Exhibit 4.5


Table of Contents


 Exhibit 4.5 
 MONARCH FINANCIAL HOLDINGS, INC. 
 2014 EQUITY INCENTIVE PLAN







Table of Contents


 MONARCH FINANCIAL HOLDINGS, INC 

2014 Equity Incentive Plan 
 Table of Contents 
  

									
	 ARTICLE I DEFINITIONS 
	  	 	1	  
				
		 	1.01.	  	 Accounting Firm
	  	 	1	  
		 	1.02.	  	 Administrator
	  	 	1	  
		 	1.03.	  	 Agreement
	  	 	1	  
		 	1.04.	  	 Award
	  	 	1	  
		 	1.05.	  	 Board
	  	 	1	  
		 	1.06.	  	 Change in Control
	  	 	1	  
		 	1.07.	  	 Code
	  	 	2	  
		 	1.08.	  	 Committee
	  	 	2	  
		 	1.09.	  	 Common Stock
	  	 	2	  
		 	1.10.	  	 Company
	  	 	3	  
		 	1.11.	  	 Control Change Date
	  	 	3	  
		 	1.12.	  	 Corresponding SAR
	  	 	3	  
		 	1.13.	  	 Exchange Act
	  	 	3	  
		 	1.14.	  	 Fair Market Value
	  	 	3	  
		 	1.15.	  	 Incentive Stock Option
	  	 	3	  
		 	1.16.	  	 Initial Value
	  	 	3	  
		 	1.17.	  	 Non-Qualified Stock Option
	  	 	3	  
		 	1.18.	  	 Option
	  	 	3	  
		 	1.19.	  	 Participant
	  	 	4	  
		 	1.20.	  	 Performance Criteria
	  	 	4	  
		 	1.21.	  	 Performance Shares
	  	 	4	  
		 	1.22.	  	 Plan
	  	 	4	  
		 	1.23.	  	 SAR
	  	 	4	  
		 	1.24.	  	 Stock Award
	  	 	5	  
		 	1.25.	  	 Stock Unit
	  	 	5	  
		 	1.26.	  	 Subsidiary
	  	 	5	  
		
	 ARTICLE II PURPOSES
	  	 	5	  
		
	 ARTICLE III ADMINISTRATION
	  	 	5	  
		
	 ARTICLE IV ELIGIBILITY
	  	 	6	  
		
	 ARTICLE V STOCK SUBJECT TO PLAN
	  	 	6	  
				
		 	5.01.	  	 Shares Issued
	  	 	6	  
		 	5.02.	  	 Aggregate Limit
	  	 	7	  
		 	5.03.	  	 Reallocation of Shares
	  	 	7	  
		
	 ARTICLE VI OPTIONS 
	  	 	7	  
				
		 	6.01.	  	 Award 
	  	 	7	  


  
 i 







Table of Contents


 MONARCH FINANCIAL HOLDINGS, INC 

2014 Equity Incentive Plan 
  

									
		 	 6.02.
	  	 Option Price
	  	 	7	  
		 	 6.03.
	  	 Maximum Option Period
	  	 	7	  
		 	 6.04.
	  	 Nontransferability
	  	 	8	  
		 	 6.05.
	  	 Transferable Options
	  	 	8	  
		 	 6.06.
	  	 Employee Status
	  	 	8	  
		 	 6.07.
	  	 Exercise
	  	 	8	  
		 	 6.08.
	  	 Payment
	  	 	9	  
		 	 6.09.
	  	 Shareholder Rights
	  	 	9	  
		 	 6.10.
	  	 Disposition of Stock
	  	 	9	  
		
	 ARTICLE VII SARS 
	  	 	9	  
				
		 	 7.01.
	  	 Award
	  	 	9	  
		 	 7.02.
	  	 Maximum SAR Period
	  	 	9	  
		 	 7.03.
	  	 Nontransferability
	  	 	10	  
		 	 7.04.
	  	 Transferable SARs
	  	 	10	  
		 	 7.05.
	  	 Exercise
	  	 	10	  
		 	 7.06.
	  	 Employee Status
	  	 	10	  
		 	 7.07.
	  	 Settlement
	  	 	11	  
		 	 7.08.
	  	 Shareholder Rights
	  	 	11	  
		
	 ARTICLE VIII STOCK AWARDS 
	  	 	11	  
				
		 	 8.01.
	  	 Award
	  	 	11	  
		 	 8.02.
	  	 Vesting
	  	 	11	  
		 	 8.03.
	  	 Employee Status
	  	 	11	  
		 	 8.04.
	  	 Shareholder Rights
	  	 	11	  
		
	 ARTICLE IX PERFORMANCE SHARE AWARDS 
	  	 	12	  
				
		 	 9.01.
	  	 Award
	  	 	12	  
		 	 9.02.
	  	 Earning the Award
	  	 	12	  
		 	 9.03.
	  	 Payment
	  	 	12	  
		 	 9.04.
	  	 Shareholder Rights
	  	 	12	  
		 	 9.05.
	  	 Nontransferability
	  	 	13	  
		 	 9.06.
	  	 Transferable Performance Shares
	  	 	13	  
		 	 9.07.
	  	 Employee Status
	  	 	13	  
		
	 ARTICLE X STOCK UNITS 
	  	 	13	  
				
		 	 10.01.
	  	 Award
	  	 	13	  
		 	 10.02.
	  	 Earning the Award
	  	 	13	  
		 	 10.03.
	  	 Payment
	  	 	14	  
		 	 10.04.
	  	 Nontransferability
	  	 	14	  
		 	 10.05.
	  	 Shareholder Rights
	  	 	14	  


  
 ii 








Table of Contents


 MONARCH FINANCIAL HOLDINGS, INC 

2014 Equity Incentive Plan 
  

									
	 ARTICLE XI ADJUSTMENT UPON CHANGE IN COMMON STOCK
	  	 	14	  
		
	 ARTICLE XII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
	  	 	15	  
		
	 ARTICLE XIII GENERAL PROVISIONS
	  	 	16	  
				
		 	 13.01.
	  	 Effect on Employment and Service
	  	 	16	  
		 	 13.02.
	  	 Unfunded Plan
	  	 	16	  
		 	 13.03.
	  	 Rules of Construction
	  	 	16	  
		 	 13.04.
	  	 Tax Withholding
	  	 	16	  
		 	 13.05.
	  	 Change in Control
	  	 	16	  
		
	 ARTICLE XIV AMENDMENT
	  	 	17	  
		
	 ARTICLE XV DURATION OF PLAN
	  	 	17	  
		
	 ARTICLE XVI EFFECTIVE DATE OF PLAN
	  	 	18	  


  
 iii








Table of Contents


 ARTICLE I 

DEFINITIONS 
  

	1.01.	 Accounting Firm 


 Accounting Firm means the independent accounting firm engaged to audit the Company’s financial statements. 
  

	1.02.	 Administrator 


 Administrator means the Committee and any delegate of the Committee that is appointed in accordance with Article III. Notwithstanding the preceding sentence, “Administrator” means the Board on
any date on which there is not a Committee. 
  

	1.03.	 Agreement 


 Agreement means a written agreement (including any amendment or supplement thereto) between the Company and a Participant specifying the terms and conditions of an Award granted to such Participant.

  

	1.04.	 Award 


 Award means an award of Performance Shares, or a Stock Award, Stock Unit, Option or SAR granted to a Participant. 
  

	1.05.	 Board 


 Board means the Board of Directors of the Company. 
  

	1.06.	 Change in Control 


 Change in Control means the occurrence of any of the events set forth in any one of the following paragraphs: 
 (a) The Company is merged or consolidated or reorganized into or with another company or other legal entity, and as a result of such merger, consolidation or reorganization less than a majority of the
combined voting power of the then outstanding securities of such resulting company or entity immediately after such transaction is held directly or indirectly in the aggregate by the holders of voting securities of the Company immediately prior to
such transaction, including voting securities issuable upon the exercise or conversion of options, warrants or other securities or rights; or 
 (b) The Company sells or otherwise transfers all or substantially all of its assets to another company or other legal entity, and as a result of such sale or other transfer of assets, less than a majority
of the combined voting power of the then outstanding securities of such company or other entity immediately after such sale or transfer is held directly or indirectly in the aggregate by the holders of voting securities of the Company immediately
prior to such sale or transfer, including voting securities issuable upon exercise or conversion of options, warrants or other securities or rights; or 

  
 1 







Table of Contents


 (c) Individuals who, as of the effective date of the Plan, constitute the
Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by
the Company’s shareholders, was approved by a vote of at least two thirds of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on
behalf of a person or entity other than the Board; or 
 (d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company; or 
 (e) An acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either
the then outstanding shares (“Outstanding Company Stock”), or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (“Outstanding Company Voting
Securities”), excluding, however, the following: (i) any acquisition directly from the Company other than the acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired
directly from the Company, (ii) any acquisition by the Company or any of its subsidiaries, or (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries; or

 (f) Approval by the Board of Directors of the Company of a resolution that a Change in Control has occurred.

 Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue
of the consummation of any transaction or series of integrated transactions immediately following which the recordholders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. 

 

	1.07.	 Code 


 Code means the Internal Revenue Code of 1986, and any amendments thereto. 
  

	1.08.	 Committee 


 Committee means the Compensation Committee of the Board. 
  

	1.09.	 Common Stock 


 Common Stock means the common stock of the Company. 

  
 2 







Table of Contents



	1.10.	 Company 


 Company means Monarch Financial Holdings, Inc. 
  

	1.11.	 Control Change Date 


 Control Change Date means the date on which a Change in Control occurs. If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such
transactions. 
  

	1.12.	 Corresponding SAR 


 Corresponding SAR means an SAR that is granted in relation to a particular Option and that can be exercised only upon the surrender to the Company, unexercised, of that portion of the Option to which the
SAR relates. 
  

	1.13.	 Exchange Act 


 Exchange Act means the Securities Exchange Act of 1934, as amended from time to time. 
  

	1.14.	 Fair Market Value 


 Fair Market Value means, on any given date, the reported “closing” price of a share of Common Stock on the NASDAQ National Market System or the Principal Stock Exchange on which the Common Stock
is traded, or if the Common Stock was not so traded on such day, then on the next preceding day that the Common Stock was so traded. 
  

	1.15.	 Incentive Stock Option 


 Incentive Stock Option means an Option which qualifies and is intended to quality as an Incentive Stock Option under Section 422 of the Code. 

 

	1.16.	 Initial Value 


 Initial Value means, with respect to a Corresponding SAR, the option price per share of the related Option and, with respect to an SAR granted independently of an Option, the price per share of Common
Stock as determined by the Administrator on the date of the grant; provided, however, that the price per share of Common Stock encompassed by the grant if an SAR shall not be less than Fair Market Value on the date of grant. Except for an adjustment
authorized under Article XI, the Initial Value may not be reduced (by amendment or cancellation of the sale or otherwise) after the date of grant. 
  

	1.17.	 Non-Qualified Stock Option 


 Non-Qualified Stock Option means an Option other than an Incentive Stock Option. 
  

	1.18.	 Option 


 Option means a stock option that entitles the holder to purchase from the Company a stated number of shares of Common Stock at the price set forth in an Agreement. 

  
 3 







Table of Contents



	1.19.	 Participant 


 Participant means an employee of the Company or a Subsidiary, a member of the Board or the board of directors of a Subsidiary or any consultant or advisor to the Company or a Subsidiary who satisfies the
requirements of Article IV and is selected by the Administrator to receive an Award. 
  

	1.20.	 Performance Criteria 


 Performance Criteria means one or more of (a) cash flow and/or free cash flow (before or after dividends), (b) earnings per share as defined by the Company, (c) EBITDA (as defined by the
Company), (d) the price of Common Stock, (e) return on equity, (f) total shareholder return, (g) return on capital (including return on total capital or return on invested capital), (h) return on assets or net assets,
(i) market capitalization, (j) total enterprise value (market capitalization plus debt), (k) economic value added (or equivalent metric), (l) debt leverage (debt to capital), (m) revenue, (n) income (including net
income, operating income, pre or after-tax income or income from continuing operations), (o) operating profit or net operating profit, (p) operating margin or profit margin, (q) return on operating revenue, (r) cash from
operations, (s) operating ratio, (t) cash flow per share, (u) market share (v) subscriber growth (on a gross or net basis), (w) churn, (x) capital expenditures, and (y) expense levels. Measurement of Performance
Criteria against goals excludes the impact of charges for restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring items, and the cumulative effects of accounting changes, each as defined by Generally Accepted
Accounting Principles and as identified in the financial statements or Management’s Discussion and Analysis in the Annual Report. Performance Criteria may be established on a Company-wide basis, with respect to one or more business units,
divisions or subsidiaries; and in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies. 
  

	1.21.	 Performance Shares 


 Performance Shares means an Award, in the amount determined by the Administrator and specified in an Agreement, stated with reference to a specified number of shares of Common Stock or Stock Units, that
entitles the holder to receive a payment for each specified share equal to the Fair Market Value of Common Stock on the date of payment. 
  

	1.22.	 Plan 


 Plan means the Monarch Bank 2014 Equity Incentive Plan. 
  

	1.23.	 SAR 


 SAR means a stock appreciation right that entitles the holder to receive, with respect to each share of Common Stock encompassed by the exercise of such SAR, the excess, if any, of the Fair Market Value
at the time of exercise over the Initial Value. References to “SARs” include both Corresponding SARs and SARs granted independently of Options, unless the context requires otherwise. 

  
 4 







Table of Contents



	1.24.	 Stock Award 


 Stock Award means Common Stock or Stock Units awarded to a Participant under Article VIII, including shares issued in settlement of benefit obligations under the Company’s incentive compensation or
deferral plan or any successor thereto. 
  

	1.25.	 Stock Unit 


 Stock Unit means an Award, in the amount determined by the Administrator and specified in an Agreement, stated with reference to a specified number of shares of Common Stock, that entitles the holder to
receive a payment for each Stock Unit equal to the Fair Market Value of a share of Common Stock on the date of payment. To the extent provided in an Agreement, each Stock Unit Award shall be adjusted (from the date of grant to the date of payment),
to reflect the payment of dividends on the comparable number of shares of Common Stock and the adjustment shall be in the form of additional Stock Units as if such dividends had been invested in Common Stock on the dividend payment date. 

 

	1.26.	 Subsidiary 


 Subsidiary means a corporation, partnership, joint venture, unincorporated association or other entity in which the Corporation has a direct or indirect ownership or other equity interest that represents,
directly or indirectly, more than 50 percent of the total combined voting power represented by all classes of stock or other ownership or equity interest units issued by such corporation, partnership, joint venture, unincorporated association or
other entity. 
 ARTICLE II 

PURPOSES 
 The Plan is intended to assist the Company and its Subsidiaries in recruiting and retaining individuals with ability and initiative by enabling such persons to participate in the future success of the
Company and its Subsidiaries and to associate their interests with those of the Company and its shareholders. The Plan is intended to permit the grant of Options, SARs, Stock Awards, Stock Units and Performance Shares. No Option that is intended to
be an Incentive Stock Option shall be invalid for failure to quality as an Incentive Stock Option. The proceeds received by the Company from the sale of Common Stock pursuant to this Plan shall be used for general corporate purposes. 

ARTICLE III 
 ADMINISTRATION 
 The Plan shall be administered by the
Administrator. The Administrator shall have authority to grant Awards, upon such terms (not inconsistent with the provisions of this Plan), as the Administrator may consider appropriate. Such terms may include conditions (in addition to those
contained in this Plan) on the exercisability of all or any part of an Option or SAR or on the transferability or forfeitability of a Stock Award, Stock Unit or an award of Performance Shares, including by way of example and not of limitation,
requirements that the Participant complete a specified period of employment or service with the Company or a Subsidiary, requirements that the Company achieve a specified level of financial performance or that the Company achieve a specified level
of financial return. Notwithstanding any such conditions, the Administrator may, in 

  
 5 







Table of Contents


 
its discretion, accelerate the time at which any Option or SAR may be exercised, or the time at which a Stock Award may become transferable or nonforfeitable or both, or the time at which an
award of Performance Shares or Stock Unit may be settled, or defer the receipt of Common Stock issuable upon the exercise of the Option or permit the deferral of a Stock Award; provided that such discretion (i) may not be exercised with respect
to an Award intended to qualify as “performance-based compensation” under Code Section 162(m) to the extent such discretion would be inconsistent with Code Section 162(m) and guidance thereunder; and (ii) may not be
exercised in a manner that would violate Code Section 409A, including deferrals relating to Awards. In addition, the Administrator shall have complete authority to interpret all provisions of this Plan; to prescribe the form of Agreements; to
adopt, amend, and rescind rules and regulations pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan. The express grant in the Plan of any specific power to the
Administrator shall not be construed as limiting any power or authority of the Administrator. Any decision made, or action taken, by the Administrator in connection with the administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Committee shall be liable for any act done in good faith with respect to this Plan or any Agreement or Award. All expenses of administering this Plan shall be borne by the Company, a Subsidiary or a combination
thereof. 
 The Committee, in its discretion, may delegate to one or more officers of the Company all or part of
the Committee’s authority and duties with respect to grants and awards (i) to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act, and (ii) that are not intended to qualify as
“performance-based compensation” for purposes of Code section 162(m). The Committee may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Committee’s delegate or
delegates that were consistent with the terms of the Plan. 
 ARTICLE IV 

ELIGIBILITY 
 Any employee of the Company, any member of the Board, any employee or director of a Subsidiary (including a corporation that becomes a Subsidiary after the adoption of this Plan) or any consultant or
advisor to the Company or a Subsidiary is eligible to participate in this Plan if the Administrator, in its sole discretion, determines that such person has contributed or can be expected to contribute to the profits or growth of the Company or a
Subsidiary. 
 ARTICLE V 
 STOCK SUBJECT TO PLAN 
  

	5.01.	 Shares Issued 


 Upon the Award of shares of Common Stock pursuant to a Stock Award or in settlement of an Award of Performance Shares or Stock Units, the Company may issue shares of Common Stock from its authorized but
unissued Common Stock. Upon the exercise of any Option or SAR the Company may deliver to the Participant (or the Participant’s broker if the Participant so directs), shares of Common Stock from its authorized but unissued Common Stock.


  
 6 







Table of Contents



	5.02.	 Aggregate Limit 


 The maximum aggregate number of shares of Common Stock that may be issued under this Plan, pursuant to the exercise of SARs and Options, the grant of Stock Awards and the settlement of Performance Shares
and Stock Units is 1,000,000 shares plus any shares of Common Stock remaining available for grant under the Company’s 2006 Equity Incentive Plan (the “Prior Plan”) on the effective date of the Plan. The maximum aggregate number of
shares that may be issued under this Plan shall be subject to adjustment as provided in Article XI. 
  

	5.03.	 Reallocation of Shares 


 (a) If any shares of Common Stock subject to an Award or to an award under the Prior Plan are forfeited, expire or otherwise terminate without the issuance of shares of Common Stock, the shares of Common
Stock shall, to the extent of such forfeiture, expiration, termination, or non-issuance, again be available for Awards under the Plan. 
 (b) If shares of Common Stock are surrendered either actually or by attestation or withheld pursuant to the exercise of an Option or other Award under the Plan or award under the Prior Plan, the number of
shares surrendered or withheld may be reallocated to other Awards to be granted under this Plan. 

ARTICLE VI 
 OPTIONS 
  

	6.01.	 Award 


 In accordance with the provisions of Article IV, the Administrator will designate each individual to whom an Option is to be granted and will specify the number of shares of Common Stock covered by each
such Award; provided, however, that no Participant may be granted Options in any calendar year covering more than 25,000 shares of Common Stock. 
  

	6.02.	 Option Price 


 The price per share for Common Stock purchased on the exercise of an Option shall be determined by the Administrator on the date of grant, but shall not be less than the Fair Market Value on the date the
Option is granted. If an employee owns or is deemed to own (by reason of the attribution rules of Code Section 424(d)) more than 10% of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation
(within the meaning of Code Sections 424(e) and 424(f)) (a “Ten Percent Shareholder”), and an Incentive Stock Option is granted to such employee, the Option price of such Incentive Stock Option shall be not less than the applicable price
required by the Code, currently 110% of the Fair Market Value on the date of grant. Except for an adjustment authorized under Article XII, the Option price may not be reduced (by amendment or cancellation of the Option or otherwise) after the date
of grant. 
  

	6.03.	 Maximum Option Period 


 The maximum period in which an Option may be exercised shall be ten years from the date such Option was granted. The terms of any Option may provide that it has a term that is less than such maximum
period. 

  
 7 







Table of Contents



	6.04.	 Nontransferability 


 Except as provided in Section 6.05, each Option granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. In the event of any transfer of an Option
(by the Participant or his transferee), the Option and any Corresponding SAR that relates to such Option must be transferred to the same person or persons or entity or entities. Except as provided in Section 6.05, during the lifetime of the
Participant to whom the Option is granted, the Option may be exercised only by the Participant. No right or interest of a Participant in any Option shall be liable for, or subject to, any lien, obligation, or liability of such Participant.

  

	6.05.	 Transferable Options 


 Section 6.04 to the contrary notwithstanding, if the Agreement provides, a Non-Qualified Stock Option may be transferred by a Participant to the Participant’s immediate family members, one or
more trusts for the benefit of such family members or a partnership in which such family members are the only partners, on such terms and conditions as may be permitted under Securities Exchange Commission Rule 16b-3 as in effect from time to time.
The holder of an Option transferred pursuant to this Section must agree in writing to be bound by the same terms and conditions that governed the Option during the period that it was held by the Participant; provided, however, that such transferee
may not transfer the Option except by will or the laws of descent and distribution. In the event of any transfer of an Option (by the Participant or his transferee), the Option and any Corresponding SAR that relates to such Option must be
transferred to the same person or persons or entity or entities. 
  

	6.06.	 Employee Status 


 For purposes of determining the applicability of Section 422 of the Code (relating to Incentive Stock Options), or in the event that the terms of any Option provide that it may be exercised only
during employment or continued service or within a specified period of time after termination of employment or service, the Administrator may decide to what extent leaves of absence for governmental or military service, illness, temporary
disability, or other reasons shall not be deemed interruptions of continuous employment or service. 
  

	6.07.	 Exercise 


 Subject to the provisions of this Plan and the applicable Agreement, an Option may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as
the Administrator shall determine; provided, however, that Incentive Stock Options (granted under the Plan and all plans of the Corporation and its related entities) may not be first exercisable in a calendar year for stock having a Fair Market
Value (determined as of the date an Option is granted) exceeding the limit prescribed by Section 422(d) of the Code. To the extent any Option exceeds this limit, it shall constitute a Non-Qualified Stock Option. An Option granted under this
Plan may be exercised with respect to any number of whole shares less than the full number for which the Option could be exercised. A partial exercise of an Option shall not affect the right to exercise the Option from time to time in accordance
with this Plan and the applicable Agreement with respect to the remaining shares subject to the Option. The exercise of an Option shall result in the termination of any Corresponding SAR to the extent of the number of shares with respect to which
the Option is exercised. 

  
 8 







Table of Contents



	6.08.	 Payment 


 Unless otherwise provided by the Agreement, payment of the Option price shall be made in cash or a cash equivalent acceptable to the Administrator or to the extent permitted under the Agreement, by a
cashless exercise through a securities broker. Subject to rules established by the Administrator, payment of all or part of the Option price may be made with shares of Common Stock including by (i) surrender to the Company of shares of Common
Stock, (ii) attestation of Common Stock ownership, and (iii) for Non-Qualified Options receipt by the Participant of fewer shares that would otherwise be issuable on exercise of the Option (“net exercise”). If Common Stock is
used to pay all or part of the Option price, the sum of the cash and cash equivalent and the Fair Market Value (determined as of the day preceding the date of exercise) of the shares surrendered must not be less than the Option price of the shares
for which the Option is being exercised. 
  

	6.09.	 Shareholder Rights 


 No Participant shall have any rights as a shareholder with respect to shares subject to his Option until the date of exercise of such Option. 

 

	6.10.	 Disposition of Stock 


 A Participant shall notify the Corporation of any sale or other disposition of Common Stock acquired pursuant to an Option that was an Incentive Stock Option if such sale or disposition occurs
(i) within two years of the grant of an Option or (ii) within one year of the issuance of the Common Stock the Participant. Such notice shall be in writing and directed to the Secretary of the Corporation. 

ARTICLE VII 
 SARS 
  

	7.01.	 Award 


 In accordance with the provisions of Article IV, the Administrator will designate each individual to whom SARs are to be granted and will specify the number of shares covered by each such Award provided,
however, no Participant may be granted SARS in any calendar year covering more than 25,000 shares of Common Stock. For purposes of the foregoing limit, an Option and Corresponding SAR shall be treated as a single Award. In addition, no Participant
may be granted Corresponding SARs (under all Incentive Stock Option plans of the Corporation and its Affiliates) that are related to Incentive Stock Options which are first exercisable in any calendar year for stock having an aggregate Fair Market
Value (determined as of the date the related Option is granted) that exceeds the limit prescribed by Section 422(d) of the Code. 
  

	7.02.	 Maximum SAR Period 


 The maximum period in which an SAR may be exercised shall be ten years from the date such SAR was granted provided, however, that a Corresponding SAR granted to a Ten Percent Shareholder and related to an
Incentive Stock Option shall not be exercisable after the expiration of five years from the date such SAR was granted. The terms of any SAR may provide that it has a term that is less than such maximum period. 

  
 9 







Table of Contents



	7.03.	 Nontransferability 


 Except as provided in Section 7.04, each SAR granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. In the event of any such transfer, a
Corresponding SAR and the related Option must be transferred to the same person or persons or entity or entities. Except as provided in Section 7.04, during the lifetime of the Participant to whom the SAR is granted, the SAR may be exercised
only by the Participant. No right or interest of a Participant in any SAR shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 
  

	7.04.	 Transferable SARs 


 Section 7.03 to the contrary notwithstanding, if the Agreement provides, an SAR, other than a Corresponding SAR that is related to an Incentive Stock Option, may be transferred by a Participant to
the Participant’s immediate family members, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners, on such terms and conditions as may be permitted under Securities
Exchange Commission Rule 16b-3 as in effect from time to time. The holder of an SAR transferred pursuant to this Section must agree in writing to be bound by the same terms and conditions that governed the SAR during the period that it was held by
the Participant; provided, however, that such transferee may not transfer the SAR except by will or the laws of descent and distribution. In the event of any transfer of a Corresponding SAR (by the Participant or his transferee), the Corresponding
SAR and the related Option must be transferred to the same person or person or entity or entities. 
  

	7.05.	 Exercise 


 Subject to the provisions of this Plan and the applicable Agreement, an SAR may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as the
Administrator shall determine; provided, however, that a corresponding SAR related to an Incentive Stock Option may be exercised only to the extent that the related Option is exercisable and only when the Fair Market Value exceeds the option price
of the related Option. An SAR granted under this Plan may be exercised with respect to any number of whole shares less than the full number for which the SAR could be exercised. A partial exercise of an SAR shall not affect the right to exercise the
SAR from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares subject to the SAR. The exercise of a Corresponding SAR shall result in the termination of the related Option to the extent of the
number of shares with respect to which the SAR is exercised. 
  

	7.06.	 Employee Status 


 If the terms of any SAR provide that it may be exercised only during employment or continued service or within a specified period of time after termination of employment or service, the Administrator may
decide to what extent leaves of absence for governmental or military service, illness, temporary disability or other reasons shall not be deemed interruptions of continuous employment or service. 

  
 10 








Table of Contents



	7.07.	 Settlement 


 At the Administrator’s discretion, the amount payable as a result of the exercise of an SAR may be settled in cash, Common Stock, or a combination of cash and Common Stock. No fractional share will
be deliverable upon the exercise of an SAR but a cash payment will be made in lieu thereof. 
  

	7.08.	 Shareholder Rights 


 No Participant shall, as a result of receiving an SAR, have any rights as a shareholder of the Company until the date that the SAR is exercised and then only to the extent that the SAR is settled by the
issuance of Common Stock. 
 ARTICLE VIII 

STOCK AWARDS 
  

	8.01.	 Award 


 In accordance with the provisions of Article IV, the Administrator will designate each individual to whom a Stock Award is to be made and will specify the number of shares of Common Stock covered by each
such Award; provided, however, that no Participant may receive Stock Awards in any calendar year for more than 25,000 shares of Common Stock. 
  

	8.02.	 Vesting 


 The Administrator, on the date of the Award, may prescribe that a Participant’s rights in a Stock Award shall be forfeitable or otherwise restricted for a period of time or subject to such conditions
as may be set forth in the Agreement. By way of example and not of limitation, the restrictions may postpone transferability of the shares or may provide that the shares will be forfeited if the Participant separates from the service of the Company
and its Subsidiaries before the expiration of a stated period. The Administrator, in its discretion, may waive the requirements for vesting or transferability for all or part of the shares subject to a Stock Award in connection with a
Participant’s termination of employment or service, but only to the extent permitted by Code Section 162(m) and guidance thereunder in the case of Stock Awards intended to qualify as “performance-based compensation” for purposes
of Code Section 162(m).. 
  

	8.03.	 Employee Status 


 In the event that the terms of any Stock Award provide that shares may become transferable and nonforfeitable thereunder only after completion of a specified period of employment or service, the
Administrator may decide in each case to what extent leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment or service. 

 

	8.04.	 Shareholder Rights 


 Prior to their forfeiture (in accordance with the applicable Agreement and while the shares of Common Stock granted pursuant to the Stock Award may be forfeited or are nontransferable), a Participant will
have all the rights of a shareholder with respect to a Stock Award, including the 

  
 11 








Table of Contents


 
right to receive dividends and vote the shares; provided, however, that during such period (i) a Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of
shares of Common Stock granted pursuant to a Stock Award, (ii) the Company shall retain custody of the certificates evidencing shares of Common Stock granted pursuant to a Stock Award, and (iii) the Participant will deliver to the Company
a stock power, endorsed in blank, with respect to each Stock Award. The limitations set forth in the preceding sentence shall not apply after the shares of Common Stock granted under the Stock Award are transferable and are no longer forfeitable.

 ARTICLE IX 
 PERFORMANCE SHARE AWARDS 
  

	9.01.	 Award 


 In accordance with the provisions of Article IV, the Administrator will designate each individual to whom an Award of Performance Shares is to be made and will specify the number of shares of Common Stock
covered by each such Award, provided, however, that no Participant may receive awards of Performance Shares in any calendar year for more than 25,000 shares of Common Stock. 

 

	9.02.	 Earning the Award 


 The Administrator, on the date of the grant of an Award, shall prescribe that the Performance Shares, or a portion thereof, will be earned, and the Participant will be entitled to receive payment pursuant
to the Award of Performance Shares, only upon the satisfaction of performance objectives or such other criteria as may be prescribed by the Administrator and set forth in the Agreement. The restrictions set forth in the Agreement must include the
attainment of performance objectives, including performance objectives stated with reference to Performance Criteria; provided, however, that such restrictions shall not apply in the case of a Stock Award granted in connection with the settlement of
Performance Shares, Stock Awards or an or in the case of a substitute Award pursuant to Article XI. By way of example and not of limitation, the performance objectives or other criteria may provide that the Performance Shares will be earned only if
the Participant remains in the employ or service of the Company or a Subsidiary for a stated period and that the Company, a Subsidiary, the Company and its Subsidiaries or the Participant achieve stated objectives. Notwithstanding the preceding
sentences of this Section 9.02, the Administrator, in its discretion, may reduce the duration of the performance period and may adjust the performance objectives for outstanding Performance Shares in connection with a Participant’s
termination of employment or service. 
  

	9.03.	 Payment 


 In the discretion of the Administrator, the amount payable when an Award of Performance Shares is earned may be settled in cash, by the issuance of Common Stock, grant of Stock Units or a combination of
cash, Common Stock and/or Stock Units. A fractional share shall not be deliverable when an Award of Performance Shares is earned, but a cash payment will be made in lieu thereof. 

 

	9.04.	 Shareholder Rights 


 No Participant shall, as a result of receiving an Award of Performance Shares, have any rights as a shareholder until and to the extent that the Award of Performance Shares is earned and


  
 12 








Table of Contents


 
settled by the issuance of Common Stock. After an Award of Performance Shares is earned, if settled completely or partially in Common Stock, a Participant will have all the rights of a
shareholder with respect to such Common Stock. 
  

	9.05.	 Nontransferability 


 Except as provided in Section 9.06, Performance Shares granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. No right or interest of a
Participant in any Performance Shares shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 
  

	9.06.	 Transferable Performance Shares 



Section 9.05 to the contrary notwithstanding, if the Agreement provides, an Award of Performance Shares may be
transferred by a Participant to the Participant’s immediate family members, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners, on such terms and conditions as may be
permitted under Securities Exchange Commission Rule 16b-3 as in effect from time to time. The holder of Performance Shares transferred pursuant to this Section must agree in writing to be bound by the same terms and conditions that governed the
Performance Shares during the period that they were held by the Participant; provided, however that such transferee may not transfer Performance Shares except by will or the laws of descent and distribution. 

 

	9.07.	 Employee Status 


 In the event that the terms of any Performance Share Award provide that no payment will be made unless the Participant completes a stated period of employment or service, the Administrator may decide to
what extent leaves of absence for government or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment or service. 

ARTICLE X 
 STOCK UNITS 
  

	10.01.	   Award 


 In accordance with the provisions of Article IV, the Administrator will designate each individual to whom an Award of Stock Units is to be made and will specify the number of Stock Units covered by such
Awards, provided, however, that no Participant may receive awards of Stock Units in any calendar year for more than 25,000 shares of Common Stock. 
  

	10.02.	   Earning the Award 



The Administrator, on the date of grant of the Award, may prescribe that the Stock Units or a portion thereof, will be
earned only upon, and the Participant will be entitled to receive a payment pursuant to the Award of Stock Units, only upon the satisfaction of performance objectives or such other criteria as may be prescribed by the Administrator and set forth in
the Agreement. By way of example and not of limitation, the Performance Criteria or other criteria may provide that the Stock Units will be earned only if the Participant remains in the employ or service of the Company or a Subsidiary for a stated
period or that the Company, a Subsidiary, the Company and its Subsidiaries 

  
 13 








Table of Contents


 
or the Participant achieve stated objectives including performance objectives stated with reference to Performance Criteria. Notwithstanding the preceding sentences of this Section 10.02,
the Administrator, in its discretion, may reduce the duration of the performance period and may adjust the performance objectives for outstanding Stock Units in connection with a Participant’s termination of employment or service. 

 

	10.03.	   Payment 


 In accordance with the Agreement, the amount payable when an award of Stock Units is earned may be settled in cash, Common Stock or a combination of cash and Common Stock. A fractional share shall not be
deliverable when an Award of Stock Units is earned, but a cash payment will be made in lieu thereof. In accordance with and subject to the terms of the Agreement, a Participant may be entitled to dividend equivalents (calculated in accordance with
the Agreement) at or prior to the time an award is earned. Such dividend equivalents may be payable in cash, Common Stock or a combination of cash and Common Stock, as determined by the Administrator in its sole discretion. 

 

	10.04.	   Nontransferability 



A Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of a Stock Unit Award other than
by will or the laws of descent and distribution. The limitations set forth in the preceding sentence shall not apply to Common Stock issued as payment pursuant to a Stock Unit Award. 

 

	10.05.	   Shareholder Rights 



No Participant shall, as a result of receiving a Stock Unit Award, have any rights as a shareholder of the Company or
Subsidiary until and to the extent that the Stock Units are earned and settled in shares of Common Stock. After Stock Units are earned and settled in shares of Common Stock, a Participant will have all the rights of a shareholder with respect to
such shares. 
 ARTICLE XI 

ADJUSTMENT UPON CHANGE IN COMMON STOCK 
 The maximum number of shares as to which Awards may be granted under this Plan and the terms of outstanding Awards shall be adjusted as the Committee shall determine to be equitably required in the event
that (a) the Company (i) effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or (ii) engages in a transaction to which Section 424 of the Code applies, (b) there occurs any other
event which, in the judgment of the Committee necessitates such action. Any such adjustment of outstanding Options or SAR must satisfy the requirements of Treasury Regulation 1.424-1 and section 409A of the Code. Any determination made under this
Article XI by the Committee shall be final and conclusive. Adjustments made under this Article XI shall be effected in compliance with Code Section 162(m) with respect to Awards intended to constitute qualified performance-based compensation
under Code Section 162(m). 
 The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefore, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the maximum number of shares as to which Awards may be granted, or the terms of outstanding Awards. 

  
 14 








Table of Contents


 The Committee may make Awards in substitution for performance shares,
phantom shares, stock awards, stock options, stock appreciation rights, or similar awards held by an individual who becomes an employee of the Company or a Subsidiary in connection with a transaction or event described in the first paragraph of this
Article XI. Notwithstanding any provision of the Plan (other than the limitation of Section 5.02), the terms of such substituted Awards shall be as the Committee, in its discretion, determines is appropriate. 

ARTICLE XII 
 COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES 
 No
Option or SAR shall be exercisable, no Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and
regulations (including, without limitation, withholding tax requirements), any listing agreement to which the Company is a party, and the rules of all domestic stock exchanges on which the Company’s shares may be listed. The Company shall have
the right to rely on an opinion of its counsel as to such compliance. Any share certificate issued to evidence Common Stock when a Stock Award is granted, a Performance Share or Stock Unit is settled or for which an Option or SAR is exercised may
bear such legends and statements as the Administrator may deem advisable to assure compliance with federal and state laws and regulations. No Option or SAR shall be exercisable, no Stock Award, Stock Unit or Performance Share shall be granted, no
Common Stock shall be issued, no certificate for shares shall be delivered, and no payment shall be made under this Plan until the Company has obtained such consent or approval as the Administrator may deem advisable from regulatory bodies having
jurisdiction over such matters. 

  
 15 








Table of Contents


 ARTICLE XIII 

GENERAL PROVISIONS 
  

	13.01.	   Effect on Employment and Service 



Neither the adoption of this Plan, its operation, nor any documents describing or referring to this Plan (or any part
thereof), shall confer upon any individual any right to continue in the employ or service of the Company or a Subsidiary or in any way affect any right or power of the Company or a Subsidiary to terminate the employment or service of any individual
at any time with or without assigning a reason therefore. 
  

	13.02.	   Unfunded Plan 


 The Plan, insofar as it provides for grants, shall be unfunded, and the Company shall not be required to segregate any assets that may at any time be represented by grants under this Plan. Any liability
of the Company to any person with respect to any grant under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such obligation of the Company shall be deemed to be secured by any pledge
of, or other encumbrance on, any property of the Company. 
  

	13.03.	   Rules of Construction 



Headings are given to the articles and sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision of law. 
  

	13.04.	   Tax Withholding 


 Each Participant shall be responsible for satisfying any income and employment tax withholding obligation attributable to participation in this Plan. In accordance with procedures established by the
Administrator, a Participant may surrender shares of Common Stock, or receive fewer shares of Common Stock than otherwise would be issuable, in satisfaction of all or part of that obligation. 

 

	13.05.	   Change in Control 



At the discretion of the Committee and in accordance with the Agreement, a Participant’s interest in a Stock Award,
Performance Share or Stock Unit may be made nonforfeitable and transferable as of a Change of Control Date, and that a grant of an Option or SAR may be exercised immediately in full upon a Change of Control. 

 

	13.06.	   Code Section 409A 



This Plan is intended to provide compensation that is exempt from or that complies with Code Section 409A, and
ambiguous provisions, if any, in this Plan or an Agreement shall be construed and administered in a manner that is compliant with or exempt from the application of Code Section 409A, as appropriate. For purposes of Code Section 409A, each
payment under this Plan shall be deemed a separate payment. Notwithstanding any provision of this Plan to the contrary, if the Participant is a “specified employee” within the meaning of Code Section 409A as of the date of the
Participant’s termination of employment and the Company determines, in 

  
 16 








Table of Contents


 
good faith, that immediate payment of any amount or benefits under this Plan would cause a violation of Code Section 409A, then any amounts or benefits that are payable under this Plan due
to the Participant’s “separation from service” within the meaning of Code Section 409A which (i) are subject to the provisions of Code Section 409A; (ii) are not otherwise excluded under Code Section 409A; and
(iii) would otherwise be payable during the first six-month period following such separation from service, shall be paid on the first business day next following the earlier of (1) the date that is six months and one day following the date
of termination or (2) the date of the Participant’s death. 
 Nothing in this Plan or an Agreement
shall constitute a representation by the Company to a Participant regarding the tax consequences of any Award. Although the Company may endeavor to avoid adverse tax treatment (e.g., under Code Section 409A), the Company makes no representation
to that effect and expressly disavows any covenant to maintain favorable tax treatment. The Company shall be unconstrained in its corporate activities without regard to the potential negative tax impact on holders of Awards under this Plan.

  

	13.07.	   Code Section 162(m) 



This Plan is intended to permit the award of qualified performance-based compensation under Code Section 162(m). This
Plan and Agreements hereunder shall be interpreted and administered to comply with Code Section 162(m) and guidance thereunder, including, without limitation, Treasury Regulation Section 1.162-27(e) as to Awards intended to constitute
qualified performance-based compensation. 
 ARTICLE XIV 

AMENDMENT 
 The Board may amend or terminate this Plan from time to time; provided, however, that no amendment may become effective until shareholder approval is obtained if (i) the amendment increases the
aggregate number of shares of Common Stock that may be issued under the Plan (other than an adjustment pursuant to Article XI) or (ii) the amendment changes the class of individuals eligible to become Participants. No amendment shall, without a
Participant’s consent, adversely affect any rights of such Participant under any Award outstanding at the time such amendment is made. 
 ARTICLE XV 
 DURATION OF PLAN 

No Award may be granted under this Plan more than ten years after the earlier of the date the Plan is adopted by the
Board or the date that the Plan is approved in accordance with Article XVI. Awards granted before that date shall remain valid in accordance with their terms. 

  
 17 








Table of Contents


 ARTICLE XVI 

EFFECTIVE DATE OF PLAN 
 Options, SARs, Stock Units and Performance Shares may be granted under this Plan upon its adoption by the Board, provided that no Option, SAR, Stock Units or Performance Shares shall be effective or
exercisable unless this Plan is approved by a majority of the votes cast by the Company’s shareholders, voting either in person or by proxy, at a duly held shareholders’ meeting at which a quorum is present or by unanimous consent. Stock
Awards may be granted under this Plan, upon the later of its adoption by the Board or its approval by shareholders in accordance with the preceding sentence. 

  
 18