EX-10.3






Exhibit 10.3




Yadkin Valley Financial Corporation




2008 OMNIBUS STOCK OWNERSHIP AND




LONG TERM INCENTIVE PLAN



THIS IS THE 2008 OMNIBUS STOCK OWNERSHIP AND LONG TERM INCENTIVE PLAN (“Plan”) of Yadkin
Valley Financial Corporation (“the Corporation” or “Company”), an North Carolina corporation with
its principal office in Surrey County, North Carolina, under which Incentive Stock Options and
Non-Qualified Options to acquire shares of the Stock, Restricted Stock, Stock Appreciation Rights,
and/or Units may be granted from time to time to Eligible Employees and Eligible Directors of the
Corporation and of any of its Subsidiaries (the “Subsidiaries”), subject to the following
provisions:



ARTICLE I




DEFINITIONS



The following terms shall have the meanings set forth below. Additional terms defined in this
Plan shall have the meanings ascribed to them when first used herein.


Board. The Board of Directors of Yadkin Valley Financial Corporation


Change in Control Transaction. The term Change in Control Transaction shall mean any of
the following events within the meaning of the requirements of Section 409A of the Code:




     (i) Any person, or more than one person acting as a group, accumulates ownership of
Yadkin Valley Financial Corporation’s common stock constituting more than 50% of the total
fair market value or total voting power of Yadkin Valley Financial Corporation’s common
stock,




     (ii) Any person, or more than one person acting as a group, acquires within a 12-month
period ownership of Yadkin Valley Financial Corporation common stock possessing 30% or more
of the total voting power of Yadkin Valley Financial Corporation’s common stock;




     (iii) A majority of Yadkin Valley Financial Corporation’s Board of Directors is
replaced during any 12-month period by directors whose appointment or election is not
endorsed in advance by a majority of Yadkin Valley Financial Corporation’s Board of
Directors before the date of appointment or election, or




     (iv) Within a 12-month period, any person, or more than one person acting as a group,
acquires assets from Yadkin Valley Financial Corporation having a total gross fair market
value equal to or exceeding 40% of the total gross fair market value of all of the assets of
Yadkin Valley Financial Corporation immediately before the acquisition or acquisitions. For
this purpose, “gross fair market value” means the value of Yadkin Valley Financial
Corporation’s assets, or the value of the assets being disposed of, determined without
regard to any liabilities associated with the assets.



 









 




Persons will be considered to be acting as a group if they are owners of a corporation that enters
into a merger, consolidation, purchase, or acquisition of stock, or a similar transaction,
involving Yadkin Valley Financial Corporation. Notwithstanding the other provisions of this Plan,
a transaction or event shall not be considered a Change in Control if, prior to the consummation or
occurrence of such transaction or event, the Officer and Yadkin Valley Financial Corporation agree
in writing that the same shall not be treated as a Change in Control for purposes of this Plan.


Code. The Internal Revenue Code of 1986, as amended, together with the rules and
regulations promulgated thereunder.


Committee. The Compensation Committee of the Board.


Common Stock. The Common Stock, $1.00 par value per share, of the Corporation.


Death. The date of death of an Eligible Employee or Eligible Director who has received
Rights as established by the relevant death certificate.


Disability. The date on which an Eligible Employee or Eligible Director who has received
Rights becomes permanently and totally disabled within the meaning of Section 22 (e) (3) of the
Code, which shall be determined by the Committee on the basis of such medical or other evidence as
it may reasonably require or deem appropriate.


Effective Date. The date as of which this Plan is effective, which shall be the date it is
adopted by the Board.


Eligible Director. A person who is, at the relevant time, a director or former director of
the Company who is not an employee of the Company or any of its subsidiaries;


Eligible Employees. Those individuals who meet the following eligibility requirements:




	 	(i)	 	Such individual must be a full time employee of the Corporation or a Subsidiary. For
this purpose, an individual shall be considered to be an “employee” only if there exists
between the Corporation or a Subsidiary and the individual the legal and bona fide
relationship of employer and employee. In determining whether such relationship exists,
the regulations of the United States Treasury Department relating to the determination of
such relationship for the purpose of collection of income tax at the source on wages shall
be applied.
	 
	 	(ii)	 	Such individual is identified by the Committee as a key employee who is in a position
to significantly influence the long-term success of the Corporation.
	 
	 	(iii)	 	If the Registration shall not have occurred, such individual must have such
knowledge and experience in financial and business matters that he or she is capable of
evaluating the merits and risks of the investment involved in the receipt and/or exercise
of a Right.




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	 	(iv)	 	Such individual, being otherwise an Eligible Employee under the foregoing items,
shall have been selected by the Committee as a person to whom a Right or Rights shall be
granted under the Plan.




Fair Market Value. With respect to the Corporation’s Common Stock, the market price per
share of such Common Stock determined by the Committee, consistent with the requirements of Section
422 of the Code and to the extent consistent therewith, as follows, as of the date specified in the
context within which such term is used:




	 	(i)	 	if the Common Stock was traded on a stock exchange on the date in question, then the
Fair Market Value will be equal to the closing price reported by the applicable
composite-transactions report for such date;
	 
	 	(ii)	 	if the Common Stock was traded over-the-counter on the date in question, then the
Fair Market Value will be equal to the average of the last reported representative bid and
asked prices quoted for such date; and
	 
	 	(iii)	 	if none of the foregoing provisions is applicable, then the Fair Market Value will
be determined by the Committee in good faith on such basis as it deems appropriate. In
such case, the Committee shall maintain a written record of its method of determining Fair
Market Value.




Holder. An individual granted Rights to Restricted Stock


ISO. An “incentive stock option” as defined in Section 422 of the Code.


Just Cause Termination. A termination by the Corporation or a Subsidiary of an Eligible
Employee’s employment by the Corporation or the Subsidiary in connection based upon a good faith
determination that the Eligible Employee is incompetent or otherwise has engaged in any acts
involving dishonesty or moral turpitude or in any acts that materially and adversely affect the
business, affairs or reputation of the Corporation or the Subsidiary. Notwithstanding the
foregoing, if the Eligible Employee has entered into an employment agreement that is binding as of
the date of employment termination, and if such employment agreement defines “Cause,” then the
definition of “Cause” in such agreement shall apply to the Eligible Employee under this Plan.


Long Term Incentive Compensation Units. The Right of a Long Term Incentive Compensation
Unit Recipient to receive cash when, as and in the amounts described in Article V.


Long Term Incentive Compensation Unit Agreement. The agreement between the Corporation and
Long Term Incentive Compensation Unit Recipient with respect to the award of Long Term Incentive
Compensation Units to the Long Term Incentive Compensation Unit Recipient, including such terms and
conditions as are necessary or appropriate under Article V.



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Non-Qualified Option. Any Option granted under Article III whether designated by the
Committee as a Non-Qualified Option or otherwise, other than an Option designated by the Committee
as an ISO, or any Option so designated but which, for any reason, fails to qualify as an ISO
pursuant to Section 422 of the Code and the rules and regulations thereunder.


Option Agreement. The agreement between the Corporation and an Optionee with respect to
Options granted to such Optionee, including such terms and provisions as are necessary or
appropriate under Article III.


Options. ISOs and Non-Qualified Options are collectively referred to herein as “Options;”
provided, however, whenever reference is specifically made only to ISOs or Non-Qualified Options,
such reference shall be deemed to be made to the exclusion of the other.


Plan Pool. A total of 700,000 shares of authorized but unissued shares of Common Stock, as
adjusted pursuant to Section 2.3(b), which shall be available as Stock under this Plan, provided
that no more than 200,000 shares may be granted in the form of an ISO.


Registration. The registration by the Corporation under the 1933 Act and applicable state
“Blue Sky” and securities laws of this Plan, the offering of Rights under this Plan, the offering
of Stock under this Plan, and/or the Stock acquirable under this Plan.


Restricted Stock. The Stock that a Holder shall be awarded with restrictions when, as, in
the amounts and with the restrictions described in Article IV.


Restricted Stock Grant Agreement. The agreement between the Corporation and a Holder with
respect to Rights to Restricted Stock, including such terms and provisions as are necessary or
appropriate under Article IV.


Restricted Stock Unit. Any unit granted under Article IV of the Plan evidencing the right
to receive a Share (or a cash payment equal to the Fair Market Value of a Share), or any
combination of cash and Shares, at some future date.


Restricted Stock Unit Grant Agreement. The agreement between the Corporation and a Holder
with respect to Rights to Restricted Stock Units, including such terms and provisions as are
necessary or appropriate under Article IV.


Retirement. “Retirement” shall mean




	 	(i)	 	the termination of an Eligible Employee’s employment under conditions which
would constitute “normal retirement” or “early retirement” under any tax qualified
retirement plan maintained by the Corporation or a Subsidiary,
	 
	 	(ii)	 	the termination of employment after attaining age 65 (except in the case of a
Just Cause Termination), or




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	 	(iii)	 	the termination of an Eligible Director’s Board service for any reason other
than death or disability.




Rights. The rights to exercise, purchase or receive the Options, Restricted Stock,
Restricted Stock Units, Units and SARs described herein.


Rights Agreement. An Option Agreement, a Restricted Stock Grant Agreement, a Unit
Agreement or an SAR Agreement.


SAR. The Right of an SAR Recipient to receive cash when, as and in the amounts described
in Article VI.


SAR Agreement. The agreement between the Corporation and an SAR Recipient with respect to
the SAR awarded to the SAR Recipient, including such terms and conditions as are necessary or
appropriate under Article VI.


SEC. The Securities and Exchange Commission.


Stock. The shares of Common Stock in the Plan Pool available for issuance pursuant to the
valid exercise of a Right or on which the cash value of a Right is to be based.


Subsidiary. Any direct or indirect subsidiary of the Corporation.


Tax Withholding Liability. All federal and state income taxes, social security tax, and
any other taxes applicable to the compensation income arising from the transaction required by
applicable law to be withheld by the Corporation.


Transfer. The sale, assignment, transfer, conveyance, pledge, hypothecation, encumbrance,
loan, gift, attachment, levy upon, assignment for the benefit of creditors, by operation of law (by
will or descent and distribution), transfer by a qualified domestic relations order, a property
settlement or maintenance agreement, transfer by result of the bankruptcy laws or otherwise of a
share of Stock or of a Right.


Units. The Right of a Unit Recipient to receive cash when, as and in the amounts
described in Article V.


1933 Act. The Securities Act of 1933, as amended, together with the rules and regulations
promulgated thereunder.


1934 Act. The Securities Exchange Act of 1934, as amended, together with the rules and
regulations promulgated thereunder.



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ARTICLE II




GENERAL



Section 2.1. Purpose.


The purposes of this Plan are to encourage and motivate selected key employees and directors to
contribute to the successful performance of the Corporation and its Subsidiaries and the growth of
the market value of the Corporation’s Common Stock; to achieve a unity of purpose between such
employees, directors and shareholders by providing ownership opportunities, and, when viewed in
conjunction with potential benefit plans for members of the Board and the Boards of Directors of
some or all of the Subsidiaries, to achieve a unity of purpose between such employees and directors
in the achievement of the Corporation’s primary long term performance objectives; and to retain
such employees by rewarding them with potentially tax-advantageous future compensation. These
objectives will be promoted through the granting of Rights to designated Eligible Employees and
Eligible Directors pursuant to the terms of this Plan


Section 2.2. Administration.




	 	(a)	 	The Plan shall be administered by the Committee. Subject to the provisions of SEC
Rule 16b-3(d), the Committee may designate any officers or employees of the Corporation or
any Subsidiary to assist in the administration of the Plan, to execute documents on behalf
of the Committee and to perform such other ministerial duties as may be delegated to them
by the Committee.
	 
	 	(b)	 	Subject to the provisions of the Plan, the determinations and the interpretation and
construction of any provision of the Plan by the Committee shall be be final and
conclusive upon persons affected thereby. By way of illustration and not of limitation,
the Committee shall have the discretion:






	 	(i)	 	to construe and interpret the Plan and all Rights granted hereunder and to
determine the terms and provisions (and amendments thereof) of the Rights granted
under the Plan (which need not be identical);
	 
	 	(ii)	 	to define the terms used in the Plan and in the Rights granted hereunder;
	 
	 	(iii)	 	to prescribe, amend and rescind the rules and regulations relating to the
Plan;
	 
	 	(iv)	 	to determine the Eligible Employees and Eligible Directors to whom and the
time or times at which such Rights shall be granted, the number of shares of Stock, as
and when applicable, to be subject to each Right, the exercise price or, other
relevant purchase price or value pertaining to a Right, and the determination of
leaves of absence which may be granted to Eligible Employees without constituting a
termination of their employment for the purposes of the Plan; and
	 
	 	(v)	 	to make all other determinations and interpretations necessary or advisable
for the administration of the Plan.






	 	(c)	 	Notwithstanding the foregoing, or any other provision of this Plan, the Committee
will have no authority to determine any matters, or exercise any discretion, to the extent




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	 	 	 	that the power to make such determinations or to exercise such discretion would cause the
loss of exemption under SEC Rule 16b-3 of any grant or award hereunder.






	 	(d)	 	It shall be in the discretion of the Committee to grant Options to purchase shares of
Stock which qualify as ISOs under the Code or which will be given tax treatment as
Non-Qualified Options. Any Options granted which fail to satisfy the requirements for
ISOs shall become Non-Qualified Options.
	 
	 	(e)	 	The intent of the Corporation is to effect the Registration. In such event, the
Corporation shall make available to Eligible Employees and Eligible Directors receiving
Rights and/or shares of Stock in connection therewith all disclosure documents required
under such federal and state laws. If such Registration shall not occur, the Committee
shall be responsible for supplying the recipient of a Right and/or shares of Stock in
connection therewith with such information about the Corporation as is contemplated by the
federal and state securities laws in connection with exemptions from the registration
requirements of such laws, as well as providing the recipient of a Right with the
opportunity to ask questions and receive answers concerning the Corporation and the terms
and conditions of the Rights granted under this Plan. In addition, if such Registration
shall not occur, the Committee shall be responsible for determining the maximum number of
Eligible Employees and the suitability of particular persons to be Eligible Employees in
order to comply with applicable federal and state securities statutes and regulations
governing such exemptions.
	 
	 	(f)	 	In determining the Eligible Employees and Eligible Directors to whom Rights may be
granted and the number of shares of Stock to be covered by each Right, the Committee shall
take into account the nature of the services rendered by such Eligible Employees and
Eligible Directors, their present and potential contributions to the success of the
Corporation and/or a Subsidiary and such other factors as the Committee shall deem
relevant. An Eligible Employee or Eligible Director who has been granted a Right under
this Plan may be granted an additional Right or Rights under this Plan if the Committee
shall so determine. If pursuant to the terms of this Plan, or otherwise in connection
with this Plan, it is necessary that the percentage of stock ownership of an Eligible
Employee or an Eligible Director be determined, the ownership attribution provisions set
forth in Section 424(d) of the Code shall be controlling.
	 
	 	(g)	 	The granting of Rights pursuant to this Plan is in the exclusive discretion of the
Committee, and until the Committee acts, no individual shall have any rights under this
Plan. The terms of this Plan shall be interpreted in accordance with this intent.




Section 2.3. Stock Available For Rights.




	 	(a)	 	Shares of the Stock shall be subject to, or underlying, grants of Options, Restricted
Stock, Restricted Stock Units, SARs and Long Term Incentive Compensation Units
under this Plan. The total number of shares of Stock for which, or with respect to
which, Rights may be granted (including the number of shares of Stock in respect of




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	 	 	 	which SARs and Long Term Incentive Compensation Units may be granted) under this Plan shall be
those designated in the Plan Pool. In the event that a Right granted under this Plan to
any Eligible Employee or Eligible Director expires or is terminated unexercised as to any shares of Stock covered thereby, such shares thereafter shall be deemed available in the
Plan Pool for the granting of Rights under this Plan; provided, however, if the
expiration or termination date of a Right is beyond the term of existence of this Plan as
described in Section 7.3, then any shares of Stock covered by unexercised or terminated
Rights shall not reactivate the existence of this Plan and therefore shall not be
available for additional grants of Rights under this Plan.






	 	(b)	 	In the event the outstanding shares of Common Stock are increased, decreased, changed
into or exchanged for a different number or kind of securities as a result of a stock
split, reverse stock split, stock dividend, recapitalization, merger, share exchange
acquisition, combination or reclassification appropriate proportionate adjustments will be
made in: (i) the aggregate number and/or kind of shares of Stock in the Plan Pool that may
be issued pursuant to the exercise of, or that are underlying, Rights granted hereunder;
(ii) the exercise or other purchase price or value pertaining to, and the number and/or
kind of shares of Stock called for with respect to, or underlying, each outstanding Right
granted hereunder; and (iii) other rights and matters determined on a per share basis
under this Plan or any Rights Agreement. Any such adjustments will be made only by the
Committee and when so approved will be effective, conclusive and binding for all purposes
with respect to this Plan and all Rights then outstanding. No such adjustments will be
required by reason of (i) the issuance or sale by the Corporation for cash of additional shares of its Common Stock or securities convertible into or exchangeable for shares of
its Common Stock, or (ii) the issuance of shares of Common Stock in exchange for shares of
the capital stock of any corporation, financial institution or other organization acquired
by the Corporation or any Subsidiary in connection therewith.
	 
	 	(c)	 	The grant of a Right pursuant to this Plan shall not affect in any way the right or
power of the Corporation to make adjustments, reclassification, reorganizations or changes
of its capital or business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or assets.
	 
	 	(d)	 	No fractional shares of Stock shall be issued under this Plan for any adjustment
under Section 2.3(b).




Section 2.4. Severable Provisions.


The Corporation intends that the provisions of each of Articles III, IV, V and VI, in each case
together with Articles I, II and VII, shall each be deemed to be effective on an independent basis,
and that if one or more of such Articles, or the operative provisions thereof, shall be deemed
invalid, void or voidable, the remainder of such Articles shall continue in full force and effect.



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Article III




OPTIONS



Section 3.1. Grant of Options.




	 	(a)	 	The Company may grant Options to Eligible Employees and Eligible Directors as
provided in this Article III. Options will be deemed granted pursuant to this Article III
only upon (i) authorization by the Committee, and (ii) the execution and delivery of an
Option Agreement by the Eligible Employee or Eligible Director optionee (“the “Optionee”)
and a duly authorized officer of the Company. The aggregate number of shares of Stock
potentially acquirable under all Options granted shall not exceed the total number of shares of Stock remaining in the Plan Pool, less all shares of Stock potentially acquired
under, or underlying, all other Rights outstanding under this Plan.
	 
	 	(b)	 	The Committee shall designate Options at the time a grant is authorized as either
ISOs or Non-Qualified Options, except in the case when the Optionee is an Eligible
Director the Options will be designated by statute as Non-Qualified Options. In
accordance with Section 422 (d) of the Code, the aggregate Fair Market Value (determined
as of the date an ISO is granted) of the shares of Stock as to which an ISO may first
become exercisable by an Optionee in a particular calendar year (pursuant to Article III
and all other plans of the Company and/or its Subsidiaries) may not exceed $100,000 (the
“$100,000 Limitation”). If an Optionee is granted Options in excess of the $100,000
Limitation, or if such Options otherwise become exercisable with respect to a number of shares of Stock which would exceed the $100,000 Limitation, such excess Options shall be
Non-Qualified Options.




Section 3.2. Exercise Price.




	 	(a)	 	The initial exercise price of each Option granted under this Plan (the “Exercise
Price”) shall be determined by the Committee in its discretion; provided, however, that
the Exercise Price of an ISO shall not be less than (i) the Fair Market Value of the
Common Stock on the date of grant of the Option, in the case of any Eligible Employee who
does not own stock possessing more than ten percent (10%) of the total combined voting
power of all classes of the capital stock of the Company (within the meaning of Section
422 (b) (6) of the Code), or (ii) one hundred ten percent (110%) of such Fair Market Value
in the case of any Eligible Employee who owns stock in excess of such amount.
	 
	 	(b)	 	Subject to the provisions of Section 3.2(a) (as to the establishment of the Exercise
Price of an Option on the date of grant), the Committee may establish that the Exercise
Price of an Option shall be adjusted upward or downward, on a quarterly basis, based upon
the market value performance of the Common Stock in comparison with the aggregate market
value performance of one or more indices composed of publicly-traded financial
institutions and financial institution holding companies deemed by the Committee to be
similar (in terms of asset size, capitalization, trading volumes and other factors deemed
relevant by the Committee) to the Corporation (an “Index” and the “Indices”); provided,
however, that the Exercise Price of an ISO shall not be




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	 	 	 	adjustable if, under the Code,
such adjustable Exercise Price would disqualify the ISO as an ISO. The Committee may
utilize Indices published by third parties and/or may construct one or more Indices
meeting the characteristics described above.
	 
	 	 	 	The Indices utilized will be recalculated quarterly, including in such quarterly
recalculation such adjustments for stock splits, reverse stock splits and stock dividends
of the companies in the indices and of the Company as are appropriate. Each such Index
shall include no fewer than fifteen (15) publicly-traded financial institutions and/or
financial institution holding companies. If more than one Index is utilized by the
Committee, it may give such weighting to each Index utilized as the Committee may
determine in its sole discretion, consistent with the provisions of this Article III.




Section 3.3. Terms and Conditions of Options.




	 	(a)	 	All Options must be granted within ten (10) years of the Effective Date.
	 
	 	(b)	 	The Committee may grant ISOs and Non-Qualified Options, either separately or
jointly, to an Eligible Employee, but only Non-Qualified Options to an Eligible Director.
	 
	 	(c)	 	Each grant of Options shall be evidenced by an Option Agreement in form and substance
satisfactory to the Committee in its discretion, consistent with the provisions of this
Article III.
	 
	 	(d)	 	At the discretion of the Committee, an Optionee, as a condition to the granting of an
Option, must execute and deliver to the Company a confidential information agreement
approved by the Committee.
	 
	 	(e)	 	Nothing contained in Article III, any Option Agreement or in any other agreement
executed in connection with the granting of an Option under this Article III will confer
upon any Optionee any right with respect to the continuation of his or her status as an
employee or as a director of the Company or any of its Subsidiaries.
	 
	 	(f)	 	Except as otherwise provided herein, each Option Agreement may specify the period or
periods of time within which each Option or portion thereof will first become exercisable
(the “Vesting Period”) with respect to the total number of shares of Stock acquirable
thereunder. Such Vesting Periods will be fixed by the Committee in its discretion, and
may be accelerated or shortened by the Committee in its discretion; provided, however,
that the Vesting Period for any portion of each ISO shall be at least one year (1) from
the date such Option was granted.
	 
	 	(g)	 	Not less than one hundred (100) shares of Stock may be purchased at any one time
through the exercise of an Option unless the number purchased is the total number at that
time purchasable under all Options granted to the Optionee.




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	 	(h)	 	An Optionee shall have no rights as a shareholder of the Company with respect to any shares of Stock covered by Options granted to the Optionee until payment in full of the
Exercise Price by such Optionee for the shares being purchased. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to the date
such Stock is fully paid for, except as provided in Sections 2.3(b) and 3.2(b).
	 
	 	(i)	 	Notwithstanding any other provisions of this Article III, no shares of Stock obtained
pursuant to an Option may be Transferred until at least six (6) months and one (1) day
shall have elapsed since the date such Option was granted.




Section 3.4. Exercise of Options.




	 	(a)	 	An Optionee must be an Eligible Employee or an Eligible Director at all times from
the date of grant until the exercise of the Options granted, except as provided in Section
3.5(b).
	 
	 	(b)	 	An Option may be exercised to the extent exercisable (i) by giving written notice of
exercise to the Company, specifying the number of full shares of Stock to be purchased
and, if applicable, accompanied by full payment of the Exercise Price thereof and the
amount of the Tax Withholding Liability pursuant to Section 3.4(c) below; and (ii) by
giving assurances satisfactory to the Company that the shares of Stock to be purchased
upon such exercise are being purchased for investment and not with a view to resale in
connection with any distribution of such shares in violation of the 1933 Act; provided,
however, that in the event the prior occurrence of the Registration or in the event resale
of such Stock without such Registration would otherwise be permissible, this second
condition will be inoperative if, in the opinion of counsel for the Company, such
condition is not required under the 1933 Act or any other applicable law, regulation or
rule of any governmental agency.
	 
	 	(c)	 	As a condition to the issuance of the shares of Stock upon full or partial exercise
of a Non-Qualified Option, the Optionee will pay to the Company in cash, or in such other
form as the Committee may determine in its discretion, the amount of the Company’s Tax
Withholding Liability required in connection with such exercise.
	 
	 	(d)	 	The Exercise Price of an Option shall be payable to the Company either (i) in United
States dollars, in cash or by check, or money order payable to the order of the Company,
or (ii) at the discretion of the Committee, through the delivery of shares of the Stock
owned by the Optionee (including, if the Committee so permits, a portion of the shares of
Stock as to which the Option is then being exercised) with a Fair Market Value as of the
date of delivery equal to the Exercise Price, or (iii) at the discretion of
the Committee, by a combination of (i) and (ii) above. No shares of Stock shall be
delivered until full payment has been made.




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Section 3.5. Term and Termination of Option.




	 	(a)	 	The Committee shall determine, and each Option Agreement shall state, the expiration
date or dates of each Option, but such expiration date shall be not later than ten (10)
years after the date such Option was granted (the “Option Period”). In the event an ISO
is granted to a 10% Shareholder, the expiration date or dates of each Option Period shall
be not later than five (5) years after the date such Option is granted. The Committee may
extend the expiration date or dates of an Option Period of any Non-Qualified Option after
such date was originally set; provided, however such expiration date may not exceed the
maximum expiration date described in this Section 3.5(a).
	 
	 	(b)	 	To the extent not previously exercised, each Option will terminate upon the
expiration of the Option Period specified in the Option Agreement; provided, however,
that, subject to the provisions of Section 3.5(a), each ISO will terminate upon the
earlier of: (i) ninety (90) days after the date that the Optionee ceases to be an
Eligible Employee for any reason, other than by reason of Death, Disability, or a Just
Cause Termination; (ii) twelve (12) months after the date that the Optionee ceases to be
an Eligible Employee by reason of Disability; or (iii) immediately as of the date that the
Optionee ceases to be an Eligible Employee by reason of a Just Cause Termination. The
Committee may specify other events that will result in the termination of an ISO
(including, without limitation, termination of employment by reason of Death). In the
case of Non-Qualified Options, the Committee shall have discretion to specify what, if
any, events will terminate the Option prior to the expiration of the Option Period.




Section 3.6. Change in Control Transaction.


At any time prior to the date of consummation of a Change in Control Transaction, the Committee
may, in its absolute discretion, determine that all or any part of the Options theretofore granted
under this Article III shall become immediately exercisable in full and may thereafter be exercised
at any time before the date of consummation of the Change in Control Transaction (except as
otherwise provided in Article II hereof, and except to the extent that such acceleration of
exercisability would result in an “excess parachute payment” within the meaning of Section 280G of
the Code). Any Option that has not been fully exercised before the date of consummation of the
Change in Control Transaction shall terminate on such date, unless a provision has been made in
writing in connection with such transaction for the assumption of all Options theretofore granted,
or the substitution for such Options of options to acquire the voting stock of a successor employer
corporation, or a parent or a subsidiary thereof, with appropriate adjustments as to the number and
kind of shares and prices, in which event the Options theretofore granted shall continue in the
manner and under the terms so provided.


Section 3.7. Restrictions On Transfer.


An Option granted under Article III may not be Transferred except by will or the laws of descent
and distribution and, during the lifetime of the Optionee to whom it was granted, may be exercised
only by such Optionee.



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Section 3.8. Stock Certificates.


Certificates representing the Stock issued pursuant to the exercise of Options will bear all
legends required by law and necessary to effectuate the provisions hereof. The Company may place a
“stop transfer” order against such shares of Stock until all restrictions and conditions set forth
in this Article III, the applicable Option Agreement, and in the legends referred to in this
Section 3.8 have been complied with.


Section 3.9. Amendment and Discontinuance.


The Board may amend, suspend or discontinue the provisions of this Article III at any time or from
time to time; provided that no action of the Board will cause ISOs granted under this Plan not to
comply with Section 422 of the Code unless the Board specifically declares such action to be made
for that purpose; and, provided, further, that no such action may, without the approval of the
shareholders of the Company, materially increase (other than by reason of an adjustment pursuant to
Section 2.3(b) hereof) the maximum aggregate number of shares of Stock in the Plan Pool available
for grant as Options, materially increase the benefits accruing to or materially modify eligibility
requirements for participation under this Article III. Moreover, no such action may alter or
impair any Option previously granted under this Article III without the consent of the applicable
Optionee.


Section 3.10. Compliance with Rule 16b-3.


With respect to persons subject to Section 16 of the 1934 Act, transactions under this Article III
are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the
1934 Act. To the extent any provision of this Article III or action by the Board or the Committee
fails so to comply, it shall be deemed null and void, to the extent permitted by law.



Article IV




RESTRICTED STOCK AND RESTRICTED STOCK UNIT GRANTS



Section 4.1 Grants of Restricted Stock and Restricted Stock Units.




	 	(a)	 	The Company may issue Restricted Stock and Restricted Stock Units to Eligible
Employees and Eligible Directors as provided in this Article IV. Restricted Stock and
Restricted Stock Units will be deemed issued only upon (i) authorization by the Committee,
and (ii) the execution and delivery of a Restricted Stock or Restricted Stock Units Grant
Agreement by the Eligible Employee or Eligible Director to whom such Restricted Stock or
Restricted Stock Unit is to be issued (the “Holder”) and a duly authorized officer of the
Company.
	 
	 	(b)	 	Each issuance of Restricted Stock and Restricted Stock Units pursuant to this Article
IV will be evidenced by a Restricted Stock or Restricted Stock Units Grant Agreement
between the Company and the Holder in form and substance satisfactory to the Committee in
its sole discretion, consistent with this Article IV. Each Restricted Stock or Restricted
Stock Units Grant Agreement will specify the purchase price per




13









 






	 	 	 	share, if any, paid by the
Holder for the Restricted Stock or Restricted Stock Units, such amount to be fixed by the
Committee.






	 	(c)	 	Without limiting the foregoing, each Restricted Stock or Restricted Stock Units Grant
Agreement shall set forth the terms and conditions of any forfeiture provisions regarding
the Restricted Stock or Restricted Stock Units, (including any provisions for accelerated
vesting in the event of a Change in Control Transaction) as determined by the Committee.
	 
	 	(d)	 	At the discretion of the Committee, the Holder, as a condition to such issuance, may
be required (i) to execute and deliver to the Company a confidential information agreement
approved by the Committee, and/or (ii) to pay to the Corporation in cash, or in such other
form as the Committee may determine in its discretion, the amount of the Corporation’s Tax
Withholding Liability required in connection with such issuance.
	 
	 	(e)	 	Nothing contained in this Article IV, any Restricted Stock or Restricted Stock Units
Grant Agreement or in any other agreement executed in connection with the issuance of
Restricted Stock and Restricted Stock Units under this Article IV will confer upon any
holder any right with respect to the continuation of his or her status as an employee of
the Company or any of its Subsidiaries.




Section 4.2. Restrictions on Transfer of Restricted Stock and Restricted Stock Units.




	 	(a)	 	Shares of Restricted Stock and Restricted Stock Units acquired by a Holder may be
transferred only in accordance with the specific limitations on the Transfer of Restricted
Stock and Restricted Stock Units imposed by applicable state or federal securities laws or
set forth below, and subject to certain undertakings of the transferee set forth in
Section 4.2(c). All Transfers of Restricted Stock and Restricted Stock Units not meeting
the conditions set forth in this Section 4.2(a) are expressly prohibited.
	 
	 	(b)	 	Any prohibited Transfer of Restricted Stock and Restricted Stock Units is void and of
no effect. Should such a Transfer purport to occur, the Company may refuse to carry out
the Transfer on its books, attempt to set aside the Transfer, enforce any undertaking or
right under this Section 4.2(b), and/or exercise any other legal or equitable remedy.
	 
	 	(c)	 	Any Transfer of Restricted Stock and Restricted Stock Units that would otherwise be
permitted under the terms of this Plan is prohibited unless the transferee executes such
documents as the Company may reasonably require to ensure the Company’s rights under a
Restricted Stock or Restricted Stock Units Grant Agreement and this Article
IV are adequately protected with respect to the Restricted Stock and Restricted Stock
Units so Transferred. Such documents may include, without limitation, an agreement by
the transferee to be bound by all of the terms of this Plan applicable to Restricted
Stock and Restricted Stock Units and of the applicable Restricted Stock or Restricted




14









 






	 	 	 	Stock Units Grant Agreement, as if the transferee were the original Holder of such
Restricted Stock and Restricted Stock Units.






	 	(d)	 	To facilitate the enforcement of the restrictions on Transfer set forth in this
Article IV, the Committee may, at its discretion, require the Holder of shares of
Restricted Stock to deliver the certificate(s) for such shares with a stock power executed
in blank by the Holder and the Holder’s spouse, to the Secretary of the Company or his or
her designee, and the Company may hold said certificate(s) and stock power(s) in escrow
and take all such actions as are necessary to insure that all Transfers and/or releases
are made in accordance with the terms of this Plan. The certificates may be held in
escrow so long as the shares of Restricted Stock whose ownership they evidence are subject
to any restriction on Transfer under this Article IV or under a Restricted Stock Grant
Agreement. Each Holder acknowledges that the Secretary of the Company (or his or her
designee) is so appointed as the escrow holder with the foregoing authorities as a
material inducement to the issuance of shares of Restricted Stock under this Article IV,
that the appointment is coupled with an interest, and that it accordingly will be
irrevocable. The escrow holder will not be liable to any party to a Restricted Stock
Grant Agreement (or to any other party) for any actions or omissions unless the escrow
holder is grossly negligent relative thereto. The escrow holder may rely upon any letter,
notice or other document executed by any signature purported to be genuine.




Section 4.3. Compliance with Law.


Notwithstanding any other provision of this Article IV, Restricted Stock and Restricted Stock Units
may be issued pursuant to this Article IV only after there has been compliance with all applicable
federal and state securities laws, and such issuance will be subject to this overriding condition.
The Company may include shares of Restricted Stock in a Registration, but will not be required to
register or qualify Restricted Stock with the SEC or any state agency, except that the Company will
register with, or as required by local law, file for and secure an exemption from such registration
requirements from, the applicable securities administrator and other officials of each jurisdiction
in which an Eligible Employee or Eligible Director would be issued Restricted Stock hereunder prior
to such issuance.


Section 4.4. Stock Certificates.


Certificates representing the Restricted Stock issued pursuant to this Article IV will bear all
legends required by law and necessary to effectuate the provisions hereof. The Company may place a
“stop transfer” order against shares of Restricted Stock until all restrictions and conditions set
forth in this Article IV, the applicable Restricted Stock Grant Agreement and the legends referred
to in this Section 4.4 have been complied with.


Section 4.5. Market Standoff.


To the extent requested by the Company and any underwriter of securities of the Company in
connection with a firm commitment underwriting, no Holder of any shares of Restricted Stock




15









 







will
Transfer any such shares not included in such underwriting, or not previously registered in a
Registration, during the one hundred twenty (120) day period following the effective date of the
registration statement filed with the SEC under the 1933 Act in connection with such offering.


Section 4.6. Amendment and Discontinuance.


The Board may amend, suspend or discontinue this Article IV at any time or from time to time;
provided, that no such action of the Board shall alter or impair any rights previously granted to
Holders under this Article IV without the consent of such affected Holders.


Section 4.7. Compliance with Rule 16b-3.


With respect to persons subject to Section 16 of the 1934 Act, transactions under this Article IV
are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the
1934 Act. To the extent any provision of this Article IV or action by the Board or the Committee
fails so to comply, it shall be deemed null and void, to the extent permitted by law.


Section 4.8. Dividend Equivalent Restricted Stock Units.


On each record date for dividends on the Common Stock, an amount equal to the dividend payable on
one share of Common Stock will be determined and credited (the “Dividend Equivalent Credit”) on the
payment date to each Restricted Stock Unit Recipient’s account for each Unit which has been awarded
to the Unit Recipient and not distributed or canceled. Such amount will be converted within the
account to an additional number of Units equal to the number of shares of Common Stock that could
be purchased at Fair Market Value on such dividend payment date. These Units will be treated for
purposes of this Article IV in the same manner as those Units granted pursuant to Section 4.1.


Section 4.9. Other Conditions.




	 	(a)	 	No person shall have any claim to be granted an award of Restricted Stock Units under
this Article IV and there is no obligation for uniformity of treatment of Eligible
Employees and Eligible Directors or Unit Recipients under this Article IV.
	 
	 	(b)	 	The Company shall have the right to deduct from any distribution or payment in cash
under this Article IV, and the Restricted Stock Unit Recipient or other person receiving shares of Stock under this Article IV shall be required to pay to the Company, any Tax
Withholding Liability. The number of shares of Stock to be distributed to any individual
Restricted Stock Unit Recipient may be reduced by the number of shares of Stock, the Fair
Market Value of which on the Distribution Date (as defined in Section 4.9(d) below) is
equivalent to the cash necessary to pay any Tax Withholding Liability,
where the cash to be distributed is not sufficient to pay such Tax Withholding Liability,
or the Unit Recipient may deliver to the Company cash sufficient to pay such Tax
Withholding Liability.




16









 












	 	(c)	 	Any distribution of shares of Stock under this Article IV may be delayed until the
requirements of any applicable laws or regulations, and any stock exchange requirements,
are satisfied. The shares of Stock distributed under this Article IV shall be subject to
such restrictions and conditions on disposition as counsel for the Company shall determine
to be desirable or necessary under applicable law.
	 
	 	(d)	 	For the purpose of distribution of Restricted Stock Units in cash, the value of a
Unit shall be the Fair Market Value on the Distribution Date. Except as otherwise
determined by the Committee, the “Distribution Date’’ shall be March 15th in the year of
distribution (or the first business day thereafter), except that in the case of special
distributions the Distribution Date shall be the first business day of the month in which
the Committee determines the amount and form of the distribution.
	 
	 	(e)	 	Notwithstanding any other provision of this Article IV, no Dividend Equivalent
Credits shall be made and no distributions of Restricted Stock Units shall be made if at
the time a Dividend Equivalent Credit or distribution would otherwise have been made:






	 	(i)	 	The regular quarterly dividend on the Common Stock has been omitted and
not subsequently paid or there exists any default in payment of dividends on any
such outstanding shares of capital stock of the Corporation:
	 
	 	(ii)	 	The rate of dividends on the Common Stock is lower than at the time the
Restricted Stock Units to which the Dividend Equivalent Credit relates were awarded,
adjusted for any change of the type referred to in Section 2.3(b).
	 
	 	(iii)	 	Estimated consolidated net income of the Corporation for the twelve
month period preceding the month the Dividend Equivalent Credit or distribution
would otherwise have been made is less than the sum of the amount of the Dividend
Equivalent Credits and Restricted Stock Units eligible for distribution under this
Article IV in that month plus all dividends applicable to such period on an accrual
basis, either paid, declared or accrued at the most recently paid rate, on all
outstanding shares of Common Stock; or
	 
	 	(iv)	 	The Dividend Equivalent Credit or distribution would result in a default
in any agreement by which the Corporation is bound.






	 	(f)	 	In the event net income available under Section 4.9(e) above for Dividend Equivalent
Credits and awards eligible for distribution under this Article IV is sufficient to cover
part but not all of such amounts, the following order shall be applied in making payments:
(i) Dividend Equivalent Credits, and then (ii) Restricted Stock Units eligible for
distribution under this Article IV.




17









 











Article V




LONG-TERM INCENTIVE COMPENSATION UNITS



Section 5.1. Awards of Units.




	 	(a)	 	The Company may grant awards of Units to Eligible Employees and Eligible Directors as
provided in this Article V. Units will be deemed granted only upon (i) authorization by
the Committee, and (ii) the execution and delivery of a Unit Agreement by the Eligible
Employee or Eligible Director to whom Units are to be granted (a “Unit Recipient”) and an
authorized officer of the Company. Units may be granted in each of the years 2008 through
2018 in such amounts and to such Unit Recipients as the Committee may determine, subject
to the limitation in Section 5.2 below.
	 
	 	(b)	 	Each grant of Units pursuant to this Article V will be evidenced by a Unit Award
Agreement between the Company and the Unit Recipient in form and substance satisfactory to
the Committee in its sole discretion, consistent with this Article V.
	 
	 	(c)	 	Except as otherwise provided herein, Units will be distributed only after the end of
a performance period of two or more years (“Performance Period”) beginning with the year
in which such Units were awarded. The Performance Period shall be set by the Committee
for each year’s awards.
	 
	 	(d)	 	The percentage of the Units awarded under this Section 5.1 or credited pursuant to
Section 5.5 that will be distributed to Unit Recipients shall depend on the levels of
financial performance and other performance objectives achieved during each year of the
Performance Period; provided, however, that the Committee may adopt one or more
performance categories or eliminate all performance categories other than financial
performance. Financial performance shall be based on the consolidated results of the
Company and its Subsidiaries prepared on the same basis as the financial statements
published for financial reporting purposes and determined in accordance with Section
5.1(e) below. Other performance categories adopted by the Committee shall be based on
measurements of performance as the Committee shall deem appropriate.
	 
	 	(e)	 	Distributions of Units awarded will be based on the Company’s financial performance
with results from other performance categories applied as a factor, not exceeding one (1),
against financial results. The annual financial and other performance results will be
averaged over the Performance Period and translated into percentage factors according to
graduated criteria established by the Committee for the entire Performance Period. The
resulting percentage factors shall determine the percentage of Units to be distributed.
No distributions of Units, based on financial performance and other performance, shall be
made if a minimum average percentage of the applicable measurement of performance, to be
established by the Committee, is not achieved for
the Performance Period. The performance levels achieved for each Performance Period and
percentage of Units to be distributed shall be conclusively determined by the Committee.




18









 












	 	(f)	 	The percentage of Units awarded which Unit Recipients become entitled to receive
based on the levels of performance (including those Units credited under Section 5.5) will
be determined as soon as practicable after each Performance Period and are called
“Retained Units.”
	 
	 	(g)	 	As soon as practical after determination of the number of Retained Units, such
Retained Units shall be distributed in the form of cash as determined by the Committee.
The Units awarded, but which Unit Recipients do not become entitled to receive, shall be
canceled.
	 
	 	(h)	 	Notwithstanding any other provision in this Article V, the Committee, if it
determines that it is necessary or advisable under the circumstances, may adopt rules
pursuant to which Eligible Employees by virtue of hire, or promotion or upgrade to a
higher job grade classification, or special individual circumstances, may be granted the
total award of Units or any portion thereof, with respect to one or more Performance
Periods that began in prior years and at the time of the awards have not yet been
completed.




Section 5.2. Limitations.


The aggregate number of all Units granted, including those Units credited pursuant to Section 5.5,
shall not exceed the total number of shares of Stock remaining in the Plan Pool, less all shares of
Stock potentially acquirable under, or underlying, all other Rights outstanding under this Plan.


Section 5.3. Terms and Conditions.




	 	(a)	 	All awards of Units must be made within ten (10) years of the Effective Date.
	 
	 	(b)	 	The award of Units shall be evidenced by a Unit Award Agreement in form and substance
satisfactory to the Committee in its discretion, consistent with the provisions of this
Article V.
	 
	 	(c)	 	At the discretion of the Committee, a Unit Recipient, as a condition to the award of
Units, may be required to execute and deliver to the Company a confidential information
agreement approved by the Committee.
	 
	 	(d)	 	Nothing contained in this Article V, any Unit Award Agreement or in any other
agreement executed in connection with the award of Units under this Article V will confer
upon any Unit Recipient any right with respect to the continuation of his or her status as
an employee of the Company or any of its Subsidiaries.
	 
	 	(e)	 	A Unit Recipient shall have no rights as a shareholder of the Company with respect to
any Units granted.




19









 










Section 5.4. Special Distribution Rules.




	 	(a)	 	Except as otherwise provided in this Section 5.4, a Unit Recipient must be an
Eligible Employee or Eligible Director from the date a Unit is awarded to him or her
continuously through and including the date of distribution of such Unit.
	 
	 	(b)	 	In case of the Death or Disability of a Unit Recipient prior to the end of any
Performance Period, the number of Units awarded to the Unit Recipient for such Performance
Period shall be reduced pro rata based on the number of months remaining in the
Performance Period after the month of Death or Disability. The remaining Units, reduced
in the discretion of the Committee to the percentage indicated by the levels of
performance achieved prior to the date of Death or Disability, if any, shall be
distributed within a reasonable time after Death or Disability. All other Units awarded
to the Unit Recipient for such Performance Period shall be canceled.
	 
	 	(c)	 	If a Unit Recipient enters into Retirement prior to the end of any Performance
Period, the Units awarded to such Unit Recipient under this Article V and not yet
distributed shall be prorated to the end of the year in which such Retirement occurs and
distributed at the end of the Performance Period based upon the Company’s performance for
such period.
	 
	 	(d)	 	In the event of the termination of the Unit Recipient’s status as an Eligible
Employee or Eligible Director prior to the end of any Performance Period for any reason
other than Death, Disability or Retirement, all Units awarded to the Unit Recipient with
respect to any such Performance Period shall be immediately forfeited and canceled.
	 
	 	(e)	 	Upon a Unit Recipient’s promotion to a higher job grade classification, the Committee
may award to the Unit Recipient the total Units, or any portion thereof, which are
associated with the higher job grade classification for the then current Performance
Period.




Notwithstanding any other provision of this Plan, the Committee may reduce or eliminate awards to a
Unit Recipient who has been demoted, and where circumstances warrant, may permit continued
participation, proration or early distribution, or a combination thereof, of awards which would
otherwise be canceled.


Section 5.5. Adjustments.




	 	(a)	 	In addition to the provisions of Section 2.3(b), if an extraordinary change occurs
during a Performance Period which significantly alters the basis upon which the
performance levels were established under Section 5.1 for that Performance Period, to
avoid distortion in the operation of this Article V, but subject to Section 5.2, the
Committee may make adjustments in such performance levels to preserve the incentive features of
this Article V, whether before or after the end of the Performance Period, to the extent
it deems appropriate in its sole discretion, which adjustments




20









 






	 	 	 	shall be conclusive and
binding upon all parties concerned. Such changes may include, without limitation,
adoption of, or changes in, accounting practices, tax laws and regulatory or other laws
or regulations; economic changes not in the ordinary course of business cycles; or
compliance with judicial decrees or other legal authorities.






	 	(b)	 	At any time prior to the date of consummation of a Change in Control Transaction, the
Committee may determine that all or any part of the Units theretofore awarded under this
Article V shall become immediately distributable (reduced pro rata based on the number of
months remaining in the Performance Period after the consummation of the Change in Control
Transaction) and may thereafter be distributed at any time before the date of consummation
of the Change in Control Transaction (except as otherwise provided in Article II hereof,
and except to the extent that such acceleration of distribution would result in an “excess
parachute payment” within the meaning of Section 280G of the Code). Any Units that have
not been distributed before the date of consummation of Use Change in Control Transaction
shall terminate on such date, unless a provision has been made in writing in connection
with such transaction for the assumption of all awards of Units theretofore made, or the
substitution for such units of awards of compensation units having comparable
characteristics under a long term incentive award plan of a successor employer
corporation, or a parent or a subsidiary thereof, with appropriate adjustments, in which
event the awards of Units theretofore made shall continue in the manner and under the
terms so provided.




Section 5.6. Other Conditions.




	 	(a)	 	No person shall have any claim to be granted an award of Units under this Article V
and there is no obligation for uniformity of treatment of Eligible Employees and Eligible
Directors or Unit Recipients under this Article V.
	 
	 	(b)	 	The Company shall have the right to deduct from any distribution or payment under
this Article V, and the Unit Recipient shall be required to pay to the Company, any Tax
Withholding Liability.
	 
	 	(c)	 	For the purpose of distribution of Units, the cash value of a Unit shall be the Fair
Market Value on the Distribution Date. Except as otherwise determined by the Committee,
the “Distribution Date’’ shall be March 15th in the year of distribution (or the first
business day thereafter), except that in the case of special distributions the
Distribution Date shall be the first business day of the month in which the Committee
determines the amount and form of the distribution.




Section 5.7. Designation of Beneficiaries.


A Unit Recipient may designate a beneficiary or beneficiaries to receive all or part of the cash to
be distributed to the Unit Recipient under this Article V in case of Death. A designation of
beneficiary may be replaced by a new designation or may be revoked by the Unit Recipient at any
time. A designation or revocation shall be on a form to be provided for that purpose and




21









 







shall be signed by the Unit Recipient and delivered to the Corporation prior to the Unit Recipient’s Death.
In case of the Unit Recipient’s Death, any amounts to be distributed to the Unit Recipient under
this Article V with respect to which a designation of beneficiary has been made (to the extent it
is valid and enforceable under applicable law) shall be distributed in accordance with this Article
V to the designated beneficiary or beneficiaries. The amount distributable to a Unit Recipient
upon Death and not subject to such a designation shall be distributed to the Unit recipient estate.
If there shall be any question as to the legal right of any beneficiary to receive a distribution
under this Article V, the amount in question may be paid to the estate of the Unit Recipient, in
which event the Corporation shall have no further liability to anyone with respect to such amount.


Section 5.8. Restrictions On Transfer.


Units granted under Article V may not be Transferred, except as provided in Section 5.7, and,
during the lifetime of the Unit Recipient to whom it was awarded, cash receivable with respect to
Units may be received only by such Unit Recipient.


Section 5.10. Amendment and Discontinuance.


No award of Units may be granted under this Article V after December 31, 2018. The Board may
amend, suspend or discontinue the provisions of this Article V at any time or from time to time,
provided, that no such action may alter or impair any rights previously granted to Unit Recipient
under this Article V without the consent of such Unit Recipient.


Section 5.11. Compliance with Rule 16b-3.


With respect to persons subject to Section 16 of the 1934 Act, transactions under this Article V
are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the
1934 Act. To the extent any provision of this Article V or action by the Board or the Committee
fails so to comply, it shall be deemed null and void, to the extent permitted by law.



Article VI




STOCK APPRECIATION RIGHTS



Section 6.1. Grants of SARs.




	 	(a)	 	The Corporation may grant SARs under this Article VI. SARs will be deemed granted
only upon (i) authorization by the Committee, and (ii) the execution and delivery of a SAR
Agreement by the Eligible Employee or Eligible Director to whom the SARs are to be granted
(the “SAR Recipient”) and a duly authorized officer of the Corporation. The aggregate
number of shares of Stock which shall underlie SARs granted hereunder shall not exceed the
total number of shares of Stock remaining in the Plan Pool, less all shares of Stock potentially acquirable under or underlying all other Rights outstanding
under this Plan.




22









 












	 	(b)	 	Each grant of SARs pursuant to this Article VI shall be evidenced by a SAR Agreement
between the Corporation and the SAR Recipient, in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Article VI.




Section 6.2. Terms and Conditions of SARs.




	 	(a)	 	All SARs must be granted within ten (10) years of the Effective Date.
	 
	 	(b)	 	Each SAR issued pursuant to this Article VI shall have an initial base value (the
“Base Value”) equal to the Fair Market Value of a share of Common Stock on the date of
issuance of the SAR.
	 
	 	(c)	 	Subject to the provisions of Section 6.2(b) (as to the establishment of the initial
Base Value of a SAR), the Committee may establish that the Base Value of a SAR shall be
adjusted, upward or downward, on a quarterly basis, based upon the market value
performance of the Common Stock in comparison with the aggregate market value performance
of the Index or Indices utilized under Section 3.2(b).
	 
	 	(d)	 	At the discretion of the Committee, a SAR Recipient, as a condition to the granting
of a SAR, must execute and deliver to the Corporation a confidential information agreement
approved by the Committee.
	 
	 	(e)	 	Nothing contained in this Article VI, any SAR Agreement or in any other agreement
executed in connection with the granting of a SAR under this Article VI will confer upon
any SAR Recipient any right with respect to the continuation of his or her status as an
employee of the Corporation or any of its Subsidiaries.
	 
	 	(f)	 	Except as otherwise provided herein, each SAR Agreement may specify the period or
periods of time within which each SAR or portion thereof will first become exercisable
(the “SAR Vesting Period”). Such SAR Vesting Periods will be fixed by the Committee and
may be accelerated or shortened by the Committee.
	 
	 	(g)	 	SARs relating to no less than one hundred (100) shares of Stock may be exercised at
any one time unless the number exercised is the total number at that time exercisable
under all SARs granted to the SAR Recipient.
	 
	 	(h)	 	A SAR Recipient shall have no rights as a shareholder of the Corporation with respect
to any shares of Stock underlying such SAR. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date such Stock is
fully paid for, except as provided in Sections 2.3(b) and 6.2(c).




23









 










Section 6.3. Restrictions On Transfer of SARs.


SARs granted under this Article VI may not be Transferred, except as provided in Section 6.7, and
during the lifetime of the SAR Recipient to whom it was granted, may be exercised only by such SAR
Recipient.


Section 6.4. Exercise of SARs.




	 	(a)	 	A SAR Recipient (or his or her executors or administrators, or heirs or legatees)
shall exercise a SAR by giving written notice of such exercise to the Corporation. SARs
may be exercised only upon the completion of the SAR Vesting Period, if any, applicable to
such SAR (the date such notice is received by the Corporation being referred to herein as
the “SAR Exercise Date”).
	 
	 	(b)	 	Within ten (10) business days of the SAR Exercise Date applicable to a SAR exercised
in accordance with Section 6.4(a), the SAR Recipient shall be paid in cash or shares of
Stock the difference between the Base Value of such SAR (as adjusted, if applicable under
Section 6.2(c), as of the most recently preceding quarterly period) and the Fair Market
Value of the Common Stock as of the SAR Exercise Date, as such difference is reduced by
the Company’s Tax Withholding Liability arising from such exercise.




Section 6.5. Termination of SARs.


The Committee shall determine, and each SAR Agreement shall state, the expiration date or dates of
each SAR, but such expiration date shall be not later than ten (10) years after the date such SAR
is granted (the “SAR Period”). The Committee may extend the expiration date or dates of a SAR
Period after such date was originally set; provided, however, such expiration date may not exceed
the maximum expiration date described in this Section 6.5(a).


Section 6.6. Change in Control Transaction.


At any time prior to the date or consummation of a Change in Control Transaction, the Committee
may, in its absolute discretion, determine that all or any part of the SARs theretofore granted
under this Article VI shall become immediately exercisable in full and may thereafter be exercised
at any time before the date of consummation of the Change in Control Transaction (except as
otherwise provided in Article II hereof, and except to the extent that such acceleration of
exercisability would result in an excess parachute payment within the meaning of Section 280G of
the Code). Any SAR that has not been fully exercised before the date of consummation of the Change
in Control Transaction shall terminate on such date, unless a provision has been made in writing in
connection with such transaction for the assumption of all SARs theretofore granted, or the
substitution for such SARs of grants of stock appreciation rights having comparable characteristics
under a stock appreciation rights plan of a successor employer corporation or bank, or a parent or
a subsidiary thereof, with appropriate adjustments, in which event the SARs theretofore granted
shall continue in the manner and under the terms so provided.





24









 







Section 6.7. Designation of Beneficiaries.


A SAR Recipient may designate a beneficiary or beneficiaries to receive all or part of the cash to
be paid to the SAR Recipient under this Article VI in case of Death. A designation of beneficiary
may be replaced by a new designation or may be revoked by the SAR Recipient at any time. A
designation or revocation shall be on a form to be provided for that purpose and shall be signed by
the SAR Recipient and delivered to the Corporation prior to the SAR Recipient’s Death. In case of
the SAR Recipient’s Death, the amounts to be distributed to the SAR Recipient under this Article VI
with respect to which a designation of beneficiary has been made (to the extent it is valid and
enforceable under applicable law) shall be distributed in accordance with this Article VI to the
designated beneficiary or beneficiaries. The amount distributable to a SAR Recipient upon Death
and not subject to such a designation shall be distributed to the SAR Recipient’s estate. If there
shall be any question as to the legal right of any beneficiary to receive a distribution under this
Article VI, the amount in question may be paid to the estate of the SAR Recipient in which event
the Corporation shall have no further liability to anyone with respect to such amount.


Section 6.8. Amendment and Discontinuance.


The Board may amend, suspend or discontinue the provisions of this Article VI at any time or from
time to time provided that no action of the Board may alter or impair any SAR previously granted
under this Article VI without the consent of the applicable SAR Recipient.


Section 6.9. Compliance With Rule 16b-3.


With respect to persons subject to Section 16 of the 1934 Act, transactions under this Article VI
are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the
1934 Act. To the extent any provision of this Article VI or action by the Board or the Committee
fails so to comply, it shall be deemed null and void, is the extent permitted by law.



Article VII




MISCELLANEOUS



Section 7.1. Application of Funds.


The proceeds received by the Corporation from the sale of Stock pursuant to the exercise of Rights
will be used for general corporate purposes.


Section 7.2. No Obligation to Exercise Right.


The granting of a Right shall impose no obligation upon the recipient to exercise such Right.


Section 7.3. Term of Plan.


Except as otherwise specifically provide herein, Rights may be granted pursuant to this Plan from
time to time within ten (10) years from the Effective Date.





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Section 7.4. Captions and Headings; Gender and Number.


Captions and paragraph headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part of, and shall not serve as a basis for,
interpretation or construction of this Plan. As used herein, the masculine gender shall include
the feminine and neuter, and the singular number shall include the plural, and vice versa, whenever
such meanings are appropriate.


Section 7.5. Expenses of Administration of Plan.


All costs and expenses incurred in the operation and administration of this Plan shall be borne by
the Corporation or by one or more Subsidiaries. The Corporation shall also indemnify, defend and
hold each member of the Committee and the Board harmless against all claims, expenses and
liabilities arising out of or related to the exercise of the powers of the Committee and the Board
and the discharge of the duties of the Committee and the Board hereunder.


Section 7.6. Governing Law.


Without regard to the principles of conflicts of laws the laws of the State of North Carolina shall
govern and control the validity, interpretation, performance and enforcement of this Plan.


Section 7.7. Inspection of Plan.


A copy of this Plan, and any amendments thereto, shall be maintained by the Secretary of the
Corporation and shall be shown to any proper person making inquiry about it.




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