**EXHIBIT 10.7**

 

 

 

**2003 STOCK INCENTIVEPLAN**

**OF**

**RFMICRO DEVICES, INC. **

 

 

 

 

 

 

 

 

 

 

 

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**2003 STOCKINCENTIVE PLAN**

**OF**

**RFMICRO DEVICES, INC.**

# 1.                 Purpose

The purpose of the 2003 Stock Incentive Plan ofRF Micro Devices, Inc. (the "Plan") is to encourage and enableselected employees, directors and independent contractors of RF Micro Devices,Inc. (RF Micro Devices, Inc., together with any successor corporation thereto,being referred to herein as the "Corporation") and its relatedentities to acquire or to increase their holdings of common stock of theCorporation (the "Common Stock") and other proprietaryinterests in the Corporation in order to promote a closer identification oftheir interests with those of the Corporation and its shareholders, therebyfurther stimulating their efforts to enhance the efficiency, soundness,profitability, growth and shareholder value of the Corporation. This purposewill be carried out through the granting of benefits (collectively referred toherein as "awards") to selected employees, independent contractorsand directors, including the granting to selected participants of incentivestock options ("incentive options") intended to qualify underSection 422 of the Internal Revenue Code of 1986, as amended (the "Code"),nonqualified stock options ("nonqualified options"), stockappreciation rights ("SARs"), restricted awards in the form ofrestricted stock awards ("restricted stock awards") andrestricted stock units ("restricted stock units"), andperformance awards in the form of performance shares ("performanceshares") and performance units ("performance units"). Incentive options and nonqualified options shall be referred to hereincollectively as "options."  Restricted stock awards andrestricted stock units shall be referred to herein collectively as "restrictedawards."  Performance shares and performance units shall be referredto herein collectively as "performance awards."

# 2.                 Administration of the Plan

## (a)               The Plan shall be administered by the Board of Directors of theCorporation (the "Board" or the "Board of Directors")or, upon its delegation, by the Compensation Committee of the Board ofDirectors  (the "Committee").  Unless the Board determinesotherwise, the Committee shall be comprised solely of two or more "non-employeedirectors," as such term is defined in Rule 16b-3 under the SecuritiesExchange Act of 1934, as amended (the "Exchange Act"), or asmay otherwise be permitted under Rule 16b-3.  Further, to the extent requiredby Section 162(m) of the Code and related regulations, the Plan shall beadministered by a committee comprised of two or more "outside directors"(as such term is defined in Section 162(m) or related regulations) or as mayotherwise be permitted under Section 162(m) and related regulations.  For thepurposes herein, the term "Administrator" shall refer to theBoard and, upon its delegation to the Committee of all or part of its authorityto administer the Plan, to the Committee.

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## (b)              In addition to action by meeting in accordance with applicable laws, anyaction of the Administrator with respect to the Plan may be taken by a writteninstrument signed by all of the members of the Board or Committee, asappropriate, and any such action so taken by written consent shall be as fullyeffective as if it had been taken by a majority of the members at a meetingduly held and called. Subject to the provisions of the Plan, the Administratorshall have full and final authority in its discretion to take any action withrespect to the Plan including, without limitation, the authority (i) to determineall matters relating to awards, including selection of individuals to begranted awards, the types of awards, the number of shares of the Common Stock,if any, subject to an award, and all terms, conditions, restrictions andlimitations of an award; (ii) to prescribe the form or forms of the agreementsevidencing any awards granted under the Plan; (iii) to establish, amend andrescind rules and regulations for the administration of the Plan; and (iv) toconstrue and interpret the Plan, awards and award agreements made under thePlan, to interpret rules and regulations for administering the Plan and to makeall other determinations deemed necessary or advisable for administering thePlan. The Administrator shall also have authority, in its sole discretion, toaccelerate the date that any award which was not otherwise exercisable, vestedor earned shall become exercisable, vested or earned in whole or in partwithout any obligation to accelerate such date with respect to any other awardgranted to any recipient.  In addition, the Administrator shall have theauthority and discretion to establish terms and conditions of awards (includingbut not limited to the establishment of subplans) as the Administratordetermines to be necessary or appropriate to conform to the applicablerequirements or practices of jurisdictions outside of the United States.  Nomember of the Board or Committee, as applicable, shall be liable while actingas Administrator for any action or determination made in good faith with respectto the Plan, an award or an award agreement.  The members of the Board orCommittee, as applicable, shall be entitled to indemnification andreimbursement in the manner provided in the Corporation’s articles ofincorporation.

## (c)               Notwithstanding the other provisions of Section 2, the Administrator maydelegate to one or more officers of the Corporation the authority to grantawards, and to make any or all of the determinations reserved for theAdministrator in the Plan and summarized in Section 2(b) herein with respect tosuch awards (subject to any restrictions imposed by applicable laws, rules andregulations and such terms and conditions as may be established by theAdministrator); provided, however, that, to the extent required by Section 16of the Exchange Act or Section 162(m) of the Code, the participant, at the timeof said grant or other determination, (i) is not deemed to be an officer ordirector of the Corporation within the meaning of Section 16 of the ExchangeAct; and (ii) is not deemed to be a "covered employee" as definedunder Section 162(m) of the Code and related regulations.  To the extent thatthe Administrator has delegated authority to grant awards pursuant to thisSection 2(c) to one or more officers of the Corporation, references to the Administratorshall include references to such officer or officers, subject, however, to therequirements of the Plan, Rule 16b-3, Section 162(m) of the Code and otherapplicable laws, rules and regulations.

# 3.                 Effective Date

The effective date of the Plan shall be July22, 2003 (the "Effective Date").  Awards may be granted underthe Plan on and after the Effective Date, but no awards will be granted afterJuly 21, 2013.  Awards which are outstanding on July 21, 2013 (or such earliertermination date as may be established by the Board pursuant to Section 16(a)herein) shall continue in accordance with their terms, unless otherwiseprovided in the Plan or an award agreement.

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# 4.                 Shares of Stock Subject to the Plan; Award Limitations

## (a)               *Shares Available for Awards*: Subject to adjustments as providedin this Section 4(c), the aggregate number of shares of Common Stock that maybe issued pursuant to awards granted under the Plan shall not exceed the sum of(i) 9,250,000 shares, plus (ii) any shares of Common Stock (A) remainingavailable for issuance as of the Effective Date of the Plan under theCorporation’s 1999 Stock Incentive Plan, Key Employees’ 1997 Stock Option Plan,1992 Stock Option Plan and any other stock incentive plans maintained by theCorporation (collectively, the "Prior Plans"), and/or (B)subject to an award granted under a Prior Plan, which award is forfeited,cancelled, terminated, expires or lapses for any reason.  Shares deliveredunder the Plan shall be authorized but unissued shares or shares purchased onthe open market or by private purchase.  The Corporation hereby reservessufficient authorized shares of Common Stock to meet the grant of awardshereunder.  Notwithstanding any provision herein to the contrary, the followinglimitations shall apply to awards granted under the Plan, in each case subjectto adjustment pursuant to Section 4(c):

### (i)           The maximum number of shares of Common Stock that may be issued underthe Plan pursuant to the grant of incentive stock options shall not exceed9,250,000 shares; and

### (ii)         No participant may be granted awards in any 12-month period for morethan 800,000 shares of Common Stock (or the equivalent value thereof based onthe fair market value per share of the Common Stock on the date of grant of anaward).

## (b)              *Shares not subject to limitations*: The following will not beapplied to the share limitations of Section 4(a) above: (i) dividends,including dividends paid in shares, or dividend equivalents paid in cash inconnection with outstanding awards, (ii) awards which by their terms aresettled in cash, (iii) shares and any awards that are granted through theassumption of, or in substitution for, outstanding awards previously granted asthe result of a merger, consolidation, or acquisition of the employing company(or an affiliate) pursuant to which it is merged with the Corporation orbecomes a related entity of the Corporation, (iv) any shares subject to anaward under the Plan which award is forfeited, cancelled, terminated, expiresor lapses for any reason, and (v) any shares surrendered by a participant orwithheld by the Corporation to pay the option price for an option or used tosatisfy any tax withholding requirement in connection with the exercise,vesting or earning of an award if, in accordance with the terms of the Plan, aparticipant pays such option price or satisfies such tax withholding by eithertendering previously owned shares or having the Corporation withhold shares.

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## (c)               *Adjustments*: If there is any change in the outstanding shares ofCommon Stock because of a merger, consolidation or reorganization involving theCorporation or a related entity, or if the Board of Directors of theCorporation declares a stock dividend, stock split distributable in shares ofCommon Stock, reverse stock split, combination or reclassification of theCommon Stock, or if there is a similar change in the capital stock structure ofthe Corporation or a related entity affecting the Common Stock, the number ofshares of Common Stock reserved for issuance under the Plan shall becorrespondingly adjusted, and the Administrator shall make such adjustments toawards and to any provisions of this Plan as the Administrator deems equitableto prevent dilution or enlargement of awards or as may be otherwise advisable.

# 5.                 Eligibility

An award may be granted only to an individualwho satisfies the following eligibility requirements on the date the award isgranted:

## (a)               The individual is either (i) an employee of the Corporation or a relatedentity, (ii) a director of the Corporation or a related entity, or (iii) anindependent contractor, consultant or advisor (collectively, "independentcontractors") providing services to the Corporation or a relatedentity.  For this purpose, an individual shall be considered to be an "employee"only if there exists between the individual and the Corporation or a relatedentity the legal and bona fide relationship of employer and employee.

## (b)              With respect to the grant of incentive options, the individual does notown, immediately before the time that the incentive option is granted, stockpossessing more than 10% of the total combined voting power of all classes ofstock of the Corporation or a related corporation.  Notwithstanding theforegoing, an individual who owns more than 10% of the total combined votingpower of the Corporation or a related corporation may be granted an incentiveoption if the option price is at least 110% of the fair market value of theCommon Stock (as defined in Section 6(c)(ii) herein), and the option period (asdefined in Section 6(d)(i) herein) does not exceed five years.  For thispurpose, an individual will be deemed to own stock which is attributable to himunder Section 424(d) of the Code.

## (c)               With respect to the grant of substitute awards or assumption of awardsin connection with a merger, consolidation, acquisition, reorganization orsimilar business combination involving the Corporation or a related entity, therecipient is otherwise eligible to receive the award and the terms of the awardare consistent with the Plan and applicable laws, rules and regulations(including, to the extent necessary, the federal securities laws registrationprovisions and Section 424(a) of the Code).

## (d)              The individual, being otherwise eligible under this Section 5, isselected by the Administrator as an individual to whom an award shall begranted (a "participant").

# 6.                 Options

## (a)               *Grant of Options*:  Subject to the limitations of the Plan, theAdministrator may in its sole and absolute discretion grant options to sucheligible individuals in such numbers, subject to such terms and conditions, andat such times as the Administrator shall determine. Both incentive options andnonqualified options may be granted under the Plan, as determined by theAdministrator; provided, however, that incentive options may only be granted toemployees of the Corporation or a related corporation.  To the extent that anoption is designated as an incentive option but does not qualify as such underSection 422 of the Code, the option (or portion thereof) shall be treated as anonqualified option.

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## (b)              *Option Price*:  The price per share at which an option may beexercised (the "option price") shall be established by theAdministrator and stated in the award agreement evidencing the grant of theoption; provided, that (i) the option price of an option shall be no less thanthe fair market value per share of the Common Stock, as determined inaccordance with Section 6(c)(ii) on the date the option is granted (or 110% ofthe fair market value with respect to incentive options granted to an employeewho owns stock possessing more than 10% of the total voting power of allclasses of stock of the Corporation or a related corporation, as provided inSection 5(b) herein); and (ii) in no event shall the option price per share ofany option be less than the par value per share, if any, of the Common Stock.

## (c)               *Date of Grant; Fair Market Value*

### (i)           An incentive option shall be considered to be granted on the date thatthe Administrator acts to grant the option, or on any later date specified bythe Administrator as the effective date of the option.  A nonqualified optionshall be considered to be granted on the date the Administrator acts to grantthe option or any other date specified by the Administrator as the date ofgrant of the option.

### (ii)         For the purposes of the Plan, the fair market value per share of theCommon Stock shall be established in good faith by the Administrator and,except as may otherwise be determined by the Administrator, the fair marketvalue shall be determined in accordance with the following provisions: (A) if theshares of Common Stock are listed for trading on the New York Stock Exchange orthe American Stock Exchange, the fair market value shall be the closing salesprice per share of the shares on the New York Stock Exchange or the AmericanStock Exchange (as applicable) on the date immediately preceding the date theoption is granted or other determination is made (each, a "valuationdate"), or, if there is no transaction on such date, then on thetrading date nearest preceding the valuation date for which closing priceinformation is available, and, provided further, if the shares are quoted onthe Nasdaq National Market or the Nasdaq SmallCap Market of the Nasdaq StockMarket but are not listed for trading on the New York Stock Exchange or theAmerican Stock Exchange, the fair market value shall be the closing sales pricefor such stock (or the closing bid, if no sales were reported) as quoted onsuch system on the date immediately or nearest preceding the valuation date forwhich such information is available; or (B) if the shares of Common Stock arenot listed or reported in any of the foregoing, then the fair market valueshall be determined by the Administrator in accordance with the applicableprovisions of Section 20.2031-2 of the Federal Estate Tax Regulations, or inany other manner consistent with the Code and accompanying regulations.

### (iii)        In no event shall there first become exercisable by an employee in anyone calendar year incentive options granted by the Corporation or any relatedcorporation with respect to shares having an aggregate fair market value(determined at the time an incentive option is granted) greater than $100,000.

## (d)              *Option Period and Limitations on the Right to Exercise Options*

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### (i)           The term of an option (the "option period") shall bedetermined by the Administrator at the time the option is granted and shall bestated in the individual award agreement. With respect to incentive options,the option period shall not extend more than 10 years from the date on whichthe option is granted (or five years with respect to incentive options grantedto an employee who owns stock possessing more than 10% of the total combinedvoting power of all classes of stock of the Corporation or a relatedcorporation, as provided in Section 5(b) herein).  Any option or portionthereof not exercised before expiration of the option period shall terminate. The period or periods during which, and conditions pursuant to which, an optionmay become exercisable shall be determined by the Administrator in itsdiscretion, subject to the terms of the Plan.

### (ii)         An option may be exercised by giving written notice to the Corporationin form acceptable to the Administrator at such place and subject to suchconditions as may be established by the Administrator or its designee.  Suchnotice shall specify the number of shares to be purchased pursuant to an optionand the aggregate purchase price to be paid therefor and shall be accompaniedby payment of such purchase price.  Unless an individual award agreementprovides otherwise, such payment shall be in the form of cash or cashequivalent; provided that, where permitted by the Administrator and applicablelaws, rules and regulations (including but not limited to Section 402 of theSarbanes-Oxley Act of 2002), payment may also be made:

#### (A)             By delivery (by either actual delivery or attestation) of shares ofCommon Stock owned by the participant at the time of exercise for a period ofat least six months and otherwise acceptable to the Administrator;

#### (B)             By shares of Common Stock withheld upon exercise;

#### (C)             By delivery of written notice of exercise to the Corporation anddelivery to a broker of written notice of exercise and irrevocable instructionsto promptly deliver to the Corporation the amount of sale or loan proceeds topay the option price;

#### (D)             By such other payment methods as may be approved by the Administratorand which are acceptable under applicable law; or

#### (E)              By any combination of the foregoing methods.

Shares tendered or withheld in payment on the exercise of anoption shall be valued at their fair market value on the date of exercise, asdetermined by the Administrator by applying the provisions of Section 6(c)(ii).

### (iii)        Unless the Administrator determines otherwise, no option granted to aparticipant who was an employee at the time of grant shall be exercised unlessthe participant is, at the time of exercise, an employee as described inSection 5(a), and has been an employee continuously since the date the optionwas granted, subject to the following:

#### (A)             An option shall not be affected by any change in the terms, conditionsor status of the participant’s employment, provided that the participantcontinues to be an employee of the Corporation or a related entity.

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#### (B)             The employment relationship of a participant shall be treated ascontinuing intact for any period that the participant is on military or sickleave or other bona fide leave of absence, provided that the period of suchleave does not exceed 90 days, or, if longer, as long as the participant’sright to reemployment is guaranteed either by statute or by contract.  Theemployment relationship of a participant shall also be treated as continuingintact while the participant is not in active service because of disability. The Administrator shall have sole authority to determine whether a participantis disabled and, if applicable, the date of a participant’s termination ofemployment or service for any reason (the "termination date").

#### (C)             Unless the Administrator determines otherwise, if the employment of aparticipant is terminated because of disability or death, the option may beexercised only to the extent exercisable on the participant’s termination date,except that the Administrator may in its discretion accelerate the date forexercising all or any part of the option which was not otherwise exercisable onthe termination date.  The option must be exercised, if at all, prior to thefirst to occur of the following, whichever shall be applicable:  (X) the closeof the period of 12 months next succeeding the termination date (or such otherperiod stated in the applicable award agreement); or (Y) the close of theoption period.  In the event of the participant’s death, such option shall beexercisable by such person or persons as shall have acquired the right toexercise the option by will or by the laws of intestate succession.

#### (D)             Unless the Administrator determines otherwise, if the employment of theparticipant is terminated for any reason other than disability, death or for "cause,"his option may be exercised to the extent exercisable on his termination date,except that the Administrator may in its discretion accelerate the date forexercising all or any part of the option which was not otherwise exercisable onthe termination date.  The option must be exercised, if at all, prior to thefirst to occur of the following, whichever shall be applicable:  (X) theclose of the period of 90 days next succeeding the termination date (or suchother period stated in the applicable award agreement); or (Y) the close of theoption period.  If the participant dies following such termination ofemployment and prior to the earlier of the dates specified in (X) or (Y) ofthis subparagraph (D), the participant shall be treated as having died whileemployed under subparagraph (C) immediately preceding (treating for thispurpose the participant's date of termination of employment as the terminationdate).  In the event of the participant’s death, such option shall beexercisable by such person or persons as shall have acquired the right toexercise the option by will or by the laws of intestate succession.

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#### (E)              Unless the Administrator determines otherwise, if the employment of theparticipant is terminated for "cause," his option shall lapseand no longer be exercisable as of his termination date, as determined by theAdministrator.  For purposes of the Plan, unless the Administrator determinesotherwise, a participant’s termination shall be for "cause" if suchtermination results from the participant’s (X) termination for "cause"under the participant’s employment, consulting or other agreement with theCorporation or a related entity, if any, or (Y) if the participant has notentered into any such employment, consulting or other agreement, then theparticipant’s termination shall be for "cause" if termination resultsdue to the participant’s (i) dishonesty; (ii) refusal to perform his duties forthe Corporation; or (iii) engaging in conduct that could be materially damagingto the Corporation without a reasonable good faith belief that such conduct wasin the best interest of the Corporation.  The determination of "cause"shall be made by the Administrator and its determination shall be final andconclusive.

#### (F)              Notwithstanding the foregoing, the Administrator may, in its discretion,accelerate the date for exercising all or any part of an option which was nototherwise exercisable on the termination date, extend the period during whichan option may be exercised, modify the terms and conditions to exercise, or anycombination of the foregoing.

### (iv)       Unless the Administrator determines otherwise, an option granted to aparticipant who was a non-employee director of the Corporation or a relatedentity at the time of grant may be exercised only to the extent exercisable onthe date of the participant’s termination of service to the Corporation or a relatedentity (unless the termination was for cause), and must be exercised, if atall, prior to the first to occur of the following, as applicable: (X) the closeof the period of 24 months next succeeding the termination date (or such otherperiod stated in the applicable award agreement); or (Y) the close of theoption period.  If the services of such a participant are terminated for cause(as defined in Section 6(a)(iii)(E) herein), his option shall lapse and nolonger be exercisable as of his termination date, as determined by theAdministrator.  Notwithstanding the foregoing, the Administrator may in itsdiscretion accelerate the date for exercising all or any part of an optionwhich was not otherwise exercisable on the termination date, extend the periodduring which an option may be exercised, modify the other terms and conditionsto exercise, or any combination of the foregoing.

### (v)         Unless the Administrator determines otherwise, an option granted to aparticipant who was an independent contractor of the Corporation or a relatedentity at the time of grant (and who does not thereafter become an employee, inwhich case he shall be subject to the provisions of Section 6(d)(iii) herein)may be exercised only to the extent exercisable on the date of the participant’stermination of service to the Corporation or a related entity (unless thetermination was for cause), and must be exercised, if at all, prior to thefirst to occur of the following, as applicable: (X) the close of the period of90 days next succeeding the termination date (or such other period stated inthe applicable award agreement); or (Y) the close of the option period.  If theservices of such a participant are terminated for cause (as defined in Section6(d)(iii)(E) herein), his option shall lapse and no longer be exercisable as ofhis termination date, as determined by the Administrator.  Notwithstanding theforegoing, the Administrator may in its discretion accelerate the date forexercising all or any part of an option which was not otherwise exercisable onthe termination date, extend the period during which an option may beexercised, modify the other terms and conditions to exercise, or anycombination of the foregoing.

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### (vi)       A participant or his legal representative, legatees or distributeesshall not be deemed to be the holder of any shares subject to an option andshall not have any rights of a shareholder unless and until certificates forsuch shares have been issued and delivered to him or them under the Plan.  Acertificate or certificates for shares of Common Stock acquired upon exerciseof an option shall be issued in the name of the participant (or hisbeneficiary) and distributed to the participant (or his beneficiary) as soon aspracticable following receipt of notice of exercise and payment of the purchaseprice (except as may otherwise be determined by the Corporation in the event ofpayment of the option price pursuant to Section 6(d)(ii)(C) herein).

### (vii)      If shares of Common Stock acquired upon exercise of an incentive optionare disposed of within two years following the date of grant or one yearfollowing the transfer of such shares to a participant upon exercise, theparticipant shall, promptly following such disposition, notify the Corporationin writing of the date and terms of such disposition and provide such otherinformation regarding the disposition as the Administrator may reasonablyrequire.

## (e)               *Nontransferability of Options*: Incentive options shall not betransferable (including by sale, assignment, pledge or hypothecation) otherthan by will or the laws of intestate succession.  Nonqualified options shallnot be transferable (including by sale, assignment, pledge or hypothecation)other than by will or the laws of intestate succession, except as may bepermitted by the Administrator in a manner consistent with the registrationprovisions of the Securities Act of 1933, as amended (the "SecuritiesAct").  Except as may be permitted by the preceding sentence, anoption shall be exercisable during the participant’s lifetime only by him or byhis guardian or legal representative.  The designation of a beneficiary doesnot constitute a transfer.

# 7.                 Stock Appreciation Rights

## (a)               *Grant of SARs*:  Subject to the limitations of the Plan, theAdministrator may in its sole and absolute discretion grant SARs to sucheligible individuals, in such numbers, upon such terms and at such times as theAdministrator shall determine. SARs may be granted to the holder of an option(hereinafter called a "related option") with respect to all ora portion of the shares of Common Stock subject to the related option (a "tandemSAR") or may be granted separately to an eligible individual (a "freestandingSAR").  Subject to the limitations of the Plan, upon the exercise ofan SAR, a participant shall be entitled to receive from the Corporation, foreach share of Common Stock with respect to which the SAR is being exercised,consideration equal in value to the excess of the fair market value of a shareof Common Stock on the date of exercise over the base price per share of suchSAR.  The base price per share of an SAR shall be no less than the fair marketvalue per share of the Common Stock (as determined in accordance with Section6(c)(ii)) on the date the SAR is granted.

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## (b)              *Tandem SARs*:  A tandem SAR may be granted either concurrentlywith the grant of the related option or (if the related option is anonqualified option) at any time thereafter prior to the complete exercise,termination, expiration or cancellation of such related option. Tandem SARsshall be exercisable only at the time and to the extent that the related optionis exercisable (and may be subject to such additional limitations onexercisability as the Administrator may provide in the agreement), and in noevent after the complete termination or full exercise of the related option.For purposes of determining the number of shares of Common Stock that remainsubject to such related option and for purposes of determining the number ofshares of Common Stock in respect of which other awards may be granted, arelated option shall be considered to have been surrendered upon the exerciseof a tandem SAR to the extent of the number of shares of Common Stock withrespect to which such tandem SAR is exercised. Upon the exercise or terminationof a related option, the tandem SARs with respect thereto shall be canceledautomatically to the extent of the number of shares of Common Stock withrespect to which the related option was so exercised or terminated.

## (c)               *Freestanding SARs*:  An SAR may be granted without relationship toan option (as defined above, a "freestanding SAR") and, in such case,will be exercisable upon such terms and subject to such conditions as may bedetermined by the Administrator, subject to the terms of the Plan.

## (d)              *Exercise of SARs*:

### (i)           Subject to the terms of the Plan, SARs shall be exercisable in whole orin part upon such terms and conditions as may be established by theAdministrator and stated in the applicable award agreement.  The period duringwhich an SAR may be exercisable shall not exceed 10 years from the date ofgrant or, in the case of tandem SARs, such shorter option period as may applyto the related option. Any SAR or portion thereof not exercised beforeexpiration of the exercise period established by the Administrator shallterminate.

### (ii)         SARs may be exercised by giving written notice to the Corporation inform acceptable to the Administrator at such place and subject to such termsand conditions as may be established by the Administrator or its designee.  Thedate of exercise of an SAR shall mean the date on which the Corporation shallhave received proper notice from the participant of the exercise of such SAR.

### (iii)        Each participant’s award agreement shall set forth the extent to whichthe participant shall have the right to exercise an SAR following terminationof the participant’s employment or service with the Corporation.  Suchprovisions shall be determined in the sole discretion of the Administrator,shall be included in the award agreement entered into with a participant, neednot be uniform among all SARs issued pursuant to this Section 7, and mayreflect distinctions based on the reasons for termination of employment. Notwithstanding the foregoing, unless the Administrator determines otherwise,no SAR may be exercised unless the participant is, at the time of exercise, aneligible participant, as described in Section 5, and has been a participantcontinuously since the date the SAR was granted, subject to the provisions ofSections 6(d)(iii), (iv) and (v) herein.

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## (e)               *Consideration*:  The consideration to be received upon theexercise of the SAR by the participant shall be paid in cash, shares of CommonStock (valued at fair market value on the date of exercise of such SAR inaccordance with Section 6(c)(ii) herein) or a combination of cash and shares ofCommon Stock, as elected by the Administrator.  The Corporation’s obligationarising upon the exercise of the SAR may be paid currently or on a deferredbasis with such interest or earnings equivalent, if any, as the Administratormay determine. A certificate or certificates for shares of Common Stockacquired upon exercise of an SAR for shares shall be issued in the name of theparticipant (or his beneficiary) and distributed to the participant (or hisbeneficiary) as soon as practicable following receipt of notice of exercise. Aparticipant or his legal representative, legatees or distributees shall not bedeemed to be the holder of any shares subject to an SAR and shall not have anyrights as a shareholder unless and until certificates for such shares have beenissued and delivered to him or them under the Plan.  No fractional shares ofCommon Stock will be issuable upon exercise of the SAR and, unless otherwiseprovided in the applicable award agreement, the participant will receive cashin lieu of fractional shares.

## (f)                *Limitations*:  The applicable award agreement shall contain suchterms, conditions and limitations consistent with the Plan as may be specifiedby the Administrator. Unless otherwise provided in the applicable awardagreement or the Plan, any such terms, conditions or limitations relating to atandem SAR shall not restrict the exercisability of the related option.

## (g)               *Nontransferability*: Unless the Administrator determinesotherwise, SARs shall not be transferable (including by sale, assignment,pledge or hypothecation) other than by will or the laws of intestatesuccession, and SARs may be exercised during the participant’s lifetime only byhim or by his guardian or legal representative.  The designation of abeneficiary does not constitute a transfer.

# 8.                 Restricted Awards

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## (a)               *Grant of Restricted Awards*:  Subject to the limitations of thePlan, the Administrator may in its sole and absolute discretion grantrestricted awards to such individuals in such numbers, upon such terms and atsuch times as the Administrator shall determine.  Such restricted awards may bein the form of restricted stock awards and/or restricted stock units that aresubject to certain conditions, which conditions must be met in order for therestricted award to vest and be earned (in whole or in part) and no longersubject to forfeiture.  Restricted awards shall be payable in cash or wholeshares of Common Stock (including restricted stock), or partly in cash andpartly in whole shares of Common Stock, in accordance with the terms of the Planand the sole and absolute discretion of the Administrator.  The Administratorshall determine the nature, length and starting date of the period, if any,during which a restricted award may be earned (the "restriction period"),and shall determine the conditions which must be met in order for a restrictedaward to be granted or to vest or be earned (in whole or in part), whichconditions may include, but are not limited to, attainment of performanceobjectives, continued service or employment for a certain period of time (or acombination of attainment of performance objectives and continued service),retirement, displacement, disability, death, or any combination of suchconditions.  In the case of restricted awards based upon performance criteria,or a combination of performance criteria and continued service, theAdministrator shall determine the performance objectives to be used in valuingrestricted awards, which performance objectives may vary from participant toparticipant and between groups of participants and shall be based upon suchcorporate, business unit or division and/or individual performance factors andcriteria as the Administrator in its sole discretion may deem appropriate;provided, however, that, with respect to restricted awards payable to coveredemployees which are intended to be eligible for the compensation deductionlimitation exception available under Section 162(m) of the Code and relatedregulations, such performance factors shall be limited to one or more of thefollowing (as determined by the Administrator in its discretion): sales goals,earnings per share, return on equity, return on assets and total return toshareholders. The Administrator shall have sole authority to determine whetherand to what degree restricted awards have vested and been earned and arepayable and to establish and interpret the terms and conditions of restrictedawards and the provisions herein.  The Administrator shall also determine theform and terms of payment of restricted awards.  The Administrator, in its soleand absolute discretion, may accelerate the date that any restricted awardgranted to the participant shall be deemed to be vested or earned in whole orin part, without any obligation to accelerate such date with respect to otherrestricted awards granted to any participant.

## (b)              *Forfeiture of Restricted Awards*: Unless the Administratordetermines otherwise, if the employment or service of a participant shall beterminated for any reason and all or any part of a restricted award has notvested or been earned pursuant to the terms of the Plan and the individualaward agreement, such award, to the extent not then vested or earned, shall beforfeited immediately upon such termination and the participant shall have nofurther rights with respect thereto.

## (c)               *Dividend and Voting Rights; Share Certificates*: The Administratorshall have sole discretion to determine whether a participant shall havedividend rights, voting rights or other rights as a shareholder with respect toshares subject to a restricted award which has not yet vested or been earned. Unless the Administrator determines otherwise, a certificate or certificatesfor shares of Common Stock subject to a restricted award shall be issued in thename of the participant (or his beneficiary) and distributed to the participant(or his beneficiary) as soon as practicable after the shares subject to theaward (or portion thereof) have vested and been earned.  Notwithstanding theforegoing, the Administrator shall have the right to retain custody of certificatesevidencing the shares subject to a restricted award and to require theparticipant to deliver to the Corporation a stock power, endorsed in blank,with respect to such award, until such time as the restricted award vests (oris forfeited).

## (d)              *Nontransferability*: Unless the Administrator determinesotherwise, restricted awards that have not vested shall not be transferable(including by sale, assignment, pledge or hypothecation) other than by will orthe laws of intestate succession, and the recipient of a restricted award shallnot sell, transfer, assign, pledge or otherwise encumber shares subject to theaward until the restriction period has expired and until all conditions tovesting have been met.

# 9.                 Performance Awards

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## (a)               *Grant of Performance Awards*:  Subject to the terms of the Plan,performance awards may be granted to participants upon such terms andconditions and at such times as shall be determined by the Administrator.  Suchperformance awards may be in the form of performance shares and/or performanceunits.  An award of a performance share is a grant of a right to receive sharesof Common Stock or the cash value thereof (or a combination thereof) which iscontingent upon the achievement of performance or other objectives during aspecified period and which has a value on the date of grant equal to the fairmarket value (as determined in accordance with Section 6(c)(iii) herein) of ashare of Common Stock.  An award of a performance unit is a grant of a right toreceive shares of Common Stock or a designated dollar value amount of CommonStock which is contingent upon the achievement of performance or otherobjectives during a specified period, and which has an initial valueestablished by the Administrator at the time of grant.  Subject to Section 4(a),above, the Administrator shall have complete discretion in determining thenumber of performance units and/or performance shares granted to anyparticipant. The Administrator shall determine the nature, length and startingdate of the period during which a performance award may be earned (the "performanceperiod"), and shall determine the conditions which must be met inorder for a performance award to be granted or to vest or be earned (in wholeor in part), which conditions may include but are not limited to specifiedperformance objectives, continued service or employment for a certain period oftime, or a combination of such conditions.  The Administrator shall determinethe performance objectives to be used in valuing performance awards, which performanceobjectives may vary from participant to participant and between groups ofparticipants and shall be based on such corporate, business unit or divisionand/or individual performance factors and criteria as the Administrator in itssole discretion may deem appropriate; provided, however, that, with respect toperformance awards payable to covered employees which are intended to beeligible for the compensation deduction limitation exception available underSection 162(m) of the Code and related regulations, such performance factorsshall be limited to one or more of the following (as determined by theAdministrator in its discretion): sales goals, earnings per share, return onequity, return on assets and total return to shareholders.  The Administratorshall have sole authority to determine whether and to what degree performanceawards have been earned and are payable and to interpret the terms andconditions of performance awards and the provisions herein.  The Administratoralso shall determine the form and terms of payment of performance awards.  TheAdministrator, in its sole and absolute discretion, may accelerate the datethat any performance award granted to a participant shall be deemed to beearned in whole or in part, without any obligation to accelerate such date withrespect to other awards granted to any participant.

## (b)              *Form of Payment*: Payment of the amount to which a participantshall be entitled upon earning a performance award shall be made in cash,shares of Common Stock, or a combination of cash and shares of Common Stock, asdetermined by the Administrator in its sole discretion.  Payment may be made ina lump sum or in installments upon such terms as may be established by theAdministrator.

## (c)               *Forfeiture of Performance Awards*: Unless the Administratordetermines otherwise, if the employment or service of a participant shallterminate for any reason and the participant has not earned all or part of aperformance award pursuant to the terms of the Plan and individual awardagreement, such award, to the extent not then earned, shall be forfeitedimmediately upon such termination and the participant shall have no furtherrights with respect thereto.

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## (d)              *Dividend and Voting Rights; Share Certificates*: The Administratorshall have sole discretion to determine whether a participant shall havedividend rights, voting rights, or other rights as a shareholder with respectto shares, if any, which are subject to a performance award prior to the timethe performance award has been earned.  Unless the Administrator determinesotherwise, a certificate or certificates for shares of Common Stock, if any,subject to a performance award shall be issued in the name of the participant(or his beneficiary) and distributed to the participant (or his beneficiary) assoon as practicable after the award has been earned.  Notwithstanding theforegoing, the Administrator shall have the right to retain custody ofcertificates evidencing the shares subject to a performance award and the rightto require the participant to deliver to the Corporation a stock power,endorsed in blank, with respect to such award, until such time as the award isearned (or forfeited).

## (e)               *Nontransferability:* Unless the Administrator determinesotherwise, performance awards which have not been earned shall not betransferable (including by sale, assignment, pledge or hypothecation) otherthan by will or the laws of intestate succession, and the recipient of aperformance award shall not sell, transfer, assign, pledge or otherwiseencumber any shares subject to the award until the performance period hasexpired and until the conditions to earning the award have been met.

# 10.             Withholding

The Corporation shall withhold all requiredlocal, state, federal, foreign and other taxes from any amount payable in cashwith respect to an award.  Prior to the delivery or transfer of any certificatefor shares or any other benefit conferred under the Plan, the Corporation shallrequire any recipient of an award to pay to the Corporation in cash the amountof any tax or other amount required by any governmental authority to bewithheld and paid over by the Corporation to such authority for the account ofsuch recipient. Notwithstanding the foregoing, the Administrator may establishprocedures to permit a recipient to satisfy such obligation in whole or inpart, and any local, state, federal, foreign or other income tax obligationsrelating to such an award, by electing (the "election") tohave the Corporation withhold shares of Common Stock from the shares to whichthe recipient is entitled. The number of shares to be withheld shall have afair market value as of the date that the amount of tax to be withheld isdetermined as nearly equal as possible to (but not exceeding) the amount ofsuch obligations being satisfied. Each election must be made in writing to theAdministrator in accordance with election procedures established by theAdministrator.

# 11.             Dividends and Dividend Equivalents

The Administrator may, in its sole discretion,provide that the awards granted under the Plan earn dividends or dividendequivalents.  Such dividends or dividend equivalents may be paid currently ormay be credited to a participant’s account.  Any crediting of dividends ordividend equivalents may be subject to such restrictions and conditions as the Administratormay establish, including reinvestment in additional shares of Common Stock orshare equivalents.

# 12.             Section 16(b) Compliance

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To the extent that any participants in the Planare subject to Section 16(b) of the Exchange Act, it is the general intentionof the Corporation that transactions under the Plan shall comply with Rule16b-3 under the Exchange Act and that the Plan shall be construed in favor ofthe Plan transactions meeting the requirements of Rule 16b-3 or any successorrules thereto.  Notwithstanding anything in the Plan to the contrary, theAdministrator, in its sole and absolute discretion, may bifurcate the Plan soas to restrict, limit or condition the use of any provision of the Plan toparticipants who are officers or directors subject to Section 16 of theExchange Act without so restricting, limiting or conditioning the Plan withrespect to other participants.

# 13.             Code Section 162(m) Performance-Based Compensation

To the extent to which Section 162(m) of theCode is applicable, the Corporation intends that compensation paid under thePlan to covered employees (as such term is defined in Section 162(m) andrelated regulations) will, to the extent practicable, constitute qualified "performance-basedcompensation" within the meaning of Section 162(m) and relatedregulations, unless otherwise determined by the Administrator.  Accordingly,the provisions of the Plan shall be administered and interpreted in a mannerconsistent with Section 162(m) and related regulations to the extentpracticable to do so.

# 14.             No Right or Obligation of Continued Employment or Service

Nothing in the Plan shall confer upon theparticipant any right to continue in the service of the Corporation or arelated entity as an employee, director or independent contractor or to interferein any way with the right of the Corporation or a related entity to terminatethe participant’s employment or service at any time.  Except as otherwiseprovided in the Plan or an award agreement, awards granted under the Plan toemployees of the Corporation or a related entity shall not be affected by anychange in the duties or position of the participant, as long as such individualremains an employee of, or in service to, the Corporation or a related entity.

# 15.             Unfunded Plan; Retirement Plans

## (a)               Neither a participant nor any other person shall, by reason of the Plan,acquire any right in or title to any assets, funds or property of theCorporation or any related entity, including, without limitation, any specificfunds, assets or other property which the Corporation or any related entity, intheir discretion, may set aside in anticipation of a liability under the Plan. A participant shall have only a contractual right to the Common Stock oramounts, if any, payable under the Plan, unsecured by any assets of theCorporation or any related entity.  Nothing contained in the Plan shallconstitute a guarantee that the assets of such corporations shall be sufficientto pay any benefits to any person.

## (b)              The amount of any compensation deemed to be received by a participantpursuant to an award shall not constitute compensation with respect to whichany other employee benefits of such participant are determined, including,without limitation, benefits under any bonus, pension, profit sharing, lifeinsurance or salary continuation plan, except as otherwise specificallyprovided by the terms of such plan or as may be determined by theAdministrator.

## (c)               The adoption of the Plan shall not affect any other stock incentive orother compensation plans in effect for the Corporation or any related entity,nor shall the Plan preclude the Corporation from establishing any other formsof stock incentive or other compensation for employees or service providers ofthe Corporation or any related entity.

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# 16.             Amendment and Termination of the Plan

## (a)               *General*: The Plan and any award granted under the Plan may beamended or terminated at any time by the Board of Directors of the Corporation;provided, that (i) approval of an amendment to the Plan by the shareholders ofthe Corporation shall be required to the extent, if any, that shareholderapproval of such amendment is required by applicable law, rule or regulation;and (ii) amendment or termination of an award shall not, without the consent ofa recipient of an award, materially adversely affect the rights of therecipient with respect to an outstanding award.  Notwithstanding clause (i) ofthe preceding sentence, except for adjustments made pursuant to Section 4(c),the option price for any outstanding option or base price of any outstanding SARgranted under the Plan may not be decreased after the date of grant, nor mayany outstanding option or SAR granted under the Plan be surrendered to theCorporation as consideration for the grant of a new option or SAR with a lowerexercise or base price than the original option or SAR, as the case may be,without shareholder approval of any such action.

## (b)              *Adjustment of Awards upon the Occurrence of Certain Unusual orNonrecurring Events*: The Administrator shall have authority to makeadjustments to the terms and conditions of awards in recognition of unusual ornonrecurring events affecting the Corporation or any related entity, or thefinancial statements of the Corporation or any related entity, or of changes inapplicable laws, regulations or accounting principles, if the Administratordetermines that such adjustments are appropriate in order to prevent dilutionor enlargement of the benefits or potential benefits intended to be madeavailable under the Plan or necessary or appropriate to comply with applicablelaws, rules or regulations.

## (c)               *Cash Settlement*: Notwithstanding any provision of the Plan, anaward or an award agreement to the contrary, the Administrator may cause anyaward granted under the Plan to be canceled in consideration of an alternativeaward or cash payment of an equivalent cash value, as determined by theAdministrator, made to the holder of such canceled award.

# 17.             Restrictions on Awards and Shares

The Corporation may impose such restrictions onawards and shares representing awards hereunder as it may deem advisable,including without limitation restrictions under the federal securities laws,the requirements of any stock exchange or similar organization and any blue skyor state securities laws applicable to such securities.  Notwithstanding anyother Plan provision to the contrary, the Corporation shall not be obligated toissue, deliver or transfer shares of Common Stock under the Plan, make anyother distribution of benefits under the Plan, or take any other action, unlesssuch delivery, distribution or action is in compliance with all applicablelaws, rules and regulations (including but not limited to the requirements ofthe Securities Act).  The Corporation may cause a restrictive legend to beplaced on any certificate issued pursuant to an award hereunder in such form asmay be prescribed from time to time by applicable laws and regulations or asmay be advised by legal counsel.

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# 18.             Change of Control

## (a)               Notwithstanding any other provision of the Plan to the contrary, andunless an individual award agreement provides otherwise, in the event of achange of control (as defined in Section 18(c) herein):

### (i)           All options and SARs outstanding as of the date of such change ofcontrol shall become fully exercisable, whether or not then otherwiseexercisable.

### (ii)         Any restrictions including but not limited to the restriction period,performance period and/or performance criteria applicable to any restrictedaward and any performance award shall be deemed to have been met, and suchawards shall become fully vested, earned and payable to the fullest extent ofthe original grant of the applicable award.

## (b)              Notwithstanding the foregoing, in the event of a merger, share exchange,reorganization or other business combination affecting the Corporation or arelated entity, the Administrator may, in its sole and absolute discretion,determine that any or all awards granted pursuant to the Plan shall not vest orbecome exercisable on an accelerated basis, if the Corporation or the survivingor acquiring corporation, as the case may be, shall have taken such action,including but not limited to the assumption of awards granted under the Plan orthe grant of substitute awards (in either case, with substantially similarterms or equivalent economic benefits as awards granted under the Plan), as inthe opinion of the Administrator is equitable or appropriate to protect therights and interests of participants under the Plan. For the purposes herein,if the Committee is acting as the Administrator authorized to make thedeterminations provided for in this Section 18(b), the Committee shall beappointed by the Board of Directors, two-thirds of the members of which shallhave been directors of the Corporation prior to the merger, share exchange,reorganization or other business combinations affecting the Corporation or arelated entity.

## (c)               For the purposes herein, a "change of control" shall bedeemed to have occurred on the earliest of the following dates:

### (i)           The date any entity or person shall have become the beneficial owner of,or shall have obtained voting control over, fifty-one percent (51%) or more ofthe outstanding Common Stock of the Corporation;

### (ii)         The date the shareholders of the Corporation approve a definitiveagreement (A) to merge or consolidate the Corporation with or into another corporationor other business entity (each, a "corporation"), in which theCorporation is not the continuing or surviving corporation or pursuant to whichany shares of Common Stock of the Corporation would be converted into cash,securities or other property of another corporation, other than a merger orconsolidation of the Corporation in which holders of Common Stock immediatelyprior to the merger or consolidation have the same proportionate ownership ofCommon Stock of the surviving corporation immediately after the merger asimmediately before, or (B) to sell or otherwise dispose of all or substantiallyall the assets of the Corporation; or

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### (iii)        The date there shall have been a change in a majority of the Board ofDirectors of the Corporation within a 12-month period unless the nomination forelection by the Corporation’s shareholders of each new director was approved bythe vote of two-thirds of the directors then still in office who were in officeat the beginning of the 12-month period.

(For purposes herein, the term "person"shall mean any individual, corporation, partnership, group, association orother person, as such term is defined in Section 13(d)(3) or Section 14(d)(2)of the Exchange Act, other than the Corporation, a subsidiary of theCorporation or any employee benefit plan(s) sponsored or maintained by theCorporation or any subsidiary thereof, and the term "beneficial owner"shall have the meaning given the term in Rule 13d-3 under the Exchange Act.)

# 19.             Applicable Law

The Plan shall be governed by and construed inaccordance with the laws of the State of North Carolina, without regard to theconflict of laws provisions of any state.

# 20.             Shareholder Approval

The Plan is subject to approval by theshareholders of the Corporation, which approval must occur, if at all, within12 months of the Effective Date of the Plan.  Awards granted prior to suchshareholder approval shall be conditioned upon and shall be effective only uponapproval of the Plan by such shareholders on or before such date.

# 21.             Deferrals

The Administrator may permit or require aparticipant to defer receipt of the delivery of shares of Common Stock or otherbenefit that would otherwise be due pursuant to the exercise, vesting orearning of an award.  If any such deferral is required or permitted, theAdministrator shall, in its discretion, establish rules and procedures for suchdeferrals.

# 22.             Beneficiary Designation

The Administrator  may permit a participant todesignate in writing a person or persons as beneficiary, which beneficiaryshall be entitled to receive settlement of awards (if any) to which theparticipant is otherwise entitled in the event of death.  In the absence ofsuch designation by a participant, and in the event of the participant’s death,the estate of the participant shall be treated as beneficiary for purposes ofthe Plan, unless the Administrator determines otherwise. The Administratorshall have sole discretion to approve and interpret the form or forms of suchbeneficiary designation.

# 23.             Gender and Number

Where the context admits, words in any gendershall include any other gender, words in the singular shall include the pluraland the plural shall include the singular.

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# 24.             Successors and Assigns

The Plan shallbe binding upon the Corporation, its successors and assigns, and participants,their executors, administrators and permitted transferees and beneficiaries.

# 25.             Severability

If anyprovision of the Plan shall be held illegal or invalid for any reason, suchillegality or invalidity shall not affect the remaining parts of the Plan, and thePlan shall be construed and enforced as if the illegal or invalid provision hadnot been included.

# 26.             Certain Definitions

In addition to other terms defined in the Plan,the following terms shall have the meaning indicated:

## (a)                "Award agreement" means any written agreement oragreements between the Corporation and the recipient of an award pursuant tothe Plan relating to the terms, conditions and restrictions of an awardconferred herein.  Such award agreement may also state such other terms,conditions and restrictions, including but not limited to terms, conditions andrestrictions applicable to shares subject to an award, as may be established bythe Administrator.

## (b)               "Covered employee" shall have the meaning given theterm in Section 162(m) of the Code and the regulations thereunder.

## (c)                "Disability" shall have the meaning ascribed to theterm in any employment agreement, consulting agreement or other similaragreement, if any, to which the participant is a party, or, if no suchagreement applies, "disability" shall mean the inability to engage inany substantial gainful activity by reason of any medically determinablephysical or mental impairment which can be expected to result in death, orwhich has lasted or can be expected to last for a continuous period of not lessthan 12 months.

## (d)               "Displacement" shall have the meaning ascribed to theterm in any employment agreement, consulting agreement or other similaragreement, if any, to which the participant is a party, or, if no suchagreement applies, "displacement" shall mean the termination of theparticipant’s employment or service due to the elimination of the participant’sjob or position without fault on the part of the participant.

## (e)                "Parent" or "parent corporation"shall mean any corporation (other than the Corporation) in an unbroken chain ofcorporations ending with the Corporation if each corporation other than theCorporation owns stock possessing 50% or more of the total combined votingpower of all classes of stock in another corporation in the chain.

## (f)                 "Predecessor" or "predecessor corporation"means a corporation which was a party to a transaction described in Section424(a) of the Code (or which would be so described if a substitution orassumption under Section 424(a) had occurred) with the Corporation, or acorporation which is a parent or subsidiary of the Corporation, or apredecessor of any such corporation.

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## (g)                "Related corporation" means any parent, subsidiary orpredecessor of the Corporation, and "related entity" means anyrelated corporation or any other business entity which is an affiliatecontrolled by the Corporation; provided, however, that the term "relatedentity" shall be construed in a manner in accordance with the registrationprovisions under applicable federal securities laws.

## (h)                "Restricted stock" shall mean shares of Common Stockwhich are subject to restricted awards payable in shares, the vesting of whichis subject to restrictions set forth in the Plan and the applicable awardagreement.

## (i)                  "Retirement" shall have the meaning ascribed in anyemployment agreement, consulting agreement or other similar agreement, if any,to which the participant is a party, or, if no such agreement applies, "retirement"shall mean retirement in accordance with the retirement policies and proceduresestablished by the Corporation.

## (j)                 "Subsidiary" or "subsidiary corporation"means any corporation (other than the Corporation) in an unbroken chain ofcorporations beginning with the Corporation if each corporation other than thelast corporation in the unbroken chain owns stock possessing 50% or more of thetotal combined voting power of all classes of stock in another corporation inthe chain.

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IN WITNESS WHEREOF, this 2003 Stock IncentivePlan of RF Micro Devices, Inc., is, by the authority of the Board of Directorsof the Corporation, executed in behalf of the Corporation, the 6thday of June, 2003.

 

**RF MICRODEVICES, INC.**

By:       /s/ William Priddy

Name:  William A. Priddy, Jr.

Title:     Chief FinancialOfficer and              Corporate VicePresident of Administration

ATTEST:

Powell T. Seymour

Secretary

[Corporate Seal]

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**2006 DECLARATIONOF AMENDMENT TO**

**2003 STOCKINCENTIVE PLAN**

***OF***

**RFMICRO DEVICES, INC.**

THIS 2006 DECLARATION OF AMENDMENT, is madeeffective as of the 1st day of June, 2006, by RF MICRO DEVICES, INC.(the "Corporation"), to the Corporation’s 2003 Stock Incentive Plan(the "Plan").

R E C I T A L S:

 

WHEREAS, the Board of Directors of theCorporation has deemed it advisable to amend the Plan to (i) increase theauthorized shares available under the Plan and available for the grant ofincentive stock options in Section 4(a), (ii) expand the performance factorsapplicable to certain restricted awards and performance awards in Section 8(a)and Section 9(a), (iii) remove the cash settlement provisions in Section 16(c),and (iv) modify the provisions of Section 18 regarding the definition andeffect of a change of control, subject to shareholder approval of theamendments described in (i) and (ii), herein; and

WHEREAS, the Corporation desires to evidencesuch amendments by this Declaration of Amendment.

NOW, THEREFORE, IT IS DECLARED that, effectiveas of June 1, 2006, the Plan shall be and hereby is amended as follows,provided, however, that the amendments to Section 4(a), Section 8(a) andSection 9(a) of the Plan, as reflected in Sections 1, 2 and 3, below, shall besubject to shareholder approval of such amendments:

##### 1.                 Amendment to Section 4(a).  Section 4(a) ("Shares of StockSubject to the Plan; Award Limitations - - Shares Available for Awards")of the Plan is hereby amended by substituting "24,250,000" for "9,250,000"in both Section 4(a) and Section 4(a)(i), so that Section 4(a) and Section4(a)(i) shall be amended as follows (with the remainder of Section 4(a) beingunchanged):

"(a)       *SharesAvailable for Awards*: Subject to adjustments as provided in this Section4(c), the aggregate number of shares of Common Stock that may be issuedpursuant to awards granted under the Plan shall not exceed the sum of (i)24,250,000 shares, plus (ii) any shares of Common Stock (A) remaining availablefor issuance as of the Effective Date of the Plan under the Corporation’s 1999Stock Incentive Plan, Key Employees’ 1997 Stock Option Plan, 1992 Stock OptionPlan and any other stock incentive plans maintained by the Corporation(collectively, the "Prior Plans"), and/or (B) subject to anaward granted under a Prior Plan, which award is forfeited, cancelled,terminated, expires or lapses for any reason.  Shares delivered under the Planshall be authorized but unissued shares or shares purchased on the open marketor by private purchase.  The Corporation hereby reserves sufficient authorizedshares of Common Stock to meet the grant of awards hereunder.  Notwithstandingany provision herein to the contrary, the following limitations shall apply to awardsgranted under the Plan, in each case subject to adjustment pursuant to Section4(c):

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###             (i)         The maximum number of shares ofCommon Stock that may be issued under the Plan pursuant to the grant ofincentive stock options shall not exceed 24,250,000 shares; and"

#####             2.         Amendment to Section 8(a). Section 8(a) ("Restricted Awards - - Grant of Restricted Awards")shall be amended by deleting the reference to "sales goals, earnings pershare, return on equity, return on assets and total return to shareholders"in the fifth sentence of Section 8(a) and inserting the following in lieuthereof (with the remainder of Section 8(a) being unchanged):

"(i) objectivegoals for revenue; (ii) gross margins; (iii) earnings per share; (iv) netbookings; (v) module productions; (vi) consolidated earnings before or aftertaxes (including earnings before interest, taxes, depreciation andamortization); (vii) net income; (viii) operating income; (ix) book value pershare; (x) return on shareholders’ equity; (xi) return on investment; (xii)return on capital; (xiii) improvements in capital structure; (xiv) expensemanagement; (xv) profitability of an identifiable business unit or product;(xvi) maintenance or improvement of profit margins; (xvii) stock price or totalshareholder return; (xviii) market share; (xix) revenues or sales; (xx) costs;(xxi) cash flow; (xxii) working capital; (xxiii) return on assets; (xxiv)economic wealth created, and/or (xxv) strategic business criteria, based onmeeting specified goals or objectives related to market penetration, geographicbusiness expansion, cost targets, customer satisfaction, employee satisfaction,management of employment practices and employee benefits, supervision oflitigation and information technology, goals relating to acquisitions ordivestitures of subsidiaries, affiliates or joint ventures, quality matrices,customer service matrices and/or execution of pre-approved corporate strategy."

#####             3.         Amendment to Section9(a).  Section 9(a) ("Performance Awards - - Grant of PerformanceAwards") shall be amended by deleting the reference to "sales goals,earnings per share, return on equity, return on assets and total return toshareholders" in the seventh sentence of Section 9(a) and inserting thefollowing in lieu thereof (with the remainder of Section 9(a) being unchanged):

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"(i) objective goalsfor revenue; (ii) gross margins; (iii) earnings per share; (iv) net bookings;(v) module productions; (vi) consolidated earnings before or after taxes(including earnings before interest, taxes, depreciation and amortization);(vii) net income; (viii) operating income; (ix) book value per share; (x)return on shareholders’ equity; (xi) return on investment; (xii) return oncapital; (xiii) improvements in capital structure; (xiv) expense management;(xv) profitability of an identifiable business unit or product; (xvi)maintenance or improvement of profit margins; (xvii) stock price or totalshareholder return; (xviii) market share; (xix) revenues or sales; (xx) costs;(xxi) cash flow; (xxii) working capital; (xxiii) return on assets; (xxiv)economic wealth created, and/or (xxv) strategic business criteria, based onmeeting specified goals or objectives related to market penetration, geographicbusiness expansion, cost targets, customer satisfaction, employee satisfaction,management of employment practices and employee benefits, supervision oflitigation and information technology, goals relating to acquisitions ordivestitures of subsidiaries, affiliates or joint ventures, quality matrices,customer service matrices and/or execution of pre-approved corporate strategy."

#####             4.         Amendment to Section 16. Section 16 ("Amendment and Termination of the Plan") shall be amendedby deleting Section 16(c) ("Cash Settlement") in its entirety, withthe remainder of Section 16 being unchanged.

#####             5.         Amendment to Section18(c).  Section 18(c)  ("Change of Control") shall be amended toread as follows (with the remainder of Section 18 being unchanged except asprovided in Section 6 herein):

"(c)       For thepurposes herein, a "change of control" shall have the meaninggiven the term "change in control" in a participant’s change incontrol agreement with the Corporation, or, if the participant has not enteredinto any such change in control agreement, then a change of control shall bedeemed to have occurred on the earliest of the following dates:

###          (i)         The date any entity or personshall have become the beneficial owner of, or shall have obtained votingcontrol over, fifty-one percent (51%) or more of the outstanding Common Stockof the Corporation;

###          (ii)        The date the shareholders of theCorporation approve a definitive agreement (A) to merge or consolidate theCorporation with or into another corporation or other business entity (each, a "corporation"),in which the Corporation is not the continuing or surviving corporation orpursuant to which any shares of Common Stock of the Corporation would beconverted into cash, securities or other property of another corporation, otherthan a merger or consolidation of the Corporation in which holders of CommonStock immediately prior to the merger or consolidation have the sameproportionate ownership of Common Stock of the surviving corporationimmediately after the merger as immediately before, or (B) to sell or otherwisedispose of all or substantially all the assets of the Corporation; or

###                         (iii)       The date thereshall have been a change in a majority of the Board of Directors of theCorporation within a 12-month period unless the nomination for election by theCorporation’s shareholders of each new director was approved by the vote oftwo-thirds of the directors then still in office who were in office at thebeginning of the 12-month period.

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(For purposes herein, the term "person"shall mean any individual, corporation, partnership, group, association orother person, as such term is defined in Section 13(d)(3) or Section 14(d)(2)of the Exchange Act, other than the Corporation, a subsidiary of theCorporation or any employee benefit plan(s) sponsored or maintained by theCorporation or any subsidiary thereof, and the term "beneficial owner"shall have the meaning given the term in Rule 13d-3 under the Exchange Act.)"

#####             6.         Addition of New Section18(d).  Section 18 ("Change of Control") shall be amended byadding a new Section 18(d), as follows (with the remainder of Section 18 beingunchanged except as provided in Section 5 herein):

"(d)      Notwithstandingany other provision of the Plan to the contrary, and unless an individual awardagreement expressly provides otherwise, in the event that a participant hasentered into a change in control agreement or similar agreement with theCorporation, the participant shall be entitled to the greater of the benefitsprovided upon a change of control of the Corporation under this Plan or therespective change in control agreement or similar agreement, and such change incontrol agreement or similar agreement shall not be construed to reduce in anyway the benefits otherwise provided to a participant upon the occurrence of achange of control as defined in the Plan."

#####             7.         Continued Effect. Except as set forth herein, the Plan shall remain in full force and effect.

IN WITNESSWHEREOF, this  Declaration of Amendment is executed on behalf of RF MicroDevices, Inc. effective as of the day and year first above written.

RF MICRODEVICES, INC.

By: /s/Robert A. Bruggeworth      ChiefExecutive Officer

ATTEST:

/s/ William A. Priddy, Jr. 

Secretary/Asst. Secretary

[Corporate Seal]

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** **

**2009 DECLARATIONOF AMENDMENT TO**

**2003 STOCKINCENTIVE PLAN**

**OF**

**RFMICRO DEVICES, INC.**

THIS 2009 DECLARATION OF AMENDMENT, is madeeffective as of the 8th day of June, 2009, by RF MICRO DEVICES, INC. (the "Corporation"),to the Corporation’s 2003 Stock Incentive Plan, as amended through June 1, 2006(the "Plan").

R E C I T A L S:

 

WHEREAS, the Board of Directors of theCorporation has deemed it advisable to amend the Plan to (i) modify Section 11("Dividends and Dividend Equivalents") to provide that dividends anddividend equivalents, if any, on unearned or unvested awards shall not bepayable (even if accrued) unless and until the underlying award (or portionthereof) has vested and/or been earned; and (ii) amend Section 18(c)(ii) ofSection 18 ("Change of Control") to provide that, with respect toawards granted on or after the effective date of this 2009 Declaration ofAmendment, a "change of control" shall not be deemed to have occurredin the context of certain mergers, consolidations and/or sales of all orsubstantially all of the Corporation’s assets until the date of theconsummation of such transaction or event.

WHEREAS, the Corporation desires to evidence such amendments by this 2009Declaration of Amendment.

NOW,THEREFORE, IT IS DECLARED that, effective as of June 8, 2009, the Plan shall beand hereby is amended as follows:

            1.         Amendmentto Section 11.  Section 11 ("Dividends and Dividend Equivalents")is hereby amended by deleting the current text of Section 11 and inserting thefollowing in lieu thereof:

 

"The Administratormay, in its sole discretion, provide that the awards granted under the Planearn dividends or dividend equivalents; provided, however, that dividends anddividend equivalents, if any, on unearned or unvested awards shall not be paid(even if accrued) unless and until the underlying award (or portion thereof)has vested and/or been earned.  Any crediting of dividends or dividendequivalents may be subject to such additional restrictions and conditions asthe Administrator may establish, including reinvestment in additional shares ofCommon Stock or share equivalents."

            2.         Amendmentto Section 18(c).  Section 18(c) of Section 18 ("Change of Control")shall be amended to read as follows (with the remainder of Section 18 beingunchanged):

 

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"(c)       For thepurposes herein, a "change of control" shall have the meaninggiven the term "change in control" in a participant’s change incontrol agreement with the Corporation, or, if the participant has not enteredinto any such change in control agreement, then a change of control shall bedeemed to have occurred on the earliest of the following dates:

### (i)         The date any entity or person shallhave become the beneficial owner of, or shall have obtained voting controlover, fifty-one percent (51%) or more of the outstanding Common Stock of theCorporation;

### (ii)        With respect to awards granted beforeJune 8, 2009, the date of shareholder approval of, and with respect to awardsgranted on or after June 8, 2009, the date of the consummation of, (A) a mergeror consolidation of the Corporation with or into another corporation or otherbusiness entity (each, a "corporation"), in which the Corporation isnot the continuing or surviving corporation or pursuant to which any shares ofCommon Stock of the Corporation would be converted into cash, securities orother property of another corporation, other than a merger or consolidation ofthe Corporation in which holders of Common Stock immediately prior to themerger or consolidation have the same proportionate ownership of Common Stockof the surviving corporation immediately after the merger as immediatelybefore, or (B) the sale or other disposition of all or substantially all theassets of the Corporation; or

### (iii)       The date there shall have been achange in a majority of the Board of Directors of the Corporation within a12-month period unless the nomination for election by the Corporation’sshareholders of each new director was approved by the vote of two-thirds of thedirectors then still in office who were in office at the beginning of the12-month period.

(For purposes herein, the term "person"shall mean any individual, corporation, partnership, group, association orother person, as such term is defined in Section 13(d)(3) or Section 14(d)(2)of the Exchange Act, other than the Corporation, a subsidiary of theCorporation or any employee benefit plan(s) sponsored or maintained by theCorporation or any subsidiary thereof, and the term "beneficial owner"shall have the meaning given the term in Rule 13d-3 under the Exchange Act.)"

            3.         ContinuedEffect.  Except as set forth herein, the Plan shall remain in full forceand effect.

 

 

*[Signature Page ToFollow]*

 

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IN WITNESSWHEREOF, this 2009 Declaration of Amendment is executed on behalf of RF MicroDevices, Inc. effective as of the day and year first above written.

RF MICRODEVICES, INC.

 

By: /s/ RobertA. Bruggeworth                  ChiefExecutive Officer

ATTEST:

/s/ William A. Priddy, Jr.                       

Secretary/Asst. Secretary

[Corporate Seal]

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