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Exhibit 10

CT COMMUNICATIONS, INC.


Amended and Restated

2001 Stock Incentive Plan


CT Communications, Inc., a North Carolina
corporation (the Company), sets forth herein the
terms of its Amended and Restated 2001 Stock Incentive Plan (the
Plan), as follows:

1.     PURPOSE

The Plan is intended to enhance the
Companys and its Affiliates (as defined herein)
ability to attract and retain highly qualified officers,
directors, key employees, and other persons, and to motivate
such persons to serve the Company and its Affiliates and to
expend maximum effort to improve the business results and
earnings of the Company, by providing to such persons an
opportunity to acquire or increase a direct proprietary interest
in the operations and future success of the Company. To this
end, the Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, unrestricted stock, stock
units, dividend equivalent rights and cash based awards. Any of
these awards may, but need not, be made as performance
incentives to reward attainment of annual or long-term
performance goals in accordance with the terms hereof. Stock
options granted under the Plan may be non-qualified stock
options or incentive stock options, as provided herein.

2.     DEFINITIONS

For purposes of interpreting the Plan and related
documents (including Award Agreements), the following
definitions shall apply:

2.1 Affiliatemeans, with
respect to the Company, any company or other trade or business
that controls, is controlled by or is under common control with
the Company within the meaning of Rule 405 of
Regulation C under the Securities Act, including, without
limitation, any Subsidiary.

2.2 Amendment and Restatement
Dateshall have the meaning set forth in
Section 5.1hereof.

2.3 Annual Incentive Awardmeans an Award made subject to attainment of performance
goals (as described in Section 14) over a
performance period of up to one year (the fiscal year, unless
otherwise specified by the Committee).

2.4 Awardmeans a grant
of an Option, Stock Appreciation Right, Restricted Stock,
Unrestricted Stock, Stock Unit, Dividend Equivalent Rights,
Annual Incentive Award or Performance Award under the Plan.

2.5 Award Agreementmeans
the written agreement between the Company and a Grantee that
evidences and sets out the terms and conditions of an Award.

2.6 Benefit Arrangementshall have the meaning set forth in Section 15hereof.

2.7 Boardmeans the Board
of Directors of the Company.

2.8 Causemeans, as
determined by the Board and unless otherwise provided in an
applicable agreement with the Company or an Affiliate,
(i) gross negligence or willful misconduct in connection
with the performance of duties, (ii) conviction of a
criminal offense (other than minor traffic offenses), or
(iii) material breach of any term of any employment,
consulting or other services, confidentiality, intellectual
property or non-competition agreements, if any, between the
Service Provider or other employee and the Company or an
Affiliate.

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2.9 Corporate Transactionmeans (i) the dissolution or liquidation of the Company
or a merger, consolidation, or reorganization of the Company
with one or more other entities in which the Company is not the
surviving entity, (ii) a sale of substantially all of the
assets of the Company to another person or entity, or
(iii) any transaction (including without limitation a
merger or reorganization in which the Company is the surviving
entity) which results in any person or entity (other than
persons who are shareholders or Affiliates immediately prior to
the transaction) owning 50% or more of the combined voting power
of all classes of stock of the Company.

2.10 Codemeans the
Internal Revenue Code of 1986, as now in effect or as hereafter
amended.

2.11 Committeemeans a
committee of, and designated from time to time by resolution of,
the Board, which shall be constituted as provided in
Section 3.2.

2.12 Companymeans CT
Communications, Inc.

2.13 Covered Employeemeans a Grantee who is a Covered Employee within the meaning
of Section 162(m)(3) of the Code.

2.14 Disabilitymeans the
Grantee is unable to perform each of the essential duties of
such Grantees position by reason of a medically
determinable physical or mental impairment which is potentially
permanent in character or which can be expected to last for a
continuous period of not less than 12 months; provided,
however, that, with respect to rules regarding expiration of an
Incentive Stock Option following termination of the
Grantees Service, Disability shall mean the Grantee is
unable to engage in any substantial gainful activity by reason
of a 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.

2.15 Dividend Equivalent
Rightmeans a right, granted to a Grantee under
Section 13hereof, to receive cash, Stock, other
Awards or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other
periodic payments.

2.16 Effective Datemeans
March 26, 2001, the date the Plan was first approved by the
Board. The Plan as herein amended and restated was approved by
the Board on the Amendment and Restatement Date.

2.17 Exchange Actmeans
the Securities Exchange Act of 1934, as now in effect or as
hereafter amended.

2.18 Fair Market Valuemeans the value of a share of Stock, determined as follows:
if on the Grant Date or other determination date the Stock is
listed on an established national or regional stock exchange, is
admitted to quotation on The Nasdaq Stock Market, Inc. or
is publicly traded on an established securities market, the Fair
Market Value of a share of Stock shall be the closing price of
the Stock on such exchange or in such market (if there is more
than one such exchange or market the Board shall determine the
appropriate exchange or market) on the Grant Date or such other
determination date (or if there is no such reported closing
price, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices or between the high and low
sale prices on such trading day) or, if no sale of Stock is
reported for such trading day, on the next preceding day on
which any sale shall have been reported. If the Stock is not
listed on such an exchange, quoted on such system or traded on
such a market, Fair Market Value shall be the value of the Stock
as determined by the Board in good faith.

2.19 Family Membermeans
a person who is a spouse, former spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother, sister, brother-in-law, or sister-in-law, including
adoptive relationships, of the Grantee, any person sharing the
Grantees household (other than a tenant or employee), a
trust in which any one or more of these persons have more than
fifty percent of the beneficial interest, a foundation in which
any one or more of these persons (or the Grantee) control the
management of assets, and any other entity in which one or more
of these persons (or the Grantee) own more than fifty percent of
the voting interests.

2.20 Grant Datemeans, as
determined by the Board or authorized by the Committee, the
latest to occur of (i) the date as of which the Board
approves an Award, (ii) the date on which the recipient of
an

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Award first becomes eligible to receive an Award
under Section 6hereof, or (iii) such other
date as may be specified by the Board.


2.21 Granteemeans a
person who receives or holds an Award under the Plan.

2.22 Incentive Stock Optionmeans an incentive stock option within the
meaning of Section 422 of the Code, or the corresponding
provision of any subsequently enacted tax statute, as amended
from time to time.

2.23 Non-qualified Stock
Optionmeans an Option that is not an Incentive Stock
Option.

2.24 Optionmeans an
option to purchase one or more shares of Stock pursuant to the
Plan.

2.25 Option Pricemeans
the purchase price for each share of Stock subject to an Option.

2.26 Other Agreementshall have the meaning set forth in Section 15hereof.

2.27 Outside Directormeans a member of the Board who is not an officer or
employee of the Company.

2.28 Performance Awardmeans an Award made subject to the attainment of performance
goals (as described in Section 14) over a
performance period of up to ten (10) years.

2.29 Planmeans this CT
Communications, Inc. Amended and Restated 2001 Stock
Incentive Plan.

2.30 Purchase Pricemeans
the purchase price for each share of Stock pursuant to a grant
of Restricted Stock or Unrestricted Stock.

2.31 Reporting Personmeans a person who is required to file reports under
Section 16(a) of the Exchange Act.

2.32 Restricted Stockmeans shares of Stock, awarded to a Grantee pursuant to
Section 11hereof.

2.33 SAR Exercise Pricemeans the per share exercise price of an SAR granted to a
Grantee under Section 10hereof.

2.34 Securities Actmeans
the Securities Act of 1933, as now in effect or as hereafter
amended.

2.35 Servicemeans
service as an employee, officer, director or other Service
Provider of the Company or an Affiliate. Unless otherwise stated
in the applicable Award Agreement, a Grantees change in
position or duties shall not result in interrupted or terminated
Service, so long as such Grantee continues to be an employee,
officer, director or other Service Provider of the Company or an
Affiliate. Subject to the preceding sentence, whether a
termination of Service shall have occurred for purposes of the
Plan shall be determined by the Board, which determination shall
be final, binding and conclusive.

2.36 Service Providermeans an employee, officer or director of the Company or an
Affiliate, or a consultant or adviser currently providing
services to the Company or an Affiliate.

2.37 Stockmeans the
common stock of the Company.

2.38 Stock Appreciation Rightor SARmeans a right granted to a Grantee
under Section 10hereof.

2.39 Stock Unitmeans a
bookkeeping entry representing the equivalent of shares of
Stock, awarded to a Grantee pursuant to Section 11hereof.

2.40 Subsidiarymeans any
subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code.

2.41 Termination Datemeans the date upon which an Option shall terminate or
expire, as set forth in Section 8.3hereof.

2.42 Ten Percent Shareholdermeans an individual who owns more than ten percent (10%) of
the total combined voting power of all classes of outstanding
stock of the Company, its parent or any of its Subsidiaries. In
determining stock ownership, the attribution rules of
Section 424(d) of the Code shall be applied.

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2.43 Unrestricted Stockmeans shares of Stock, awarded to a Grantee pursuant to
Section 11hereof.

3.     ADMINISTRATION
OF THE PLAN

3.1Board

The Board shall have such powers and authorities
related to the administration of the Plan as are consistent with
the Companys articles of incorporation and bylaws and
applicable law. The Board shall have full power and authority to
take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement,
and shall have full power and authority to take all such other
actions and make all such other determinations not inconsistent
with the specific terms and provisions of the Plan that the
Board deems to be necessary or appropriate to the administration
of the Plan, any Award or any Award Agreement. All such actions
and determinations shall be by the affirmative vote of a
majority of the members of the Board present at a meeting or by
unanimous consent of the Board executed in writing in accordance
with the Companys articles of incorporation and bylaws and
applicable law. The interpretation and construction by the Board
of any provision of the Plan, any Award or any Award Agreement
shall be final and conclusive.

3.2 Committee

The Board from time to time may delegate to the
Committee such powers and authorities related to the
administration and implementation of the Plan, as set forth in
Section 3.1 above and other applicable provisions, as the
Board shall determine, consistent with the articles of
incorporation and bylaws of the Company and applicable law.

(i) Except as provided in
Subsection (ii) and except as the Board may otherwise
determine, the Committee, if any, appointed by the Board to
administer the Plan shall consist of two or more Outside
Directors of the Company who: (a) qualify as outside
directors within the meaning of Section 162(m) of the
Code, (b) meet such other requirements as may be
established from time to time by the Securities and Exchange
Commission for plans intended to qualify for exemption under
Rule 16b-3 (or its successor) under the Exchange Act and
(c) who satisfy such requirements for independence as may
be established by the stock market on which the Stock is listed.

(ii) The Board may also appoint one or more
separate committees of the Board, each composed of one or more
directors of the Company who need not be Outside Directors, who
may administer the Plan with respect to employees or other
Service Providers who are not officers or directors of the
Company, may grant Awards under the Plan to such employees or
other Service Providers, and may determine all terms of such
Awards.

In the event that the Plan, any Award or any
Award Agreement entered into hereunder provides for any action
to be taken by or determination to be made by the Board, such
action may be taken or such determination may be made by the
Committee if the power and authority to do so has been delegated
to the Committee by the Board as provided for in this Section.
Unless otherwise expressly determined by the Board, any such
action or determination by the Committee shall be final, binding
and conclusive. To the extent permitted by law, the Committee
may delegate its authority under the Plan to a member of the
Board.

3.3 Terms of Awards

Subject to the other terms and conditions of the
Plan, the Board shall have full and final authority:



| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) to designate Grantees,                                                                                                                                                                                                     
|
| | (ii) to determine the type or types of
    Awards to be made to a Grantee,                                                                                                                                                     
|
| | (iii) to determine the number of shares of
    Stock to be subject to an Award,                                                                                                                                                
|
| | (iv) to establish the terms and conditions
    of each Award (including, but not limited to, the exercise price
    of any Option, the nature and duration of any restriction or
    condition (or provision for lapse thereof)

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | relating to the vesting, exercise, transfer, or
    forfeiture of an Award or the shares of Stock subject thereto,
    and any terms or conditions that may be necessary to qualify
    Options as Incentive Stock Options),                                                                                                                                                                                                                                                                                            
|
| | (v) to prescribe the form of each Award
    Agreement evidencing an Award, and                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (vi) to amend, modify, or supplement the
    terms of any outstanding Award. Such authority specifically
    includes the authority, in order to effectuate the purposes of
    the Plan but without amending the Plan, to modify Awards to
    eligible individuals who are foreign nationals or are
    individuals who are employed outside the United States to
    recognize differences in local law, tax policy, or custom. This
    authority does not include the authority to reprice outstanding
    Options.

As a condition to any subsequent Award, the Board
shall have the right, at its discretion, to require Grantees to
return to the Company Awards previously made under the Plan.
Subject to the terms and conditions of the Plan, any such new
Award shall be upon such terms and conditions as are specified
by the Board at the time the new Award is made. The Board shall
have the right, in its discretion, to make Awards in
substitution or exchange for any other award under another plan
of the Company, any Affiliate, or any business entity to be
acquired by the Company or an Affiliate. The Company may retain
the right in an Award Agreement to cause a forfeiture of the
gain realized by a Grantee on account of actions taken by the
Grantee in violation or breach of or in conflict with any
non-competition agreement, any agreement prohibiting
solicitation of employees or clients of the Company or any
Affiliate thereof or any confidentiality obligation with respect
to the Company or any Affiliate thereof or otherwise in
competition with the Company or any Affiliate thereof, to the
extent specified in such Award Agreement applicable to the
Grantee. Furthermore, the Company may annul an Award if the
Grantee is an employee of the Company or an Affiliate thereof
and is terminated for Cause as defined in the applicable Award
Agreement or the Plan, as applicable, or if such Grantee
violates or breaches any non-competition agreement, any
agreement prohibiting solicitation of employees or clients of
the Company or any Affiliate thereof or any confidentiality
obligation with respect to the Company or any Affiliate thereof
or otherwise competes with the Company or any Affiliate thereof.
The grant of any Award shall be contingent upon the Grantee
executing the appropriate Award Agreement.

3.4Deferral Arrangement

The Board may permit or require the deferral of
any award payment into a deferred compensation arrangement,
subject to such rules and procedures as it may establish, which
may include provisions for the payment or crediting of interest
or Dividend Equivalents Rights, including converting such
credits into deferred Stock equivalents and restricting
deferrals to comply with hardship distribution rules affecting
401(k) plans.

3.5No Liability

No member of the Board or of the Committee shall
be liable for any action or determination made in good faith
with respect to the Plan or any Award or Award Agreement.



|   |                          
|-- | -------------------------
|4. | STOCK SUBJECT TO THE PLAN

Subject to adjustment as provided in
Section 17 hereof, the number of shares of Stock available
for issuance under the Plan shall be the sum of
two million, six hundred thousand (2,600,000) shares
of Stock plus any shares of Stock available for grant (including
shares which become available due to forfeitures of outstanding
options or other awards) under the Companys Omnibus Stock
Compensation Plan. Stock issued or to be issued under the Plan
shall be authorized but unissued shares or, to the extent
permitted by applicable law, issued shares that have been
reacquired by the Company. If any shares covered by an Award are
not purchased or are forfeited, or if an Award otherwise
terminates without delivery of any Stock subject thereto, then
the number of shares of Stock counted against the aggregate
number of shares available under the Plan with respect to such
Award shall, to the extent of any such forfeiture or
termination, again be available for making Awards under the
Plan. If the exercise price of any Option granted under the
Plan, or if pursuant to Section 18.3 the withholding
obligation of any Grantee with respect to an Option, is
satisfied by tendering shares of Stock to the Company (by either
actual delivery or by attestation) or by withholding shares of
Stock, the total number of shares of Stock issued, including the
shares of Stock tendered or withheld, shall be

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deemed delivered for purposes of determining the
maximum number of shares of Stock available for delivery under
the Plan.




|   |                                                                               
|-- | ------------------------------------------------------------------------------
|5. | EFFECTIVE DATE AND AMENDMENT AND RESTATEMENT
    DATE, DURATION AND AMENDMENTS

5.1Effective Date and Amendment and
Restatement Date

The Plan was originally effective as of the
Effective Date and was approved by the Companys
shareholders on April 26, 2001. The Plan as herein amended
and restated shall be effective as of February 26, 2004
(the Amendment and Restatement Date), subject to
approval of the Plan as herein amended and restated by the
affirmative vote of a majority of the shares of Stock voting
thereon. Upon approval of the Plan as herein amended and
restated by the shareholders, all Awards made under the Plan on
or after the Amendment and Restatement Date shall be fully
effective as if the shareholders of the Company had approved the
Plan on the Amendment and Restatement Date. If the shareholders
of the Company fail to approve the Plan as herein amended and
restated within the one-year period set forth in this
Section 5.1, any Awards made hereunder in excess of the
number of shares available for Awards under the Plan prior to
its amendment and restatement shall be null and void and of no
effect, and the applicable terms of the Plan shall be the terms
in effect immediately prior to the Amendment and Restatement
Date.

5.2Term

The Plan shall terminate automatically ten
(10) years after the Amendment and Restatement Date set
forth in Section 5.1 and may be terminated on any earlier
date as provided in Section 5.3.

5.3Amendment and Termination of the
Plan

The Board may, at any time and from time to time,
amend, suspend, or terminate the Plan as to any shares of Stock
as to which Awards have not been made. An amendment shall be
contingent on approval of the Companys shareholders to the
extent stated by the Board, required by applicable law or
required by the stock market on which the Stock is listed. No
Awards shall be made after termination of the Plan. No
amendment, suspension, or termination of the Plan shall, without
the consent of the Grantee, impair rights or obligations under
any Award theretofore awarded under the Plan.



|   |                                  
|-- | ---------------------------------
|6. | AWARD ELIGIBILITY AND LIMITATIONS

6.1Company or Subsidiary Employees;
Service Providers; Other Persons

Subject to this Section 6, Awards may be
made under the Plan to: (i) any employee of, or a Service
Provider to, the Company or of any Affiliate, including any such
employee or other Service Provider who is an officer or director
of the Company, or of any affiliate, as the Board shall
determine and designate from time to time, (ii) any Outside
Director, and (iii) any other individual whose
participation in the Plan is determined to be in the best
interests of the Company by the Board.

6.2Successive Awards

An eligible person may receive more than one
Award, subject to such restrictions as are provided herein.

6.3Limitation on Shares of Stock Subject
to Awards and Cash Awards

The maximum number of shares of Stock subject to
Options that can be awarded under the Plan to any person
eligible for an Award under Section 6 hereof is
four hundred thousand (400,000) per calendar year. The
maximum number of shares that can be awarded under the Plan,
other than pursuant to an Option, is one million,
two hundred thousand (1,200,000) shares; provided,
that, no more than two hundred thousand (200,000) shares may be
awarded, other than pursuant to an Option, per calendar year to
an eligible person. The preceding limitations in this
Section 6.3 are subject to adjustment as provided in
Section 17 hereof. The maximum amount that may be earned as
an Annual Incentive Award or other cash Award in any fiscal year
by any one Grantee shall be $1,000,000 and the maximum amount
that may be earned as a Performance Award or other cash Award in
respect of a performance period by any one Grantee shall be
$3,000,000.

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6.4Limitations on Incentive Stock
Options

An Option shall constitute an Incentive Stock
Option only (i) if the Grantee of such Option is an
employee of the Company or any Subsidiary of the Company,
(ii) to the extent specifically provided in the related
Award Agreement, and (iii) to the extent that the aggregate
Fair Market Value (determined at the time the Option is granted)
of the shares of Stock with respect to which all Incentive Stock
Options held by such Grantee become exercisable for the first
time during any calendar year (under the Plan and all other
plans of the Grantees employer and its Affiliates) does
not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.

6.5Stand-Alone, Additional, Tandem, and
Substitute Awards

Awards granted under the Plan may, in the
discretion of the Board, be granted either alone or in addition
to, in tandem with, or in substitution or exchange for, any
other Award or any award granted under another plan of the
Company, any Affiliate, or any business entity to be acquired by
the Company or an Affiliate, or any other right of a Grantee to
receive payment from the Company or any Affiliate. Such
additional, tandem, and substitute or exchange Awards may be
granted at any time. If an Award is granted in substitution or
exchange for another Award, the Board shall require the
surrender of such other Award in consideration for the grant of
the new Award. In addition, Awards may be granted in lieu of
cash compensation, including in lieu of cash amounts payable
under other plans of the Company or any Affiliate, in which the
value of Stock subject to the Award is equivalent in value to
the cash compensation (for example, Stock Units, Restricted
Stock or Unrestricted Stock), or in which the exercise price,
grant price or purchase price of the Award in the nature of a
right that may be exercised is equal to the Fair Market Value of
the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an exercise price
discounted by the amount of the cash compensation
surrendered).



|   |                
|-- | ---------------
|7. | AWARD AGREEMENT

Each Award granted pursuant to the Plan shall be
evidenced by an Award Agreement, in such form or forms as the
Board shall from time to time determine. Award Agreements
granted from time to time or at the same time need not contain
similar provisions but shall be consistent with the terms of the
Plan. Each Award Agreement evidencing an Award of Options shall
specify whether such Options are intended to be Non-qualified
Stock Options or Incentive Stock Options, and in the absence of
such specification such options shall be deemed Non-qualified
Stock Options.



|   |                                
|-- | -------------------------------
|8. | TERMS AND CONDITIONS OF OPTIONS

8.1Option Price

The Option Price of each Option shall be fixed by
the Board and stated in the Award Agreement evidencing such
Option. The Option Price of each Option shall be at least the
Fair Market Value on the Grant Date of a share of Stock;
provided, however, that in the event that a Grantee is a
Ten Percent Shareholder, the Option Price of an Option granted
to such Grantee that is intended to be an Incentive Stock Option
shall be not less than 110 percent of the Fair Market Value
of a share of Stock on the Grant Date. In no case shall the
Option Price of any Option be less than the par value of a share
of Stock.

8.2Vesting

Subject to Sections 8.3 and 17.3 hereof,
each Option granted under the Plan shall become exercisable at
such times and under such conditions as shall be determined by
the Board and stated in the Award Agreement. For purposes of
this Section 8.2, fractional numbers of shares of Stock
subject to an Option shall be rounded down to the next nearest
whole number. The Board may provide, for example, in the Award
Agreement for (i) accelerated exercisability of the Option
in the event the Grantees Service terminates on account of
death, Disability, retirement, or another event,
(ii) expiration of the Option prior to its term in the
event of the termination of the Grantees Service,
(iii) immediate forfeiture of the Option in the event the
Grantees Service is terminated for Cause, or
(iv) unvested Options to be exercised subject to the
Companys right of repurchase with respect to unvested
shares of Stock.

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8.3Term

Each Option granted under the Plan shall
terminate, and all rights to purchase shares of Stock thereunder
shall cease, upon the expiration of ten years from the date such
Option is granted, or under such circumstances and on such date
prior thereto as is set forth in the Plan or as may be fixed by
the Board and stated in the Award Agreement relating to such
Option (the Termination Date); provided,
however, that in the event that the Grantee is a Ten Percent
Shareholder, an Option granted to such Grantee that is intended
to be an Incentive Stock Option shall not be exercisable after
the expiration of five years from its Grant Date.

8.4Termination of Service

Each Award Agreement shall set forth the extent
to which the Grantee shall have the right to exercise the Option
following termination of the Grantees Service. Such
provisions shall be determined in the sole discretion of the
Board, need not be uniform among all Options issued pursuant to
the Plan, and may reflect distinctions based on the reasons for
termination of Service.

8.5Limitations on Exercise of Option

Notwithstanding any other provision of the Plan,
in no event may any Option be exercised, in whole or in part,
after ten years following the Grant Date, or after the
occurrence of an event referred to in Section 17 hereof
which results in termination of the Option.

8.6Method of Exercise

An Option that is exercisable may be exercised by
the Grantees delivery to the Company of written notice of
exercise on any business day, at the Companys principal
office, on the form specified by the Company. Such notice shall
specify the number of shares of Stock with respect to which the
Option is being exercised and shall be accompanied by payment in
full of the Option Price of the shares for which the Option is
being exercised. The minimum number of shares of Stock with
respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of
(i) 100 shares or such lesser number set forth in the
applicable Award Agreement and (ii) the maximum number of
shares available for purchase under the Option at the time of
exercise.

8.7Rights of Holders of Options

Unless otherwise stated in the applicable Award
Agreement, an individual holding or exercising an Option shall
have none of the rights of a shareholder (for example, the right
to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the
voting of the subject shares of Stock) until the shares of Stock
covered thereby are fully paid and issued to him. Except as
provided in Section 17 hereof, no adjustment shall be made
for dividends, distributions or other rights for which the
record date is prior to the date of such issuance.

8.8Delivery of Stock Certificates

Promptly after the exercise of an Option by a
Grantee and the payment in full of the Option Price, such
Grantee shall be entitled to the issuance of a stock certificate
or certificates evidencing his or her ownership of the shares of
Stock subject to the Option.



|   |                           
|-- | --------------------------
|9. | TRANSFERABILITY OF OPTIONS

9.1Transferability of Options

Except as provided in Section 9.2, during
the lifetime of a Grantee, only the Grantee (or, in the event of
legal incapacity or incompetency, the Grantees guardian or
legal representative) may exercise an Option. Except as provided
in Section 9.2, no Option shall be assignable or
transferable by the Grantee to whom it is granted, other than by
will or the laws of descent and distribution.

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9.2Family Transfers

If, and to the extent, authorized in the
applicable Award Agreement, a Grantee may transfer, not for
value, all or part of an Option which is not an Incentive Stock
Option to any Family Member. For the purpose of this
Section 9.2, a not for value transfer is a
transfer which is (i) a gift, (ii) a transfer under a
domestic relations order in settlement of marital property
rights to the extent required by the court order; or
(iii) a transfer to an entity in which more than fifty
percent of the voting interests are owned by Family Members (or
the Grantee) in exchange for an interest in that entity.
Following a transfer under this Section 9.2, any such
Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer.
Subsequent transfers of transferred Options are prohibited
except to Family Members of the original Grantee in accordance
with this Section 9.2 or by will or the laws of descent and
distribution. The events of termination of Service of
Section 8.4 hereof shall continue to be applied with
respect to the original Grantee, following which the Option
shall be exercisable by the transferee only to the extent, and
for the periods specified, in Section 8.4.



|    |                          
|--- | -------------------------
|10. | STOCK APPRECIATION RIGHTS

The Board is authorized to grant Stock
Appreciation Rights (SARs) to Grantees on the
following terms and conditions:

10.1Right to Payment

An SAR shall confer on the Grantee to whom it is
granted a right to receive, upon exercise thereof, the excess of
(i) the Fair Market Value of one share of Stock on the date
of exercise over (ii) the grant price of the SAR as
determined by the Board. The Award Agreement for an SAR shall
specify the grant price of the SAR, which may be fixed at the
Fair Market Value of a share of Stock on the date of grant or
may vary in accordance with a predetermined formula while the
SAR is outstanding.

10.2Other Terms

The Board shall determine at the date of grant or
thereafter, the time or times at which and the circumstances
under which an SAR may be exercised in whole or in part
(including based on achievement of performance goals and/or
future service requirements), the time or times at which SARs
shall cease to be or become exercisable following termination of
Service or upon other conditions, the method of exercise, method
of settlement, form of consideration payable in settlement,
method by or forms in which Stock will be delivered or deemed to
be delivered to Grantees, whether or not an SAR shall be in
tandem or in combination with any other Award, and any other
terms and conditions of any SAR.



|    |                                                         
|--- | --------------------------------------------------------
|11. | RESTRICTED STOCK, STOCK UNITS AND UNRESTRICTED
    STOCK

11.1Grant of Restricted Stock or Stock
Units

The Board may from time to time grant Restricted
Stock or Stock Units to persons eligible to receive Awards under
Section 6 hereof, subject to such restrictions, conditions
and other terms, if any, as the Board may determine. Awards of
Restricted Stock may be made for no consideration (other than
par value of the shares which is deemed paid by Services already
rendered).

11.2Restrictions

At the time a grant of Restricted Stock or Stock
Units is made, the Board may, in its sole discretion, establish
a period of time (a restricted period) applicable to
such Restricted Stock or Stock Units. Each Award of Restricted
Stock or Stock Units may be subject to a different restricted
period. The Board may, in its sole discretion, at the time a
grant of Restricted Stock or Stock Units is made, prescribe
restrictions in addition to or other than the expiration of the
restricted period, including the satisfaction of corporate or
individual performance objectives, which may be applicable to
all or any portion of the Restricted Stock or Stock Units in
accordance with Section 14.1 and 14.2. Neither Restricted
Stock nor Stock Units may be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of during the
restricted period or prior to

9



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the satisfaction of any other restrictions
prescribed by the Board with respect to such Restricted Stock or
Stock Units.


11.3Restricted Stock Certificates

The Company shall issue, in the name of each
Grantee to whom Restricted Stock has been granted, stock
certificates representing the total number of shares of
Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an
Award Agreement that either (i) the Secretary of the
Company shall hold such certificates for the Grantees
benefit until such time as the Restricted Stock is forfeited to
the Company or the restrictions lapse, or (ii) such
certificates shall be delivered to the Grantee, provided,
however, that such certificates shall bear a legend or
legends that comply with the applicable securities laws and
regulations and makes appropriate reference to the restrictions
imposed under the Plan and the Award Agreement.

11.4Rights of Holders of Restricted
Stock

Unless the Board otherwise provides in an Award
Agreement, holders of Restricted Stock shall have the right to
vote such Stock and the right to receive any dividends declared
or paid with respect to such Stock. The Board may provide that
any dividends paid on Restricted Stock must be reinvested in
shares of Stock, which may or may not be subject to the same
vesting conditions and restrictions applicable to such
Restricted Stock. All distributions, if any, received by a
Grantee with respect to Restricted Stock as a result of any
stock split, stock dividend, combination of shares, or other
similar transaction shall be subject to the restrictions
applicable to the original Grant.

11.5 Rights of Holders of Stock
Units

11.5.1Voting and Dividend Rights



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Unless the Board otherwise provides in an Award
    Agreement, holders of Stock Units shall have no rights as
    shareholders of the Company. The Board may provide in an Award
    Agreement evidencing a grant of Stock Units that the holder of
    such Stock Units shall be entitled to receive, upon the
    Companys payment of a cash dividend on its outstanding
    Stock, a cash payment for each Stock Unit held equal to the
    per-share dividend paid on the Stock. Such Award Agreement may
    also provide that such cash payment will be deemed reinvested in
    additional Stock Units at a price per unit equal to the Fair
    Market Value of a share of Stock on the date that such dividend
    is paid.

11.5.2Creditors Rights



| |                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A holder of Stock Units shall have no rights
    other than those of a general creditor of the Company. Stock
    Units represent an unfunded and unsecured obligation of the
    Company, subject to the terms and conditions of the applicable
    Award Agreement.

11.6Termination of Service

Unless the Board otherwise provides in an Award
Agreement or in writing after the Award Agreement is issued,
upon the termination of a Grantees Service, any Restricted
Stock or Stock Units held by such Grantee that have not vested,
or with respect to which all applicable restrictions and
conditions have not lapsed, shall immediately be deemed
forfeited. Upon forfeiture of Restricted Stock or Stock Units,
the Grantee shall have no further rights with respect to such
Award, including but not limited to any right to vote Restricted
Stock or any right to receive dividends with respect to shares
of Restricted Stock or Stock Units.

11.7Purchase of Restricted Stock

The Grantee shall be required, to the extent
required by applicable law, to purchase the Restricted Stock
from the Company at a Purchase Price equal to the greater of
(i) the aggregate par value of the shares of Stock
represented by such Restricted Stock or (ii) the Purchase
Price, if any, specified in the Award Agreement relating to such
Restricted Stock. The Purchase Price shall be payable in a form
described in Section 12 or, in the discretion of the Board,
in consideration for past Services rendered to the Company or an
Affiliate.

10



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##### 



11.8Delivery of Stock

Upon the expiration or termination of any
restricted period and the satisfaction of any other conditions
prescribed by the Board, the restrictions applicable to shares
of Restricted Stock or Stock Units settled in Stock shall lapse,
and, unless otherwise provided in the Award Agreement, a stock
certificate for such shares shall be delivered, free of all such
restrictions, to the Grantee or the Grantees beneficiary
or estate, as the case may be.

11.9Unrestricted Stock

The Board may, in its sole discretion, grant
Stock (or authorize the Company to sell Stock at par value or
such other higher purchase price determined by the Board) free
of restrictions other than those required under federal or state
securities laws (Unrestricted Stock) to persons
eligible to receive Awards under Section 6 hereof.
Unrestricted Stock may be granted or sold as described in the
preceding sentence in respect of past Services or other valid
consideration, or in lieu of any cash compensation due to the
Grantee thereof.



|    |                                                       
|--- | ------------------------------------------------------
|12. | FORM OF PAYMENT FOR OPTION PRICE OR PURCHASE
    PRICE

12.1General Rule

Payment of the Option Price for the shares
purchased pursuant to the exercise of an Option or the Purchase
Price for Restricted Stock or Unrestricted Stock shall be made
in cash or in cash equivalents acceptable to the Company.

12.2Surrender of Stock

To the extent the Award Agreement so provides,
payment of the Option Price for shares purchased pursuant to the
exercise of an Option or the Purchase Price for Restricted Stock
or Unrestricted Stock may be made all or in part through the
tender to the Company of shares of Stock, which shares, if
acquired from the Company, shall have been held for at least six
months at the time of tender and which shall be valued, for
purposes of determining the extent to which the Option Price or
Purchase Price has been paid thereby, at their Fair Market Value
on the date of exercise or surrender.

12.3 Cashless Exercise

With respect to an Option only (and not with
respect to Restricted Stock or Unrestricted Stock), to the
extent the Award Agreement so provides, payment of the Option
Price for shares purchased pursuant to the exercise of an Option
may be made all or in part by delivery (on a form acceptable to
the Board) of an irrevocable direction to a licensed securities
broker acceptable to the Company to sell shares of Stock and to
deliver all or part of the sales proceeds to the Company in
payment of the Option Price and any withholding taxes described
in Section 18.3.

12.4Other Forms of Payment

To the extent the Award Agreement so provides,
payment of the Option Price for shares purchased pursuant to
exercise of an Option or the Purchase Price for Restricted Stock
or Unrestricted Stock may be made in any other form that is
consistent with applicable laws, regulations and rules.



|    |                           
|--- | --------------------------
|13. | DIVIDEND EQUIVALENT RIGHTS

13.1Dividend Equivalent Rights

A Dividend Equivalent Right is an Award entitling
the recipient to receive credits based on cash distributions
that would have been paid on the shares of Stock specified in
the Dividend Equivalent Right (or other award to which it
relates) if such shares had been issued to and held by the
recipient. A Dividend Equivalent Right may be granted hereunder
to any Grantee as a component of another Award or as a
freestanding award. The terms and conditions of Dividend
Equivalent Rights shall be specified in the grant. Credits to
the holder of a Dividend Equivalent Right may be paid currently
or may be deemed to be reinvested in additional shares of Stock,
which may thereafter accrue additional equivalents. Any such
reinvestment shall

11



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##### 



be at Fair Market Value on the date of
reinvestment. Dividend Equivalent Rights may be settled in cash
or Stock or a combination thereof, in a single installment or
installments, all determined in the sole discretion of the
Board. A Dividend Equivalent Right granted as a component of
another Award may provide that such Dividend Equivalent Right
shall be settled upon exercise, settlement, or payment of, or
lapse of restrictions on, such other award, and that such
Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A
Dividend Equivalent Right granted as a component of another
Award may also contain terms and conditions different from such
other award.


13.2Termination of Service

Except as may otherwise be provided by the Board
either in the Award Agreement or in writing after the Award
Agreement is issued, a Grantees rights in all Dividend
Equivalent Rights or interest equivalents shall automatically
terminate upon the Grantees termination of Service for any
reason.



|    |                                            
|--- | -------------------------------------------
|14. | PERFORMANCE AND ANNUAL INCENTIVE
    AWARDS

14.1Performance Conditions

The right of a Grantee to exercise or receive a
grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by
the Board. The Board may use such business criteria and other
measures of performance as it may deem appropriate in
establishing any performance conditions, and may exercise its
discretion to reduce the amounts payable under any Award subject
to performance conditions, except as limited under
Sections 14.2 hereof in the case of a Performance Award or
Annual Incentive Award intended to qualify under Code
Section 162(m). If and to the extent required under Code
Section 162(m), any power or authority relating to a
Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m), shall be exercised by the
Committee and not the Board.

14.2Performance or Annual Incentive
Awards Granted to Designated Covered Employees

If and to the extent that the Committee
determines that a Performance or Annual Incentive Award to be
granted to a Grantee who is designated by the Committee as
likely to be a Covered Employee should qualify as
performance-based compensation for purposes of Code
Section 162(m), the grant, exercise and/or settlement of
such Performance or Annual Incentive Award shall be contingent
upon achievement of pre-established performance goals and other
terms set forth in this Section 14.2.

14.2.1Performance Goals Generally



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The performance goals for such Performance or
    Annual Incentive Awards shall consist of one or more business
    criteria and a targeted level or levels of performance with
    respect to each of such criteria, as specified by the Committee
    consistent with this Section 14.2. Performance goals shall
    be objective and shall otherwise meet the requirements of Code
    Section 162(m) and regulations thereunder including the
    requirement that the level or levels of performance targeted by
    the Committee result in the achievement of performance goals
    being substantially uncertain. The Committee may
    determine that such Performance or Annual Incentive Awards shall
    be granted, exercised and/or settled upon achievement of any one
    performance goal or that two or more of the performance goals
    must be achieved as a condition to grant, exercise and/or
    settlement of such Performance or Annual Incentive Awards.
    Performance goals may differ for Performance or Annual Incentive
    Awards granted to any one Grantee or to different Grantees.

14.2.2Business Criteria



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | One or more of the following business criteria
    for the Company, on a consolidated basis, and/or specified
    subsidiaries or business units of the Company (except with
    respect to the total shareholder return and earnings per share
    criteria), shall be used exclusively by the Committee in
    establishing performance goals for such Performance or Annual
    Incentive Awards: (1) total shareholder return,
    (2) such total shareholder return as compared to total
    return (on a comparable basis) of a publicly available index
    such as, but not limited to, the Standard & Poors
    500 Stock Index or an index consisting

12



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | of telecommunications companies that are peer
    companies to the Company, (3) net income, (4) pretax
    earnings, (5) operating earnings before interest expense,
    taxes, depreciation and amortization, (6) earnings before
    interest expense, taxes, depreciation and amortization,
    (7) pretax operating earnings after interest expense and
    before bonuses, service fees, and extraordinary or special
    items, (8) operating margin, (9) earnings per share,
    (10) return on equity, (11) return on capital,
    (12) return on investment, (13) operating earnings,
    (14) working capital, (15) ratio of debt to
    shareholders equity, (16) revenue, (17) results
    of customer satisfaction surveys, (18) number of access
    line additions, (19) account retention rates,
    (20) customer turnover, (21) number of new accounts,
    (22) market share, and (23) operating free cash flow.

14.2.3Timing For Establishing
Performance Goals



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Performance goals shall be established not later
    than 90 days after the beginning of any performance period
    applicable to such Performance or Annual Incentive Awards, or at
    such other date as may be required or permitted for
    performance-based compensation under Code
    Section 162(m).

14.2.4Performance or Annual Incentive
Award Pool



| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Committee may establish a Performance or
    Annual Incentive Award pool, which shall be an unfunded pool,
    for purposes of measuring Company performance in connection with
    Performance or Annual Incentive Awards.

14.2.5Settlement of Performance or
Annual Incentive Awards; Other Terms



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Settlement of such Performance or Annual
    Incentive Awards shall be in cash, Stock, other Awards or other
    property, in the discretion of the Committee. The Committee may,
    in its discretion, reduce the amount of a settlement otherwise
    to be made in connection with such Performance or Annual
    Incentive Awards. The Committee shall specify the circumstances
    in which such Performance or Annual Incentive Awards shall be
    paid or forfeited in the event of termination of Service by the
    Grantee prior to the end of a performance period or settlement
    of Performance Awards.

14.3Written Determinations

All determinations by the Committee as to the
establishment of performance goals, the amount of any
Performance Award pool or potential individual Performance
Awards and as to the achievement of performance goals relating
to Performance Awards, and the amount of any Annual Incentive
Award pool or potential individual Annual Incentive Awards and
the amount of final Annual Incentive Awards, shall be made in
writing in the case of any Award intended to qualify under Code
Section 162(m). To the extent required to comply with Code
Section 162(m), the Committee may delegate any
responsibility relating to such Performance Awards or Annual
Incentive Awards.

14.4Status of Section 14.2 Awards
Under Code Section 162(m)

It is the intent of the Company that Performance
Awards and Annual Incentive Awards under Section 14.2
hereof granted to persons who are designated by the Committee as
likely to be Covered Employees within the meaning of Code
Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute qualified
performance-based compensation within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, the
terms of Section 14.2, including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a
manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Grantee will be
a Covered Employee with respect to a fiscal year that has not
yet been completed, the term Covered Employee as used herein
shall mean only a person designated by the Committee, at the
time of grant of Performance Awards or an Annual Incentive
Award, as likely to be a Covered Employee with respect to that
fiscal year. If any provision of the Plan or any agreement
relating to such Performance Awards or Annual Incentive Awards
does not comply or is inconsistent with the requirements of Code
Section 162(m) or regulations thereunder, such provision
shall be construed or deemed amended to the extent necessary to
conform to such requirements.

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|    |                      
|--- | ---------------------
|15. | PARACHUTE LIMITATIONS

Notwithstanding any other provision of this Plan
or of any other agreement, contract, or understanding heretofore
or hereafter entered into by a Grantee with the Company or any
Affiliate, except an agreement, contract, or understanding
hereafter entered into that expressly modifies or excludes
application of this paragraph (an Other Agreement),
and notwithstanding any formal or informal plan or other
arrangement for the direct or indirect provision of compensation
to the Grantee (including groups or classes of Grantees or
beneficiaries of which the Grantee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of
a benefit to or for the Grantee (a Benefit
Arrangement), if the Grantee is a disqualified
individual, as defined in Section 280G(c) of the
Code, any Option, Restricted Stock or Stock Unit held by that
Grantee and any right to receive any payment or other benefit
under this Plan shall not become exercisable or vested
(i) to the extent that such right to exercise, vesting,
payment, or benefit, taking into account all other rights,
payments, or benefits to or for the Grantee under this Plan, all
Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Grantee under this Plan to be
considered a parachute payment within the meaning of
Section 280G(b)(2) of the Code as then in effect (a
Parachute Payment) and (ii) if, as a result of
receiving a Parachute Payment, the aggregate after-tax amounts
received by the Grantee from the Company under this Plan, all
Other Agreements, and all Benefit Arrangements would be less
than the maximum after-tax amount that could be received by the
Grantee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of
any such right to exercise, vesting, payment, or benefit under
this Plan, in conjunction with all other rights, payments, or
benefits to or for the Grantee under any Other Agreement or any
Benefit Arrangement would cause the Grantee to be considered to
have received a Parachute Payment under this Plan that would
have the effect of decreasing the after-tax amount received by
the Grantee as described in clause (ii) of the preceding
sentence, then the Grantee shall have the right, in the
Grantees sole discretion, to designate those rights,
payments, or benefits under this Plan, any Other Agreements, and
any Benefit Arrangements that should be reduced or eliminated so
as to avoid having the payment or benefit to the Grantee under
this Plan be deemed to be a Parachute Payment.



|    |                    
|--- | -------------------
|16. | REQUIREMENTS OF LAW

16.1General

The Company shall not be required to sell or
issue any shares of Stock under any Award if the sale or
issuance of such shares would constitute a violation by the
Grantee, any other individual exercising an Option, or the
Company of any provision of any law or regulation of any
governmental authority, including without limitation any federal
or state securities laws or regulations. If at any time the
Company shall determine, in its discretion, that the listing,
registration or qualification of any shares subject to an Award
upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or
in connection with, the issuance or purchase of shares
hereunder, no shares of Stock may be issued or sold to the
Grantee or any other individual exercising an Option pursuant to
such Award unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company, and any delay
caused thereby shall in no way affect the date of termination of
the Award. Specifically, in connection with the Securities Act,
upon the exercise of any Option or the delivery of any shares of
Stock underlying an Award, unless a registration statement under
such Act is in effect with respect to the shares of Stock
covered by such Award, the Company shall not be required to sell
or issue such shares unless the Board has received evidence
satisfactory to it that the Grantee or any other individual
exercising an Option may acquire such shares pursuant to an
exemption from registration under the Securities Act. Any
determination in this connection by the Board shall be final,
binding, and conclusive. The Company may, but shall in no event
be obligated to, register any securities covered hereby pursuant
to the Securities Act. The Company shall not be obligated to
take any affirmative action in order to cause the exercise of an
Option or the issuance of shares of Stock pursuant to the Plan
to comply with any law or regulation of any governmental
authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable until the
shares of Stock covered by such Option are registered or are
exempt from registration, the exercise of

14



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such Option (under circumstances in which the
laws of such jurisdiction apply) shall be deemed conditioned
upon the effectiveness of such registration or the availability
of such an exemption.


16.2Rule 16b-3

During any time when the Company has a class of
equity security registered under Section 12 of the Exchange
Act, it is the intent of the Company that Awards pursuant to the
Plan and the exercise of Options and SARs granted hereunder will
qualify for the exemption provided by Rule 16b-3 under the
Exchange Act. To the extent that any provision of the Plan or
action by the Board does not comply with the requirements of
Rule 16b-3, it shall be deemed inoperative to the extent
permitted by law and deemed advisable by the Board, and shall
not affect the validity of the Plan. In the event that
Rule 16b-3 is revised or replaced, the Board may exercise
its discretion to modify this Plan in any respect necessary to
satisfy the requirements of, or to take advantage of any
features of, the revised exemption or its replacement.



|    |                                    
|--- | -----------------------------------
|17. | EFFECT OF CHANGES IN CAPITALIZATION

17.1Changes in Stock

If the number of outstanding shares of Stock is
increased or decreased or the shares of Stock are changed into
or exchanged for a different number or kind of shares or other
securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such
shares effected without receipt of consideration by the Company
occurring after the Effective Date, the number and kinds of
shares for which grants of Options and other Awards may be made
under the Plan shall be adjusted proportionately and accordingly
by the Company. In addition, the number and kind of shares for
which Awards are outstanding shall be adjusted proportionately
and accordingly so that the proportionate interest of the
Grantee immediately following such event shall, to the extent
practicable, be the same as immediately before such event. Any
such adjustment in outstanding Options or SARs shall not change
the aggregate Option Price or SAR Exercise Price payable with
respect to shares that are subject to the unexercised portion of
an outstanding Option or SAR, as applicable, but shall include a
corresponding proportionate adjustment in the Option Price or
SAR Exercise Price per share. The conversion of any convertible
securities of the Company or the issuance of any shares of Stock
under any Company benefit plan shall not be treated as an
increase in shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution
to the Companys shareholders of securities of any other
entity or other assets (other than dividends payable in cash or
stock of the Company) without receipt of consideration by the
Company, the Company may, in such manner as the Company deems
appropriate, adjust (i) the number and kind of shares
subject to outstanding Awards and/or (ii) the exercise
price of outstanding Options and SARs to reflect such
distribution.



| |      |                                                                                                                          
| | ---- | -------------------------------------------------------------------------------------------------------------------------
| | 17.2 | Reorganization in Which the Company is the
    Surviving Entity and Which Does Not Constitute a Corporate
    Transaction

Subject to Section 17.3 hereof, if the
Company shall be the surviving entity in any reorganization,
merger, or consolidation of the Company with one or more other
entities and which does not constitute a Corporate Transaction,
any Option or SAR theretofore granted pursuant to the Plan shall
pertain to and apply to the securities to which a holder of the
number of shares of Stock subject to such Option or SAR would
have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate
adjustment of the Option Price or SAR Exercise Price per share
so that the aggregate Option Price or SAR Exercise Price
thereafter shall be the same as the aggregate Option Price or
SAR Exercise Price of the shares remaining subject to the Option
or SAR immediately prior to such reorganization, merger, or
consolidation. Subject to any contrary language in an Award
Agreement evidencing an Award, any restrictions applicable to
such Award shall apply as well to any replacement shares
received by the Grantee as a result of the reorganization,
merger or consolidation.

15



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| |      |                                                                                              
| | ---- | ---------------------------------------------------------------------------------------------
| | 17.3 | Reorganization, Sale of Assets or Sale of
    Stock Which Constitutes a Corporate Transaction

Subject to the exceptions set forth in the last
sentence of this Section 17.3 and the last sentence of
Section 17.4:



| |                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) upon the occurrence of a Corporate
    Transaction, all outstanding shares of Restricted Stock shall be
    deemed to have vested, and all restrictions and conditions
    applicable to such shares of Restricted Stock shall be deemed to
    have lapsed, immediately prior to the occurrence of such
    Corporate Transaction, and
|
| | (ii) either of the following two actions
    shall be taken:                                                                                                                                                                                                                                                                               



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) fifteen days prior to the scheduled
    consummation of the Corporate Transaction, all Options and SARs
    outstanding hereunder shall become immediately exercisable and
    shall remain exercisable for a period of fifteen days, or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (B) prior to the consummation of the
    Corporate Transaction, the Board may elect, in its sole
    discretion, to cancel any outstanding Awards of Options,
    Restricted Stock, and/or SARs and pay or deliver, or cause to be
    paid or delivered, to the holder thereof an amount in cash or
    securities having a value (as determined by the Board acting in
    good faith), in the case of Restricted Stock, equal to the
    formula or fixed price per share paid to holders of shares of
    Stock and, in the case of Options or SARs, equal to the product
    of the number of shares of Stock subject to the Option or SAR
    (the Award Shares) multiplied by the amount, if any,
    by which (I) the formula or fixed price per share paid to
    holders of shares of Stock pursuant to such transaction exceeds
    (II) the Option Price or SAR Exercise Price applicable to
    such Award Shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | With respect to the Companys establishment
    of an exercise window, (i) any exercise of an Option or SAR
    during such fifteen-day period shall be conditioned upon the
    consummation of the event and shall be effective only
    immediately before the consummation of the event, and
    (ii) upon consummation of any Corporate Transaction, the
    Plan, and all outstanding but unexercised Options and SARs shall
    terminate. The Board shall send written notice of an event that
    will result in such a termination to all individuals who hold
    Options and SARs not later than the time at which the Company
    gives notice thereof to its shareholders. This Section 17.3
    shall not apply to any Corporate Transaction to the extent that
    provision is made in writing in connection with such Corporate
    Transaction for the assumption or continuation of the Options,
    SARs and Restricted Stock theretofore granted, or for the
    substitution for such Options, SARs and Restricted Stock for new
    common stock options and stock appreciation rights and new
    common stock restricted stock relating to the stock of a
    successor entity, or a parent or subsidiary thereof, with
    appropriate adjustments as to the number of shares (disregarding
    any consideration that is not common stock) and option and stock
    appreciation right exercise prices, in which event the Plan,
    Options, SARs and Restricted Stock theretofore granted shall
    continue in the manner and under the terms so provided.

17.4Adjustments

Adjustments under this Section 17 related to
shares of Stock or securities of the Company shall be made by
the Board, whose determination in that respect shall be final,
binding and conclusive. No fractional shares or other securities
shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated
in each case by rounding downward to the nearest whole share.
The Board shall determine the effect of a Corporate Transaction
upon Awards other than Options, SARs and Restricted Stock, and
such effect shall be set forth in the appropriate Award
Agreement. The Board may provide in the Award Agreements at the
time of grant, or any time thereafter with the consent of the
Grantee, for different provisions to apply to an Award in place
of those described in Sections 17.1, 17.2 and 17.3.

17.5No Limitations on Company

The making of Awards pursuant to the Plan shall
not affect or limit 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,
consolidate, dissolve, or liquidate, or to sell or transfer all
or any part of its business or assets.

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|18. | GENERAL PROVISIONS

18.1Disclaimer of Rights

No provision in the Plan or in any Award or Award
Agreement shall be construed to confer upon any individual the
right to remain in the employ or service of the Company or any
Affiliate, or to interfere in any way with any contractual or
other right or authority of the Company either to increase or
decrease the compensation or other payments to any individual at
any time, or to terminate any employment or other relationship
between any individual and the Company. In addition,
notwithstanding anything contained in the Plan to the contrary,
unless otherwise stated in the applicable Award Agreement, no
Award granted under the Plan shall be affected by any change of
duties or position of the Grantee, so long as such Grantee
continues to be a director, officer, consultant or employee of
the Company or an Affiliate. The obligation of the Company to
pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed
herein. The Plan shall in no way be interpreted to require the
Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any
Grantee or beneficiary under the terms of the Plan. No Grantee
shall have any of the rights of a shareholder with respect to
the shares of Stock subject to an Option except to the extent
the certificates for such shares of Stock shall have been issued
upon the exercise of the Option.

18.2Nonexclusivity of the Plan

Neither the adoption of the Plan nor the
submission of the Plan to the shareholders of the Company for
approval shall be construed as creating any limitations upon the
right and authority of the Board to adopt such other incentive
compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or
specifically to a particular individual or particular
individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock
options otherwise than under the Plan.

18.3Withholding Taxes

The Company or an Affiliate, as the case may be,
shall have the right to deduct from payments of any kind
otherwise due to a Grantee any federal, state, or local taxes of
any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to an Award
or upon the issuance of any shares of Stock upon the exercise of
an Option or pursuant to an Award. At the time of such vesting,
lapse, or exercise, the Grantee shall pay to the Company or the
Affiliate, as the case may be, any amount that the Company or
the Affiliate may reasonably determine to be necessary to
satisfy such withholding obligation. Subject to the prior
approval of the Company or the Affiliate, which may be withheld
by the Company or the Affiliate, as the case may be, in its sole
discretion, the Grantee may elect to satisfy such obligations,
in whole or in part, (i) by causing the Company or the
Affiliate to withhold shares of Stock otherwise issuable to the
Grantee or (ii) by delivering to the Company or the
Affiliate shares of Stock already owned by the Grantee. The
shares of Stock so delivered or withheld shall have an aggregate
Fair Market Value equal to such withholding obligations. The
Fair Market Value of the shares of Stock used to satisfy such
withholding obligation shall be determined by the Company or the
Affiliate as of the date that the amount of tax to be withheld
is to be determined. A Grantee who has made an election pursuant
to this Section 18.3 may satisfy his or her withholding
obligation only with shares of Stock that are not subject to any
repurchase, forfeiture, unfulfilled vesting, or other similar
requirements.

18.4Book Entry

Notwithstanding any other provision of this Plan
to the contrary, the Company may, in its discretion, use the
book entry method for recording Stock issuances in lieu of
issuing stock certificates.

18.5Captions

The use of captions in this Plan or any Award
Agreement is for the convenience of reference only and shall not
affect the meaning of any provision of the Plan or such Award
Agreement.

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18.6Other Provisions

Each Award granted under the Plan may contain
such other terms and conditions not inconsistent with the Plan
as may be determined by the Board, in its sole discretion.

18.7Number and Gender

With respect to words used in this Plan, the
singular form shall include the plural form, the masculine
gender shall include the feminine gender, etc., as the context
requires.

18.8Severability

If any provision of the Plan or any Award
Agreement shall be determined to be illegal or unenforceable by
any court of law in any jurisdiction, the remaining provisions
hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.

18.9Governing Law

The validity and construction of this Plan and
the instruments evidencing the Award hereunder shall be governed
by the laws of the State of North Carolina, other than any
conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Plan and
the instruments evidencing the Awards granted hereunder to the
substantive laws of any other jurisdiction.

The Plan was originally adopted by the Board as
of March 26, 2001 and first approved by the shareholders of
the Company on April 26, 2001. The Plan as herein amended
and restated was adopted by the Board as of February 26,
2004 and approved by the shareholders of the Company
on April 22,
2004.

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