EX-10.2



 






Exhibit 10.2




LANCE, INC.




2003 KEY EMPLOYEE STOCK PLAN

(As amended through July 21, 2005)




TABLE OF CONTENTS




	 	 	 	 	 	 	 
	Section 1.

	 	Purpose
	 	 	2	 
	 

	Section 2.

	 	Definitions
	 	 	2	 
	 

	Section 3.

	 	Administration
	 	 	5	 
	 

	Section 4.

	 	Duration of and Common Stock Subject to Plan
	 	 	5	 
	 

	Section 5.

	 	Eligibility
	 	 	6	 
	 

	Section 6.

	 	Stock Options
	 	 	6	 
	 

	Section 7.

	 	Stock Appreciation Rights
	 	 	7	 
	 

	Section 8.

	 	Restricted Awards
	 	 	8	 
	 

	Section 9.

	 	Performance Awards
	 	 	9	 
	 

	Section 10.

	 	Other Stock-Based and Combination Awards
	 	 	11	 
	 

	Section 11.

	 	Deferral Elections
	 	 	11	 
	 

	Section 12.

	 	Termination of Employment
	 	 	11	 
	 

	Section 13.

	 	Non-transferability of Awards
	 	 	11	 
	 

	Section 14.

	 	Adjustments Upon Changes in Capitalization, Etc.
	 	 	12	 
	 

	Section 15.

	 	Change in Control
	 	 	13	 
	 

	Section 16.

	 	Amendment and Termination
	 	 	14	 
	 

	Section 17.

	 	Miscellaneous
	 	 	14	 






 









 






LANCE, INC.




2003 KEY EMPLOYEE STOCK PLAN




     Section 1. Purpose. The purpose of the Lance, Inc. 2003 Key Employee Stock Plan (the “Plan”)
is to attract and retain managerial and other key employees, and to reward such employees for
making major contributions to the success of Lance, Inc. (the “Company”). The Plan is designed to
meet these objectives by offering performance-based stock and cash incentives and other
equity-based incentive awards, thereby providing such employees with a proprietary interest in the
long term growth and performance of the Company.



     Section 2. Definitions. For purposes of the Plan, unless the context clearly indicates
otherwise, the following terms shall have the meanings set forth below:




     (a) “Award” (collectively, “Awards") means an award or grant made to a
Participant under Sections 6 through 10, inclusive, of the Plan.




     (b) “Beneficial Owner” has the meaning ascribed to such term in Section 13(d)
of the Exchange Act and Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.




     (c) “Board” means the Board of Directors of the Company.




     (d) “Code” means the Internal Revenue Code of 1986, as in effect from time to
time, or any successor thereto, together with rules, regulations and interpretations
promulgated thereunder.




     (e) “Common Stock” means the $.83 1/3 par value Common Stock of the Company or
any security of the Company issued in substitution, exchange or lieu thereof
pursuant to Section 14 hereof.




     (f) “Company” means Lance, Inc., a North Carolina corporation, and any
subsidiary corporations within the meaning of Section 424(f) of the Code, as well as
any successor corporation or corporations thereto.




     (g) “Compensation Committee” means the Compensation Committee of the Board;
provided, that (i) with respect to any Awards to any Insider,
Compensation Committee means all of the members of the Compensation Committee who
are “non-employee” directors within the meaning of Rule 16b-3 adopted under the
Exchange Act, and (ii) with respect to any Awards to any key employees who are Named
Executive Officers intended to comply with the Performance-Based Exception,
Compensation Committee means all of the members of the Compensation Committee who
are “outside directors” within the meaning of Section 162(m) of the Code.



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     (h) “Director” means a member of the Board.




     (i) “Disability” means the inability, by reason of physical or mental infirmity
or both, of an individual to perform satisfactorily the duties then assigned to such
individual or any other duties the Company is willing to assign to such individual
for which compensation is payable. Disability shall be determined by the
Compensation Committee based upon such evidence as the Compensation Committee shall
deem sufficient and, upon medical evidence, if available, and, in the discretion of
the Compensation Committee, upon certification of such Disability by an independent
qualified physician.




     (j) “Exchange Act” means the Securities Exchange Act of 1934, as amended and in
effect from time to time, or any successor statute.




     (k) “Fair Market Value,” with respect to a share of the Common Stock at a
particular time, shall be that value as determined by the Compensation Committee
which shall be (i) if such Common Stock is listed on a national securities exchange
or traded on the National Market System, the mean between the highest price and the
lowest price at which the Common Stock shall have been sold regular way on a
national securities exchange or the National Market System on said date, or, if no
sales occur on said date, then on the next preceding date on which there were such
sales of Common Stock, (ii) if the Common Stock shall not be listed on a national
securities exchange or traded on the National Market System, the mean between the
bid and asked prices last reported by the National Association of Securities
Dealers, Inc. for the over-the-counter market on said date or, if no bid and asked
prices are reported on said date, then on the next preceding date on which there
were such quotations, or (iii) if at any time quotations for the Common Stock shall
not be reported by the National Association of Securities Dealers, Inc. for the
over-the-counter market and the Common Stock shall not be listed on any national
securities exchange or traded on the National Market System, the fair market value
determined by the Compensation Committee in such manner as it may deem reasonable.




     (l) “Incentive Stock Option” means any Stock Option granted pursuant to the
provisions of Section 6 of the Plan that is intended to be and is specifically
designated as an “incentive stock option” within the meaning of Section 422 of the
Code.




     (m) “Insider” means an individual who is, on the relevant date, an officer,
director or ten percent (10%) beneficial owner of any class of the Company’s equity
securities that is registered pursuant to Section 12 of the Exchange Act, all as
defined under Section 16 of the Exchange Act and the rules thereunder.




     (n) “Member of the Van Every Family” means (i) a lineal descendant of Salem A.
Van Every, Sr., including adopted persons as well as persons related by blood, (ii)
a spouse of an individual described in clause (i) of this Paragraph



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2(m) or (iii) a trust, estate, custodian and other fiduciary or similar account for
an individual described in clause (i) or (ii) of this Paragraph 2(m).




     (o) “Named Executive Officer” means, for a calendar year, a Participant who is
one of the group of “covered employees” for such calendar year within the meaning of
Code Section 162(m) or any successor statute.




     (p) “Non-Qualified Stock Option” means any Stock Option granted pursuant to the
provisions of Section 6 of the Plan that is not an Incentive Stock Option.




     (q) “Outside Person” means any Person other than (i) a Member of the Van Every
Family, (ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or (iii) a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same proportions as their
ownership of the Company.




     (r) “Participant” means an employee of the Company who is granted an Award
under the Plan.




     (s) “Performance Award” means an Award granted pursuant to the provisions of
Section 9 of the Plan the vesting of which is contingent on performance attainment.




     (t) “Performance-Based Exception” means the performance-based exception set
forth in Code Section 162(m)(4)(C) from the deductibility limitations of Code
Section 162(m).




     (u) “Performance Equity Grant” means an Award of units representing shares of
Common Stock granted pursuant to the provisions of Section 9 of the Plan.




     (v) “Performance Unit Grant” means an Award of monetary units granted pursuant
to the provisions of Section 9 of the Plan.




     (w) “Person” has the meaning ascribed to said term in Section 3(a)(9) of the
Exchange Act as modified and used in Sections 13(d) and 14(d) of the Exchange Act,
including a “group” as defined in Section 13(d) of the Exchange Act.




     (x) “Plan” means the Lance, Inc. 2003 Key Employee Stock Plan as set forth
herein, as the same may be hereafter amended and from time to time in effect.




     (y) “Restricted Award” means an Award granted pursuant to the provisions of
Section 8 of the Plan.



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     (z) “Restricted Stock Grant” means an Award of shares of Common Stock granted
pursuant to the provisions of Section 8 of the Plan.




     (aa) “Restricted Unit Grant” means an Award of units representing shares of
Common Stock granted pursuant to the provisions of Section 8 of the Plan.




     (bb) “Retirement” means the termination of an employee’s employment with the
Company at any time after the last day of the calendar month immediately preceding
the calendar month in which the employee attains the age of 60 years.




     (cc) “Stock Appreciation Right” means an Award to benefit from the appreciation
of Common Stock granted pursuant to the provisions of Section 7 of the Plan.




     (dd) “Stock Option” means an Award to purchase shares of Common Stock granted
pursuant to the provisions of Section 6 of the Plan.



     Section 3. Administration.



     (a) The Plan shall be administered by the Compensation Committee.



     (b) The Compensation Committee is authorized to grant Awards under the Plan, to construe and
interpret the Plan, to promulgate, amend and rescind rules and regulations relating to the
implementation of the Plan and to make all other determinations necessary or advisable for the
administration of the Plan. Any determination, decision or action of the Compensation Committee in
connection with the construction, interpretation, administration or application of the Plan shall
be final, conclusive and binding upon all persons participating in the Plan and any person validly
claiming under or through persons participating in the Plan. The Company shall effect the granting
of Awards under the Plan in accordance with the determinations made by the Compensation Committee,
by execution of instruments in writing in such form as are approved by the Compensation Committee.



     Section 4. Duration of and Common Stock Subject to Plan.



     (a) Term. The Plan shall be effective on April 24, 2003, subject to approval by a plurality
of the shares voting on approval of the Plan at the Annual Meeting of Stockholders held on said
date or any adjournment thereof. The Plan shall terminate on April 23, 2008.



     (b) Shares of Common Stock Subject to Plan. The maximum number of shares of Common Stock with
respect to which Awards may be granted under the Plan, subject to adjustment as provided in Section
14 of the Plan, shall be 1,500,000 shares of the total authorized shares of the Common Stock. For
the purpose of computing the total number of shares of Common Stock available for Awards under the
Plan, there shall be counted against the foregoing limitation the number of shares of Common Stock
subject to issuance upon exercise or settlement of Awards and the number of shares of Common Stock
which equal the value of



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Restricted Unit Grants and Performance Equity Grants and other stock-based Awards in each case
determined as of the dates on which such Awards are granted. If any Award is canceled, terminates,
expires or lapses for any reason, any shares subject to such Award shall not count against the
aggregate number of shares that may be issued under the Plan as set forth above. If, in accordance
with the terms of the Plan, a Participant pays the option exercise price for a Stock Option or
satisfies any tax withholding requirement in connection with the exercise of a Stock Option by
either tendering previously owned shares or having the Company withhold shares, then such shares
surrendered to pay the option exercise price or used to satisfy such tax withholding requirements
shall not count against the aggregate number of shares that may be issued under the Plan as set
forth above. The following items shall not count against the aggregate number of shares that may
be issued under the Plan as set forth above: (i) the payment in cash of dividends or dividend
equivalents under any outstanding Award; (ii) any Award that is settled in cash rather than by
issuance of shares; or (iii) Awards granted through the assumption of, or in substitution for,
outstanding Awards previously granted to individuals who become key employees as a result of a
merger, consolidation, acquisition or other corporation transaction involving the Company or any
subsidiary of the Company. Common Stock which may be issued under the Plan may be either
authorized and unissued shares or issued shares which have been reacquired by the Company. No
fractional shares of Common Stock shall be issued under the Plan.




     (c) Individual Award Limit. In no event shall a Participant receive an Award or Awards during
any one calendar year covering in the aggregate more than 150,000 shares of Common Stock.



     (d) Restricted Award Limitations. In no event shall the Compensation Committee grant
Restricted Awards covering in the aggregate more than 200,000 shares of Common Stock.



     Section 5. Eligibility. Only managerial and other key employees shall be eligible to be
granted Awards under the Plan. The Compensation Committee shall, from time to time, (i) determine
those managerial and other key employees to whom Awards shall be granted and the conditions of each
such Award or issue and sale and (ii) grant such Awards. No member of the Compensation Committee
while serving as such shall be eligible to receive any Award hereunder.



     Section 6. Stock Options. Stock Options may be granted under the Plan in the form of
Incentive Stock Options or Non-Qualified Stock Options; and such Stock Options shall be subject to
the following terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Compensation Committee shall
determine:




     (a) Grant. Stock Options may be granted under the Plan on such terms and
conditions not inconsistent with the provisions of the Plan and in such form as the
Compensation Committee may from time to time approve. Stock Options may be granted
alone, in addition to or in combination with other Awards under the Plan.



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     (b) Stock Option Price. The option exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Compensation Committee
at the time of grant, but in no event shall the exercise price of an Incentive Stock
Option be less than 100% of the Fair Market Value of the Common Stock on the date of
the grant of such Incentive Stock Option.




     (c) Option Term. The term of each Stock Option shall be fixed by the
Compensation Committee; except that the term of Incentive Stock Options shall not
exceed 10 years after the date the Incentive Stock Option is granted.




     (d) Exercisability. A Stock Option shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the Compensation
Committee at the date of grant.




     (e) Method of Exercise. A Stock Option may be exercised, in whole or in part,
by a Participant’s giving written notice of exercise to the Company specifying the
number of shares to be purchased. Such notice shall be accompanied by payment in
full of the purchase price in cash or, if acceptable to the Compensation Committee
in its sole discretion, in shares of Common Stock already owned by the Participant,
or by surrendering outstanding Awards denominated in stock or stock units.




     (f) Special Rule for Incentive Stock Options. With respect to Incentive Stock
Options granted under the Plan, the aggregate Fair Market Value (determined as of
the date the Incentive Stock Option is granted) of the number of shares with respect
to which Incentive Stock Options are exercisable for the first time by a Participant
during any calendar year shall not exceed $100,000 or such other limit as may be
required by the Code.




     (g) Repricing of Stock Options. In no event shall any outstanding Stock Option
be repriced to a lower option exercise price per share of Common Stock at any time
during the term of such Stock Option without the prior affirmative vote of holders
of a majority of the shares of Common Stock of the Company present at a stockholders
meeting in person or represented by proxy and entitled to vote thereon.



     Section 7. Stock Appreciation Rights. Stock Appreciation Rights may be granted under the Plan
subject to the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the express terms of the Plan, as the Compensation Committee
shall determine:




     (a) Stock Appreciation Rights. A Stock Appreciation Right is an Award
entitling a Participant to receive an amount equal to (or if the Compensation
Committee shall so determine at the time of grant, less than) the excess of the Fair
Market Value of a share of Common Stock on the date of exercise over the Fair Market
Value of a share of Common Stock on the date of grant of the Stock Appreciation
Right, or such other price as is set by the



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Compensation Committee, multiplied by the number of shares of Common Stock with
respect to which the Stock Appreciation Right shall have been exercised.




     (b) Grant. A Stock Appreciation Right may be granted in combination with, in
addition to or completely independent of a Stock Option or any other Award under the
Plan.




     (c) Exercise. A Stock Appreciation Right may be exercised by a Participant in
accordance with procedures established by the Compensation Committee, except that in
no event shall a Stock Appreciation Right be exercisable within the first six months
after the date of grant. The Compensation Committee may also provide that a Stock
Appreciation Right shall be automatically exercised on one or more specified dates.




     (d) Form of Payment. Payment upon exercise of a Stock Appreciation Right may
be made in cash, in shares of Common Stock, or any combination thereof, as the
Compensation Committee shall determine; provided, however, that any Stock
Appreciation Right exercised upon or subsequent to the occurrence of a Change in
Control (as defined in Section 15) shall be paid in cash.



     Section 8. Restricted Awards. Restricted Awards may be granted under the Plan in the form of
either Restricted Stock Grants or Restricted Unit Grants. Restricted Awards shall be subject to
the following terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Compensation Committee shall
determine:




     (a) Restricted Stock Grants. A Restricted Stock Grant is an Award of shares of
Common Stock to a Participant subject to such terms and conditions as the
Compensation Committee deems appropriate, including, without limitation,
restrictions on the sale, assignment, transfer or other disposition of such shares
and the requirement that the Participant forfeit such shares back to the Company
upon termination of employment prior to vesting.




     (b) Restricted Unit Grants. A Restricted Unit Grant is an Award of units to be
paid in cash upon vesting (with each unit having a value equivalent to the Fair
Market Value of one share of Common Stock) granted to a Participant subject to such
terms and conditions as the Compensation Committee deems appropriate, including,
without limitation, the requirement that the Participant forfeit such units upon
termination of employment prior to vesting.




     (c) Grants of Awards. Restricted Awards may be granted under the Plan in such
form and on such terms and conditions as the Compensation Committee may from time to
time approve. Restricted Awards may be granted alone, in addition to or in
combination with other Awards under the Plan. Subject to the terms of the Plan, the
Compensation Committee shall determine the number of Restricted Awards to be granted
to a Participant and the Compensation Committee may impose different terms and
conditions on any particular



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Restricted Award made to any Participant. Each Participant receiving a Restricted
Stock Grant shall be issued a stock certificate in respect of such shares of Common
Stock. Such certificate shall be registered in the name of such Participant, shall
be accompanied by a stock power duly executed by such Participant, and shall bear an
appropriate legend referring to the terms, conditions and restrictions applicable to
such Award; which certificate evidencing such shares shall be held in custody by the
Company until the restrictions thereon shall have lapsed.




     (d) Restriction Period. Restricted Awards shall provide that in order for a
Participant’s rights to vest in such Awards, the Participant must remain in the
employment of the Company, subject to relief for specified reasons, for a period of
time commencing on the date of the Award and ending on such later date or dates as
the Compensation Committee may designate at the time of the Award (“Restriction
Period”). During the Restriction Period, a Participant may not sell, assign,
transfer, pledge, encumber or otherwise dispose of shares of Common Stock received
under a Restricted Stock Grant. The Compensation Committee, in its sole discretion,
may provide for the lapse of restrictions in installments during the Restriction
Period. Upon expiration of the applicable Restriction Period (or lapse of
restrictions during the Restriction Period where the restrictions lapse in
installments), the Participant shall be entitled to receive his or her Restricted
Award or portion thereof, as the case may be.




     (e) Payment of Awards. A Participant shall be entitled to receive payment for
a Restricted Unit Grant (or portion thereof) upon expiration of the applicable
Restriction Period. Payment in settlement of a Restricted Unit Grant shall be made
as soon as practicable following the expiration of the Restriction Period in cash,
in shares of Common Stock equal to the number of units granted under the Restricted
Unit Grant with respect to which such payment is made, or in any combination
thereof, as the Compensation Committee in its sole discretion shall determine. The
Compensation Committee may also, in its discretion, permit a Participant to elect to
receive, in lieu of shares of unrestricted stock at the conclusion of a Restriction
Period, a cash payment equal to the Fair Market Value of the Restricted Stock
vesting on the date the restrictions expire.




     (f)
Rights as a Stockholder. A Participant shall have, with respect to the
shares of Common Stock received under a Restricted Stock Grant, all of the rights of
a Stockholder of the Company, including the right to vote the shares, and the right
to receive any cash dividends. Stock dividends issued with respect to the shares
covered by a Restricted Stock Grant shall be treated as additional shares under the
Restricted Stock Grant and shall be subject to the same restrictions and other terms
and conditions that apply to shares under the Restricted Stock Grant with respect to
which such dividends are issued.



     Section 9. Performance Awards. Performance Awards may be granted under the Plan in the form
of either Performance Equity Grants or Performance Unit Grants. Performance Awards may be subject
to the following terms and conditions and may contain such additional



9









 




terms and conditions, not inconsistent with the express provisions of the Plan, as the Compensation
Committee shall determine:





     (a) Performance Equity Grants. A Performance Equity Grant is an Award of units
(with each unit equivalent in value to one share of Common Stock as it varies
throughout the term of the designated performance period) to a Participant and may
be subject to such terms and conditions as the Compensation Committee deems
appropriate, including, without limitation, the requirement that the Participant
forfeit such units or a portion of such units in the event certain performance
criteria are not met within a designated period of time.




     (b) Performance Unit Grants. A Performance Unit Grant is an Award of units to
be paid in cash upon vesting (with each unit representing such monetary amount as
designated by the Compensation Committee) to a Participant subject to such terms and
conditions as the Compensation Committee deems appropriate, including, without
limitation, the requirement that the Participant forfeit such units or a portion of
such units in the event certain performance criteria are not met within a designated
period of time.




     (c) Grants of Awards. Performance Awards may be granted under the Plan in such
form as the Compensation Committee may from time to time approve. Performance
Awards may be granted alone, in addition to or in combination with other Awards
under the Plan. Subject to the terms of the Plan, the Compensation Committee shall
determine the number of Performance Awards to be granted to a Participant and the
Compensation Committee may impose different terms and conditions on any particular
Performance Award made to any Participant.




     (d) Performance Goals and Performance Periods. Performance Awards shall
provide that in order for a Participant’s rights to vest in such Awards the Company
or the Participant, or a combination thereof, must achieve certain performance goals
(“Performance Goals”) over a designated performance period (“Performance Period”).
The Performance Goals and Performance Period shall be established by the
Compensation Committee, in its sole discretion. The Compensation Committee shall
establish Performance Goals for each Performance Period before, or as soon as
practicable after, the commencement of the Performance Period. The Compensation
Committee may also establish a schedule or formula for such Performance Period
setting forth the portion of the Performance Award which will be earned or forfeited
based on the degree of achievement of the Performance Goals actually achieved or
exceeded. In setting Performance Goals, the Compensation Committee may use such
measures of performance as it deems appropriate.




     (e) Payment of Awards. In the case of a Performance Equity Grant, the
Participant shall be entitled to receive payment for each unit earned in an amount
equal to the Fair Market Value of a share of Common Stock on the date on which the
Compensation Committee determines the number of units earned by



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the Participant. In the case of a Performance Unit Grant, the Participant shall be
entitled to receive payment for each unit earned in an amount equal to the dollar
value of each unit times the number of units earned. Payment in settlement of a
Performance Award shall be made as soon as practicable following the conclusion of
the respective Performance Period in cash, in shares of Common Stock, or in any
combination thereof, as the Compensation Committee in its sole discretion shall
determine.



     Section 10. Other Stock-Based and Combination Awards.



     (a) The Compensation Committee may grant other Awards under the Plan pursuant to which Common
Stock is or may in the future be acquired, or Awards denominated in stock units, including ones
valued using measures other than market value. Such other stock-based Awards may be granted either
alone, in addition to or in combination with any other type of Award granted under the Plan.



     (b) The Compensation Committee may also grant Awards under the Plan in combination with other
Awards or in exchange of Awards, or in combination with or as alternatives to grants or rights
under any other employee plan of the Company, including the plan of any acquired entity.



     (c) Subject to the provisions of the Plan, the Compensation Committee shall have authority to
determine the individuals to whom and the time or times at which such Awards shall be made, the
number of shares of Common Stock to be granted or covered pursuant to such Awards, and any and all
other conditions and/or terms of the Awards.



     Section 11. Deferral Elections. The Compensation Committee may permit a Participant to elect
to defer his or her receipt of the payment of cash or the delivery of shares of Common Stock that
would otherwise be due to such Participant by virtue of the exercise or earn out of an Award made
under the Plan. If any such election is permitted, the Compensation Committee may establish rules
and procedures for such payment deferrals, including the possible (a) payment or crediting of
reasonable interest on such deferred amounts credited in cash, and (b) the payment or crediting
dividend equivalents in respect of deferrals credited in units of Common Stock.



     Section 12. Termination of Employment. The terms and conditions under which an Award may be
exercised after a Participant’s termination of employment shall be determined by the Compensation
Committee.



     Section 13. Non-transferability of Awards. No Award under the Plan, and no rights or
interests therein, shall be assignable or transferable by a Participant except by will or the laws
of descent and distribution. During the lifetime of a Participant, Stock Options and Stock
Appreciation Rights are exercisable only by, and payments in settlement of Awards will be payable
only to, the Participant or his or her legal representative.



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     Section 14. Adjustments Upon Changes in Capitalization, Etc.



     (a) The existence of the Plan and the Awards granted hereunder shall not affect or restrict in
any way the right or power of the Board or the Stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company’s capital structure or
its business, any merger or consolidation of the Company, any issue of bonds, other debentures,
preferred or prior preference stocks, the dissolution or liquidation of the Company or any sale or
transfer of all or any part of its assets or business, or any other corporate act or proceeding.



     (b) In the event that a dividend shall be declared upon the Common Stock payable in shares of
Common Stock, the number of shares of Common Stock then subject to any Award and the number of
shares reserved for issuance pursuant to the Plan but not yet covered by an Award shall be adjusted
by adding to each such share the number of shares which would be distributable thereon if such
share had been outstanding on the date fixed for determining the Stockholders entitled to receive
such stock dividend. In the event that the outstanding shares of Common Stock shall be changed
into or exchanged for a different number or kind of shares of stock or other securities of the
Company or of another corporation, or changed into or exchanged for cash or property or the right
to receive cash or property (but not including any dividend payable in cash or property other than
a liquidating distribution), whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation, then there shall be substituted for each share of
Common Stock subject to any Award and for each share of Common Stock reserved for issuance pursuant
to the Plan but not yet covered by an Award, the number and kind of shares of stock or other
securities or cash or property or right to receive cash or property into which each outstanding
share of Common Stock shall be so changed or for which each such share shall be exchanged. In the
event there shall be any change other than as specified above in this Section 14, in the number or
kind of outstanding shares of Common Stock or of any stock or other securities into which such
Common Stock shall have been changed or for which it shall have been exchanged, then if the
Compensation Committee shall in its sole discretion determine that such change equitably requires
an adjustment in the number or kind of shares theretofore reserved for issuance pursuant to the
Plan but not yet covered by an Award and of the shares then subject to an Award or Awards, such
adjustment shall be made by the Compensation Committee and shall be effective and binding for all
purposes of the Plan and each agreement entered into with a Participant under the Plan. In the
case of any such substitution or adjustment as provided for in this Section 14, the Award price for
each share covered thereby prior to such substitution or adjustment will be the Award price for all
shares of stock or other securities or cash or property or right to receive cash or property which
shall have been substituted for such share or to which such share shall have been adjusted pursuant
to this Section 14. No adjustment or substitution provided for in this Section 14 shall require
the Company in any agreement with a Participant to issue a fractional share and the total
substitution or adjustment with respect to each agreement with a Participant shall be limited
accordingly. In the event that the number of shares of Common Stock subject to an Award is
adjusted pursuant to the provisions of this Section 14, then any Stock Appreciation Rights related
to such Award shall be appropriately and equitably adjusted.



     (c) In the event of (i) a dissolution or liquidation of the Company, (ii) a sale of all or
substantially all of the Company’s assets, (iii) a merger or consolidation involving the Company



12









 




in which the Company is not the surviving corporation or (iv) a merger or consolidation involving
the Company in which the Company is the surviving corporation but the holders of shares of the
Company’s Common Stock receive securities of another corporation and/or other property, including
cash, the Compensation Committee shall, in its absolute discretion, have the power to cancel,
effective immediately prior to the occurrence of such event, each Stock Option and each Stock
Appreciation Right outstanding immediately prior to such event (whether or not then exercisable)
and, in consideration of such cancellation, the Company will pay to the Participant an amount in
cash for each share of Common Stock subject to such Stock Option or Stock Appreciation Right equal
to the excess of (A) the value as determined by the Compensation Committee, in its absolute
discretion, of the property (including cash) received by the holder of one share of Common Stock as
a result of such event over (B) the exercise price of such Stock Option or Stock Appreciation
Right; or provide for the exchange of each Stock Option and Stock Appreciation Right outstanding
immediately prior to such event (whether or not then exercisable) for an option on or stock
appreciation right with respect to, as appropriate, some or all of the property which a holder of
the number of shares of Common Stock subject to such Stock Option or Stock Appreciation Right would
have received in such transaction and, incident thereto, make an equitable adjustment as determined
by the Compensation Committee, in its absolute discretion, in the exercise price of the option or
stock appreciation right, or the number of shares or amount of property subject to the option or
stock appreciation right or, if appropriate, provide for a cash payment to the Participant to whom
such Stock Option or Stock Appreciation Right was granted in partial consideration for the exchange
of the Stock Option or Stock Appreciation Right.




     Section 15. Change in Control.



     (a) In the event of a Change in Control (as defined below) of the Company, (i) all Stock
Options or Stock Appreciation Rights then outstanding shall become fully exercisable as of the date
of the Change in Control, whether or not then exercisable, (ii) all restrictions and conditions of
all Restricted Stock Grants and Restricted Unit Grants then outstanding shall be deemed satisfied
as of the date of the Change in Control, and (iii) all Performance Equity Grants and Performance
Unit Grants shall be deemed to have been fully earned as of the date of the Change in Control.



     (b) “Change in Control” means, and shall be deemed to have occurred upon, the first to occur
of any of the following events:




	 	(i)	 	Any Outside Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing
twenty-five percent (25%) or more of the combined voting power of the
Company’s then outstanding securities; or
	 
	 	(ii)	 	During any period of two (2) consecutive years (not
including any period prior to the date hereof), individuals who at the
beginning of such period constitute the Board (and any new Director,
whose nomination for election by the Company’s stockholders was
approved by a vote of at least two-thirds (2/3) of the Directors then
in office who either were Directors at the beginning of the period




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	 		 	or whose nomination for election was so approved) cease for any
reason to constitute a majority of the members of the Board; or
	 
	 	(iii)	 	The stockholders of the Company approve: (i) a plan of
complete liquidation of the Company; or (ii) an agreement for the sale
or disposition of all or substantially all of the Company’s assets
other than a sale or disposition of all or substantially all of the
Company’s assets to an entity at least sixty percent (60%) of the
combined voting power of the voting securities of which are owned by
the stockholders of the Company in substantially the same proportions
as their ownership of the Company immediately prior to such sale or
disposition; or
	 
	 	(iv)	 	The stockholders of the Company approve a merger,
consolidation, or reorganization of the Company with or involving any
other corporation, other than a merger, consolidation, or
reorganization that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at least
sixty percent (60%) of the combined voting power of the voting
securities of the Company (or such surviving entity) outstanding
immediately after such merger, consolidation, or reorganization.




However, in no event shall a “Change in Control” be deemed to have occurred with respect to a
Participant if that Participant is part of a purchasing group which consummates the Change in
Control transaction. A Participant shall be deemed “part of a purchasing group” for purposes of
the preceding sentence if the Participant is an equity participant in the acquiring company or
group or surviving entity (the “Purchaser”) except for ownership of less than one percent (1%) of
the equity of the Purchaser.




     Section 16. Amendment and Termination. Without further approval of the Stockholders, the Board
may at any time terminate the Plan, or may amend it from time to time in such respects as the Board
may deem advisable, except that the Board may not, without approval of the Stockholders, make any
amendment which would (i) require Stockholder approval for Incentive Stock Options granted or to be
granted under the Plan to qualify as incentive stock options within the meaning of Section 422 of
the Code or (ii) require Stockholder approval under applicable law or the rules of any national
securities exchange upon which the Common Stock is listed at the time such amendment is proposed.



     Section 17. Miscellaneous.



     (a) Tax Withholding. The Company shall have the right to deduct from any settlement,
including the delivery or vesting of shares, made under the Plan any federal, state or local taxes
of any kind required by law to be withheld with respect to such payments or to take such other
action as may be necessary in the opinion of the Company to satisfy all obligations for



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the payment of such taxes. If Common Stock is used to satisfy tax withholding, such stock shall be
valued based on the Fair Market Value when the tax withholding is required to be made.




     (b) No Right To Employment. Neither the adoption of the Plan nor the granting of any Award
hereunder shall confer upon any employee of the Company any right to continued employment with the
Company, nor shall it interfere in any way with the right of the Company to terminate the
employment of any of its employees at any time, with or without cause.



     (c) Unfunded Plan. The Plan shall be unfunded and the Company shall not be required to
segregate any assets that may at any time be represented by Awards under the Plan. Any liability
of the Company to any person with respect to any Award under the Plan shall be based solely upon
any contractual obligations that may be effected pursuant to the 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.



     (d) Payments to Trust. The Compensation Committee is authorized to cause to be established a
trust agreement or several trust agreements whereunder the Company may make payments of amounts due
or to become due to Participants in the Plan.



     (e) Engaging in Competition With Company. In the event a Participant’s employment with the
Company is terminated for any reason whatsoever, and within 18 months after the date thereof such
Participant accepts employment with any competitor of, or otherwise engages in competition with,
the Company, the Compensation Committee, in its sole discretion, may require such Participant to
return to the Company the economic value of any Award which is realized or obtained (measured at
the date of exercise, vesting or payment) by such Participant at any time during the period
beginning on that date which is six months prior to the date of such Participant’s termination of
employment with the Company.



     (f) Securities Law Restrictions. No shares of Common Stock shall be issued under the Plan
unless counsel for the Company shall be satisfied that such issuance will be in compliance with
applicable Federal and state securities laws. Certificates for shares of Common Stock delivered
under the Plan may be subject to such stop-transfer orders and other restrictions as the
Compensation Committee may deem advisable under the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law. The Compensation Committee may cause a
legend or legends to be put on any such certificates to make appropriate reference to such
restrictions.



     (g) Award Agreement. Each Participant receiving an Award under the Plan shall enter into an
agreement with the Company in a form specified by the Compensation Committee agreeing to the terms
and conditions of the Award and such related matters as the Compensation Committee shall, in its
sole discretion, determine.



     (h) Costs of Plan. The costs and expenses of administering the Plan shall be borne by the
Company.



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     (i) Governing Law. The Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of North Carolina.




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