exhibit10_1.htm


     

     
      
        

      

    

    Exhibit 10.1

     

     

     

    
      2004
        LONG-TERM INCENTIVE COMPENSATION PLAN

       

      (As
        approved by shareholders on November 1, 2007)

       

       

      ARTICLE
        1—GENERAL PROVISIONS

       

      1.1         Establishment
        of Plan. Cree, Inc., a North Carolina corporation (the “Company”), hereby
        establishes an incentive compensation plan to be known as the “Cree, Inc. 2004
        Long-Term Incentive Compensation Plan” (the “Plan”), as set forth in this
        document.

       

      1.2         Purpose
        of Plan. The objectives of the Plan are to (i) attract and retain employees
        for the Company and its affiliates and directors of the Company by providing
        competitive compensation opportunities; (ii) provide incentives to those
        individuals who contribute significantly to the long-term performance and
        growth
        of the Company and its affiliates; and (iii) align the long-term financial
        interests of employees and directors with those of the Company’s
        shareholders.

       

      1.3         Types
        of Awards. Awards under the Plan may be made to Eligible Participants who
        are employees in the form of (i) Incentive Stock Options, (ii) Nonqualified
        Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock, (v)
        Stock
        Units, (vi) Performance Units, or any combination of these. Awards under
        the
        Plan may be made to Eligible Participants who are Outside Directors in the
        form
        of (i) Nonqualified Stock Options, (ii) Stock Appreciation Rights, (iii)
        Restricted Stock, (iv) Stock Units, or any combination of these, subject
        to and
        in accordance with Section 4.2 and Article 10.

       

      1.4         Effective
        Date. The Plan became effective upon approval of the Plan by the Company’s
        shareholders on November 4, 2004, and the date of such approval is referred
        to
        herein as the “Effective Date.”

       

      1.5         Predecessor
        Plan. Upon approval of the Plan by the shareholders of the Company, no
        further grants may be made under the Cree, Inc. Amended and Restated Equity
        Compensation Plan (the “Predecessor Plan”).

       

      ARTICLE
        2—DEFINITIONS

       

      Except
        where the context otherwise
        indicates, the following definitions apply:

       

      2.1         “Award
        Agreement” means the written agreement, whether in printed or electronic form,
        between the Company and a Participant, evidencing an Award granted to the
        Participant under the Plan. The Award Agreement may be in the form of a master
        agreement between an Eligible Participant and the Company with respect to
        all or
        any types of Awards supplemented, with respect to a particular Award, by
        a
        notice of award issued by the Company.

       

      2.2         “Award”
        means an award granted to a Participant under the Plan that is an Option,
        Stock
        Appreciation Right, Restricted Stock, Stock Unit, Performance Unit or
        combination of these.

       

      2.3         “Board”
        means the Board of Directors of the Company.

       

      2.4         “Cause”
        means, unless provided otherwise in the Award Agreement: any conduct amounting
        to fraud, dishonesty, willful misconduct, negligence, significant activities
        materially harmful to the reputation of the Company or an Employer,
        insubordination or conviction of a felony or a crime involving moral turpitude,
        all as determined by the Committee in good faith, including but not limited
        to
        (as determined by the Committee in good faith), (i) Participant’s breach of any
        agreement between Participant and an Employer, (ii) Participant’s intentional or
        negligent failure to perform a reasonably requested directive or assignment
        or
        to perform his duties to the Employer substantially in accordance with the
        Employer’s operating and personnel policies and procedures generally applicable
        to all of its employees, or (iii) Participant’s misappropriation or attempted
        misappropriation of any of the Employer’s funds or property.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.5         “Code”
        means the Internal Revenue Code of 1986, as now in effect or as hereafter
        amended. All citations to sections of the Code are to such sections as they
        may
        from time to time be amended or renumbered.

       

      2.6         “Committee”
        means the committee appointed by the Board to administer this Plan pursuant
        to
        Article 3.

       

      2.7         “Company”
        means Cree, Inc., a North Carolina corporation, and its successors and
        assigns.

       

      2.8         “Disability”
        means, with respect to any Incentive Stock Option, disability as determined
        under Section 22(e)(3) of the Code, and with respect to any other Award,
        unless
        provided otherwise in the Award Agreement, (i) with respect to a Participant
        who
        is eligible to participate in the Employer’s program of long-term disability
        insurance, if any, a condition with respect to which the Participant is entitled
        to commence benefits under such program of long-term disability insurance
        and
        which results in Termination of Employment of the Participant, and (ii) with
        respect to any Participant (including a Participant who is eligible to
        participate in the Employer’s program of long-term disability insurance, if
        any), a disability as determined under procedures established by the Committee
        or in any Award.

       

      2.9         “Effective
        Date” shall have the meaning ascribed to such term in Section 1.4
        hereof.

       

      2.10       “Eligible
        Participant” means any employee of the Employer and any Outside Director,
        subject to such limitations as may be provided by the Code, the Exchange
        Act or
        the Committee, as shall be determined by the Committee.

       

      2.11       “Employer”
        means the Company and any corporation or entity in which the Company owns
        or
        controls, directly or indirectly, fifty percent (50%) or more of the voting
        power or economic interests of such corporation or entity.

       

      2.12       “Exchange
        Act” means the Securities Exchange Act of 1934, as now in effect or as hereafter
        amended. All citations to sections of the Exchange Act or rules thereunder
        are
        to such sections or rules as they may from time to time be amended or
        renumbered.

       

      2.13       “Fair
        Market Value” means the fair market value of a Share, as determined in good
        faith by the Committee; provided, however, that unless otherwise directed
        by the
        Committee:

       

      (a)
        if the Shares are listed for
        trading on a national securities exchange, Fair Market Value on any date
        shall
        be the last sale price reported for the Shares on such exchange on such date
        or,
        if no sale was reported on such date, on the last date preceding such date
        on
        which a sale was reported;

       

      (b)
        if the Shares are listed for
        trading on The Nasdaq Stock Market and have been designated as a National
        Market
        System (“NMS”) security, Fair Market Value on any date shall be the last sale
        price reported for the Shares on such system during the regular trading session
        on such date or on the last day preceding such date on which a sale was reported
        during the regular trading session;

       

      (c)
        if the Shares are listed for
        trading on The Nasdaq Stock Market and have not been designated a NMS Security,
        Fair Market Value on any date shall be the average of the highest bid and
        lowest
        asked prices of the Shares on such system during the regular trading session
        on
        such date or on the last day preceding such date on which a sale was reported
        during the regular trading session; or

       

      (d)
        if (a), (b) and (c) do not apply,
        on the basis of the good faith determination of the Committee.

       

      For
        purposes of subsection (a) above, if the Shares are traded on more than one
        national securities exchange then the following exchange shall be referenced
        to
        determine Fair Market Value: (i) the New York Stock Exchange if the Shares
        are
        then traded on such exchange and (ii) otherwise such other exchange on which
        Shares are traded as may be designated by the Committee.

       

       

      
        
          
          

        

        
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      2.14       “Incentive
        Stock Option” or “ISO” means an Option granted to an Eligible Participant under
        Article 5 of the Plan which meets the requirements of Section 422 of the
        Code.

       

      2.15       “Insider”
        shall mean an individual who is, on the relevant date, subject to the reporting
        requirements of Section 16(a) of the Exchange Act.

       

      2.16       “Nonqualified
        Stock Option” or “NQSO” means an Option granted to an Eligible Participant under
        Article 5 of the Plan that does not meet the requirements of Section 422
        of the
        Code.

       

      2.17       “Option”
        means an Incentive Stock Option or a Nonqualified Stock Option. An Option
        shall
        be designated in the applicable Award Agreement as either an Incentive Stock
        Option or a Nonqualified Stock Option, and in the absence of such designation,
        shall be treated as a Nonqualified Stock Option.

       

      2.18       “Option
        Price” means the price at which a Participant may purchase a Share pursuant to
        an Option.

       

      2.19       “Outside
        Director” means a member of the Board who is not an employee of the Company or
        any other Employer.

       

      2.20       “Participant”
        means an Eligible Participant to whom an Award has been granted.

       

      2.21       “Payment
        Date” shall have the meaning set forth in Section 5.6 of the Plan.

       

      2.22       “Performance
        Unit” means an Award under Article 8 of the Plan that has a value set by the
        Committee (or that is determined by reference to a valuation formula specified
        by the Committee), which value may be paid to the Participant by delivery
        of
        such property as the Committee shall determine, including without limitation,
        cash or Shares, or any combination thereof, upon achievement of such performance
        objectives during the relevant performance period as the Committee shall
        establish at the time of such Award or thereafter, but not later than the
        time
        permitted by Section 162(m) of the Code in the case of Awards intended to
        comply
        with Section 162(m) of the Code.

       

      2.23       “Plan”
        means the Cree, Inc. 2004 Long-Term Incentive Compensation Plan, as amended
        from
        time to time.

       

      2.24       “Restricted
        Stock” means an Award of Shares under Article 7 of the Plan, which Shares are
        issued with such restriction(s) as the Committee, in its sole discretion,
        may
        impose, including without limitation, any restriction on the right to retain
        such Shares, to sell, transfer, pledge or assign such Shares, to vote such
        Shares, and/or to receive any cash dividends with respect to such Shares,
        which
        restrictions may lapse separately or in combination at such time or times,
        in
        installments or otherwise, as the Committee may deem appropriate.

       

      2.25       “Restriction
        Period” means the period commencing on the date an Award of Restricted Stock or
        Stock Units is granted and ending on such date as the Committee shall
        determine.

       

      2.26       “Retirement”
        means, unless provided otherwise in the Award Agreement, termination of
        employment other than for Cause after a Participant has reached the age of
        55
        years and has completed at least five years of service (full-time or full-time
        equivalent).

       

      2.27       “Share”
        means one share of common stock, par value $0.00125 per share, of the Company,
        as such Share may be adjusted pursuant to the provisions of Section 4.3 of
        the
        Plan.

       

      2.28       “Stock
        Appreciation Right” or “SAR” means an Award granted under Article 6 which
        provides for an amount payable in Shares and/or cash, as determined by the
        Committee, equal to the excess of the Fair Market Value of a Share on the
        day
        the Stock Appreciation Right is exercised over the specified purchase
        price.

       

      2.29       “Stock
        Unit” means an Award under Article 7 of the Plan that is valued by reference to
        a Share, which value may be paid to the Participant by delivery of such property
        as the Committee shall determine, including without
        limitation, cash or Shares, or any combination thereof, and that has such
        restriction(s) as the Committee, in its sole discretion, may impose, including
        without limitation, any restriction on the right to retain such Awards, to
        sell,
        transfer, pledge or assign such Awards, and/or to receive any cash dividend
        equivalents with respect to such Awards, which restrictions may lapse separately
        or in combination at such time or times, in installments or otherwise, as
        the
        Committee may deem appropriate.

       

       

      
        
          
          

        

        
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      2.30       “Termination
        of Employment” means, unless provided otherwise in the Award Agreement, the
        discontinuance of employment of a Participant with the Employer for any reason,
        whether voluntary or involuntary. The determination of whether a Participant
        has
        discontinued employment shall be made by the Committee in its sole
        discretion.

       

      ARTICLE
        3—ADMINISTRATION

       

      3.1         Composition
        of Committee. This Plan shall be administered by the Committee. The
        Committee shall consist of two or more Outside Directors who shall be appointed
        by the Board. The Board shall fill vacancies on the Committee and may from
        time
        to time remove or add members of the Committee. The Board, in its sole
        discretion, may exercise any authority of the Committee under this Plan in
        lieu
        of the Committee’s exercise thereof and in such instances references herein to
        the Committee shall refer to the Board of Directors. Unless the Board directs
        otherwise, the Compensation Committee of the Board shall serve as the
        Committee.

       

      3.2         Authority
        of the Committee.

       

      (a)
        The Committee shall have the
        exclusive right to interpret, construe and administer the Plan, to select
        the
        persons who are eligible to receive an Award, and to act in all matters
        pertaining to the granting of an Award and the contents of the Award Agreement
        evidencing the Award, including without limitation, the determination of
        the
        number of Options, Stock Appreciation Rights, Restricted Stock, Stock Units
        or
        Performance Units subject to an Award and the form, terms, conditions and
        duration of each Award, and any amendment thereof consistent with the provisions
        of the Plan, except that Awards to Outside Directors must also be approved
        by
        the Board. The Committee may adopt such rules, regulations and procedures
        of
        general application for the administration of this Plan as it deems appropriate.
        The Committee may correct any defect, supply any omission or reconcile any
        inconsistency in the Plan or any Award Agreement in the manner and to the
        extent
        it shall deem desirable to carry it into effect.

       

      (b)
        The Committee shall have the
        discretion to determine the effect upon an Award and upon an individual’s status
        as an employee under the Plan (including whether a Participant shall be deemed
        to have experienced a Termination of Employment or other change in status)
        and
        upon the vesting, expiration or forfeiture of an Award in the case of (i)
        any
        individual who is employed by an entity that ceases to qualify as an Employer,
        (ii) any leave of absence approved by the Employer, (iii) any transfer between
        locations of employment with the Employer or between Employers, (iv) any
        change
        in the Participant’s status from an employee to a consultant or member of the
        Board of Directors, or vice versa, and (v) any employee who, at the request
        of
        the Employer or the Company, becomes employed by any partnership, joint venture,
        corporation or other entity not meeting the requirements of an
        Employer.

       

      (c)
        All actions, determinations and
        decisions of the Committee made or taken pursuant to grants of authority
        under
        the Plan or with respect to any questions arising in connection with the
        administration and interpretation of the Plan, including the severability
        of any
        and all of the provisions thereof, shall be conclusive, final and binding
        upon
        all parties, including the Company, its shareholders, Participants, Eligible
        Participants and their estates, beneficiaries and successors. The Committee
        shall consider such factors as it deems relevant to making or taking such
        actions, determinations and decisions including, without limitation, the
        recommendations or advice of any director, officer or employee of the Company
        and such attorneys, consultants and accountants as it may select. A Participant
        or other holder of an Award may contest an action, determination or decision
        by
        the Committee with respect to such person or Award only on the grounds that
        such
        action, determination or decision was arbitrary or capricious or was unlawful,
        and any review of such action, determination or decision shall be limited
        to
        determining whether the Committee’s decision or action was arbitrary or
        capricious or was unlawful.

       

       

      
        
          
          

        

        
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      3.3         Rules
        for Foreign Jurisdictions. Notwithstanding anything in the Plan to the
        contrary, the Committee may, in its sole discretion, amend or vary the terms
        of
        the Plan in order to conform such terms with the requirements of each non-U.S.
        jurisdiction where an Eligible Participant is located or to meet the goals
        and
        objectives of the Plan; establish one or more sub-plans for these purposes;
        and
        establish administrative rules and procedures to facilitate the operation
        of the
        Plan in such non-U.S. jurisdictions. For purposes of clarity, the terms and
        conditions contained herein which are subject to variation in a non-U.S.
        jurisdiction shall be reflected in a written addendum to the Plan for each
        Employer of a Participant located in such non-U.S. jurisdiction.

       

      3.4         Delegation
        of Authority. The Committee may, at any time and from time to time, to the
        extent permitted by law and the Company’s Bylaws and subject to the applicable
        rules of any securities exchange or quotation or trading system on which
        Shares
        are traded, delegate to one or more members of the Committee or executive
        officers of the Company any or all of its authority under Section 3.2 and
        3.3,
        except that the Committee may not delegate such authority with respect to
        Awards
        to members of the Board or to executive officers of the Company. The Committee
        may delegate the administration of the Plan to an officer or officers of
        the
        Company, and such administrator(s) may have the authority to execute and
        distribute Award Agreements or other documents relating to Awards granted
        by the
        Committee under the Plan, to maintain records relating to the grant, vesting,
        exercise, forfeiture or expiration of Awards, to process or oversee the issuance
        of Shares upon the exercise, vesting and/or settlement of an Award, to interpret
        the terms of Awards and to take such other actions as the Committee may specify,
        provided that the actions and interpretations of any such administrator shall
        be
        subject to review and approval, disapproval or modification by the
        Committee.

       

      3.5         Award
        Agreements. Each Award granted under the Plan shall be evidenced by an
        Award Agreement. Each Award Agreement shall be subject to and incorporate,
        by
        reference or otherwise, the applicable terms and conditions of the Plan,
        and any
        other terms and conditions, not inconsistent with the Plan, as may be directed
        by the Committee, including without limitation, provisions related to the
        consequences of Termination of Employment. A copy of such document shall
        be
        provided to the Participant, and the Committee may, but need not, require
        that
        the Participant sign a copy of the Award Agreement or otherwise confirm the
        Participant’s acceptance of the provisions of the Award Agreement. The
        Participant shall in any event be deemed to have accepted the provisions
        of an
        Award Agreement delivered to the Participant with respect to an Award by
        exercising the Award or receiving any benefits thereunder.

       

      3.6         Indemnification.
        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 and
        any
        persons acting on its behalf pursuant to authority delegated by the Committee
        shall be indemnified by the Company against reasonable expenses, including
        attorneys’ fees, actually and necessarily 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 thereunder, and against all amounts paid by them in settlement thereof,
        provided such settlement is approved by independent legal counsel selected
        by
        the Company, or paid by them in satisfaction of a judgment in any such action,
        suit or proceeding, except as to matters as to which the person seeking
        indemnification has been negligent or engaged in misconduct in the performance
        of his or her duties; provided, that within sixty (60) days after institution
        of
        any such action, suit or proceeding, the person seeking indemnification shall
        in
        writing offer the Company the opportunity, at its own expense, to handle
        and
        defend the same.

       

      ARTICLE
        4—SHARES SUBJECT TO THE PLAN

       

      4.1         Aggregate
        Limits.

       

      (a)
        Subject to adjustment as provided
        in Section 4.3, the aggregate number of Shares which may be issued pursuant
        to
        Awards under this Plan is (i) 5,200,000 plus (ii) the number of Shares which,
        immediately prior to the Effective Date, were authorized for issuance under
        the
        Predecessor Plan and are not thereafter used for awards under the Predecessor
        Plan. Shares described in clause (ii) above include Shares which, immediately
        prior to the Effective Date, were authorized for issuance under the Predecessor
        Plan and either (x) were not subject to then outstanding awards or (y) were
        subject to then outstanding awards that subsequently expire, are canceled
        or
        otherwise terminate unexercised for any reason.

       

       

      
        
          
          

        

        
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      (b)
        Subject to adjustment as provided
        in Section 4.3, no more than an aggregate of 1,400,000 Shares authorized
        by
        subsection (a) may be issued pursuant to Awards of Restricted Stock, Stock
        Units
        or Performance Units.

       

      (c)
        If for any reason any Shares
        awarded or subject to purchase under this Plan are not delivered or purchased,
        or are reacquired by the Company, for reasons including, but not limited
        to, a
        forfeiture of Restricted Stock or a Stock Unit or the termination, expiration
        or
        cancellation of an Option, Stock Appreciation Right or Performance Unit,
        such
        Shares (“Returned Shares”) shall again be available for issuance pursuant to an
        Award under the Plan. The determination of the number of issued Shares that
        again become available for issuance with respect to grants of Incentive Stock
        Options pursuant to this Section 4.1 shall be made in accordance with the
        requirements of Treas. Reg. section 1.422-2(b)(3).

       

      4.2         Individual
        Limits.

       

      (a)
Tax
        Code Limits. Except
        to the extent the Committee determines that an Award shall not comply with
        the
        performance-based compensation provisions of Section 162(m) of the Code:
        (i) the
        aggregate number of Shares subject to Options or Stock Appreciation Rights
        granted under this Plan in any one fiscal year to any one Participant shall
        not
        exceed 300,000; (ii) the aggregate number of Shares subject to Restricted
        Stock
        or Stock Unit Awards granted under this Plan in any one fiscal year to any
        one
        Participant shall not exceed 100,000; and (iii) the aggregate value of
        Performance Unit Awards (valued as of the grant date) that may be granted
        in any
        one fiscal year to any one Participant shall not exceed the Fair Market Value
        of
        100,000 Shares.

       

      (b)
Awards
        to Outside Directors.
Awards to Outside Directors may be in the form of Nonqualified Stock
        Options, Stock Appreciation Rights, Restricted Stock, Stock Units or a
        combination thereof. The aggregate number of Shares subject to Restricted
        Stock
        or Stock Units granted under this Plan in any one fiscal year to any Outside
        Director shall not exceed 10,000.  The aggregate number of Shares
        subject to Awards of any type granted under this Plan in any one fiscal year
        to
        any Outside Director shall not exceed 20,000.

       

      4.3         Adjustment
        of Shares. If any change in corporate capitalization, such as a stock
        split, reverse stock split, or stock dividend; or any corporate transaction
        such
        as a reorganization, reclassification, merger or consolidation or separation,
        including a spin-off, of the Company or sale or other disposition by the
        Company
        of all or a portion of its assets, any other change in the Company’s corporate
        structure, or any distribution to shareholders (other than a cash dividend)
        results in the outstanding Shares, or any securities exchanged therefor or
        received in their place, being exchanged for a different number or class
        of
        shares or other securities of the Company, or for shares of stock or other
        securities of any other corporation (including unpaired shares replacing
        paired
        Shares); or new, different or additional shares or other securities of the
        Company or of any other corporation being received by the holders of outstanding
        Shares; then equitable adjustments shall be made by the Committee, as it
        determines are necessary and appropriate, in:

       

      (a)
        the number of Shares that may be
        awarded as set forth in Section 4.1;

       

      (b)
        the limitations on the aggregate
        number of Shares that may be awarded to any one single Participant as set
        forth
        in Section 4.2;

       

      (c)
        the number and class of Shares
        that may be subject to an Award, and which have not been issued or transferred
        under an outstanding Award;

       

      (d)
        the Option Price under
        outstanding Options and the number of Shares to be transferred in settlement
        of
        outstanding Stock Appreciation Rights; and

       

      (e)
        the terms, conditions or
        restrictions of any Award and Award Agreement, including the price payable
        for
        the acquisition of Shares; provided, however, that all such adjustments made
        in
        respect of each ISO shall be accomplished so that such Option shall continue
        to
        be an incentive stock option within the meaning of Section 422 of the
        Code.

       

       

      
        
          
          

        

        
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      ARTICLE
        5—STOCK OPTIONS

       

      5.1         Grant
        of Options. Subject to the provisions of the Plan, Options may be granted
        to Eligible Participants at any time and from time to time as shall be
        determined by the Committee. The Committee shall have sole discretion in
        determining the number of Shares subject to Options granted to each Participant.
        The Committee may grant a Participant ISOs, NQSOs or a combination thereof,
        and
        may vary such Awards among Participants; provided that only an employee may
        be
        granted ISOs.

       

      5.2         Award
        Agreement. Each Option grant shall be evidenced by an Award Agreement that
        shall specify the Option Price, the duration of the Option, the number of
        Shares
        to which the Option pertains and such other provisions as the Committee shall
        determine. The Award Agreement shall further specify whether the Award is
        intended to be an ISO or an NQSO. Any portion of an Option that is not
        designated as an ISO or otherwise fails or is not qualified as an ISO (even
        if
        designated as an ISO) shall be an NQSO.

       

      5.3         Option
        Price. The Option Price for each grant of an Option shall not be less than
        the Fair Market Value of a Share on the date the Option is granted.

       

      5.4         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 later than the seventh (7th) anniversary of its grant
        date.

       

      5.5         Exercise
        of Options. Options granted under the Plan shall be exercisable at such
        times and be subject to such restrictions and conditions as the Committee
        shall
        in each instance approve, including conditions related to the employment
        of or
        provision of services by the Participant with the Company or any Employer,
        which
        need not be the same for each grant or for each Participant. The Committee
        may
        provide in the Award Agreement for automatic accelerated vesting and other
        rights upon the occurrence of such events as are specified in the Award
        Agreement. In addition, the Committee may provide in the Award Agreement
        for the
        deferral of gains related to an exercise or may establish a cap on the maximum
        earnings a Participant can realize from exercise.

       

      5.6         Payment.
        Options shall be exercised by the delivery of written or electronic notice
        of
        exercise to the Company or its designated representative, setting forth the
        number of Shares with respect to which the Option is to be exercised and
        satisfying any requirements that the Committee may establish in or pursuant
        to
        the Award Agreement from time to time. Unless otherwise authorized by the
        Committee, no Shares shall be delivered, whether in certificated or
        uncertificated form, until the full Option Price has been paid. Full payment
        of
        the Option Price (less any amount previously received from the Participant
        to
        acquire the Option) must be made on or prior to the Payment Date, as defined
        below. The Option Price shall be payable to the Company either: (a) in cash,
        (b)
        cash equivalent approved by the Committee, (c) if approved by the Committee,
        by
        tendering previously acquired Shares (or delivering a certification or
        attestation of ownership of such Shares) having an aggregate Fair Market
        Value
        at the time of exercise equal to the total Option Price (provided that the
        tendered Shares must have been held by the Participant for any period required
        by the Committee), or (d) by a combination of (a), (b) or (c). The Committee
        also may allow cashless exercises as permitted under Regulation T of the
        Federal
        Reserve Board, subject to applicable securities law restrictions, or by any
        other means which the Committee determines to be consistent with the Plan’s
        purpose and applicable law. “Payment Date” shall mean the date on which a sale
        transaction in a cashless exercise (whether or not payment is actually made
        pursuant to a cashless exercise) would have settled in connection with the
        subject option exercise.

       

      5.7         Nontransferability
        of Options.

       

      (a)
Incentive
        Stock Options.
        No ISO granted under the Plan may be sold, transferred, pledged, assigned,
        or
        otherwise alienated or hypothecated, other than by will or by the laws of
        descent and distribution. Further, all ISOs granted to a Participant under
        the
        Plan shall be exercisable during his or her lifetime only by such
        Participant.

       

      (b)
Nonqualified
        Stock
        Options. Except as otherwise provided in a Participant’s Award Agreement
        consistent with securities and other applicable laws, rules and regulations,
        no
        NQSO granted under this Article 5 may be sold, transferred, pledged, assigned,
        or otherwise alienated or hypothecated, other than by will or by the laws
        of
        descent and distribution. Further, except as otherwise provided in a
        Participant’s Award Agreement, all NQSOs granted to a Participant under this
        Article 5 shall be exercisable during his or her lifetime only by such
        Participant.

       

       

      
        
          
          

        

        
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      5.8         Special
        Rules for ISOs. Notwithstanding the above, in no event shall any
        Participant who owns (within the meaning of Section 424(d) of the Code) stock
        of
        the Company possessing more than ten percent (10%) of the total combined
        voting
        power of all classes of stock of the Company be eligible to receive an ISO
        at an
        Option Price less than one hundred ten percent (110%) of the Fair Market
        Value
        of a share on the date the ISO is granted or be eligible to receive an ISO
        that
        is exercisable later than the fifth (5th) anniversary date of its grant.
        No
        Participant may be granted ISOs (under the Plan and all other incentive stock
        option plans of the Employer) which are first exercisable in any calendar
        year
        for Shares having an aggregate Fair Market Value (determined as of the date
        an
        Option is granted) that exceeds $100,000.

       

      ARTICLE
        6—STOCK APPRECIATION RIGHTS

       

      6.1         Grant
        of SARs. A Stock Appreciation Right may be granted to an Eligible
        Participant in connection with an Option granted under Article 5 of this
        Plan or
        may be granted independently of any Option. A Stock Appreciation Right shall
        entitle the holder, within the specified period, to exercise the SAR and
        receive
        in exchange a payment having an aggregate value equal to the amount by which
        the
        Fair Market Value of a Share exceeds the exercise price, times the number
        of
        Shares with respect to which the SAR is exercised. A SAR granted in connection
        with an Option (a “Tandem SAR”) shall entitle the holder of the related Option,
        within the period specified for the exercise of the Option, to surrender
        the
        unexercised Option, or a portion thereof, and to receive in exchange therefore
        a
        payment having an aggregate value equal to the amount by which the Fair Market
        Value of a Share exceeds the Option price per Share, times the number of
        Shares
        under the Option, or portion thereof, which is surrendered.

       

      6.2         Tandem
        SARs. Each Tandem SAR shall be subject to the same terms and conditions as
        the related Option, including limitations on transferability, shall be
        exercisable only to the extent such Option is exercisable and shall terminate
        or
        lapse and cease to be exercisable when the related Option terminates or lapses.
        The grant of Stock Appreciation Rights related to ISOs must be concurrent
        with
        the grant of the ISOs. With respect to NQSOs, the grant either may be concurrent
        with the grant of the NQSOs, or in connection with NQSOs previously granted
        under Article 5, which are unexercised and have not terminated or
        lapsed.

       

      6.3         Payment.
        The Committee shall have sole discretion to determine in each Award Agreement
        whether the payment with respect to the exercise of an SAR will be in the
        form
        of cash, Shares, or any combination thereof. If payment is to be made in
        Shares,
        the number of Shares shall be determined based on the Fair Market Value of
        a
        Share on the date of exercise. If the Committee elects to make full payment
        in
        Shares, no fractional Shares shall be issued and cash payments shall be made
        in
        lieu of fractional shares. The Committee shall have sole discretion to determine
        in each Award Agreement the timing of any payment made in cash or Shares,
        or a
        combination thereof, upon exercise of SARs. Payment may be made in a lump
        sum,
        in annual installments or may be otherwise deferred; and the Committee shall
        have sole discretion to determine in each Award Agreement whether any deferred
        payments may bear amounts equivalent to interest or cash dividends.

       

      6.4         Exercise
        Price and Exercise of SARs. The exercise price for each grant of an SAR
        shall not be less than the Fair Market Value of a Share on the date the SAR
        is
        granted. Upon exercise of an SAR, the number of Shares subject to exercise
        under
        any related Option shall automatically be reduced by the number of Shares
        represented by the Option or portion thereof which is surrendered.

       

      ARTICLE
        7—RESTRICTED STOCK AND STOCK UNITS

       

      7.1         Grants
        of Restricted Stock and Stock Units. Restricted Stock Awards and Stock Unit
        Awards may be made to Eligible Participants as an incentive for the performance
        of future services that the Committee in its sole discretion determines will
        contribute materially to the successful operation of the Employer. Subject
        to
        Section 4.2 with respect to grants to Outside Directors, Awards of Restricted
        Stock or Stock Units may be made either alone or in addition to or in tandem
        with other Awards granted under the Plan and may be current grants of Restricted
        Stock or Stock Units or deferred grants of Restricted Stock or Stock
        Units.

       

       

      
        
          
          

        

        
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      7.2         Restricted
        Stock/Stock Unit Award Agreement.

       

      (a)
In
        General. The
        Restricted Stock/Stock Unit Award Agreement shall set forth the terms of
        the
        Award, as determined by the Committee, including, without limitation, the
        purchase price, if any, to be paid for such Restricted Stock or Stock Unit,
        which may be more than, equal to, or less than Fair Market Value of a Share
        and
        may be zero, subject to such minimum consideration as may be required by
        applicable law; any restrictions applicable to the Restricted Stock or Stock
        Unit such as continued service or achievement of performance goals; the length
        of the Restriction Period and whether any circumstances will shorten or
        terminate the Restriction Period; and rights of the Participant during the
        Restriction Period to vote and receive dividends in the case of Restricted
        Stock, or to receive dividend equivalents in the case of Stock Units that
        accrue
        dividend equivalents.

       

      (b)
Minimum
        Restriction
        Periods. All grants of Restricted Stock or Stock Units shall have a
        Restriction Period of at least three (3) years, except that (i) the Restriction
        Period for any Award may be shortened pursuant to the Award Agreement in
        connection with death, Disability or Retirement or pursuant to Section 14.5,
        (ii) Awards with restrictions based upon achievement of performance goals
        shall
        have a Restriction Period of at least one (1) year, and (iii) Awards to Outside
        Directors shall have a Restriction Period of at least one (1) year (or, in
        the
        case of an initial Award to an Outside Director appointed to fill a vacancy
        of
        the Board of Directors, such shorter period as may be approved by the
        Committee), provided that the aggregate number of Shares issued to Outside
        Directors pursuant to Awards having Restriction Periods of less than three
        (3)
        years shall not exceed five percent (5%) of the aggregate number of Shares
        authorized for issuance under the Plan.

       

      (c)
Execution
        of Award
        Agreements. Notwithstanding Section 3.5, a Restricted Stock or Stock Unit
        Award must be accepted within a period of sixty (60) days, or such other
        period
        as the Committee may specify, by executing a Restricted Stock/Stock Unit
        Award
        Agreement and paying whatever price, if any, is required. The prospective
        recipient of a Restricted Stock or Stock Unit Award shall not have any rights
        with respect to such Award, unless and until such recipient has executed
        a
        Restricted Stock/Stock Unit Award Agreement and has delivered a fully executed
        copy thereof to the Company, and has otherwise complied with the applicable
        terms and conditions of such Award.

       

      7.3         Nontransferability.
        Except as otherwise provided in this Article 7 or in a Participant’s Award
        Agreement, no shares of Restricted Stock or Stock Units received by a
        Participant shall be sold, exchanged, transferred, pledged, assigned,
        hypothecated or otherwise disposed of during the Restriction Period or, in
        the
        case of Stock Units, either during or after the Restriction Period, other
        than
        by will or by the laws of descent and distribution. Further, except as otherwise
        provided in a Participant’s Award Agreement, a Participant’s rights under an
        Award of Restricted Stock or Stock Units shall be exercisable during the
        Participant’s lifetime only by the Participant or the Participant’s legal
        representative.

       

      7.4         Certificates.
        Upon an Award of Restricted Stock to a Participant, Shares of Restricted
        Stock
        shall be registered in the Participant’s name. Certificates, if issued, may
        either be held in custody by the Company until the Restriction Period expires
        or
        until restrictions thereon otherwise lapse and/or be issued to the Participant
        and registered in the name of the Participant, bearing an appropriate
        restrictive legend and remaining subject to appropriate stop-transfer orders.
        If
        required by the Committee, the Participant shall deliver to the Company one
        or
        more stock powers endorsed in blank relating to the Restricted Stock. If
        and
        when the Restriction Period expires without a prior forfeiture of the Restricted
        Stock subject to such Restriction Period, unrestricted certificates for such
        shares shall be delivered to the Participant; provided, however, that the
        Committee may cause such legend or legends to be placed on any such certificates
        as it may deem advisable under the rules, regulations and other requirements
        of
        the Securities and Exchange Commission and any applicable federal or state
        law.

       

      7.5         Dividends
        and Other Distributions. Except as provided in this Article 7 or in the
        Award Agreement, a Participant receiving a Restricted Stock Award shall have,
        with respect to such Restricted Stock Award, all of the rights of a shareholder
        of the Company, including the right to vote the Shares to the extent, if
        any,
        such Shares possess voting rights and the right to receive any dividends;
        provided, however, the Committee may require that any dividends on such Shares
        of Restricted Stock shall be automatically deferred and reinvested in additional
        Restricted Stock subject to the same restrictions as the underlying Award,
        or
        may require that dividends and other distributions on Restricted Stock shall
        be
        paid to the Company for the account of the Participant and held pending and
        subject to the vesting of the applicable Shares. The Committee shall determine
        whether interest shall be paid on such amounts, the rate of any such interest,
        and the other terms applicable to such amounts. A Participant receiving a
        Stock
        Unit Award shall not possess voting rights and shall accrue dividend equivalents
        on such Units to the extent provided in the Award Agreement relating to the
        Award. The Committee may require that such dividend equivalents shall be
        subject
        to the same restrictions on vesting and payment as the underlying Award.
        In
        addition, with respect to Awards intended to qualify for the performance-based
        compensation provisions of Section 162(m) of the Code, the Committee may
        apply
        any restrictions it deems appropriate to the payment of dividends declared
        with
        respect to Restricted Stock such that the dividends and/or Restricted Stock
        maintain eligibility for such provisions.

       

       

      
        
          
          

        

        
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      ARTICLE
        8—PERFORMANCE UNITS

       

      8.1         Grant
        of Performance Units. Performance Units may be granted to Participants in
        such amounts and upon such terms, and at any time and from time to time,
        as
        shall be determined by the Committee.

       

      8.2         Value
        of Performance Units. Each Performance Unit shall have an initial value
        that is established by the Committee at the time of grant. The Committee
        shall
        set performance goals in its discretion which, depending on the extent to
        which
        they are met, will determine the number and/or value of Performance Units
        that
        will be paid out to the Participant. For purposes of this Article 8, the
        time
        period during which the performance goals must be met shall be called a
“Performance Period.”

       

      8.3         Earning
        of Performance Units. Subject to the terms of this Plan, after the
        applicable Performance Period has ended, the holder of Performance Units
        shall
        be entitled to receive a payout of the number and value of Performance Units
        earned by the Participant over the Performance Period, to be determined as
        a
        function of the extent to which the corresponding performance goals have
        been
        achieved.

       

      8.4         Form
        and Timing of Payment of Performance Units. Subject to the terms of this
        Plan, the Committee, in its sole discretion, may pay earned Performance Units
        in
        the form of cash or in Shares (or in a combination thereof) that has an
        aggregate Fair Market Value equal to the value of the earned Performance
        Units
        at the close of the applicable Performance Period. Such Shares may be granted
        subject to any restrictions in the Award Agreement deemed appropriate by
        the
        Committee. The determination of the Committee with respect to the form and
        timing of payout of such Awards shall be set forth in the Award Agreement
        pertaining to the grant of the Award. Except as otherwise provided in the
        Participant’s Award Agreement, a Participant shall be entitled to receive any
        dividends declared with respect to earned grants of Performance Units that
        are
        being settled in Shares and that have not yet been distributed to the
        Participant (such dividends may be subject to the same accrual, forfeiture,
        and
        payout restrictions as apply to dividends earned with respect to Stock Units,
        as
        set forth in Section 7.5 herein). In addition, unless otherwise provided
        in the
        Participant’s Award Agreement, a Participant shall be entitled to exercise full
        voting rights with respect to such Shares.

       

      8.5         Nontransferability.
        Except as otherwise provided in a Participant’s Award Agreement, Performance
        Units may not be sold, transferred, pledged, assigned, or otherwise alienated
        or
        hypothecated, other than by will or by the laws of descent and
        distribution.

       

      ARTICLE
        9—PERFORMANCE MEASURES

       

      9.1         Approved
        Measures. Until the Committee proposes for shareholder vote and
        shareholders approve a change in the general performance measures set forth
        in
        this Article 9, the attainment of which may determine the degree of payout
        and/or vesting with respect to Awards that are intended to qualify under
        the
        performance-based compensation provisions of Section 162(m) of the Code,
        the
        performance measure(s) to be used for purposes of such Awards shall be chosen
        from among the following: earnings, earnings per share, consolidated pre-tax
        earnings, net earnings, operating income, EBIT (earnings before interest
        and
        taxes), EBITDA (earnings before interest, taxes, depreciation and amortization),
        gross margin, revenues, revenue growth, market value added, economic value
        added, return on equity, return on investment, return on assets, return on
        net
        assets, return on capital employed, total shareholder return, profit, economic
        profit, after-tax profit, pre-tax profit, cash flow measures, cash flow return,
        sales, sales volume, stock price, cost, and/or unit cost. The Committee can
        establish other performance measures for Awards granted to Eligible Participants
        that are not intended to qualify under the performance-based compensation
        provisions of Section 162(m) of the Code.

       

       

      
        
          
          

        

        
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      9.2         Adjustments
        to Measures. The Committee shall be authorized to make adjustments in
        performance-based criteria or in the terms and conditions of other Awards
        in
        recognition of unusual or nonrecurring events affecting the Company or its
        financial statements or changes in applicable laws, regulations or accounting
        principles. In the case of Awards that are intended to qualify under the
        performance-based compensation provisions of Section 162(m) of the Code,
        such
        adjustments shall be made in accordance with guidelines established by the
        Committee at the time the performance-based Award is granted (or within such
        period thereafter as may be permissible under Section 162(m) of the Code).
        The
        Committee shall also have the discretion to adjust the determinations of
        the
        degree of attainment of the pre-established performance goals; provided,
        however, that Awards which are designed to qualify for the performance-based
        compensation exception from the deductibility limitations of Section 162(m)
        of
        the Code, and which are held by executive officers, may not be adjusted upward
        (the Committee shall retain the discretion to adjust such Awards
        downward).

       

      9.3         Use
        of Other Measures. If changes in applicable laws or regulations permit the
        Committee, in the case of Awards intended to qualify under the performance-based
        compensation provisions of Section 162(m) of the Code, discretion to use
        performance measures other than those listed in Section 9.1 without obtaining
        shareholder approval of such changes, the Committee may make such changes
        without obtaining shareholder approval. In addition, in the event that the
        Committee determines that it is advisable to grant Awards which shall not
        qualify for the performance-based compensation exception from the deductibility
        limitations of Section 162(m) of the Code, the Committee may make such grants
        without satisfying the requirements of Section 162(m) of the Code.

       

      ARTICLE
        10—AWARDS TO NON-EMPLOYEE DIRECTORS

       

      An
        Outside Director may be granted
        one or more Awards of Nonqualified Stock Options, Stock Appreciation Rights,
        Restricted Stock, Stock Units or a combination thereof in any fiscal year,
        subject to the limitations of Section 4.2. The number of Shares subject to
        such
        Awards, any formula pursuant to which such number shall be determined, the
        date
        of grant and the vesting, expiration and other terms applicable to such Awards
        shall be recommended from time to time by the Committee and approved by the
        Board and shall be subject to the terms of this Plan applicable to Awards
        in
        general. Outside Directors may receive Awards under the Plan only as provided
        in
        this Article 10.

       

      ARTICLE
        11—BENEFICIARY DESIGNATION

       

      If
        and to the extent permitted by the
        Committee, each Participant under the Plan may, from time to time, name any
        beneficiary or beneficiaries (who may be named contingently or successively)
        to
        whom any benefit under the Plan is to be paid in case of his or her death
        before
        he or she receives any or all of such benefit. If any such designation is
        permitted, the Committee shall, in its sole discretion, establish rules and
        procedures for such designations. Unless different rules and procedures are
        established by the Committee, each such designation shall revoke all prior
        designations by the same Participant, shall be in a form prescribed by the
        Company, and will be effective only when filed by the Participant in writing
        with a designated representative of the Committee during the Participant’s
        lifetime. In the absence of any such designation, benefits remaining unpaid
        at
        the Participant’s death shall be paid to the Participant’s estate.

       

      ARTICLE
        12—DEFERRALS

       

      The
        Committee may permit or require a
        Participant to defer such Participant’s receipt of the payment of cash or the
        delivery of Shares that would otherwise be due to such Participant by virtue
        of
        the exercise of an Option or SAR, the lapse or waiver of restrictions with
        respect to Restricted Stock, or the satisfaction of any requirements or goals
        with respect to Stock Units. If any such deferral election is required or
        permitted, the Committee shall, in its sole discretion, establish rules and
        procedures for such deferrals, and the Committee may provide for such
        arrangements, including conversion to another form of Award that is available
        under the Plan and has equivalent value, as it deems necessary in order to
        permit the deferral of taxes in connection with such deferral by the
        Participant.

       

       

      
        
          
          

        

        
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      ARTICLE
        13—WITHHOLDING

       

      13.1         Tax
        Withholding. The Company shall have the power and the right to deduct or
        withhold, or require a Participant to remit to the Company, an amount sufficient
        to satisfy federal, state, and local taxes, domestic or foreign, required
        by law
        or regulation to be withheld with respect to any taxable event arising as
        a
        result of this Plan. The Company shall not be required to issue Shares or
        to
        recognize the disposition of such Shares until such obligations are
        satisfied.

       

      13.2         Share
        Withholding. With respect to withholding required upon the exercise of
        Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon
        any
        other taxable event arising as a result of Awards granted hereunder, to the
        extent permitted or required by the Committee, these obligations may or shall
        be
        satisfied by having the Company withhold Shares having a Fair Market Value
        on
        the date the tax is to be determined equal to not more than the minimum amount
        of tax required to be withheld with respect to the transaction. All such
        elections shall be subject to any restrictions or limitations that the
        Committee, in its sole discretion, deems appropriate.

       

      ARTICLE
        14—AMENDMENT AND TERMINATION

       

      14.1         Amendment
        of Plan. Except as otherwise provided in this Section 14.1, the Committee
        or the Board may at any time terminate or from time to time amend the Plan
        in
        whole or in part, but no such action shall adversely affect any rights or
        obligations with respect to any Awards previously granted under the Plan,
        unless
        the affected Participants consent in writing. Neither the Committee nor the
        Board may, without approval of the shareholders of the Company, amend the
        Plan
        to (i) materially increase benefits accruing to Participants under the Plan,
        (ii) materially increase the number of Shares which may be issued under the
        Plan
        or (iii) materially modify the requirements for participation in the Plan.
        The
        Company will also obtain the approval of the shareholders before amending
        the
        Plan to the extent required by Section 162(m) or Section 422 of the Code
        or the
        rules of any securities exchange or quotation or trading system on which
        Shares
        are traded or other applicable law.

       

      14.2         Amendment
        of Award; Repricing. The Committee may, at any time, amend outstanding
        Awards in a manner not inconsistent with the terms of the Plan; provided,
        however, that: (i) if such amendment is adverse to the Participant, as
        determined by the Committee, the amendment shall not be effective unless
        and
        until the Participant consents, in writing, to such amendment, except as
        provided in Section 14.4 or in the Award Agreement; and (ii) the Committee
        shall
        not have the authority to decrease the exercise price of any outstanding
        Option
        or SAR, nor award any Option or SAR in replacement of a canceled Option or
        SAR
        with a higher exercise price, except in accordance with Section 4.3 or unless
        such an amendment is approved by the shareholders of the Company. To the
        extent
        not inconsistent with the terms of the Plan and the foregoing, the Committee
        may, at any time, amend an outstanding Award Agreement in a manner that is
        not
        unfavorable to the Participant without the consent of such
        Participant.

       

      14.3         Termination
        of Plan. No Awards shall be granted under the Plan after June 28, 2009, but
        Awards theretofore granted may extend beyond that date.

       

      14.4         Cancellation
        of Awards.

       

      (a)
        The Committee may, in its sole
        discretion, provide in the Award Agreement that if a Participant engages
        in any
“Detrimental Activity” (as defined below), the Committee may, notwithstanding
        any other provision in this Plan to the contrary, cancel, rescind, suspend,
        withhold or otherwise restrict or limit any unexpired, unexercised, unpaid
        or
        deferred Award as of the first date the Participant engages in the Detrimental
        Activity, unless sooner terminated by operation of another term of this Plan
        or
        any other agreement. Without limiting the generality of the foregoing, the
        Award
        Agreement may also provide that if the Participant exercises an Option or
        SAR,
        receives a Performance Unit payout, receives or vests in Shares under an
        Award
        or vests in or receives a payout under a Stock Unit at any time during the
        period beginning six months prior to the date the Participant first engages
        in
        Detrimental Activity and ending six months after the date the Participant
        ceases
        to engage in any Detrimental Activity, the Participant shall be required
        to pay
        to the Company the excess of the then fair market value of the Shares subject
        to
        the Award over the total price paid by the Participant for such
        Shares.

       

       

      
        
          
          

        

        
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      (b)
        For purposes of this Section,
        except to the extent provided otherwise in the Award Agreement, “Detrimental
        Activity” means any of the following, as determined by the Committee in good
        faith: (i) the violation of any agreement between the Company or any Employer
        and the Participant relating to the disclosure of confidential information
        or
        trade secrets, the solicitation of employees, customers, suppliers, licensees,
        licensors or contractors, or the performance of competitive services; (ii)
        conduct that constitutes Cause (as defined in Section 2.4 above), whether
        or not
        the Participant’s employment is terminated for Cause; (iii) making, or causing
        or attempting to cause any other person to make, any statement, either written
        or oral, or conveying any information about the Company or any other Employer
        which is disparaging or which in any way reflects negatively upon the Company
        or
        the Employer; (iv) improperly disclosing or otherwise misusing any confidential
        information regarding the Company or any Employer; or (v) the refusal or
        failure
        of a Participant to provide, upon the request of the Company, a certification,
        in a form satisfactory to the Company, that he or she has not engaged in
        any
        activity described in clauses (i)-(iv).

       

      14.5         Assumption
        or Acceleration of Awards. In the event of a proposed sale of all or
        substantially all of the assets or stock of the Company, the merger of the
        Company with or into another corporation such that shareholders of the Company
        immediately prior to the merger exchange their shares of stock in the Company
        for cash and/or shares of another entity or any other corporate transaction
        to
        which the Committee deems this provision applicable, each Award shall be
        assumed
        or an equivalent Award shall be substituted by the successor corporation
        or a
        parent or subsidiary of such successor corporation (and adjusted as
        appropriate), unless such successor corporation does not agree to assume
        the
        Award or to substitute an equivalent award, in which case the Committee may,
        in
        lieu of such assumption or substitution, provide for the Participant to have
        the
        right to exercise the Option or other Award as to all Shares, including Shares
        as to which the Option or other Award would not otherwise be exercisable
        (or
        with respect to Restricted Stock or Stock Units, provide that all restrictions
        shall lapse). If the Committee makes an Option or other Award fully exercisable
        in lieu of assumption or substitution in the event of a merger or sale of
        assets
        or stock or other corporate transaction, the Committee shall notify the
        Participant that, subject to rescission if the merger, sale of assets or
        stock
        or other corporate transaction is not successfully completed within a certain
        period, the Option or other Award shall be fully exercisable for a period
        of
        fifteen (15) days from the date of such notice (or such other period as provided
        by the Committee), and, to the extent not exercised, the Option or other
        Award
        will terminate upon the expiration of such period.

       

      ARTICLE
        15—MISCELLANEOUS PROVISIONS

       

      15.1         Restrictions
        on Shares. All certificates for Shares delivered under the Plan shall be
        subject to such stop-transfer orders and other restrictions as the Committee
        may
        deem advisable under the rules and regulations of the Securities and Exchange
        Commission, any securities exchange or quotation or trading system on which
        Shares are traded and any applicable federal, state, local or foreign laws,
        and
        the Committee may cause a legend or legends to be placed on any such
        certificates to make appropriate reference to such restrictions. In making
        such
        determination, the Committee may rely upon an opinion of counsel for the
        Company. Notwithstanding any other provision of the Plan, the Company shall
        have
        no liability to deliver any Shares under the Plan or make any other distribution
        of the benefits under the Plan unless such delivery or distribution would
        comply
        with all applicable laws (including, without limitation, the requirements
        of the
        Securities Act of 1933), and the applicable requirements of any securities
        exchange or quotation or trading system on which Shares are traded.

       

      15.2         Rights
        of a Shareholder. Except as otherwise provided in Article 7 of the Plan and
        in the Restricted Stock Award Agreement, each Participant who receives an
        Award
        of Restricted Stock shall have all of the rights of a shareholder with respect
        to such Shares, including the right to vote the Shares to the extent, if
        any,
        such Shares possess voting rights and receive dividends and other distributions.
        Except as provided otherwise in the Plan or in an Award Agreement, no
        Participant shall have any rights as a shareholder with respect to any Shares
        covered by an Award prior to the date of issuance to him or her of a certificate
        or certificates for such Shares.

       

      15.3         No
        Implied Rights. Nothing in the Plan or any Award granted under the Plan
        shall confer upon any Participant any right to continue in the service of
        the
        Employer, or to serve as a member of the Board, or interfere in any way with
        the
        right of the Employer to terminate his or her employment or other service
        relationship at any time. Except to the extent approved by the Board, no
        Award
        granted under the Plan shall be deemed salary or compensation for the purpose
        of
        computing benefits under any employee benefit plan, severance program, or
        other
        arrangement of the Employer for the benefit of its employees. No Participant
        shall have any claim to an Award until it is actually granted under the Plan.
        To
        the extent that any person acquires a right to receive payments from the
        Company
        under the Plan, such right shall, except as otherwise provided by the Committee,
        be no greater than the right of an unsecured general creditor of the
        Company.

       

       

      
        
          
          

        

        
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      15.4         Compliance
        with Laws. At all times when the Committee determines that compliance with
        Section 162(m) of the Code is required or desirable, all Awards granted under
        this Plan shall comply with the requirements of Section 162(m) of the Code.
        In
        addition, in the event that changes are made to Section 162(m) of the Code
        to
        permit greater flexibility with respect to any Awards under the Plan, the
        Committee may, subject to the requirements of Article 14, make any adjustments
        it deems appropriate. The Plan and the grant of Awards shall be subject to
        all
        applicable federal, state local and foreign laws, rules, and regulations
        and to
        such approvals by any government or regulatory agency as may be
        required.

       

      15.5         Successors.
        The terms of the Plan shall be binding upon the Company, and its successors
        and
        assigns.

       

      15.6         Tax
        Elections. Each Participant shall give the Committee prompt written notice
        of any election made by such Participant under Section 83(b) of the Code
        or any
        similar provision thereof. Notwithstanding the preceding sentence, the Committee
        may condition any award on the Participant’s not making an election under
        Section 83(b) of the Code.

       

      15.7         Legal
        Construction.

       

      (a)
Severability.
        If any
        provision of this Plan or an Award Agreement is or becomes or is deemed invalid,
        illegal or unenforceable in any jurisdiction, or would result in the Plan
        or any
        Award Agreement not complying with any law deemed applicable by the Committee,
        such provision shall be construed or deemed amended to conform to applicable
        laws or if it cannot be construed or deemed amended without, in the
        determination of the Committee, materially altering the intent of the Plan
        or
        the Award Agreement, it shall be stricken and the remainder of the Plan or
        the
        Award Agreement shall remain in full force and effect.

       

      (b)
Gender
        and Number. Where
        the context permits, words in any gender shall include the other gender,
        words
        in the singular shall include the plural and words in the plural shall include
        the singular.

       

      (c)
Governing
        Law. To the
        extent not preempted by federal law, the Plan and all Award Agreements
        hereunder, shall be construed in accordance with and governed by the substantive
        laws of the State of North Carolina.

       

       

      
        
          
          

        

        
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