Exhibit 10.4

NONQUALIFIED STOCK OPTIONS

FOR NAMED EXECUTIVE OFFICERS

 

 

    

GRANT DATE

  

OPTIONS GRANTED

John P. McGrath

   2/11/08    8,000

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Employee:

You have been granted a Non-Qualified Stock Option to purchase             
shares of Common Stock of the Company, subject to the terms and conditions
(i) in the Company’s 2007 Stock Incentive Plan, as amended from time to time
(the “Plan”), and (ii) as set forth in Exhibit A, attached hereto and made a
part hereof (together with this letter, the “Agreement”), as follows:

 

Date of Agreement/Grant:

   [grant date]

Restricted Shares Granted:

   [number of options granted]

Expiration Date:

   [to be determined]

Vesting Schedule:

   25% per year for 4 years

Please indicate your acceptance by executing two (2) original copies of this
Agreement and returning one

(1) original copy by U.S. Mail to Cindy Freeze.

Very truly yours,

Martin L. Vaughan, III

By my signature below, I hereby acknowledge receipt of this Award on the date
shown above, which has been issued to me under the terms and conditions of the
Plan. I further acknowledge receipt of the copy of the Plan and agree to conform
to all of the terms and conditions of the Award and the Plan.

 

Signature:

 

 

   Date:  

 

  Optionee’s Name     

Note: If there are any discrepancies in the name or address shown above, please
make the appropriate corrections on this form.

 

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EXHIBIT A

TERMS AND CONDITIONS

STOCK OPTION AGREEMENT

1.    Exercise of Option. Except as provided in paragraphs 4, 5, 6, 11 and 12 of
these Terms and Conditions, this Option shall be exercisable as set forth in the
Vesting Schedule for each full year, up to a total of four (4) full years, that
Optionee continues to be employed by the Company after the date of this
Agreement. Once this Option has become exercisable with respect to any portion
of the total number of shares in accordance with the preceding sentence, it
shall continue to be exercisable with respect to such shares until the
termination of Optionee’s rights hereunder pursuant to paragraphs 4, 5 or 6, or
until the Expiration Date. A partial exercise of this Option shall not affect
Optionee’s right to exercise subsequently this Option with respect to the
remaining shares that are exercisable, subject to the conditions of the 2007
Stock Incentive Plan (Plan) and this Agreement.

2.    Method of Exercising and Payment for Shares. This Option may be exercised
only by written notice delivered to the attention of the Company’s Secretary at
the Company’s principal office. The written notice shall specify the number of
shares being acquired pursuant to the exercise of the Option when such Option is
being exercised in part in accordance with the Vesting Schedule. The exercise
date shall be the date such notice is received by the Company. Such notice shall
be accompanied by payment of the Option price in full for each share (a) in cash
(United States dollars) or by cash equivalent acceptable to the Company, or
(b) by a cashless exercise pursuant to Section IX(2) of the Plan.

3.    Transferability.

(a)    Except as otherwise provided in paragraph 3(b), the Option is not
transferable and during the Participant’s life, may be exercised only by the
Participant. Transfers at death are governed by paragraph 4 below.

(b)    The Participant may transfer the Option during his or her lifetime for no
consideration to or for the benefit of the Participant’s Immediate Family,
subject to such limits as the Committee may establish, and the transferee shall
remain subject to all the terms and conditions applicable to the Option prior to
such transfer. The foregoing right to transfer the Option shall apply to the
right to consent to amendments to this Agreement and, in the discretion of the
Committee, shall also apply to the right to transfer ancillary rights associated
with the Option.

(c)    The term “Immediate Family” shall mean Participant’s child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Participant’s household (other than a tenant or employee), a trust
in which these persons have more than fifty percent of the beneficial interest,
a foundation in which these persons (or the Participant) control the management
of assets, and any other entity in which these persons (or the Participant) own
more than fifty percent of the voting interests. The following transactions are
not prohibited transfers for consideration: (i) a transfer under a domestic
relations order in settlement of marital property rights; and (ii) a transfer to
an entity in which more than fifty percent of the voting interests are owned by
the Immediate Family (or the Participant) in exchange for an interest in that
entity.

4.    Exercise in the Event of Death. This Option shall be exercisable in full
in the event that Optionee dies while employed by the Company or an Affiliate
and prior to the Expiration Date of this Option. In that event, this Option may
be exercised by Optionee’s estate, or the person or persons to whom his rights
under this Option shall pass by will or the laws of descent and distribution.
Optionee’s estate or such persons must exercise this Option, if at all, within
one year of the date of Optionee’s death or during the remainder of the period
preceding the Expiration Date, whichever is shorter, but in no event may the
Option be exercised prior to the expiration of six (6) months from the date of
the grant of the Option.

 

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5.    Exercise in the Event of Permanent and Total Disability. This Option shall
be exercisable in full if Optionee becomes Disabled while employed by the
Company or an Affiliate and prior to the Expiration Date of this Option. In that
event, Optionee must exercise this Option, if at all, within one year of the
date he becomes Disabled or during the remainder of the period preceding the
Expiration Date, whichever is shorter, but in no event may the Option be
exercised prior to the expiration of six (6) months from the date of the grant
of the Option.

6.    Exercise After Termination of Employment. In the event that the Optionee
retires from employment with the Company after attaining age 62 and serving at
least 10 consecutive years with the Company or an Affiliate or predecessor
thereof, then this Option shall be exercisable in full but must be exercised by
the Optionee, if at all, within one year following his retirement date or during
the remainder of the period preceding the Expiration Date, whichever is shorter,
but in no event may the Option be exercised prior to the expiration of six
(6) months from the date of the grant of the Option. In all events other than
those events addressed in paragraphs 4 or 5 or the foregoing sentence of this
paragraph 6, in which Optionee ceases to be employed by the Company:
(a) Optionee, subject to the provisions of paragraph 12, may exercise the Option
in whole or in part with respect to that number of shares which are exercisable
by him under the Vesting Schedule on the date his employment terminated, and
(b) this Option must be exercised by Optionee, if at all, within ninety
(90) days following the date upon which he ceases to be employed by the Company
or during the remainder of the period preceding the Expiration Date, whichever
is shorter, but in no event may the Option be exercised prior to the expiration
of six (6) months from the date of the grant of the Option.

7.    Fractional Shares. Fractional shares shall not be issuable hereunder, and
when any provision hereof may entitle Optionee to a fractional share such
fraction shall be disregarded.

8.    No Right to Continued Employment. This Option does not confer upon
Optionee any right with respect to continuance of employment by the Company or
an Affiliate, nor shall it interfere in any way with the right of the Company or
an Affiliate to terminate his employment at any time.

9.    Investment Representation. Optionee agrees that, unless such shares
previously have been registered under the Securities Act of 1933, as amended
(the “Securities Act”): (i) any shares purchased by him hereunder will be
purchased for investment and not with a view to distribution or resale and
(ii) until such registration, certificates representing such shares may bear an
appropriate legend to assure compliance with the Securities Act. This investment
representation shall terminate when such shares have been registered under the
Securities Act.

10.    Change in Capital Structure. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
this Option, and the price per share thereof, shall be proportionately adjusted
by the Company for any increase or decrease in the number of issued and
outstanding shares of Common Stock of the Company resulting from any stock
dividend (but only on the Common Stock), stock split, combination,
reclassification, recapitalization or general issuance to holders of Common
Stock of rights to purchase Common Stock at substantially below its then fair
market value, or any change in the number of such shares outstanding effected
without receipt of cash or property or labor or services by the Company, or any
spin-off or other distribution of assets to shareholders.

In the event of a change in the Common Stock of the Company as presently
constituted, which is limited to a change of all or a part of its authorized
shares without par value into the same number of shares with a par value, or any
subsequent change into the same number of shares with a different par value, the
shares resulting from any such change shall be deemed to be the Common Stock
within the meaning of the Plan.

The grant of this Option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.

 

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11.    Change of Control. Notwithstanding any other provision of this Agreement
to the contrary, in the event of a Change of Control, the provisions of
Section 12.03 of the Plan shall apply to this Option.

12.    Forfeiture of Certain Gains.

(a)    Termination for Cause. If Optionee’s employment is terminated for “Cause”
within one year of any exercise of this Option, in whole or in part, the
Optionee shall pay to the Company an amount equal to the gain realized by
Optionee from such exercise represented by the excess of the Fair Market Value
on the date of exercise over the Option price multiplied by the number of shares
purchased, without regard to any subsequent market price increase or decrease
(“Option Gain”). For purposes of this paragraph, “Cause” shall have the meaning
ascribed to it in any employment agreement between the Optionee and the Company
that is in effect at the time of termination and, if no such agreement exists,
it shall mean:

(i)    the willful and continued failure of the Optionee to perform
substantially the Optionee’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Optionee by the Company which specifically identifies the manner in which the
Company believes that the Optionee has not substantially performed the
Optionee’s duties, or

(ii)    the willful engaging by the Employee in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.

(b)    Forfeiture if Optionee Engages in Certain Activities. If Optionee,
between the date hereof and one year after the date of termination of Optionee’s
employment, engages in any activity in competition with any activity of the
Company, or inimical, contrary or harmful to the interests of the Company,
including but not limited to (i) accepting employment with or serving as a
consultant advisor or in any other capacity to an employer that is in
competition with or acting against the interests of the Company, (ii) disclosing
or misusing any confidential information or material concerning the Company or
(iii) participating in any hostile takeover attempt, then (1) this Option,
including any vested but unexercised shares, shall terminate effective the date
on which Optionee enters into such activity, unless terminated sooner by
operation of another term or condition of this Agreement or the Plan, and
(2) the Optionee shall pay to the Company an amount equal to the Option Gain
realized by Optionee from any exercise of this Option, in whole or in part,
within one year of the date such activity began.

(c)    Right of Set-off. Optionee hereby consents to a deduction from any
amounts owed by the Company to Optionee from time to time (including amounts
owed as wages or other compensation, fringe benefits or vacation pay, to the
extent of any amounts Optionee owes the Company under paragraphs 12(a) and (b).
Whether or not the Company elects to make any set-off in whole or in part, if
Company does not recover by means of set-off the full amount owed by Optionee
under paragraphs 12(a) and (b), Optionee agrees to immediately pay the unpaid
balance to the Company.

13.    Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Virginia, except to
the extent that federal law shall be deemed to apply.

14.    Conflicts. In the event of any conflict between the provisions of the
Plan as in effect on the date hereof and the provisions of this Agreement, the
provisions of the Plan shall govern. All references herein to the Plan shall
mean the Plan as in effect on the date hereof.

15.    Optionee Bound by Plan. Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all the terms and provisions thereof.

16.    Binding Effect. Subject to the limitations stated above and in the Plan,
this Agreement shall be binding upon and inure to the benefit of the legatees,
distributes, and personal representatives of Optionee and the successors of the
Company.

 

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17.    Gender. All pronouns used herein shall be deemed to refer to either the
male or female as appropriate.

18.    Notice and Consent to Electronic Delivery. The Company expects to deliver
notices and certain documents relating to its employee benefit plans by posting
the information on the Company’s web site, intranet or electronic bulletin board
or transmitting the material to employees by e-mail. These documents include
employee benefits plans and any amendments thereto, election forms,
prospectuses, supplements to prospectuses, annual reports to shareholders,
informational brochures and similar information. The Company will provide you
with e-mail notification of the posting of any of the foregoing documents. This
method of notification and access to documents relating to employee benefit
plans will be in lieu of paper delivery of the same documents. To satisfy legal
requirements, your signature is an affirmative election to accept electronic
notification and delivery of these documents in lieu of paper delivery, as well
as all other terms of the award.

19.    Defined Terms. All terms used herein that are defined in the Plan shall
have the meanings given to them in the Plan.

 

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