EX-10.0



 







Gateway Financial Holdings, Inc.




2005 OMNIBUS STOCK OWNERSHIP AND

LONG TERM INCENTIVE PLAN




THIS IS THE 2005 OMNIBUS STOCK OWNERSHIP AND LONG TERM INCENTIVE PLAN (“Plan”) of Gateway Financial
Holdings, Inc. (“the Corporation” or “Company”), a North Carolina corporation with its principal
office in Pasquotank County, North Carolina, under which Incentive Stock Options and Non-Qualified
Options to acquire shares of the Stock, Restricted Stock, Stock Appreciation Rights, and/or Units
may be granted from time to time to Eligible Employees and, where applicable, to Directors of the
Corporation and of any of its Subsidiaries (the “Subsidiaries”), subject to the following
provisions:



ARTICLE I




DEFINITIONS




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



Annual Vesting Amount. With respect to any calendar year, the aggregate fair market value
of stock subject to ISOs that are first exercisable during such calendar year for any Optionee,
which may not exceed $100,000. The aggregate fair market value of stock with respect to which ISOs
are first exercisable during any calendar year shall be determined by taking into account all ISOs
granted to such person under all incentive stock options plans of the Corporation or of any of its
parent or subsidiary corporations.



Base Value. The Fair Market Value of a share of Common Stock on the date of issuance of a
SAR.



Board. The Board of Directors of Gateway Financial Holdings, Inc.



Change in Control Transaction. The dissolution or liquidation of the Corporation; a
reorganization, merger or consolidation of the Corporation as a result of which the outstanding
securities of the class then subject to Rights hereunder are changed into or exchanged for cash or
property or securities not of the Corporation’s issue; or a sale of all or substantially all of the
assets of the Corporation to, or the acquisition of stock representing more than twenty-five
percent (25%) of the voting power of the capital stock of the Corporation then outstanding by,
another corporation, bank, other entity or person, other than pursuant to a merger in which the
Corporation is the surviving entity.



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



Committee. The Compensation Committee of the Board.



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



Death. The date of death of an individual who has received Rights as established by the
relevant death certificate.



Director. A member of the Board.



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



Distribution Date. March 15th in the year of distribution of a Retained Unit in cash or
Stock under Article V (or the first business day thereafter), except that in the case of special
distributions, the Distribution Date shall be the first business day of the month in which the
Committee determines the amount and form of the distribution.



Dividend Equivalent Credit. An amount equal to the dividend payable on one share of
Common Stock determined and credited on the dividend payment date to each Unit Recipient’s account
for each Unit which has been awarded to the Unit Recipient and not converted to a Retained Unit or
canceled.



Dividend Equivalent Unit. A Unit awarded pursuant to a Dividend Equivalent Credit.



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



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




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





Exercise Price. The price at which an Option may be exercised.



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



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	 	(i)	 	if the Common Stock was traded on a stock exchange on the date as of which such
determination is made, then the Fair Market Value will be equal to the closing price
reported by the applicable composite-transactions report for such date;
	 
	 	(ii)	 	if on the date as of which such determination is made, quotations for the Common
Stock are regularly listed on the NASDAQ system or another comparable system, the fair
market value of a share of Common Stock shall be deemed to be equal to the closing price
for the Common Stock quoted on such system for the trading date as of the date as of which
such determination is made; and if a closing price is not available for such date, then
the fair market value shall be equal to the closing price on the most recent trading day
for which such a price is available;
	 
	 	(iii)	 	if no such quotations are available, the fair market value of a share of Common
Stock shall be deemed to be the average of the closing bid and asked prices furnished by a
professional securities dealer making a market in such shares, as selected by the
Committee, for the trading date first preceding the date as of which such determination is
made; and
	 
	 	(iv)	 	if the Committee determines that the price as determined above does not represent
the fair market value of a share of Common Stock, the Committee may then consider such
other factors as it deems appropriate and then fix the fair market value for the purposes
of this Plan. In such case, the Committee shall maintain a written record of its method
of determining Fair Market Value.





Holder. An individual granted Rights to Restricted Stock




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



Just Cause Termination means:




	 	(i)	 	with respect to the Company or any subsidiary which employs the recipient of any rights
under the Plan (the “recipient”) or for which such recipient primarily performs services,
the commission by the recipient of an act of fraud, embezzlement, theft or proven
dishonesty, or any other illegal act or practice (whether or not resulting in criminal
prosecution or conviction), or any act or practice which the Committee shall, in good
faith, deem to have resulted in the recipient’s becoming unbondable under the Company’s or
the subsidiary’s fidelity bond;
	 
	 	(ii)	 	the willful engaging by the recipient in misconduct which is deemed by the Committee,
in good faith, to be materially injurious to the Company or any subsidiary, monetarily or
otherwise, including, but not limited, improperly disclosing trade secrets or other
confidential or sensitive business information and data about the Company or any
subsidiaries and competing with the Company or its subsidiaries, or soliciting employees,
consultants or customers of the Company in violation of law or any employment or other
agreement to which the recipient is a party; or
	 
	 	(iii)	 	the willful and continued failure or habitual neglect by the recipient to perform his
or her duties with the Company or the subsidiary substantially in accordance with the
operating and personnel policies and procedures of the Company or the subsidiary generally
applicable to all their employees. For purposes of this Plan, no act or failure to act by
the recipient shall be deemed be “willful” unless done or omitted to be done by recipient
not in good faith and without reasonable belief that the recipient’s action or omission was
in the best interest of the Company and/or the subsidiary. Notwithstanding the foregoing,
if the recipient has entered




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	 	 	 	into an employment agreement that is binding as of the date of employment termination,
and if such employment agreement defines “Cause,” then the definition of “Cause” in such
agreement shall apply to the recipient in this Plan. “Cause” under either (i), (ii) or
(iii) shall be determined by the Committee.





NASDAQ. National Association of Securities Dealers Nasdaq system.



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



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



Optionee. An individual granted an Option under Article III.



Option Period. The period ending on the expiration date of each Option, which shall not
exceed 10 years from the date of grant of the Option.



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.



Performance Period. A period of two or more years during which certain criteria must be
met in order for Units to become Retained Units.



Plan Pool. A total of 600,000 shares of authorized, but unissued, shares of Common Stock,
as adjusted pursuant to Section 2.3(b), which shall be available as Stock under this Plan.



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



Retained Units. Units which Unit Recipients receive based upon the satisfaction of
performance goals during a Performance Period.



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



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



Retirement. “Retirement” shall mean:




	 	(i)	 	the termination of an Eligible Employee’s employment under conditions which would
constitute “normal retirement” or “early retirement” under any tax qualified retirement
plan maintained by the Corporation or a Subsidiary, or




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	 	(ii)	 	termination of employment after attaining age 65 (except in the case of a Just
Cause Termination).





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



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



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



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



SAR Exercise Date. The date notice is received by the Corporation that a SAR is being
exercised.



SAR Period. The period ending on the expiration date or dates of each SAR, which date
shall be not later than ten (10) years after the date such SAR is granted.



SAR Recipient. An individual to whom SARs are granted.



SAR Vesting Period. The period or periods of time within which each SAR or portion thereof
will first become exercisable.



SEC. The Securities and Exchange Commission.



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



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



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



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



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



Unit Recipient. An individual granted a Unit.



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Vesting Period. The period or periods of time within which each Option or portion thereof
will first become exercisable.



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



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



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ARTICLE II




GENERAL




Section 2.1. Purpose.




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



Section 2.2. Administration.





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






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






	 	(c)	 	It shall be in the discretion of the Committee to grant Options to purchase shares of
Stock to Eligible Employees which qualify as ISOs under the Code. Any Options granted
which fail to satisfy the requirements for ISOs shall become Non-Qualified Options.




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	 	(d)	 	The intent of the Corporation is to effect the Registration. In such event, the
Corporation shall make available to Eligible Employees and Directors receiving Rights
and/or shares of Stock in connection therewith all disclosure documents required under
applicable federal and state laws. If such Registration shall not occur, the Committee
shall be responsible for supplying the recipient of a Right and/or shares of Stock in
connection therewith with such information about the Corporation as is contemplated by the
federal and state securities laws in connection with exemptions from the registration
requirements of such laws, as well as providing the recipient of a Right with the
opportunity to ask questions and receive answers concerning the Corporation and the terms
and conditions of the Rights granted under this Plan. In addition, if such Registration
shall not occur, the Committee shall be responsible for determining the maximum number of
Eligible Employees and the suitability of particular persons to be Eligible Employees in
order to comply with applicable federal and state securities statutes and regulations
governing such exemptions.
	 
	 	(e)	 	In determining the Eligible Employees to whom Rights may be granted and the number of
shares of Stock to be covered by each Right, the Committee shall take into account the
nature of the services rendered by such Eligible Employees and Directors, their present
and potential contributions to the success of the Corporation and/or a Subsidiary and such
other factors as the Committee shall deem relevant. An Eligible Employee or Director who
has been granted a Right under this Plan may be granted an additional Right or Rights
under this Plan if the Committee shall so determine. If pursuant to the terms of this
Plan, or otherwise in connection with this Plan, it is necessary that the percentage of
stock ownership of an Eligible Employee 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.





Section 2.3. Stock Available For Rights.





	 	(a)	 	Shares of the Stock shall be subject to, or underlying, grants of Options, Restricted
Stock, SARs and Units under this Plan. The total number of shares of Stock for which, or
with respect to which, Rights may be granted (including the number of shares of Stock in
respect of which SARs and Units may be granted) under this Plan shall be those designated
in the Plan Pool. In the event that a Right granted under this Plan to any Eligible
Employee or Director expires or is terminated unexercised as to any shares of Stock
covered thereby, such shares thereafter shall be deemed available in the Plan Pool for the
granting of Rights under this Plan; provided, however, if the expiration or termination
date of a Right is beyond the term of existence of this Plan as described in Section 7.3,
then any shares of Stock covered by unexercised or terminated Rights shall not reactivate
the existence of this Plan and therefore shall not be available for additional grants of
Rights under this Plan.
	 
	 	(b)	 	In the event the outstanding shares of Common Stock are increased, decreased, changed
into or exchanged for a different number or kind of securities as a result of a stock
split, reverse stock split, stock dividend, recapitalization, merger, share exchange
acquisition, combination or reclassification, appropriate proportionate adjustments will
be made in: (i) the aggregate number and/or kind of shares of Stock in the Plan Pool that
may be issued pursuant to the exercise of, or that are underlying, Rights granted
hereunder; (ii) the exercise or other purchase price or value pertaining to, and the
number and/or kind of shares of Stock called for




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	 	 	 	with respect to, or underlying, each outstanding Right granted hereunder; and (iii) other
rights and matters determined on a per share basis under this Plan or any Rights
Agreement. Any such adjustments will be made only by the Committee and when so approved
will be effective, conclusive and binding for all purposes with respect to this Plan and
all Rights then outstanding. No such adjustments will be required by reason of (i) the
issuance or sale by the Corporation for cash of additional shares of its Common Stock or
securities convertible into or exchangeable for shares of its Common Stock, or (ii) the
issuance of shares of Common Stock in exchange for shares of the capital stock of any
corporation, financial institution or other organization acquired by the Corporation or
any Subsidiary in connection therewith.
	 
	 	(c)	 	The grant of a Right pursuant to this Plan shall not affect in any way the right or
power of the Corporation to make adjustments, reclassification, reorganizations or changes
of its capital or business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or assets.
	 
	 	(d)	 	No fractional shares of Stock shall be issued under this Plan for any adjustment
under Section 2.3(b).





Section 2.4. Severable Provisions.




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



Article III




OPTIONS




Section 3.1. Grant of Options.





	 	(a)	 	The Company may grant Options to 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 Optionee
and a duly authorized officer of the Company. The aggregate number of shares of Stock
potentially acquirable under all Options granted shall not exceed the total number of
shares of Stock remaining in the Plan Pool, less all shares of Stock potentially acquired
under, or underlying, all other Rights outstanding under this Plan, except that Options
for not more than 150,000 shares of Stock may be granted as ISOs.
	 
	 	(b)	 	The Committee shall designate Options at the time a grant is authorized as either
ISOs or Non-Qualified Options. ISOs may only be granted to Eligible Employees. In
accordance with Section 422 (d) of the Code, the aggregate Fair Market Value (determined
as of the date an ISO is granted) of the shares of Stock as to which an ISO may first
become exercisable by an Optionee in a particular calendar year may not exceed the Annual
Vesting Amount. If an Optionee is granted Options in excess of the Annual Vesting Amount,
or if such Options otherwise become exercisable with respect to a number of shares of
Stock which would exceed the Annual Vesting Amount, such excess Options shall be
Non-Qualified Options.




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Section 3.2. Exercise Price.




The initial Exercise Price of each Option granted under this Plan shall be determined by the
Committee in its discretion; provided, however, that the Exercise Price of an ISO shall not be less
than (i) the Fair Market Value of the Common Stock on the date of grant of the Option, in the case
of any Eligible Employee who does not own stock possessing more than ten percent (10%) of the total
combined voting power of all classes of the capital stock of the Company (within the meaning of
Section 422 (b) (6) of the Code), or (ii) one hundred and ten percent (110%) of such Fair Market
Value in the case of any Eligible Employee who owns stock in excess of such amount.



Section 3.3. Terms and Conditions of Options.





	 	(a)	 	All Options must be granted within ten (10) years of the Effective Date.
	 
	 	(b)	 	The Committee may grant ISOs and Non-Qualified Options, either separately or jointly,
to an Eligible Employee. Directors are only eligible to be granted Non-Qualified Options
by the Committee.
	 
	 	(c)	 	Each grant of Options shall be evidenced by an Option Agreement in form and substance
satisfactory to the Committee in its discretion, consistent with the provisions of this
Article III.
	 
	 	(d)	 	Nothing contained in Article III, any Option Agreement or in any other agreement
executed in connection with the granting of an Option to an Eligible Employee under this
Article III will confer upon any Optionee any right with respect to the continuation of
his or her status as an employee of the Company or any of its Subsidiaries.
	 
	 	(e)	 	Except as otherwise provided herein, each Option Agreement may specify the Vesting
Period with respect to the total number of shares of Stock acquirable thereunder. Such
Vesting Periods will be fixed by the Committee in its discretion, and may be accelerated
or shortened by the Committee in its discretion.
	 
	 	(f)	 	Not less than one hundred (100) shares of Stock may be purchased at any one time
through the exercise of an Option unless the number purchased is the total number at that
time purchasable under all Options granted to the Optionee.
	 
	 	(g)	 	An Optionee shall have no rights as a shareholder of the Company with respect to any
shares of Stock covered by Options granted to the Optionee until payment in full of the
Exercise Price by such Optionee for the shares being purchased. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to the date
such Stock is fully paid for, except as provided in Section 2.3(b).





Section 3.4. Exercise of Options.





	 	(a)	 	An Optionee must be an Eligible Employee or Director at all times from the date of
grant until the exercise of the Options granted, except as provided in Section 3.5.
	 
	 	(b)	 	An Option may be exercised to the extent exercisable (i) by giving written notice of
exercise to the Company, specifying the number of full shares of Stock to be purchased
and, if




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





Section 3.5. Term and Termination of Option.





	 	(a)	 	The Committee shall determine, and each Option Agreement shall state, the expiration
date or dates of each Option, but such expiration date shall be not later than ten (10)
years after the date such Option was granted. In the event an ISO is granted to a 10%
Shareholder, the expiration date or dates of each Option Period shall be not later than
five (5) years after the date such Option is granted. The Committee may extend the
expiration date or dates of an Option Period of any Non-Qualified Option after such date
was originally set; provided, however such expiration date may not exceed the maximum
expiration date described in this Section 3.5(a).
	 
	 	(b)	 	In the event of the termination of employment of an Optionee either by reason of (i)
Just Cause Termination, or (ii) voluntary separation on the part of such Optionee for a
reason other than Retirement or Disability, any Option or Options granted to the Optionee
under this Plan, to the extent not previously exercised or surrendered by the Optionee, or
expired by their terms, shall immediately terminate.
	 
	 	(c)	 	In the event of the termination of employment of an Optionee as a result of such
Optionee’s Retirement, such Optionee shall have the right to exercise any Option or
Options granted to the Optionee under this Plan, to the extent that they have not
previously been exercised or surrendered by the Optionee, or expired by their terms, for a
period of three (3) months after the date of retirement, but in no event may any Option be
exercised later than the end of the Option Period. Notwithstanding any other provision
contained herein, or in any Option Agreement, upon Retirement, any Option then held by an
Optionee shall be exercisable immediately in full.




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	 	(d)	 	In the event of the termination of employment of an Optionee by reason of such
Optionee’s Disability, such Optionee shall have the right to exercise any Option or
Options held by the Optionee, to the extent that they previously have not been exercised
or surrendered by the Optionee, or expired by their terms, notwithstanding any limitations
placed on the exercise of such Options by this Plan or an Option Agreement, immediately in
full and at any time within twelve (12) months after the last date on which such Optionee
provides services as an officer or an employee of the Corporation before being disabled,
but in no event may any Option be exercised later than the end of the Option Period.
	 
	 	(e)	 	In the event that an Optionee should die while employed by the Corporation, or within
three (3) months after Retirement, any Option or Options granted to the Optionee under
this Plan and not previously exercised or surrendered by the Optionee, or expired by their
terms, shall vest and shall be exercisable, according to their respective terms, by the
personal representative of such Optionee or by any person or persons who acquired such
Options by bequest or inheritance from such Optionee, notwithstanding any limitations
placed on the exercise of such Options by this Plan or any Option Agreement, immediately
in full and at any time within twelve (12) months after the date of death of such
Optionee, but in no event may any Option be exercised later than the end of the Option
Period. Any references herein to an Optionee shall be deemed to include any person
entitled to exercise an Option under the terms of this Plan after the death of such
Optionee.





Section 3.6. Change in Control Transaction.




At any time prior to the date of consummation of a Change in Control Transaction, the Committee
may, in its absolute discretion, determine that all or any part of the Options theretofore granted
under this Article III shall become immediately exercisable in full and may thereafter be exercised
at any time before the date of consummation of the Change in Control Transaction (except as
otherwise provided in Article II hereof, and except to the extent that such acceleration of
exercisability would result in an “excess parachute payment” within the meaning of Section 280G of
the Code).



Section 3.7. Restrictions On Transfer.




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



Section 3.8. Stock Certificates.




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



12









 





Section 3.9. Amendment and Discontinuance.




The Board may at any time terminate the Plan; provided, however, that the Board (unless its actions
are approved or ratified by the shareholders of the Corporation within twelve months of the date
that the Board amends the Plan) may not amend the Plan to:




	 	(a)	 	Increase the total number of shares of Stock issuable pursuant to all Rights under
the Plan, except as contemplated in Section 2.3(b) hereof; or
	 
	 	(b)	 	Change the class of employees eligible to receive Incentive Stock Options that may
participate in the Plan.





No termination, amendment, or modification of the Plan shall affect adversely a Optionee’s rights
under an Option Agreement without the consent of the Optionee or his legal representative.



Article IV




RESTRICTED STOCK GRANTS




Section 4.1 Grants of Restricted Stock.





	 	(a)	 	The Company may issue Restricted Stock to Eligible Employees and Directors as
provided in this Article IV. Restricted Stock will be deemed issued only upon (i)
authorization by the Committee, and (ii) the execution and delivery of a Restricted Stock
Grant Agreement by the person to whom such Restricted Stock is to be issued and a duly
authorized officer of the Company.
	 
	 	(b)	 	Each issuance of Restricted Stock pursuant to this Article IV will be evidenced by a
Restricted Stock Grant Agreement between the Company and the Holder in form and substance
satisfactory to the Committee in its sole discretion, consistent with this Article IV.
Each Restricted Stock Grant Agreement will specify the purchase price per share, if any,
paid by the Holder for the Restricted Stock, such amount to be fixed by the Committee.
	 
	 	(c)	 	Without limiting the foregoing, each Restricted Stock Grant Agreement shall set forth
the terms and conditions of any forfeiture provisions regarding the Restricted Stock,
(including any provisions for accelerated vesting in the event of a Change in Control
Transaction) as determined by the Committee.
	 
	 	(d)	 	At the discretion of the Committee, the Holder, as a condition to such issuance, may
be required to pay to the Corporation in cash, or in such other form as the Committee may
determine in its discretion, the amount of the Corporation’s Tax Withholding Liability
required in connection with such issuance.
	 
	 	(e)	 	Nothing contained in this Article IV, any Restricted Stock Grant Agreement, or any
other agreement executed in connection with the issuance of Restricted Stock under this
Article IV will confer upon any Holder any right with respect to the continuation of his
or her status as an employee of the Company or any of its Subsidiaries.




13









 











Section 4.2. Restrictions on Transfer of Restricted Stock.





	 	(a)	 	Shares of Restricted Stock acquired by a Holder may be Transferred only in accordance
with the specific limitations on the Transfer of Restricted Stock imposed by applicable
state or federal securities laws or set forth below, and subject to certain undertakings
of the transferee set forth in Section 4.2(c). All Transfers of Restricted Stock not
meeting the conditions set forth in this Section 4.2 are expressly prohibited.
	 
	 	(b)	 	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, and/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 Grant Agreement
and this Article IV are adequately protected with respect to the 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 Grant Agreement, as if the transferee were the original
Holder 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 Holder of shares of
Restricted Stock to deliver the certificate(s) for such shares with a stock power executed
in blank by the Holder and the Holder’s spouse, to the Secretary of the Company or his or
her designee, and the Company may hold said certificate(s) and stock power(s) in escrow
and take all such actions as are necessary to insure that all Transfers and/or releases
are made in accordance with the terms of this Plan. The certificates may be held in
escrow so long as the shares of Restricted Stock whose ownership they evidence are subject
to any restriction on Transfer under this Article IV or under a Restricted Stock Grant
Agreement. Each Holder acknowledges that the Secretary of the Company (or his or her
designee) is so appointed as the escrow agent 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 agent will not be liable to any party to a Restricted Stock Grant Agreement (or to
any other party) for any actions or omissions unless the escrow agent is grossly negligent
relative thereto. The escrow agent 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 may be issued pursuant to
this Article IV only after there has been compliance with all applicable federal and state
securities laws, and such issuance will be subject to this overriding condition. The Company may
include shares of Restricted Stock in a Registration, but will not be required to register or
qualify Restricted Stock with the SEC or any state agency, except that the Company will register
with, or as required by local law, file for and secure an exemption from such registration
requirements from the applicable securities administrator and other officials of each jurisdiction
in which a Holder would be issued Restricted Stock hereunder prior to such issuance.



14









 





Section 4.4. Stock Certificates.




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



Section 4.5. Market Standoff.




To the extent requested by the Company and any underwriter of securities of the Company in
connection with a firm commitment underwriting, no Holder of any shares of Restricted Stock will
Transfer any such shares not included in such underwriting, or not previously registered in a
Registration, during the one hundred twenty (120) day period following the effective date of the
registration statement filed with the SEC under the 1933 Act in connection with such offering.



Section 4.6. Amendment and Discontinuance.




The Board may at any time terminate the Plan; provided, however, that the Board (unless its actions
are approved or ratified by the shareholders of the Corporation within twelve months of the date
that the Board amends the Plan) may not amend the Plan to:




	 	(a)	 	Increase the total number of shares of Stock issuable pursuant to all Rights under
the Plan, except as contemplated in Section 2.3(b) hereof; or
	 
	 	(b)	 	modify the requirements as to eligibility for participation under this Article IV.





No termination, amendment, or modification of the Plan shall affect adversely a Holder’s rights
under a Restricted Stock Agreement without the consent of the Holder or his legal representative.



Article V




LONG-TERM INCENTIVE COMPENSATION UNITS




Section 5.1. Awards of Units.





	 	(a)	 	The Company may grant awards of Units to Eligible Employees as provided in this
Article V. Units will be deemed granted only upon (i) authorization by the Committee, and
(ii) the execution and delivery of a Unit Agreement by the Eligible Employee to whom Units
are to be granted and an authorized officer of the Company. Units may be granted in each
of the years 2004 through 2014 in such amounts and to such Unit Recipients as the
Committee may determine, subject to the limitations in Section 5.2 below.
	 
	 	(b)	 	Each grant of Units pursuant to this Article V will be evidenced by a Unit Award
Agreement between the Company and the Unit Recipient in form and substance satisfactory to
the Committee in its sole discretion, consistent with this Article V.
	 
	 	(c)	 	Except as otherwise provided herein, Units will be distributed only after the end of
the Performance Period. The Performance Period shall be set by the Committee for each
year’s awards.




15









 






	 	(d)	 	The percentage of the Units awarded under this Section 5.1 or credited pursuant to
Section 5.5 that will be distributed to Unit Recipients shall depend on the levels of
financial performance and other performance objectives achieved during each year of the
Performance Period; provided, however, that the Committee may adopt one or more
performance categories or eliminate all performance categories other than financial
performance. Financial performance shall be based on the consolidated results of the
Company and its Subsidiaries prepared on the same basis as the financial statements
published for financial reporting purposes and determined in accordance with Section
5.1(e) below. Other performance categories adopted by the Committee shall be based on
measurements of performance as the Committee shall deem appropriate.
	 
	 	(e)	 	Distributions of Units awarded will be based on the Company’s financial performance
with results from other performance categories applied as a factor, not exceeding one (1),
against financial results. The annual financial and other performance results will be
averaged over the Performance Period and translated into percentage factors according to
graduated criteria established by the Committee for the entire Performance Period. The
resulting percentage factors shall determine the percentage of Units that will be
converted to Retained Units. No conversion to Retained Units shall be made if a minimum
average percentage of the applicable measurement of performance, financial and other, to
be established by the Committee is not achieved for the Performance Period. The
performance levels achieved for each Performance Period and percentage of Units converted
to Retained Units shall be conclusively determined by the Committee.
	 
	 	(f)	 	The percentage of Units awarded which are converted to Retained Units based on the
levels of performance (including any Units credited under Section 5.5) will be determined
as soon as practicable after each Performance Period.
	 
	 	(g)	 	As soon as practical after determination of the number of Retained Units, such
Retained Units shall be distributed in the form of a combination of shares and cash in the
relative percentages as between the two as determined by the Committee. Units that have
been awarded, but which do not become Retained Units, shall be canceled.
	 
	 	(h)	 	Notwithstanding any provision in this Article V other than Section 5.2, if the
Committee determines that it is appropriate under the circumstances, the Committee may
award to any Eligible Employee by virtue of hire, promotion or upgrade to a higher job
grade classification, or special individual circumstances, an award of Units, with respect
to one or more Performance Periods that began in prior years and at the time of the award
have not yet been completed.
	 
	 	(i)	 	Notwithstanding any other provision of this Plan, the Committee may reduce or
eliminate awards to a Unit Recipient who has been demoted to a lower job grade
classification, and where circumstances warrant, may permit continued participation,
proration or early distribution, or a combination thereof, of awards which would otherwise
be canceled.





Section 5.2. Limitations.




The aggregate number of shares of Stock potentially distributable under all Units granted,
including any Units credited pursuant to Section 5.5, shall not exceed the total number of shares
of Stock remaining in



16









 





the Plan Pool, less all shares of Stock potentially acquirable under, or underlying, all other
Rights outstanding under this Plan.



Section 5.3. Terms and Conditions.





	 	(a)	 	All awards of Units must be made within ten (10) years of the Effective Date.
	 
	 	(b)	 	The award of Units shall be evidenced by a Unit Award Agreement in form and substance
satisfactory to the Committee in its discretion, consistent with the provisions of this
Article V.
	 
	 	(c)	 	Nothing contained in this Article V, any Unit Award Agreement or in any other
agreement executed in connection with the award of Units under this Article V will confer
upon any Unit Recipient any right with respect to the continuation of his or her status as
an employee of the Company or any of its Subsidiaries.
	 
	 	(d)	 	A Unit Recipient shall have no rights as a shareholder of the Company with respect to
any Units until the Retained Unit has been converted into shares of Stock. No adjustment
shall be made in the number of Units for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which the record
date is prior to the date such Stock is fully paid for, except as provided in Sections
2.3(b) and 5.6(a).





Section 5.4. Special Distribution Rules.





	 	(a)	 	Except as otherwise provided in this Section 5.4, a Unit Recipient must be an
Eligible Employee from the date a Unit is awarded to him or her continuously through and
including the date of conversion to a Retained Unit.
	 
	 	(b)	 	In case of the Death or Disability of a Unit Recipient prior to the end of any
Performance Period, the number of Retained Units converted for the Unit Recipient for such
Performance Period shall be reduced pro rata based on the number of months remaining in
the Performance Period after the month of Death or Disability. The Retained 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 in cash or Stock within a reasonable time after Death or Disability. All
other Units awarded to the Unit Recipient for such Performance Period shall be canceled.
	 
	 	(c)	 	If a Unit Recipient enters into Retirement prior to the end of any Performance
Period, the Units converted to Retained Units for such Unit Recipient shall be prorated to
the end of the year in which such Retirement occurs and distributed in cash or Stock at
the end of the Performance Period based upon the Company’s performance for such period.
	 
	 	(d)	 	In the event of the termination of the Unit Recipient’s status as an Eligible
Employee prior to the end of any Performance Period for any reason other than Death,
Disability or Retirement, all Units awarded to the Unit Recipient with respect to any such
Performance Period shall be immediately forfeited and canceled.
	 
	 	(e)	 	Upon a Unit Recipient’s promotion to a higher job grade classification, the Committee
may award to the Unit Recipient the total Units, or any portion thereof, which are
associated with the higher job grade classification for the then current Performance
Period.




17









 











Section 5.5. Dividend Equivalent Units.




The Committee may provide in a grant and in the Unit Agreement that on each record date for
dividends on the Common Stock, an amount equal to the dividend payable on one share of Common Stock
will be determined and credited on the payment date to each Unit Recipient’s account for each Unit
which has been awarded to the Unit Recipient and not converted to a Retained Unit or canceled.
Such amount will be converted within the account to an additional number of Units equal to the
number of shares of Common Stock that could be purchased at Fair Market Value on such dividend
payment date. These Units will be treated for purposes of this Article V in the same manner as
those Units granted pursuant to Section 5.1.



Section 5.6. Adjustments.





	 	(a)	 	In addition to the provisions of Section 2.3(b), if an extraordinary change occurs
during a Performance Period which significantly alters the basis upon which the
performance levels were established under Section 5.1 for that Performance Period, to
avoid distortion in the operation of this Article V, but subject to Section 5.2, the
Committee may make adjustments in such performance levels to preserve the incentive
features of this Article V, whether before or after the end of the Performance Period, to
the extent it deems appropriate in its sole discretion, which adjustments shall be
conclusive and binding upon all parties concerned. Such changes may include, without
limitation, adoption of, or changes in, accounting practices, tax laws and regulatory or
other laws or regulations; economic changes not in the ordinary course of business cycles;
significant corporate transactions; or compliance with judicial decrees or other legal
authorities.
	 
	 	(b)	 	At any time prior to the date of consummation of a Change in Control Transaction, the
Committee may determine that all or any part of the Units theretofore awarded under this
Article V shall become immediately Retained Units (reduced pro rata based on the number of
months remaining in the Performance Period after the consummation of the Change in Control
Transaction) and may thereafter be distributed in cash or Stock at any time before the
date of consummation of the Change in Control Transaction (except as otherwise provided in
Article II hereof, and except to the extent that such acceleration of distribution would
result in an “excess parachute payment” within the meaning of Section 280G of the Code).





Section 5.7. Other Conditions.





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




18









 






	 	(c)	 	Any distribution of shares of Stock under this Article V may be delayed until the
requirements of any applicable laws or regulations, and any stock exchange or applicable
NASDAQ requirements, are satisfied. The shares of Stock 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 Units in cash, the value of a Unit shall be the
Fair Market Value on the Distribution Date.
	 
	 	(e)	 	Notwithstanding any other provision of this Article V, no Dividend Equivalent Credits
shall be made and no conversion of Dividend Equivalent Units to Retained Units shall be
made if at the time a Dividend Equivalent Credit or conversion of Dividend Equivalent
Units to Retained Units would otherwise have been made:






	 	(i)	 	The regular dividend on the Common Stock has been omitted and not
subsequently paid or there exists any default in payment of dividends on any such
outstanding shares of capital stock of the Corporation:
	 
	 	(ii)	 	The rate of dividends on the Common Stock is lower than at the time the
Dividend Equivalent Units were awarded, adjusted for any change of the type referred
to in Section 2.3(b).
	 
	 	(iii)	 	Estimated consolidated net income of the Corporation for the
twelve-month period preceding the month the Dividend Equivalent Credit or conversion
of Dividend Equivalent Units to Retained Units would otherwise have been made is
less than the sum of the amount of the Dividend Equivalent Credits and Retained
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 Equivalent Credit or conversion of Dividend Equivalent Units
to Retained Units would result in a default in any agreement by which the
Corporation is bound.






	 	(f)	 	In the event net income available under Section 5.7(e) above for Dividend Equivalent
Credits and conversion of Dividend Equivalent Units to Retained Units is sufficient to
cover part but not all of such amounts, the following order shall be applied in making
payments: (i) Dividend Equivalent Credits, and then (ii) conversion of Dividend Equivalent
Units to Retained Units.





Section 5.8. Designation of Beneficiaries.




A Unit Recipient may designate a beneficiary or beneficiaries to receive all or part of the Stock
and/or cash to be distributed to the Unit Recipient under this Article V in case of Death. A
designation of beneficiary may be replaced by a new designation or may be revoked by the Unit
Recipient at any time. A designation or revocation shall be on a form to be provided for that
purpose and shall be signed by the Unit Recipient and delivered to the Corporation prior to the
Unit Recipient’s Death. In case of the Unit Recipient’s Death, any amounts to be distributed to
the Unit Recipient under this Article V with respect to which a designation of beneficiary has been
made (to the extent it is valid and enforceable under applicable law) shall be distributed in
accordance with this Article V to the designated beneficiary or



19









 





beneficiaries. The amount distributable to a Unit Recipient upon Death and not subject to such a
designation shall be distributed to the Unit Recipient’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 Unit Recipient, in which event the Corporation shall have
no further liability to anyone with respect to such amount.



Section 5.9. Restrictions On Transfer.




Units granted under Article V may not be Transferred, except as provided in Section 5.8, and,
during the lifetime of the Unit Recipient to whom it was awarded, cash and Stock receivable with
respect to Retained Units may be received only by such Unit Recipient.



Section 5.10. Amendment and Discontinuance.




The Board may at any time terminate the Plan; provided, however, that the Board (unless its actions
are approved or ratified by the shareholders of the Corporation within twelve months of the date
that the Board amends the Plan) may not amend the Plan to:




	 	(a)	 	Increase the total number of shares of Stock issuable pursuant to all Rights under
the Plan, except as contemplated in Section 2.3(b) hereof; or
	 
	 	(b)	 	modify the requirements as to eligibility for participation under this Article V.





No termination, amendment, or modification of the Plan shall affect adversely a Unit Recipient’s
rights under a Unit Award Agreement without the consent of the Unit Recipient or his legal
representative.



No award of Units may be granted under this Article V after December 31, 2012.



Article VI




STOCK APPRECIATION RIGHTS




Section 6.1. Grants of SARs.





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





Section 6.2. Terms and Conditions of SARs.





	 	(a)	 	All SARs must be granted within ten (10) years of the Effective Date.
	 
	 	(b)	 	Each SAR issued pursuant to this Article VI shall have an initial Base Value.




20









 






	 	(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 SAR Recipient any right with respect to the continuation of his or her status as an
employee of the Corporation or any of its Subsidiaries.
	 
	 	(d)	 	Except as otherwise provided herein, each SAR Agreement may specify the SAR Vesting
Period. Such SAR Vesting Periods will be fixed by the Committee and may be accelerated
or shortened by the Committee.
	 
	 	(e)	 	SARs relating to less than one hundred (100) shares of Stock may not be exercised at
any one time unless the number exercised is the total number at that time exercisable
under all SARs granted to the SAR Recipient.
	 
	 	(f)	 	A SAR Recipient shall have no rights as a shareholder of the Corporation with respect
to any shares of Stock underlying such SAR. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date such Stock is
fully paid for, except as provided in Sections 2.3(b) and 6.2(c).





Section 6.3. Restrictions On Transfer of SARs.




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



Section 6.4. Exercise of SARs.





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





Section 6.5. Termination of SARs.




The Committee shall determine, and each SAR Agreement shall state the SAR Period. The Committee
may extend the expiration date or dates of a SAR Period after such date is originally set;
provided, however, such expiration date may not exceed 10 years from the date of grant of the SAR.



21









 





Section 6.6. Change in Control Transaction.




At any time prior to the date or consummation of a Change in Control Transaction, the Committee
may, in its absolute discretion, determine that all or any part of the SARs theretofore granted
under this Article VI shall become immediately exercisable in full and may thereafter be exercised
at any time before the date of consummation of the Change in Control Transaction (except as
otherwise provided in Article II hereof, and except to the extent that such acceleration of
exercisability would result in an excess parachute payment within the meaning of Section 280G of
the Code).



Section 6.7. Designation of Beneficiaries.




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



Section 6.8. Amendment and Discontinuance.




The Board may at any time terminate the Plan; provided, however, that the Board (unless its actions
are approved or ratified by the shareholders of the Corporation within twelve months of the date
that the Board amends the Plan) may not amend the Plan to:




	 	(a)	 	Increase the total number of shares of Stock issuable pursuant to all Rights under
the Plan, except as contemplated in Section 2.3(b) hereof; or
	 
	 	(b)	 	modify the requirements as to eligibility for participation under this Article VI.





No termination, amendment, or modification of the Plan shall affect adversely a SAR Recipient’s
rights under a SAR Agreement without the consent of the SAR Recipient or his legal representative.



22









 





Article VII

MISCELLANEOUS




Section 7.1. Application of Funds.




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



Section 7.2. No Obligation to Exercise Right.




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



Section 7.3. Term of Plan.




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



Section 7.4. Captions and Headings; Gender and Number.




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



Section 7.5. Expenses of Administration of Plan.




All costs and expenses incurred in the operation and administration of this Plan shall be borne by
the Corporation or by one or more Subsidiaries.



Section 7.6. Exculpation and Indemnification.




In connection with this Plan, no member of the Committee shall be personally liable for any act or
omission to act in such person’s capacity as a member of the Committee, nor for any mistake in
judgment made in good faith, unless arising out of, or resulting from, such person’s own bad faith,
gross negligence, willful misconduct, or criminal acts. To the extent permitted by applicable law
and regulation, the Corporation shall indemnify and hold harmless the members of the Committee, and
each other officer or employee of the Corporation to whom any duty or power relating to the
administration or interpretation of this Plan may be assigned or delegated, from and against any
and all liabilities (including any amount paid in settlement of a claim with approval of the Board)
and any costs or expense (including reasonable counsel fees) incurred by such person arising out
of, or as a result of, such person’s duties, responsibilities, and obligations under this Plan,
other than such liabilities, costs, and expenses as may arise out of, or result from, the bad
faith, gross negligence, willful misconduct, or criminal acts of such persons.



Section 7.7. 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.



23









 





Section 7.8. Inspection of Plan.




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




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