EXHIBIT
(10)(o)





PEOPLES
BANCORP OF NORTH CAROLINA, INC.








OMNIBUS
STOCK OWNERSHIP AND


LONG
TERM INCENTIVE PLAN


February
19, 2009





THIS IS THE OMNIBUS STOCK OWNERSHIP AND
LONG TERM INCENTIVE PLAN (“Plan”) of Peoples Bancorp of North Carolina, Inc.
(the “Company”), a North Carolina corporation with its principal office in
Newton, Catawba County, North Carolina, under which Incentive Stock Options and
Non-Qualified Options to acquire Shares of Common Stock, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Units, and/or
Book Value Shares may be granted from time to time to Eligible Directors and
Eligible Employees of the Company and of any of its Subsidiaries, subject to the
following provisions.




ARTICLE I


DEFINITIONS





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





Award.An award, grant
or issuance of any of the Rights available under this Plan.





Award
Agreement.  The agreement
between the Company and/or the Bank and the Grantee that evidences and sets out
the terms and conditions of an Award.





Bank.
            Peoples
      Bank, Newton, North Carolina.





Board.  The Board of
Directors of Peoples Bancorp of North Carolina, Inc.





Book
Value Share.  The Right of a Grantee to receive cash
compensation under such terms and conditions as described in Article
VII.





Book
Value Share Agreement.  The agreement between the Company and
the Grantee with respect to Book Value Shares granted to such Grantee, including
such terms and provisions as are necessary or appropriate under Article
VII.





Change In
Control.   Any one of
the following corporate events: (i) a Change of Ownership; (ii) a Change in
Effective Control; or (iii) a Change of Asset Ownership; in each case, as
defined herein and as further defined and interpreted in Section
409A.





(i)
“Change of Ownership” shall mean the date one person (or group) acquires
ownership of stock of the Company that, together with stock previously held,
constitutes




1
 
  more than 50% of the total fair market value or total voting power of the stock
of the Company; provided that such person (or group) did not previously own 50%
or more of the
 value or voting power of the stock of the Company.





(ii)
“Change in Effective Control” means the date either (A) one person (or group)
acquires (or has acquired during the proceeding 12 months) ownership of stock of
the Company possessing 30% or more of the total voting power of the Company
stock or (B) a majority of the board of directors of the Company is replaced
during any 12 month period by directors whose election is not endorsed by a
majority of the members of the board of directors of the Company prior to such
election.





(iii)
“Change of Asset Ownership” means the date one person (or group) acquires (or
has acquired during the preceding 12 months) assets from the Company that have a
total gross fair market value that is equal to or exceeds 40% of the total gross
fair market value of all the Company’s assets immediately prior to such
acquisition.





(iv)  For
purposes of determining whether the Company has undergone a Change in Control
under the Plan, the term “Company” shall include any corporation that is a
majority shareholder of the Company within the meaning of Section 409A (i.e.,
owning more than 50% of the total fair market value and total voting power of
the Company).





Code.  The Internal
Revenue Code of 1986, as amended.





Committee.  The Compensation
Committee of the Board, which shall be composed solely of two or more members of
the Board who are “non-employee directors” as described in Rule 16(b)(3) of the
Rules and Regulations under the Securities Exchange Act of 1934, as
amended.





Common
Stock.  The Common Stock,
no par value, of the Company.





Corporate
Transaction.Any one or more
of the following transactions:





(i)
            a
      merger or consolidation in which the Company is not the surviving entity,
      except for a transaction the principal purpose of which is to change the
      state in which the Company is
incorporated;




(ii)
            the
      sale, transfer, or other disposition of all or substantially all of the
      assets of the Company (including without limitation the capital stock of
      the Company’s Subsidiaries);




(iii)
            approval
      by the Company’s shareholders of any plan or proposal for the complete
      liquidation or dissolution of the
Company;




(iv)
            any
      reverse merger in which the Company is the surviving entity but in which
      securities possessing more than fifty (50%) percent of the total combined
      voting






2






power
      of the Company’s outstanding securities are transferred to a person or
      entity or persons or entities different from those that held such
      securities immediately prior to such merger;
or




(v)
            acquisition
      by any person or entity or related group of persons or entities (other
      than the Company or a Company-sponsored employee benefit plan) of
      beneficiary ownership (within the meaning of Rule 13d-3 of the Exchange
      Act) of securities possessing more than fifty (50%) percent of the total
      combined voting power of the Company’s outstanding securities (whether or
      not in a transaction also constituting a Change in
    Control).




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





Disability.  The date on which
an Eligible Director or Eligible Employee who has received Rights
is:





(i)
            Unable
      to engage in any substantial gainful activity by reason of any medically
      determinable physical or mental impairment which can be expected to result
      in death or can be expected to last for a continuous period of not less
      than 12 months, or




(ii)
            By
      reason of any medically determinable physical or mental impairment (which
      can be expected to result in death or can be expected to last for a
      continuous period of not less than 12 months) receiving income replacement
      benefits for a period of 3 or more months under an accident and health
      plan covering employees of the Company and/or the Bank,
  or




(iii)
            Determined
      to be disabled by the Social Security
  Administration.





Effective
Date.  Pursuant to the
action of the Board adopting the Plan, the date as of which this Plan is
effective is the date it is approved by the Company’s shareholders.





Eligible
Directors.Those individuals
who are duly elected directors of the Company or any Subsidiary who are serving
in such capacity and who have been selected by the Committee as a person to whom
a Right or Rights shall be granted under the Plan.





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





(i)
            Such
      individual must be a full time employee of the Company or a
      Subsidiary.  For this purpose, an individual shall be considered
      to be an “employee” only if there exists between the Company or a
      Subsidiary and the individual the legal and bona fide relationship of
      employer and employee.  In determining whether such relationship
      exists, the regulations of the United States Treasury
      Department






3






relating
      to the determination of such relationship for the purpose of collection of
      income tax at the source on wages shall be
  applied.


(ii)
            If
      the Registration shall not have occurred, such individual must have such
      knowledge and experience in financial and business matters that he or she
      is capable of evaluating the merits and risks of the investment involved
      in the receipt and/or exercise of a
Right.





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





Fair
Market Value.  With respect to
the Company’s Common Stock, the market price per share of such Common Stock
determined by the Committee, consistent with the requirements of Sections 409
and 422 of the Code and to the extent consistent therewith, determined as
follows, as of the date specified in the context within which such term is
used:





(i)
            When
      there is a public market for the Common Stock, the Fair Market Value shall
      be determined by (A) the closing price for a share on the market trading
      day on the date of the determination (and if a closing price was not
      reported on that date, then the arithmetic mean of the closing bid and
      asked prices at the close of the market on that date, and if these prices
      were not reported on that date, then the closing price on the last trading
      date on which a closing price was reported) on the stock exchange or
      national market system that is the primary market for the Shares; and (B)
      if the shares are not traded on such stock exchange or national market
      system, the arithmetic mean of the closing bid and asked prices for a
      share on the Nasdaq Stock Market for the day prior to the date of the
      determination (and if these prices were not reported on that date, then on
      the last date on which these prices were reported), in each case as
      reported in The Wall Street Journal or such other source that the
      Committee considers reliable in its exclusive
  discretion.





(ii)
            If
      the Committee, in its exclusive discretion, determines that the foregoing
      methods do not apply or produce a reasonable valuation, then Fair Market
      Value shall be determined by an independent appraisal that satisfies the
      requirements of Code Section 401(a)(28)(C) as of a date within twelve (12)
      months before the date of the transaction for which the appraisal is used,
      e.g., the date of grant of an Award (the “Appraisal”).  If the
      Committee, in its exclusive discretion, determines that the Appraisal does
      not reflect information available after the date of the Appraisal that may
      materially affect the value of the shares, then Fair Market Value shall be
      determined by a new Appraisal.





(iii)
            The
      Committee shall maintain a written record of its method of determining
      Fair Market Value.





Grantee.A person who
receives or holds an Award under the Plan.






4




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





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





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





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





Parent.  A corporation,
other than the Company, in an unbroken chain of corporations ending with the
Company, if on the date of grant of an Award each corporation, other than the
Company, owns stock possessing at least fifty (50%) percent of the total
combined voting power of all classes of stock in one of the other corporations
in the chain.




Performance
Units.The Right of a
Grantee to receive a combination of cash and Shares under such terms and
conditions as described in Article V.





Performance
Unit Agreement.  The agreement
between the Company and a Grantee with respect to the award of Performance Units
to the Grantee, including such terms and conditions as are necessary or
appropriate under Article V.





Plan
Pool.  A total of
360,000 shares of authorized but unissued Common Stock, as such number may be
adjusted from time to time in accordance with the provisions of the
Plan.





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





Related
Entity. A
corporation or other entity, other than the Company, to which the Grantee
primarily provides services on the date of grant of an Award, and any
corporation or other entity, other than the Company, in an unbroken chain of
corporations or other entities beginning with the Company in which each
corporation or other entity has a controlling interest in another corporation or
other entity in the chain, ending with the corporation or other entity that has
a controlling interest in the corporation or other entity to which the Grantee
primarily provides services on the date of grant of an Award.  For a
corporation, a controlling interest means ownership of stock possessing at least
fifty (50%) percent of total combined voting power of all classes of stock, or
at least fifty (50%) percent of the total value of all classes of
stock.  For a partnership or limited liability company, a controlling
interest means ownership of at least fifty




5
 
  (50%)
percent of the profits interest or capital interest of the entity.  In
determining ownership, the rules of Treasury Regulation §§1.414(c)-3 and
1.414(c)-4 apply.





Related
Entity Disposition.The sale,
distribution, or other disposition by the Company, Parent, or a Subsidiary of
all or substantially all of the interests of the Company, Parent, or a
Subsidiary in any Related Entity effected by a sale, merger, consolidation, or
other transaction involving that Related Entity, or the sale of all or
substantially all of the assets of that Related Entity, other than any Related
Entity Disposition to the Company, Parent, or a Subsidiary.





Restricted
Stock.  The Shares which
a Grantee shall be entitled to receive under such terms and conditions as
described in Article IV.





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





Restricted
Stock Units.  The Right of a
Grantee to receive cash and/or Shares under such terms and conditions as
described in Article IV.





Restricted
Stock Unit Agreement.  The agreement
between the Company and a Grantee with respect to Rights to receive the value of
Shares, either in the form of cash or Shares, including such terms and
provisions as are necessary or appropriate under Article IV.





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





SAR.  The Right of a
Grantee to receive cash under such terms and conditions as described in Article
VI.





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





SEC.  The Securities
and Exchange Commission.





Section
409A.  Internal Revenue
Code Section 409A, including guidance and regulations issued
thereunder.





Section
424 Corporate Transaction.  The occurrence,
in a single transaction or a series of related transactions, of any one or more
of the following:  (i) a sale or disposition of all or substantially
all of the assets of the Company and its Subsidiaries; (ii) a sale or other
disposition of more than fifty (50%) percent of the outstanding stock of the
Company; (iii) the consummation of a merger, consolidation, or similar
transaction after which the Company is not the surviving corporation; (iv) the
consummation of a merger, consolidation, or similar transaction after which the
Company is the surviving corporation but the shares outstanding




6
 
  immediately
preceding the merger, consolidation, or similar transaction are converted or
exchanged by reason of the transaction into other stock, property, or cash; or
(v) a distribution by the Company (excluding an ordinary dividend or a stock
split or stock dividend described in Treasury Regulation
§1.424-1(e)(4)(v)).





Separation
from Service.  When an employee,
director, and contractor to the Company, Bank, and all Parents and Related
Entities has a “separation from service” within the meaning of Section 409A,
including when the Grantee dies, retires or has a termination of service in as
explained in the following provisions:





(i)
            The
      employment relationship is treated as continuing intact while the Grantee
      is on military leave, sick leave, or other bona fide leave of absence, if
      the period of leave does not exceed six (6) months or, if longer, as long
      as the employee’s right to reemployment with the Company, Bank, a Parent
      or a Related Entity is provided by statute or contract.  A leave
      of absence is bona fide only if there is a reasonable expectation that the
      employee will return to perform services for the Company, Bank, Parent, or
      Related Entity.  If the period of leave exceeds six (6) months
      and the Grantee’s right to reemployment is not provided by statute or
      contract, the employment relationship is deemed to terminate on the first
      day immediately following the six (6) month
  period;




(ii)
            A
      director or contractor has a separation from service upon the expiration
      of the contract, and if there is more than one contract, all contracts,
      under which the director or contractor performs services as long as the
      expiration is a good faith and complete termination of the contractual
      relationship; and




(iii)
            If
      a Grantee performs services in more than one capacity, the Grantee must
      separate from service in all capacities as an employee, director, and
      contractor.  Notwithstanding the foregoing, if a Grantee
      provides services both as an employee and a director, the services
      provided as a director are not taken into account in determining whether
      the Grantee has a separation from service as an employee under a
      nonqualified deferred compensation plan in which the Grantee participates
      as an employee and that is not aggregated under Section 409A with any plan
      in which the Grantee participates as a director.  In addition,
      if a Grantee provides services both as an employee and a director, the
      services provided as an employee are not taken into account in determining
      whether the Grantee has a separation from service as a director under a
      nonqualified deferred compensation plan in which the Grantee participates
      as a director and that is not aggregated under Section 409A with any plan
      in which the Grantee participates as an
  employee.





Share.A share of Common
Stock.





Specified
Employee.  A “specified
employee” as defined by Section 409A.  As of the date of the adoption
of this amended and restated Plan, Section 409A provides that if the




7
 
  Company’s
Common Stock is publicly traded on an established securities market or
otherwise, then “specified employee” means senior officers who make $130,000 or
more annually (indexed) (limited to the top 3 such officers or, if greater (up
to a maximum of 50), the top 10%)); 1% owners whose compensation is $150,000 or
more annually; and 5% owners regardless of their
compensation).





Subsidiary. A subsidiary corporation,
whether now or hereafter existing, under Code Section 424(f).




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





Termination
of Employment.  In this Plan, all
references to termination of employment mean that the Eligible Employee or
Eligible Director has had a Separation from Service.





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





1933
Act.  The Securities
Act of 1933, as amended.





1934
Act.  The Securities
Exchange Act of 1934, as amended.








8




ARTICLE
II


GENERAL





Section
2.1.Purpose.  The purposes of
this Plan are to encourage and motivate directors and key employees to
contribute to the successful performance of the Company and its Subsidiaries and
the growth of the market value of the Common Stock; to achieve a unity of
purpose among such directors, key employees and the Company’s shareholders by
providing ownership opportunities, and a unity of interest among such parties in
the achievement of the Company’s primary long term performance objectives; and
to retain key employees by rewarding them with potentially tax-advantageous
future compensation.  These objectives will be promoted through the
granting of Rights to designated Eligible Directors and Eligible Employees
pursuant to the terms of this Plan.





Section
2.2.Administration.





(a)  The Plan shall be
administered by the Committee which meets, and shall continue to meet, the
standards of Rule 16b-3(d)(1) promulgated by the SEC under the 1934
Act.  Subject to the provisions of SEC Rule 16b-3(d)(1), the Committee
may designate any officers or employees of the Company or any Subsidiary to
assist in the administration of the Plan, to execute documents on behalf of the
Committee and to perform such other ministerial duties as may be delegated to
them by the Committee.





(b)  Subject to the
provisions of the Plan, the determinations and the interpretation and
construction of any provision of the Plan by the Committee shall be final and
conclusive upon all persons affected thereby.  By way of illustration
and not of limitation, the Committee shall have the discretion (a) to construe
and interpret the Plan and all Rights granted hereunder and to determine the
terms and provisions (and amendments thereof) of the Rights granted under the
Plan (which need not be identical); (b) to define the terms used in the Plan and
in the Rights granted hereunder; (c) to prescribe, amend and rescind the rules
and regulations relating to the Plan; (d) to determine the Eligible Employees to
whom and the time or times at which such Rights shall be granted, the number of
Shares, as and when applicable, to be subject to each Right, the exercise, other
relevant purchase price or value pertaining to a Right, and the determination of
leaves of absence which may be granted to Eligible Employees without
constituting a termination of their employment for the purposes of the Plan,
provided that the determination must be in compliance with Section 409A if
Section 409A applies to the Rights; and (e) to make all other determinations
necessary or advisable for the administration of the Plan.  Provided,
however, that the Committee shall administer and interpret the Plan in a manner
so as to comply with Section 409A to the extent that Section 409A applies to any
portion(s) of the Plan.  Only the full Board has the discretion to
determine the Eligible Directors to whom and the time or times at which such
Rights shall be granted, the number of Shares, as and when applicable, to be
subject to each Right, the exercise, and other relevant purchase price or value
pertaining to a Right.  References to the Committee contained in this
Agreement will also mean the Board wherever Rights of Eligible Directors are
addressed.




9





(c)  It shall be in the
discretion of the Committee to grant Options to purchase Shares which qualify as
ISOs under the Code or which will be given tax treatment as Non-Qualified
Options.  Any Options granted which fail to satisfy the requirements
for ISOs shall become Non-Qualified Options.





(d)  The intent of the
Company is to register the (i) offering of Shares pertaining to or underlying
the Rights and the offering of Rights pursuant to this Plan, (ii) this Plan and
(iii) the Rights, to the extent required, under the 1933 Act and applicable
state securities and “Blue Sky” laws.  In such event, the Company
shall make available to Eligible Directors and Eligible Employees receiving
Rights, and/or Shares in connection therewith, all disclosure documents required
under such federal and state laws.  If such Registration shall not
occur, the Committee shall be responsible for supplying the recipient of a
Right, and/or Shares in connection therewith, with such information about the
Company as is contemplated by the federal and state securities laws in
connection with exemptions from the registration requirements of such laws, as
well as providing the recipient of a Right with the opportunity to ask questions
and receive answers concerning the Company and the terms and conditions of the
Rights granted under this Plan.  In addition, if such Registration
shall not occur, the Committee shall be responsible for determining the maximum
number of Eligible Directors and Eligible Employees and the suitability of
particular persons to be Eligible Directors and Eligible Employees in order to
comply with applicable federal and state securities statutes and regulations
governing such exemptions.





(e)  In determining the
Eligible Directors and Eligible Employees to whom Rights shall be granted and
the number of Shares to be covered by each Right, the Committee shall take into
account the nature of the services rendered by such Eligible Directors and
Eligible Employees, their present and potential contributions to the success of
the Company and/or the Subsidiaries and such other factors as the Committee
shall deem relevant.  An Eligible Director or Eligible Employee who
has been granted a Right under the Plan may be granted additional Rights under
the Plan if the Committee shall so determine.





If, pursuant to the terms of the Plan,
or otherwise in connection with the Plan, it is necessary that the percentage of
stock ownership of an Eligible Director or Eligible Employee be determined, the
ownership attribution provisions set forth in Section 424(d) of the Code shall
be controlling.





(f)  The granting of Rights
pursuant to this Plan is in the exclusive discretion of the Committee, and until
the Committee acts, no individual shall have any rights under this
Plan.  The terms of this Plan shall be interpreted in accordance with
this intent.




10




Section
2.3.Stock
Matters.





(a)  Shares Available for
Rights.  Shares shall be subject to, or underlying, grants of
Options, Restricted Stock, Restricted Stock Units, SARs, Performance Units and
Book Value Shares under this Plan.  The total number of Shares for
which, or with respect to which, Rights may be granted (including the number of
Shares in respect of which Restricted Stock, Restricted Stock Units, SARs,
Performance Units and Book Value Shares may be granted) under this Plan shall be
those designated in the Plan Pool.  In the event that a Right granted
under the Plan to any Eligible Director or Eligible Employee expires or is
terminated unexercised as to any Shares covered thereby, such Shares thereafter
shall be deemed available in the Plan Pool for the granting of Rights under this
Plan; provided, however, if the expiration or termination date of a Right is
beyond the term of the Plan as described in Section 8.3, then any Shares covered
by unexercised or terminated Rights shall not reactivate the existence of this
Plan and therefore shall not be available for additional grants of Rights under
this Plan.





(b)  Adjustments Upon Changes in
Capitalization.  Subject to any required action by the
Company’s shareholders, the number of Shares covered by each outstanding Award,
and the number of Shares that have been authorized for issuance under the Plan
but as to which no Awards have yet been granted or that have been returned to
the Plan, the exercise or purchase price of each such outstanding Award, as well
as any other terms that the Committee determines in its exclusive discretion
require adjustment, may be proportionately adjusted for (a) any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination, or reclassification of the Shares, or
similar event affecting the Shares; (b) any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company; or (c) as the Committee determines in its exclusive discretion, any
other transaction with respect to Common Stock to which Code Section 424(a)
applies or any similar transaction; provided, however, that conversion of any
convertibles securities of the Company shall not be deemed to have been effected
without receipt of consideration.  Such adjustment, if any, shall be
made by the Committee in its exclusive discretion, and its determination shall
be final, binding and conclusive.  Except as the Committee determines
in its exclusive discretion, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award.





(c) 
Corporate
Transactions/Changes in Control/Related Entity
Dispositions.  Except as otherwise provided in an Award
Agreement:





(i)
            On
      the specified effective date of a Corporate Transaction or Change in
      Control, each Award that is at the time outstanding automatically shall
      become fully vested and exercisable and be released from any restrictions
      on transfer (other than transfer restrictions applicable to ISOs) and
      repurchase or forfeiture rights, immediately prior to the specified
      effective






11




date
      of such Corporate Transaction or Change in Control, for all the Shares at
      the time represented by such Award (except to the extent that such
      acceleration of exercisability would result in an “excess parachute
      payment” within the meaning of Section 280G of the
      Code).  Notwithstanding the foregoing provisions, the Committee
      may, in its exclusive discretion, provide as part of a Section 424
      Corporate Transaction that any one or more of the foregoing provisions
      shall not apply.


(ii)
            On
      the specified effective date of a Related Entity Disposition, for each
      Grantee who on such specified effective date is engaged primarily in
      service to the Related Entity that is the subject of the Related Entity
      Disposition, each Award that is at the time outstanding automatically
      shall become fully vested and exercisable and be released from any
      restrictions on transfer (other than transfer restrictions applicable to
      ISOs) and repurchase and forfeiture rights, immediately prior to the
      specified effective date of such Related Entity Disposition, for all the
      Shares at the time represented by such Award.  Notwithstanding
      the foregoing provisions, the Committee may, in its exclusive discretion,
      provide as part of a Section 424 Corporate Transaction that any one or
      more of the foregoing provisions shall not
  apply.




(iii)
            The
      Committee may provide in any Award, Award Agreement, or as part of a
      Section 424 Corporate Transaction, that if the requirements of Treas. Reg.
      §1.424-1 (without regard to the requirement described in Treas. Reg.
      §1.424-1(a)(2) that an eligible corporation be the employer of the
      optionee) would be met if the stock right were an ISO, the substitution of
      a new stock right pursuant to a Section 424 Corporate Transaction for an
      outstanding stock right or the assumption of an outstanding stock right
      pursuant to a Section 424 Corporate Transaction shall not be treated as
      the grant of a new stock right or a change in the form of
      payment.  The requirement of Treas. Reg. §1.424-1(a)(5)(iii) is
      deemed satisfied if the ratio of the exercise price to the Fair Market
      Value of the Shares immediately after the substitution or assumption is
      not greater than the ratio of the exercise price to the Fair Market Value
      of the Shares immediately before the substitution or
      assumption.  In the case of a transaction described in Code
      Section 355 in which the stock of the distributing corporation and the
      stock distributed in the transaction are both readily tradable on an
      established securities market immediately after the transaction, the
      requirements of Treas. Reg. §1.424-1(a)(5) may be satisfied
      by:




(1)
            using
      the last sale before or the first sale after the specified date as of
      which such valuation is being made, the closing price on the last trading
      day before or the trading day of a specified date, the
      arithmetic






12






mean
      of the high and low prices on the last trading day before or the trading
      day of such specified date, or any other reasonable method using actual
      transactions in such stock as reported by such market on a specified date,
      for the stock of the distributing corporation and the stock distributed in
      the transaction, provided the specified date is designated before such
      specified date, and such specified date is not more than sixty (60) days
      after the transaction;
  (2)
              using
      the arithmetic mean of such market price on trading days during a
      specified period designated before the beginning of such specified period,
      when such specified period is not longer than thirty (30) days and ends no
      later than sixty (60) days after the transaction;
  or


(3)
            using
      an average of such prices during such prespecified period weighted based
      on the volume of trading of such stock on each trading day during such
      prespecified period.




(d)  No Limitations on Power of
Company.  The grant of a Right pursuant to this Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassification, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.





(e)  No
fractional Shares shall be issued under this Plan for any adjustment under
Section 2.3(b).





Section
2.4.Section
409A Matters.  The Plan and the
Awards issued hereunder are intended to fall within available exemptions from
the application of Section 409A of the Code (the incentive stock option
exemption, the exemption for certain nonqualified stock options and stock
appreciation rights issued at Fair Market Value, the restricted property
exemption, and/or the short-term deferral exemption).  Thus, it is
intended that the Awards fall outside the scope of Section 409A and are not
required to comply with the Section 409A requirements.  The Plan and
the Awards will be administered and interpreted in a manner consistent with the
intent set forth herein.  Notwithstanding anything to the contrary in
this Plan or in any Award Agreement, (i) this Plan and each Award Agreement may
be amended from time to time as the Committee may determine to be necessary or
appropriate in order to avoid any grant of any Rights, this Plan, or any Award
Agreement from resulting in the inclusion of any compensation in the gross
income of any Participant under Section 409A as amended from time to time, and
(ii) if any provision of this Plan or of any Award Agreement would otherwise
result in the inclusion of any compensation in the gross income of any
Participant under Section 409A as amended from time to time, then such provision
shall not apply as to such Participant and the Committee, in its discretion, may
apply in lieu thereof another provision that (in the judgment of the Committee)
accomplishes the intent of this Plan or such Award Agreement without resulting
in such inclusion so long as such action by the Committee does not violate
Section 409A.  The Company makes no representation or warranty
regarding the treatment of this Plan or the benefits payable




13




under
this Plan or any Award Agreement under federal, state or local income tax laws,
including Section 409A.





Section
2.5.Amendment
and Discontinuance. The Board may at any time
alter, suspend, terminate or discontinue the Plan, subject to Section 409A, and
subject to any applicable regulatory requirements and any required shareholder
approval or any shareholder approval which the Board may deem advisable for any
reason, such as for the purpose of obtaining or retaining any statutory or
regulatory benefits under tax, securities or other laws or satisfying applicable
stock exchange or quotation system listing requirements.  The Board
may not, without the consent of the Grantee of an Award previously granted, make
any alteration which would deprive the Grantee of his rights with respect
thereto, except to the extent an amendment is required in order for the Award to
comply with Section 409A, if applicable to the Award, or to fall within an
exemption from Section 409A.





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





Section
2.7.  Term and Termination of
Awards other than Performance Units.





(a)  The Committee shall
determine, and each Award Agreement shall state, the expiration date or dates of
each Award, but such expiration date shall be not later than ten (10) years
after the date such Award is granted (the “Award Period”).  In the
event an ISO is granted to a 10% Shareholder, the expiration date or dates of
each Award Period shall be not later than five (5) years after the date such ISO
is granted.  The Committee, in its discretion, may extend the
expiration date or dates of an Award Period after such date was originally set;
provided, however, such expiration date may not exceed the maximum expiration
date described in this Section 2.7(a).  Provided further that no
extension will be granted if it would violate Section 409A to the extent that
Section 409A applies to the Award.





(b) To the extent not previously
exercised, each Award will terminate upon the expiration of the Award Period
specified in the Award Agreement; provided, however, that each such Award will
terminate upon the earlier of: (i) twelve (12) months after the date that the
Grantee ceases to be an Eligible Director or Eligible Employee by reason of
Death or Disability; or (ii) immediately as of the date that the Grantee ceases
to be an Eligible Director or Eligible Employee for any reason other than Death
or Disability.  Any portions of Awards not exercised within the
foregoing periods shall terminate.





(c)  This Section 2.7 applies
to all Awards other than Performance Units.





Section
2.8.Delay of
Certain Payments Upon Termination of Employment.  Notwithstanding
anything in the Plan to the contrary, to the extent any Right is subject to
Section




14




409A, and
payment or exercise of such Right is on account of a Termination of Employment,
such payment or exercise shall only be effectuated if the Grantee incurs a
Separation from Service.  Payment will occur on the 60th day
after the Separation from Service.  Provided, however, that if the
Grantee is a Specified Employee, payment or exercise shall be effectuated on the
first day of the seventh month following the Separation from
Service.




ARTICLE
III


OPTIONS





Section
3.1.  Grant of
Options.





(a)  The Company may grant
Options to Eligible Directors and Eligible Employees as provided in this Article
III.  Options will be deemed granted pursuant to this Article III only
upon (i) authorization by the Committee, and (ii) the execution and delivery of
an Option Agreement by the Grantee and a duly authorized officer of the
Company.  Options will not be deemed granted hereunder merely upon
authorization of such grant by the Committee.  The aggregate number of
Shares potentially acquirable under all Options granted shall not exceed the
total number of Shares in the Plan Pool, less all Shares potentially acquired
under, or underlying, all other Rights outstanding under this Plan.





(b)  The Committee shall
designate Options at the time a grant is authorized as either ISOs or
Non-Qualified Options.  The aggregate Fair Market Value (determined as
of the time an ISO is granted) of the Shares as to which an ISO may first become
exercisable by a Grantee in a particular calendar year (pursuant to Article III
and all other plans of the Company and/or its Subsidiaries) may not exceed
$100,000 (the “$100,000 Limitation”).  If a Grantee is granted Options
in excess of the $100,000 Limitation, or if such Options otherwise become
exercisable with respect to the number of Shares which would exceed the $100,000
Limitation, such excess Options shall be Non-Qualified Options.





Section
3.2.Exercise
Price.    The
exercise price of each Option granted under the Plan (the “Exercise Price”)
shall be not less than one hundred percent (100%) of the Fair Market Value of
the Common Stock on the date of grant of the Option.  In the case of
ISOs granted to a shareholder who owns capital stock of the Company possessing
more than ten percent (10%) of the total combined voting power of all classes of
the capital stock of the Company (a “10% Shareholder”), the Exercise Price of
each Option granted under the Plan to such 10% Shareholder shall not be less
than one hundred and ten percent (110%) of the Fair Market Value of the Common
Stock on the date of grant of the Option.





Section
3.3.  Terms and Conditions of
Options.





(a)  All Options must be
granted within ten (10) years of the Effective Date.




15





(b)  The Committee may grant
ISOs and Non-Qualified Options, either separately or jointly, to an Eligible
Employee.  The Committee may grant Non-Qualified Options to an
Eligible Director but may not grant ISOs to an Eligible Director.





(c)  The grant of Options
shall be evidenced by an Option Agreement in form and substance satisfactory to
the Committee in its discretion, consistent with the provisions of this Article
III, and the Option Agreement will fix the number of Shares subject to the
Option.





(d)  At the discretion of the
Committee, a Grantee, as a condition to the granting of the Option, must execute
and deliver to the Company a confidential information agreement approved by the
Committee.





(e)  Nothing contained in
Article III, any Option Agreement or in any other agreement executed in
connection with the granting of an Option under this Article III will confer
upon any Grantee any right with respect to the continuation of his or her status
as an employee or director of the Company or any of its
Subsidiaries.





(f) Except as otherwise provided
herein, each Option Agreement may specify the period or periods of time within
which each Option or portion thereof will first become exercisable (the “Vesting
Period”) with respect to the total number of Shares acquirable
thereunder.  Such Vesting Periods will be fixed by the Committee in
its discretion, and may be accelerated or shortened by the Committee in its
discretion.





(g)  Not less than one
hundred (100) Shares may be purchased at any one time through the exercise of an
Option unless the number purchased is the total number at that time purchasable
under all Options granted to the Grantee.





(h)  A Grantee shall have no
rights as a shareholder of the Company with respect to any Shares underlying
such Option until payment in full of the Exercise Price by such Grantee for the
stock being purchased.  No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such Shares is fully paid for, except as provided in Sections 2.3(b) and
2.3(c).





(i)  All Shares obtained
pursuant to an Option which is designated and qualifies as an ISO shall be held
in escrow for a period which ends on the later of (i) two (2) years from the
date of the granting of the ISO or (ii) one (1) year after the issuance of such
Shares pursuant to the exercise of the ISO.  Such Shares shall be held
by the Company or its designee.  The Grantee who has exercised the ISO
shall have all rights of a shareholder, including, but not limited, to the
rights to vote, receive dividends and sell such shares.  The sole
purpose of the escrow is to inform the Company of a disqualifying disposition of
the Shares acquired within the meaning of Section 422 of the Code, and it shall
be administered solely for this purpose.




16





(j)   When Non-Qualified
Options are transferred or exercised, the transfer or exercise shall be subject
to taxation under Code Section 83 and Treasury Regulation §1.83-7.  No
Non-Qualified Option awarded hereunder shall contain any feature for the
deferral of compensation other than the deferral of recognition of income until
the later of exercise or disposition of the Option under Treasury Regulation
§1.83-7 or the time the stock acquired pursuant to the exercise of the option
first becomes substantially vested as defined in Treasury Regulation
§1.83-3(b).  Further, each Non-Qualified Option will comply with any
other applicable Section 409A requirement in order to maintain the status of the
Non-Qualified Option as exempt from the requirements of Section
409A.





Section
3.4.  Exercise of
Options.





(a)  A Grantee must at all
times be an Eligible Director or Eligible Employee from the date of grant until
the exercise of the Options granted, except as provided in Section
2.7(b).





(b)  An Option may be
exercised to the extent exercisable (i) by giving written notice of exercise to
the Company, specifying the number of Shares to be purchased and, if applicable,
accompanied by full payment of the Exercise Price thereof and the amount of
withholding taxes pursuant to Section 3.4(c) below; and (ii) by giving
assurances satisfactory to the Company that the Shares to be purchased upon such
exercise are being purchased for investment and not with a view to resale in
connection with any distribution of such Shares in violation of the 1933 Act;
provided, however, that in the event of the prior occurrence of the Registration
or in the event resale of such Shares without such Registration would otherwise
be permissible, the second condition will be inoperative if, in the opinion of
counsel for the Company, such condition is not required under the 1933 Act or
any other applicable law, regulation or rule of any governmental
agency.





(c)  As a condition to the
issuance of the Shares upon full or partial exercise of a Non-Qualified Option,
the Grantee will pay to the Company in cash, or in such other form as the
Committee may determine in its discretion, the amount of the Company’s Tax
Withholding Liability required in connection with such exercise.





(d)  The Exercise Price of an
Option shall be payable to the Company either (i) in United States dollars, in
cash or by check, bank draft or money order payable to the order of the Company,
or (ii) at the discretion of the Committee, through the delivery of outstanding
shares of the Common Stock owned by the Grantee with a Fair Market Value at the
date of delivery equal to the aggregate Exercise Price of the Option(s) being
exercised, or (iii) at the discretion of the Committee by a combination of (i)
and (ii) above.  No Shares shall be delivered until full payment has
been made.  Except as provided in Sections 2.3(b) and 2.3(c), the
Committee may not approve a reduction of such Exercise Price in any such Option,
or the cancellation of any such Options and the regranting thereof to the same
Grantee at a lower Exercise Price, at a time when the Fair Market Value of the
Common Stock is lower than it was when such Option was granted.




17




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





Section
3.6.Stock
Certificates.  Certificates
representing the Shares issued pursuant to the exercise of Options will bear all
legends required by law and necessary to effectuate the provisions
hereof.  The Company may place a “stop transfer” order against such
Shares until all restrictions and conditions set forth in this Article III, the
applicable Option Agreement, and in the legends referred to in this Section 3.6
have been complied with.




ARTICLE
IV


RESTRICTED
STOCK AND RESTRICTED STOCK UNIT GRANTS





Section
4.1.  Grants of Restricted
Stock.





(a)  The Company may grant
Restricted Stock or Restricted Stock Units to Eligible Directors and Eligible
Employees as provided in this Article IV.  Shares of Restricted Stock
or Restricted Stock Units will be deemed granted only upon (i) authorization by
the Committee and (ii) the execution and delivery of a Restricted Stock
Agreement or Restricted Stock Unit Agreement, as applicable, by the Grantee and
a duly authorized officer of the Company.  Restricted Stock and
Restricted Stock Units will not be deemed to have been granted merely upon
authorization by the Committee.  The aggregate number of Shares
potentially acquirable under all Restricted Stock Agreements and all Restricted
Stock Unit Agreements shall not exceed the total number of Shares in the Plan
Pool, less all Shares potentially acquirable under, or underlying, all other
Rights outstanding under this Plan.





(b)  Each grant of Restricted
Stock or Restricted Stock Units pursuant to this Article IV will be evidenced by
a Restricted Stock Agreement or Restricted Stock Unit Agreement, as applicable,
between the Company and the Grantee in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Article
IV.  Each Restricted Stock Agreement and Restricted Stock Unit
Agreement will specify the purchase price per share (the “Purchase Price”), if
any, with respect to the Restricted Stock or Restricted Stock Units to be issued
to the Grantee thereunder.  The Purchase Price will be fixed by the
Committee in its exclusive discretion.  The Purchase Price will be
payable to the Company in United States dollars in cash or by check or such
other legal consideration as may be approved by the Committee, in its exclusive
discretion.





(c)  Without limiting the
foregoing, each Restricted Stock Agreement and Restricted Stock Unit Agreement
shall include the following terms and conditions:





(i)  Nothing
contained in this Article IV, any Restricted Stock Agreement, any Restricted
Stock Unit Agreement, or in any other agreement executed in connection with the
issuance of Restricted Stock or Restricted Stock Units under this Article IV
will confer upon any Grantee any right with respect to the




18




continuation
of his or her status as an employee or director of the Company or any of its
Subsidiaries.





(ii)  Except
as otherwise provided herein, each Restricted Stock Agreement and each
Restricted Stock Unit Agreement shall specify the period or periods of time
within which each share of Restricted Stock or Restricted Stock Unit or portion
thereof will first become exercisable (the "Vesting Period") with respect to the
total number of shares of Restricted Stock acquirable
thereunder.  Such Vesting Period will be fixed by the Committee in its
discretion, but generally shall be at least two (2) years and one day of
continued service with the Company.  The Committee may, in its
discretion, establish a shorter Vesting Period by specifically providing for
such shorter period in the Restricted Stock Agreement; provided, however, that
the Vesting Period shall not be less than one (1) year and one day of continued
service with the Company after the date on which the Restricted Stock Right is
granted.





(iii)  Each
Restricted Stock Unit Agreement shall specify whether the distribution will be
in the form of cash, shares or a combination of cash and shares.





(iv)  Upon
satisfaction of the Vesting Period and any other applicable restrictions, terms
and conditions, the Grantee shall be entitled to receive his Restricted Stock or
payment of his Restricted Stock Unit(s) on or before the sixtieth (60th) day
following satisfaction of the Vesting Period as provided in the Restricted Stock
Agreement or Restricted Stock Unit Agreement, as applicable.





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





(a)  Restricted Stock Units
may not be Transferred, and shares of Restricted Stock acquired by a Grantee may
be Transferred only in accordance with the specific limitations on the Transfer
of Restricted Stock imposed by applicable state or federal securities laws and
set forth below, and subject to certain undertakings of the transferee set forth
in Section 4.2(c).  All Transfers of Restricted Stock not meeting the
conditions set forth in this Section 4.2(a) are expressly
prohibited.





(b)  Any Transfer of
Restricted Stock Units and any prohibited Transfer of Restricted Stock is void
and of no effect.  Should such a Transfer purport to occur, the
Company may refuse to carry out the Transfer on its books, attempt to set aside
the Transfer, enforce any undertaking or right under this Section 4.2, or
exercise any other legal or equitable remedy.





(c)  Any Transfer of
Restricted Stock that would otherwise be permitted under the terms of this Plan
is prohibited unless the transferee executes such documents as the Company may
reasonably require to ensure the Company’s rights under a Restricted Stock
Agreement and this Article IV are adequately protected with respect to the




19




Restricted
Stock so Transferred.  Such documents may include, without limitation,
an agreement by the transferee to be bound by all of the terms of this Plan
applicable to Restricted Stock, and of the applicable Restricted Stock
Agreement, as if the transferee were the original Grantee of such Restricted
Stock.





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





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





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





Section
4.5.Market
Standoff.  To the extent
requested by the Company and any underwriter of securities of the Company in
connection with a firm commitment underwriting, no Grantee of any shares of
Restricted Stock will sell or otherwise Transfer any such shares not included in
such underwriting, or not previously registered in a Registration, during the
one




20




hundred
twenty (120) day period following the effective date of the registration
statement filed with the SEC in connection with such offering.





Section
4.6.   Rights of Grantees of
Restricted Stock or Restricted Stock Units.





(a)  A Grantee shall have no
rights as a stockholder of the Company unless and until he receives Restricted
Shares at the conclusion of the Vesting Period.




(b)  A Grantee shall have no
rights other than those of a general creditor of the
Company.  Restricted Stock and Restricted Stock Units represent an
unfunded and unsecured obligation of the Company.





(c)  Unless the Committee
otherwise provides in a dividend agreement awarded to the Grantee at the time of
the Award Agreement, the Grantee shall have no rights to dividends, whether cash
or stock, until the Restricted Stock and/or Restricted Stock Units vest and
Shares are delivered to the Grantee except as provided in Sections 2.3(b) and
2.3(c).




ARTICLE
V


PERFORMANCE
UNITS





Section
5.1.  Awards of Performance
Units.





(a)  The Committee may grant
awards of Performance Units to Eligible Directors and Eligible Employees as
provided in this Article V.  Performance Units will be deemed granted
only upon (i) authorization by the Committee and (ii) the execution and delivery
of a Performance Unit Agreement by the Grantee and an authorized officer of the
Company.  Performance Units will not be deemed granted merely upon
authorization by the Committee.  Performance Units may be granted in
such amounts and to such Grantees as the Committee may determine in its sole
discretion subject to the limitation in Section 5.2 below.





(b)  Each grant of
Performance Units pursuant to this Article V will be evidenced by a Performance
Unit Agreement between the Company and the Grantee in form and substance
satisfactory to the Committee in its sole discretion, consistent with this
Article V.





(c)  Except as otherwise
provided herein, Performance Units will be distributed only after the end of a
performance period of two or more years (“Performance Period”) beginning with
the year in which such Performance Units were awarded.  The
Performance Period shall be set by the Committee for each year’s
awards.





(d)  The percentage of the
Performance Units awarded under this Section 5.1 that will be distributed to
Grantees shall depend on the levels of financial performance and other
performance objectives achieved during each year of the Performance Period;




21




provided,
however, that the Committee may adopt one or more performance categories or
eliminate all performance categories other than financial
performance.  Financial performance shall be based on the consolidated
results of the Company and its Subsidiaries prepared on the same basis as the
financial statements published for financial reporting purposes and determined
in accordance with Section 5.1(e) below.  Other performance categories
adopted by the Committee shall be based on measurements of performance as the
Committee shall deem appropriate.





(e)  Distributions of
Performance Units awarded will be based on the Company’s financial performance
with results from other performance categories applied as a factor, not
exceeding one, against financial results.  The annual financial and
other performance results will be averaged over the Performance Period and
translated into percentage factors according to graduated criteria established
by the Committee for the entire Performance Period.  The resulting
percentage factors shall determine the percentage of Units to be
distributed.





No distributions of Performance Units,
based on financial performance and other performance, shall be made if a minimum
average percentage of the applicable measurement of performance, to be
established by the Committee, is not achieved for the Performance
Period.  The performance levels achieved for each Performance Period
and percentage of Performance Units to be distributed shall be conclusively
determined by the Committee.





(f)  The percentage of
Performance Units awarded and which Grantees become entitled to receive based on
the levels of performance will be determined as soon as practicable after each
Performance Period and are called “Retained Performance Units.”





(g)  On or before the 60th day
after determination of the number of Retained Performance Units, such Retained
Performance Units shall be distributed in the form of a combination of shares
and cash.  The Committee, in its sole discretion, will determine how
much of the Retained Performance Unit will be distributed in cash and how much
will be distributed in Shares.  The Performance Units awarded, but
which Grantees do not become entitled to receive, shall be
cancelled.





(h)  Notwithstanding any
other provision in this Article V, the Committee, if it determines in its sole
discretion that it is necessary or advisable under the circumstances, may adopt
rules pursuant to which Eligible Employees by virtue of hire, or promotion or
upgrade to a higher employee grade classification, or special individual
circumstances, may be granted the total award of Performance Units or any
portion thereof, with respect to one or more Performance Periods that began in
prior years and at the time of the awards have not yet been
completed.





Section
5.2.Limitations.  The aggregate
number of Shares potentially distributable under all Units granted shall not
exceed the total number of Shares in the Plan Pool, less all Shares potentially
acquirable under, or underlying, all other Rights outstanding under this
Plan.




22




Section
5.3.Terms and
Conditions.





(a)  All awards of
Performance Units must be made within ten (10) years of the original Effective
Date.





(b)  The award of Performance
Units shall be evidenced by a Performance Unit Agreement in form and substance
satisfactory to the Committee in its discretion, consistent with the provisions
of this Article V.





(c)  Nothing contained in
this Article V, any Performance Unit Agreement or in any other agreement
executed in connection with the award of Performance Units under this Article V
will confer upon any Grantee any right with respect to the continuation of his
or her status as an employee or director of the Company or any of its
Subsidiaries.





Section
5.4.  Special Distribution
Rules.





(a)  Except as otherwise
provided in this Section 5.4, a Grantee must be an Eligible Director or Eligible
Employee from the date a Unit is awarded to him or her continuously through and
including the date of distribution of such Unit.





(b)  In case of the Death or
Disability of a Grantee prior to the end of any Performance Period, whether
before or after any event set forth in Section 2.3(c), the number of Performance
Units awarded to the Grantee for such Performance Period shall be reduced pro
rata based on the number of months remaining in the Performance Period after the
month of Death or Disability.  The remaining Performance Units,
reduced in the discretion of the Committee to the percentage indicated by the
levels of performance achieved prior to the date of Death or Disability, if any,
shall be distributed within a reasonable time after Death or
Disability.  All other Units awarded to the Grantee for such
Performance Period shall be cancelled.





(c)  In case of the
termination of the Grantee’s status as an Eligible Director or Eligible Employee
prior to the end of any Performance Period for any reason other than Death or
Disability, all Performance Units awarded to the Grantee with respect to any
such Performance Period shall be immediately forfeited and
cancelled.





(d)  Upon a Grantee’s
promotion to a higher employee grade classification, the Committee may award to
the Grantee the total Performance Units, or any portion thereof, which are
associated with the higher employee grade classification for the current
Performance Period.





Notwithstanding any other provision of
the Plan, the Committee may reduce or eliminate awards to a Grantee who has been
demoted to a lower employee grade classification, and where circumstances
warrant, may permit continued participation, proration or early distribution, or
a combination thereof, of awards which would otherwise be
cancelled.




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Section
5.5.  Rights of Grantees of
Performance Units.





(a)  A Grantee shall have no
rights as a stockholder of the Company unless and until he receives Shares, if
any.




(b)  A Grantee shall have no
rights other than those of a general creditor of the
Company.  Performance Units represent an unfunded and unsecured
obligation of the Company.





(c)  Unless the Committee
otherwise provides in a dividend agreement awarded to the Grantee at the time of
the Performance Unit Agreement, the Grantee shall have no rights to dividends,
whether cash or stock, unless and until Shares are delivered to the Grantee
except as provided in Sections 2.3(b) and 2.3(c).





Section
5.6.Extraordinary
Adjustment.In addition to
the provisions of Section 2.3(b), if an extraordinary change occurs during a
Performance Period which significantly alters the basis upon which the
performance levels were established under Section 5.1 for that Performance
Period, to avoid distortion in the operation of this Article V, but subject to
Section 5.2, the Committee may make adjustments in such performance levels to
preserve the incentive features of this Article V, whether before or after the
end of the Performance Period, to the extent it deems appropriate in its sole
discretion, which adjustments shall be conclusive and binding upon all parties
concerned.  Provided, however, that such adjustment must comply with
Section 409A.  Such changes may include, without limitation, adoption
of, or changes in, accounting practices, tax laws and regulatory or other laws
or regulations; economic changes not in the ordinary course of business cycles;
or compliance with judicial decrees or other legal authorities.





Section
5.7.  Other
Conditions.





(a)  No person shall have any
claim to be granted an award of Performance Units under this Article V and there
is no obligation for uniformity of treatment of Eligible Directors, Eligible
Employees or Grantees under this Article V.  Performance Units under
this Article V may not be Transferred.





(b)  The Company shall have
the right to deduct from any distribution or payment in cash under this Article
V, and the Grantee or other person receiving Shares under this Article V shall
be required to pay to the Company, any Tax Withholding Liability.  The
number of Shares to be distributed to any individual Grantee may be reduced by
the number of Shares, the Fair Market Value on the Distribution Date (as defined
in Section 5.7(d) below) of which is equivalent to the cash necessary to pay any
Tax Withholding Liability, where the cash to be distributed is not sufficient to
pay such Tax Withholding Liability or the Grantee may deliver to the Company
cash sufficient to pay such Tax Withholding Liability.




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(c)  Any distribution of
Shares under this Article V may be delayed until the requirements of any
applicable laws or regulations, and any stock exchange or Nasdaq National Market
requirements, are satisfied.  The Shares distributed under this
Article V shall be subject to such restrictions and conditions on disposition as
counsel for the Company shall determine to be desirable or necessary under
applicable law.





(d)  For the purpose of
distribution of Performance Units in cash, the value of a Performance Unit shall
be the Fair Market Value on the Distribution Date.  The “Distribution
Date” shall be the first business day of April in the year of distribution,
except that in the case of special distributions the Distribution Date shall be
the first business day of the month in which the Committee determines the
distribution.





(e)  Notwithstanding any
other provision of this Article V and subject also to Section 5.5(c), no
dividends shall accrue and no distributions of Performance Units shall be made
if at the time a dividend would otherwise have accrued or distribution would
otherwise have been made:





(i)  The regular quarterly
dividend on the Common Stock has been omitted and not subsequently paid or there
exists any default in payment of dividends on any such outstanding shares of
capital stock of the Company;





(ii)  The rate of dividends
on the Common Stock is lower than at the time the Performance Units to which the
accrued dividend relates were awarded, adjusted for any change of the type
referred to in Section 2.3(b).





(iii)  Estimated consolidated
net income of the Company for the twelve-month period preceding the month the
dividend would otherwise have accrued distribution would otherwise have been
made is less than the sum of the amount of the accrued dividends and Performance
Units eligible for distribution under this Article V in that month plus all
dividends applicable to such period on an accrual basis, either paid, declared
or accrued at the most recently paid rate, on all outstanding shares of Common
Stock; or





(iv)  The dividend accrual or
distribution would result in a default in any agreement by which the Company is
bound.





(f)  In the event net income
available under Section 5.7(e) above for accrued dividends and awards eligible
for distribution under this Article V is sufficient to cover part but not all of
such amounts, the following order shall be applied in making payments: (i)
accrued dividends, and (ii) Performance Units eligible for distribution under
this Article V.





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Section
5.8.Restrictions
On Transfer.  Performance Units
granted under Article V may not be Transferred except by will or the laws of
descent and distribution or as otherwise provided in Section 5.9, and during the
lifetime of the Grantee to whom it was awarded, cash and Shares receivable with
respect to Performance Units may be received only by such Grantee.





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




ARTICLE
VI


STOCK
APPRECIATION RIGHTS





Section
6.1.  Grants of
SARs.





(a)  The Company may grant
SARs to Eligible Directors and Eligible Employees under this Article
VI.  SARs will be deemed granted only upon (i) authorization by the
Committee and (ii) the execution and delivery of a SAR Agreement by the Grantee
and a duly authorized officer of the Company.  SARs will not be deemed
granted merely upon authorization by the Committee.  The aggregate
number of Shares which shall underlie SARs granted hereunder shall not exceed
the total number of Shares in the Plan Pool, less all Shares potentially
acquirable under, or underlying, all other Rights outstanding under this
Plan.





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





Section
6.2.  Terms and
Conditions of SARs.





(a)  All SARs must be granted
within ten (10) years of the Effective Date.





(b)  Each SAR issued pursuant
to this Article VI shall have an initial base value (the “Base Value”) equal to
the Fair Market Value of a share of Common Stock on the date of issuance of the
SAR (the “SAR Issuance Date”).




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(c)  Nothing contained in
this Article VI, any SAR Agreement or in any other agreement executed in
connection with the granting of a SAR under this Article VI will confer upon any
Grantee any right with respect to the continuation of his or her status as an
employee or director of the Company or any of its Subsidiaries.





(d)  Except as otherwise
provided herein, each SAR Agreement shall specify the number of Shares covered
by the SAR and the period or periods of time within which each SAR or portion
thereof will first become exercisable (the “SAR Vesting Period”) with respect to
the total Cash Payment (as defined in Section 6.4(b)) receivable
thereunder.  Such SAR Vesting Period will be fixed by the Committee in
its discretion, and may be accelerated or shortened by the Committee in its
discretion.





(e)  SARs relating to no less
than one hundred (100) Shares may be exercised at any one time unless the number
exercised is the total number at that time exercisable under all SARs granted to
the Grantee.





(f)  A Grantee shall have no
rights as a shareholder of the Company with respect to any Shares covered by
such SAR.  No adjustment shall be made to a SAR for dividends
(ordinary or extraordinary, whether in cash, securities or other
property).





(g)  Notwithstanding anything in the Plan to the contrary, no
      SAR shall contain any feature for the deferral of compensation other than
      the right to receive compensation equal to the difference between the Base
      Value on the date of grant and the Fair Market Value of the Share on the
      date of Exercise.





Section
6.3.  Restrictions
on Transfer of SARs.  Each SAR granted under this Article VI
may not be Transferred except by will or the laws of descent and distribution or
as otherwise provided in Section 6.5, and during the lifetime of the Grantee to
whom it was granted, may be exercised only by such Grantee.





Section
6.4.  Exercise
of SARs.





(a)  A Grantee, or his or her
executors or administrators, or heirs or legatees, shall exercise a SAR of the
Grantee by giving written notice of such exercise to the Company (the “SAR
Exercise Date”).  SARs may be exercised only upon the completion of
the SAR Vesting Period applicable to such SAR.





(b)  Within ten (10) days of
the SAR Exercise Date applicable to a SAR exercised in accordance with Section
6.4(a), the Grantee shall be paid in cash the difference between the Base Value
of such SAR and the Fair Market Value of the Common Stock as of the SAR Exercise
Date (the “Cash Payment”), reduced by the Tax Withholding Liability arising from
such exercise.




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




ARTICLE
VII


BOOK
VALUE SHARES





Section
7.1.Grant of
Book Value Shares.The Company may grant
Book Value Shares to Eligible Directors and Eligible Employees as provided in
this Article VII.  Book Value Shares will be deemed granted only (i)
authorization by the Committee and (ii) the execution and delivery of a Book
Value Share Agreement by the Grantee and a duly authorized officer of the
Company.  Book Value Shares will not be deemed granted hereunder
merely upon authorization of such grant by the Committee.  The
aggregate number of Book Value Shares potentially granted shall not exceed the
total number of shares in the Plan Pool, less all Shares potentially acquirable
under, or underlying, all other Rights outstanding under this Plan.





Section
7.2.Initial
Value.   The initial value of each Book Value Share
granted under this Plan (the “Initial Value”) shall be the book value of the
Common Stock on the day of issuance.





Section
7.3.  Terms and Conditions of Book
Value Shares.





(a)  All Book Value Shares
must be granted within ten (10) years of the Effective Date.





(b)  The Committee may make
more than one grant of Book Value Shares to a Grantee.





(c)  Each grant of Book Value
Shares shall be evidenced by a Book Value Share Agreement in form and substance
satisfactory to the Committee in its discretion, consistent with the provisions
of this Article VII.





(d)  Nothing contained in
Article VII, any Book Value Share Agreement or in any other agreement executed
in connection with the granting of Book Value Shares under




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this
Article VII will confer upon any Grantee any right with respect to the
continuation of his or her status as an employee or director of the Company or
any of its Subsidiaries.





(e)  Except as otherwise
provided herein, each Book Value Share Agreement may specify the period or
periods of time within which each Book Value Share or portion thereof will first
become redeemable (the “Vesting Period”) with respect to the total number of
Book Value Shares acquirable thereunder.  Such Vesting Periods will be
fixed by the Committee in its discretion, and may be accelerated or shortened by
the Committee in its discretion provided that such acceleration is consistent
with Section 409A.





Section
7.4.  Redemption of Book Value
Shares.





(a)  A Grantee must be an
Eligible Employee or Eligible Director at all times from the date of grant until
the redemption of the Book Value Shares granted, except as provided in Section
2.7(b).





(b)  A Book Value Share may
be redeemed to the extent redeemable by giving written notice of redemption to
the Company, specifying the number of full Book Value Shares to be redeemed and,
if applicable, accompanied by full payment of the amount of the Tax Withholding
Liability pursuant to Section 7.4(c) below.





(c)  As a condition to the
redemption, in full or in part, of the Book Value Shares, the Grantee will pay
to the Company in cash, or in such other form as the Committee may determine in
its discretion, the amount of the Tax Withholding Liability required in
connection with such exercise.





(d)  Book Value Shares shall
be redeemed for (i) the then current book value of the Common Stock and the mark
to market valuation of the Company’s investment securities portfolio in
accordance with FASB 115 less (ii) the Initial Value per share.





(e)  The monies due shall be
payable to the Grantee either in United States dollars, in cash or by check,
draft or money order payable to the order of the Grantee.





Section 7.5.  Rights of Grantees of Book
Value Shares.





(a)  A Grantee shall have no
rights as a stockholder of the Company unless and until he receives Book Value
Shares at the conclusion of the Vesting Period.




(b)  A Grantee shall have no
rights other than those of a general creditor of the Company.  Book
Value Shares represent an unfunded and unsecured obligation of the
Company.





(c)  Unless the Committee
otherwise provides in a dividend agreement awarded to the Grantee at the time of
the Book Value Agreement, the Grantee shall have




29




no rights
to dividends, whether cash or stock, or an adjustment for dividends, except as
provided in Sections 2.3(b) and 2.3(c).  No adjustment shall be made
if the adjustment would cause the Book Value Shares granted hereunder to be
considered deferred compensation for purposes of Section 409A, or would
otherwise subject the Book Value Shares to Section 409A.





Section
7.6.Restrictions
on Transfer. A Book Value Share
granted under Article VII may not be Transferred except by will or the laws of
descent and distribution or as otherwise provided in Section 7.7, and during the
lifetime of the Grantee to whom it was granted, may be exercised only by such
Grantee.





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





Section
7.8.Evidence
of Participation.In lieu of certificates
representing the Book Value Shares issued pursuant to this Plan, the Book Value
Share Agreement shall serve as evidence of ownership.





ARTICLE
VIII


MISCELLANEOUS





Section
8.1.Application
of Funds.  The proceeds
received by the Company from the sale of Shares pursuant to the exercise of
Rights will be used for general corporate purposes.





Section
8.2.No
Obligation to Exercise Right.  The granting of a
Right shall impose no obligation upon the recipient to exercise such
Right.





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




30





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





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





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





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





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








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