gender, words in the singular shall include the plural and the plural shall
include the singular.

17

--------------------------------------------------------------------------------

 

24. Successors and Assigns

     The Plan shall be binding upon the Corporation, its successors and assigns,
and participants, their executors, administrators and permitted transferees and
beneficiaries.

25. Severability

     If any provision of the Plan shall be held illegal or invalid for any
reason, such 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.

26. Certain Definitions

     In addition to other terms defined in the Plan, the following terms shall
have the meaning indicated:

     (a) “Award agreement” means any written agreement or agreements between the
Corporation and the recipient of an award pursuant to the Plan relating to the
terms, conditions and restrictions of an award conferred herein. Such award
agreement may also state such other terms, conditions and restrictions,
including but not limited to terms, conditions and restrictions applicable to
shares subject to an award, as may be established by the Administrator.

     (b) “Covered employee” shall have the meaning given the term in Section
162(m) of the Code and the regulations thereunder.

     (c) “Disability” shall have the meaning ascribed to the term in any
employment agreement, consulting agreement or other similar agreement, if any,
to which the participant is a party, or, if no such agreement applies,
“disability” shall mean the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death, or which has lasted or can be expected
to last for a continuous period of not less than 12 months.

     (d) “Displacement” shall have the meaning ascribed to the term in any
employment agreement, consulting agreement or other similar agreement, if any,
to which the participant is a party, or, if no such agreement applies,
“displacement” shall mean the termination of the participant’s employment or
service due to the elimination of the participant’s job or position without
fault on the part of the participant.

     (e) “Parent” or “parent corporation” shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations ending with the
Corporation if each corporation other than the Corporation owns stock possessing
50% or more of the total combined voting power of all classes of stock in
another corporation in the chain.

     (f) “Predecessor” or “predecessor corporation” means a corporation which
was a party to a transaction described in Section 424(a) of the Code (or which
would be so described if a substitution or assumption under Section 424(a) had
occurred) with the Corporation, or a corporation which is a parent or subsidiary
of the Corporation, or a predecessor of any such corporation.

18

--------------------------------------------------------------------------------

 

     (g) “Related corporation” means any parent, subsidiary or predecessor of
the Corporation, and “related entity” means any related corporation or any other
business entity which is an affiliate controlled by the Corporation; provided,
however, that the term “related entity” shall be construed in a manner in
accordance with the registration provisions under applicable federal securities
laws.

     (h) “Restricted stock” shall mean shares of Common Stock which are subject
to restricted awards payable in shares, the vesting of which is subject to
restrictions set forth in the Plan and the applicable award agreement.

     (i) “Retirement” shall have the meaning ascribed in any employment
agreement, consulting agreement or other similar agreement, if any, to which the
participant is a party, or, if no such agreement applies, “retirement” shall
mean retirement in accordance with the retirement policies and procedures
established by the Corporation.

     (j) “Subsidiary” or “subsidiary corporation” means any corporation (other
than the Corporation) in an unbroken chain of corporations beginning with the
Corporation if each corporation other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in another corporation in the chain.

     IN WITNESS WHEREOF, this 2003 Stock Incentive Plan of RF Micro Devices,
Inc., is, by the authority of the Board of Directors of the Corporation,
executed in behalf of the Corporation, the 6th day of June, 2003.

         

  RF MICRO DEVICES, INC.
 
       

  By:   /s/ WILLIAM A. PRIDDY, JR.

       

  Name: William A. Priddy, Jr.
Title: Chief Financial Officer and Corporate
          Vice President of Administration
 
       
ATTEST:
       
 
       
 
       
/s/ POWELL T. SEYMOUR
       
 
       
Secretary
       
 
       
[Corporate Seal]
       

19