Document:

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                                                                 ---------------
                                                                  Exhibit 4.5.2
                                                                 ---------------

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                                 FIRST AMENDMENT

                                       TO

                             NOTE PURCHASE AGREEMENT

                                  by and among

                             NUMATICS, INCORPORATED,

                                 NUMATICS, GMBH,

                                 NUMATICS LTD.,

                    the OTHER Loan Parties signatory hereto,

                                       and

                   AMERICAN CAPITAL FINANCIAL SERVICES, INC.,
                                    AS AGENT

                                       and

                          THE PURCHASERS IDENTIFIED ON
                                 ANNEX A HERETO

                     Date of First Amendment: March 29, 2002
                        Original Date: November 28, 2001

--------------------------------------------------------------------------------

<PAGE>

                                 FIRST AMENDMENT
                                       TO
                             NOTE PURCHASE AGREEMENT
                             -----------------------

                    $14,354,000 Aggregate Principal Amount of
                       Senior Notes Due November 27, 2006
                    of Numatics, Incorporated, Numatics, GMBH
                                and Numatics Ltd.

                    $17,000,000 Aggregate Principal Amount of
                         Senior Secured Term A Notes Due
                                November 27, 2006
                            of Numatics, Incorporated

         THIS FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT (this "Amendment") is
entered into as of March 29, 2002 by and NUMATICS, INCORPORATED, a Michigan
corporation (the "Company"), NUMATICS, GMBH, a corporation organized under the
laws of the Federal Republic of Germany ("Numatics Germany"), NUMATICS LTD., a
Canadian corporation ("Numatics Canada", and together with the Company and
Numatics Germany, the "Borrowers"), the U.S. Subsidiaries of the Company
signatory hereto (the "Subsidiary Guarantors" and together with the Borrowers,
the "Loan Parties"), the securities purchasers that are now and hereafter at any
time parties hereto and are listed in Annex A (or any amendment or supplement
thereto) attached hereto (each a "Purchaser" and collectively, "Purchasers"),
and AMERICAN CAPITAL FINANCIAL SERVICES, INC., a Delaware corporation ("ACFS"),
as administrative agent for Purchasers (in such capacity "Agent").

                                    RECITALS

         A.       As of November 28, 2001, the Loan Parties, the Purchasers and
                  Agent entered into a Note Purchase Agreement (the
                  "Agreement"), pursuant to which the Purchasers purchased from
                  the Borrowers certain notes (the "Notes"). Capitalized terms
                  used and not defined elsewhere in this Amendment that are
                  defined in the Agreement shall have the same meaning as in the
                  Agreement.

         B.       American Capital Strategies, Ltd. has sold or contributed
                  their Notes issued under the Agreement to either the ACS
                  Funding Trust I, a Delaware business trust (the "Funding
                  Trust"), and ACAS Business Loan Trust 2000-1, a Delaware
                  business trust (the "2000-1 Trust") and has assigned to the
                  Funding Trust or the 2000-1 Trust, as applicable, certain of
                  its rights under the Purchase Agreement associated with
                  ownership of its Notes.

         C.       The Loan Parties have requested that Purchaser amend certain
                  provisions of the Agreement, and Purchaser is willing to do so
                  on the terms and conditions set forth herein.

                                       1

<PAGE>

         NOW, THEREFORE, the parties hereto, in consideration of the premises
and their mutual covenants and agreements herein set forth and intending to be
legally bound hereby, covenant and agree as follows:

                                    ARTICLE 1
                                  THE AMENDMENT

         Upon the satisfaction of the conditions set forth in Section 3.1
herein, the Agreement shall be deemed to be amended, retroactive to November 28,
2001, as set forth in this Article 1.

         1.1 Amendment to Section 1.1. Section 1.1 of the Agreement is amended
by restating the definition of "Tangible Net Worth" to read as follows:

                  `"Tangible Net Worth" shall mean the Company's shareholders'
         equity (including retained earnings) on a consolidated basis less the
         book value of all intangible assets and all "Investments", "Other
         Current Assets", "Deferred Tax Assets" and "Other Assets" all as
         classified on the Company's consolidated balance sheet, including, but
         not limited to, transaction costs not amortized, debt issuance costs
         not amortized and product drawings, as determined solely by Agent on a
         consistent basis less prepaid expenses and obligations due from
         officers, affiliates and employees plus the amount of any LIFO reserve
         plus the amount of any debt subordinated to the Indebtedness hereunder
         in a manner satisfactory to Agent (but excluding the Indebtedness
         evidenced by the Subordinated Redemption Note dated January 3, 2001 in
         the principal amount of $1,089,996 issued by the Company to Bruce W.
         Hoppe and, to the extent in excess of $500,000, Indebtedness consisting
         of deferred compensation owing to John H. Welker), plus deferred tax
         liabilities, all as determined for the Company and its Subsidiaries on
         a consolidated basis under GAAP applied on a basis consistent with the
         financial statement dated September 30, 2001 except as set forth herein
         without giving effect to any unrealized non-cash foreign exchange gains
         and/or losses accumulating after December 31, 2001."

         1.2 Addition of Section 7.3. Section 7.3 is hereby amended by restating
subsection (a) to read as follows:

         "(a) Minimum Tangible Net Worth. A minimum Tangible Net Worth of (i)
         $15,700,000 at all times from and including November 28, 2001 through
         June 30, 2002, (ii) $17,000,000 at all times from and including July 1,
         2002 through December 30, 2002, (iii) $19,500,000 at all times from and
         including December 31, 2002 through December 30, 2003, and

                                       2

<PAGE>

         (iv) $22,000,000 at all times from and including December 31, 2003 and
         thereafter."

                                    ARTICLE 2
                                    RESERVED

                                    ARTICLE 3
                                   CONDITIONS

3.1 Conditions. The obligation of Purchaser to deliver this Amendment is subject
to the satisfaction of the following conditions precedent:

                  (a) the Loan Parties shall have paid to the Purchaser or its
         designee a processing fee in the amount of $16,500;

                  (b) the Loan Parties shall have delivered an amendment to the
         Revolving Credit Agreement, duly executed by the Loan Parties and the
         Revolving Financing Lender, all to the satisfaction of Purchaser; and

                  (c) all representations, warranties, covenants and agreements
         of the Loan Parties contained in the Agreement shall be true and
         correct in all material respects at and as of the date hereof as though
         then made, except (i) to the extent of the changes caused by the
         transactions expressly contemplated therein or herein, and (ii) for
         such representations and warranties as by their terms expressly speak
         as of an earlier date, and an officer of the Loan Parties shall have
         delivered a certificate to Purchaser to such effect.

                                    ARTICLE 4
                    REFERENCE TO AND EFFECT ON THE AGREEMENT

         4.1 Representations. In order to induce the Purchaser to enter into
this Amendment and to consummate the transactions contemplated hereby, the Loan
Parties hereby (x) represent and warrant that no Default or Event of Default
exists on the date hereof after giving effect to this Amendment and (y) make
each of the representations, warranties and agreements contained in the
Agreement and the other Purchase Documents on and as of the date hereof, after
giving effect to this Amendment (it being understood that any representation or
warranty that by its terms is made as of a specified date shall be required to
be true and correct in all material respects as of such date).

         4.2 References. On and after the date hereof, (i) each reference in the
Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like
import shall mean and be a reference to the Agreement as amended hereby, and
(ii) each reference to the Agreement in all other Purchase Documents shall mean
and be a reference to the Agreement, as amended hereby.

                                       3

<PAGE>

         4.3 Effects. Except as specifically amended hereby, the Agreement and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.

         4.4 No Waiver or Novation. The execution, delivery and effectiveness of
this Amendment shall not (i) operate as a waiver of any right, power or remedy
of Purchaser, whether created by contract, at law or in equity, (ii) constitute
a waiver of, or consent to and departure from, any provision of the Agreement,
or any other documents, instruments and agreements executed and/or delivered in
connection therewith (the "Note Documents"), or (iii) be construed or deemed to
be a satisfaction, novation, cure, modification, amendment or release of the
Notes.

                                    ARTICLE 5
                                  MISCELLANEOUS

         5.1 Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.

         5.2 Severability. Whenever possible, each provision of this Amendment
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Amendment is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Amendment.

         5.3 Headings. Article, section and subsection headings in this
Amendment are included for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.

         5.4 Counterparts. This Amendment may be executed in any number of
counterparts and by either party hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute one and the same instrument.

         5.5 Integration. This Amendment, the Agreement and the other Purchase
Documents set forth the entire understanding of the parties hereto with respect
to all matters contemplated hereby and supersede all previous agreements and
understandings among them concerning such matters. No statements or agreements,
oral or written, made prior to or at the signing hereof, shall vary, waive or
modify the written terms hereof.

                                       4

<PAGE>

                                SIGNATURE PAGE TO
                               FIRST AMENDMENT TO
                             NOTE PURCHASE AGREEMENT

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                  THE BORROWERS:

                                  NUMATICS, INCORPORATED

                                  By:      /s/ John H. Welker
                                      ----------------------------------------
                                        John H. Welker
                                        Chief Executive Officer

                                  NUMATICS, GMBH, a corporation organized
                                  under the laws of the Federal Republic
                                  of Germany

                                  By:      /s/ John H. Welker
                                      ----------------------------------------
                                  Name:             John H. Welker
                                        --------------------------------------
                                  Title:            General Manager
                                         -------------------------------------

                                  NUMATICS LTD., a Canadian corporation

                                  By:      /s/ Robert P. Robeson
                                      ----------------------------------------
                                  Name:             Robert P. Robeson
                                        --------------------------------------
                                  Title:            Secretary
                                         -------------------------------------

                                  AGENT:

                                  AMERICAN CAPITAL FINANCIAL SERVICES, INC.

                                  By:      /s/ Mark D. Schindel
                                       ---------------------------------------
                                           Mark D. Schindel
                                           Vice President

                                       S-1

<PAGE>

                                  PURCHASERS:

                                  ACAS BUSINESS LOAN TRUST 2000-1

                                  By: AMERICAN CAPITAL STRATEGIES, LTD.,
                                  as Servicer

                                  By:   /s/ Mark Schindel
                                      ------------------------------------------
                                      Mark Schindel, Vice President

                                  ACAS FUNDING TRUST I

                                  By: AMERICAN CAPITAL STRATEGIES, LTD.,
                                  as Servicer

                                  By:   /s/ Mark Schindel
                                      ------------------------------------------
                                      Mark Schindel, Vice President

                                  AMERICAN CAPITAL STRATEGIES, LTD.

                                  By:   /s/ Mark Schindel
                                      ------------------------------------------
                                      Mark Schindel, Vice President

                                      S-2<PAGE>

                                                                   Exhibit 10.10

                               FIRST WESTERN BANK
                       1998 NONSTATUTORY STOCK OPTION PLAN

         First Western Bank, a North Carolina corporation (the "Corporation"),
does herein set forth the terms of its 1998 Nonstatutory Stock Option Plan (the
"Plan"), which was adopted by the Board of Directors (the "Board") of the
Corporation subject to approval by the Corporation's shareholders as provided in
Paragraph 19 hereof, and by the appropriate regulatory authorities, as provided
by law.

         1. Purpose of this Plan. The purpose of this Plan is to provide for the
grant of Nonstatutory Stock Options (the "Options" or singularly, "Option") to
employees and directors of the Corporation who wish to invest in the
Corporation's common stock, par value $5.00 per share (the "Common Stock"). The
Board believes the existence of this Plan will make it possible for the
Corporation to attract capable individuals to serve with the Corporation or any
of its subsidiaries and on the Board.

         2. Administration of this Plan.

                  (a) This Plan shall be administered by the Board. The Board
         shall have full power and authority to construe, interpret and
         administer this Plan. All actions, decisions, determinations, or
         interpretations of the Board shall be final, conclusive, and binding
         upon all parties.

                  (b) The Board may designate any officers or employees of the
         Corporation to assist in the administration of this Plan. The Board may
         authorize such individuals to execute documents on its behalf and may
         delegate to them such other ministerial and limited discretionary
         duties as the Board may see fit.

         3. Shares of Common Stock Subject to this Plan. The number of shares of
Common Stock that shall be available initially for Options under this Plan is
Seventy two thousand seven hundred and forty two (77,742), subject to adjustment
as provided in Paragraph 12. Common Stock subject to Options which expire or
terminate prior to exercise of the Options shall lapse and such shares shall
again be available for future grants of Options under this Plan.

         4. Eligibility.

                  (a) Options under this Plan may be granted to any employee or
         director as determined by the Board. An individual may hold more than
         one Option under this or other plans adopted by the Corporation.

                  (b) Upon the forfeiture of an Option for whatever reason prior
         to the expiration of the Option Period (as defined in Paragraph 8
         hereof) the shares of Common Stock covered by a forfeited Option shall
         be available for the granting of additional Options during the
         remaining term of this Plan upon such terms and conditions and to such
         Optionees (as defined below) as may be determined by the Board.

         5. Option Price.

                  (a) The price per share of each Option granted under this Plan
         (the "Option Price") shall be determined by the Board as of the
         effective date of grant of such Option. In no event shall such Option
         Price be less than 100% of the fair market value of the Common Stock on
         the date of the grant. An Option shall be considered as granted on the
         later of

                           (i) the date the Board acts to grant such Option, or

<PAGE>

                           (ii) such later date as the Board shall specify in an
                  Option Agreement (as hereinafter defined).

                  (b) The fair market value of a share of Common Stock shall be
         determined as follows:

                           (i) If on the date as of which such determination is
                  being made, the Common Stock is admitted to trading on a
                  securities exchange or exchanges for which actual sale prices
                  are regularly reported, or actual sale prices are otherwise
                  regularly published, the fair market value of a share of the
                  Common Stock shall be deemed to be equal to the mean of the
                  closing sale price as reported for each of the five (5)
                  trading days immediately preceding the date as of which such
                  determination is made; provided, however, that, if a closing
                  sale price is not reported for each of the five (5) trading
                  days immediately preceding the date as of which such
                  determination is made, then the fair market value shall be
                  equal to the mean of the closing sale prices on those trading
                  days for which such price is available.

                           (ii) If on the date as of which such determination is
                  made, no such closing sale prices are reported, but quotations
                  for the Common Stock are regularly listed on the National
                  Association of Securities Dealers Nasdaq system or another
                  comparable system, the fair market value of a share of Common
                  Stock shall be deemed to be equal to the mean of the average
                  of the closing bid and asked prices for the Common Stock
                  quoted on such system on each of the five (5) trading days
                  preceding the date as of which such determination is made. If
                  a closing bid and asked price is not available for each of the
                  five (5) trading days, then the fair market value shall be
                  equal to the mean of the average of the closing bid and asked
                  prices on those trading days during the five-day period for
                  which such prices are 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 Board, for the trading date first preceding
                  the date as of which such determination is made.

         If the Board determines that the price as determined above does not
represent the fair market value of a share of Common Stock, the Board may then
consider such other factors as it deems appropriate and then fix the fair market
value for the purposes of this Plan.

         6. Payment of Option Price. Payment for shares subject to an Option
must be made in cash.

         7. Terms and Conditions of Grant of Options.

                  (a) Each Option granted pursuant to this Plan shall be
         evidenced by a written Nonstatutory Stock Option Agreement (the "Option
         Agreement") with each employee or director to whom an Option is granted
         (the "Optionee"). The Option Agreement shall be in the form the Board
         shall adopt and may contain such terms and conditions as the Board may
         determine.

                  (b) Notwithstanding any other provision of this Plan, no
         person shall be granted an Option or Options under this Plan which
         would result in the total number of shares granted to such Optionee to
         exceed 40% of the shares allocated to this Plan, or, if greater, the
         maximum permitted by the Commissioner of Banks of North Carolina (the
         "Commissioner of Banks").

         8. Option Period. Each Option Agreement shall set forth a period during
which such Option may be exercised (the "Option Period")' provided, however,
that the Option Period shall not exceed ten (10) years after the date of grant
of such Option as specified in an Option Agreement.

<PAGE>

         9. Exercise of Options.

                  (a) An Option shall be exercised by written notice to the
         Board signed by an Optionee or by such other person an may be entitled
         to exercise such Option or to surrender such Option. The written notice
         shall state the number of shares with respect to which an Option is
         being exercised and shall either be accompanied by the payment of the
         aggregate Option Price for such shares or shall fix a date (not more
         than ten (10) business days after the date of such notice) by which the
         payment of the aggregate Option Price will be made. An Optionee shall
         not exercise an Option to purchase less than 100 shares, unless the
         Board otherwise approves or unless the partial exercise is for the
         remaining shares available under such Option.

                  (b) A certificate or certificates for the shares of Common
         Stock purchased by the exercise of an Option shall be issued in the
         regular course of business following the receipt of the notice of
         exercise of such Option and the payment therefor. During the Option
         Period, no person entitled to exercise any Option granted under this
         Plan shall have any of the rights or privileges of a shareholder with
         respect to any shares of the Common Stock issuable upon exercise of
         such Option, until certificates representing such shares shall have
         been issued and delivered and the individual's name entered as a
         shareholder of record on the books of the Corporation for such shares.

         10. Effect of Leaving the Corporation or Death.

                  (a) In the event that an Optionee terminates the relationship
         with the Corporation for any reason other than retirement, disability,
         or death, any Option granted to the Optionee under this Plan, to the
         extent not previously exercised or surrendered by the Optionee or
         expired, shall immediately terminate.

                  (b) In the event of an Optionee's retirement, such Optionee
         shall have the right to exercise an Option granted under this Plan, to
         the extent that it has not previously been exercised or surrendered by
         the Optionee or expired, for such period of time as may be determined
         by the Board and specified in the Option Agreement, but in no event may
         any Option be exercised later than the end of the Option Period
         provided in the Option Agreement in accordance with Paragraph 8 hereof.
         Notwithstanding any other provision contained this Plan, or in any
         Option Agreement, upon retirement, any Option then held by an Optionee
         shall be exercisable immediately in full. For purposes of this Plan,
         the term "retirement" for a Director shall mean termination of a
         Director's membership on the Board

                           (i) at any time after attaining age 65 with the
                  approval of the Board; or

                           (ii) at the election of the Director, at any time
                  after not less than five (5) years service as a member of the
                  Board.

                  (c) In the event of an Optionee's disability, such Optionee
         shall have the right to exercise an Option granted under this Plan, to
         the extent that it has not previously been exercised or surrendered by
         the Optionee or expired, for such period of time as may be determined
         by the Board and specified in the Option Agreement, but in no event may
         any Option be exercised later than the end of the Option Period
         provided in the Option Agreement in accordance with Paragraph 8 hereof.
         Notwithstanding any other provision contained this Plan, or in any
         Option Agreement, upon an Optionee's disability, any Option then held
         by the Optionee shall be exercisable immediately in full. For purposes
         of this Plan, the term "disability" shall be defined as may be
         determined by the Board.

                  (d) In the event that an Optionee should die while serving on
         the Board or as an employee during the Option Period, an Option granted
         under this Plan, to the extent that it has not previously been
         exercised or surrendered by the Optionee or expired, shall vest and
         shall be exercisable, in accordance with the terms of the Option
         Agreement, by the personal representative of such Optionee, the
         executor or administrator of such Optionee's estate, or by any person
         or persons who acquired such Option by bequest or inheritance from such
         optionee, notwithstanding any limitations placed on the exercise of
         such Option by

<PAGE>

         this Plan or the Option Agreement, at any time within twelve (12)
         months after the date of death of such Optionee. In no event may an
         Option be exercised later than the end of the Option Period provided in
         the Option Agreement in accordance with Paragraph 8 hereof. Any
         references herein to an Optionee shall be deemed to include any person
         entitled to exercise an Option after the death of such Optionee under
         the terms of this Plan.

         11. Effect of Plan on Status with Corporation. The fact that an
Optionee has been granted an Option under this Plan shall not confer on such
Optionee any right to continued service on the Board, nor shall it limit the
right of the Corporation to remove such Optionee from service with the
Corporation at any time.

         12. Adjustment Upon Changes in Capitalization; Dissolution or
Liquidation.

                  (a) In the event of a change in the number of shares of Common
         Stock outstanding by reason of a stock dividend, stock split,
         recapitalization, reorganization, merger, exchange of shares, or other
         similar capital adjustment prior to the termination of an Optionee's
         rights under this Plan, equitable proportionate adjustments shall be
         made by the Board in (i) the number and kind of shares which remain
         available under this Plan and (ii) the number, kind, and the Option
         Price of shares subject to the unexercised portion of an Option under
         this Plan. The adjustments to be made shall be determined by the Board
         and shall be consistent with such change or changes in the
         Corporation's total number of outstanding shares; provided, however,
         that no adjustment shall change the aggregate Option Price for the
         exercise of Options granted under this Plan.

                  (b) The grant of Options under this Plan shall not affect in
         any way the right or power of the Corporation or its shareholders to
         make or authorize any adjustment, recapitalization, reorganization, or
         other change in the Corporation's capital structure or its business, or
         any merger or consolidation of the Corporation, or to issue bonds,
         debentures, preferred or other preference stock ahead of or affecting
         the Common Stock or the rights thereof, or the dissolution or
         liquidation of the Corporation, or any sale or transfer of all or any
         part of the Corporation's assets or business.

                  (c) Upon the effective date of the dissolution or liquidation
         of the Corporation, or of a reorganization, merger, or consolidation of
         the Corporation with one or more other corporations in which the
         Corporation is not the surviving corporation, or the transfer of all or
         substantially all of the assets or shares of the Corporation to another
         person or entity, or a tender offer approved by the Board (any such
         transaction being hereinafter referred to as an "Acceleration Event"),
         this Plan and any Options granted hereunder shall terminate unless
         provision is made in writing in connection with such Acceleration Event
         for the continuance of this Plan and for the assumption of Options
         granted hereunder, or the substitution for such Options of new options
         for the shares of the successor corporation, or a parent or a
         subsidiary thereof, with such appropriate adjustments as may be
         determined or approved by the Board, or the successor to the
         Corporation, to the number, kind and Option Price of shares subject to
         such substituted options. In such event, this Plan and Options granted
         hereunder, or the new options substituted therefore, shall continue in
         the manner and under the terms so provided, but any vesting periods or
         other restrictions on exercise that would otherwise apply shall no
         longer be applicable. Upon the occurrence of any Acceleration Event in
         which provision is not made for the continuance of this Plan and for
         the assumption of Options granted hereunder, or the substitution for
         such Options of new options for the shares of a successor corporation
         or a parent or a subsidiary thereof, each Optionee to whom an Option
         has been granted under this Plan (or such person's personal
         representative, the executor or administrator of such person's estate,
         or any person who acquired the right to exercise such Option from such
         person by bequest or inheritance) shall be entitled, prior to the
         effective date of the Acceleration Event,

                           (i) to exercise, in whole or in part, the Optionee's
                  rights under any Option granted to the Optionee without any
                  regard to any restrictions on exercise that would otherwise
                  apply, or

<PAGE>

                           (ii) to surrender any such Option to the Corporation
                  in exchange for receipt of cash equivalent to the amount by
                  which the fair market value of the shares of Common Stock such
                  person would have received had such person exercised the
                  Option in full immediately prior to consummation of the
                  Acceleration Event exceeds the applicable aggregate Option
                  Price. To the extent that a person, pursuant to this
                  Subparagraph 12(c) has a right to exercise or surrender any
                  Option on account of an Acceleration Event which such person
                  otherwise would not have had at that time, such right shall be
                  contingent upon the consummation of the Acceleration Event.

         13. Non-Transferability. An Option granted under this Plan shall not be
assignable or transferable except, in the event of the death of an Optionee, by
will or by the laws of descent and distribution. In the event of the death of an
Optionee, his personal representative, the executor or the administrator of such
Optionee's estate, or the person or persons who acquired by bequest or
inheritance the rights to exercise or to surrender such Options, may exercise or
surrender any Option or portion thereof to the extend not previously exercisable
or surrendered by an Optionee or expired, in accordance with the terms of the
Option Agreement, prior to the expiration of the exercise period as specified in
Subparagraph 10(d) hereof.

         14. Tax Withholding. The Corporation shall have the right to deduct or
otherwise effect a withholding or payment of any amount required by federal or
state laws to be withheld or paid with respect to the grant, exercise or
surrender for cash of any Option or the sale of stock acquired upon the exercise
of an Option in order for the Corporation or any of its subsidiaries to obtain a
tax deduction otherwise available as a consequence of such grant, exercise,
surrender for cash, or sale, as the case may be.

         15. Listing and Registration of Option Shares. Any Option granted under
this Plan shall be subject to the requirement that if at any time the Board
shall determine, in its sole discretion, that the listing, registration, or
qualification of the shares covered thereby upon any securities exchange or
under any state or federal law or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the issuance or purchase of shares
thereunder, such Option may not be exercised in whole or in part unless and
until such listing, registration, qualification, consent, or approval shall have
been effected or obtained free of any conditions not acceptable to the Board.

         16. Exculpation and Indemnification. In connection with this Plan, no
member of the Board shall be personally liable for any act or omission to act in
such person's capacity as a member of the Board, 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 Board, 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 the
approval of the Board) and any costs or expenses (including reasonable counsel
fees) incurred by such persons arising out of, or as a result of, any act or
omission to act in connection with the performance 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.

         17. Amendment and Modification of this Plan. The Board may at any time,
and from time to time, amend or modify this Plan in any respect; provided,
however, that no amendment or modification shall be made that increases the
total number of shares covered by this Plan or effects any change in the
category of persons who may receive Options under this Plan or materially
increases the benefits accruing to Optionees under this Plan unless such change
is approved by the holders of two thirds of the outstanding shares of the Common
Stock. Any amendment or modification of this Plan shall not materially reduce
the benefits under any Option therefore granted to an Optionee under this Plan
without the consent of such Optionee or any permitted transferee.

<PAGE>

         18. Termination and Expiration of this Plan. This Plan may be
abandoned, suspended, or terminated at any time by the Board; provided, however,
that abandonment, suspension, or termination of this Plan shall not affect any
Options then outstanding under this Plan. No Option shall be granted pursuant to
this Plan after ten

         (10) years from the effective date of this Plan as provided in
Paragraph 19 hereof.

         19. Effective Date; Shareholder Approval. This Plan has been adopted by
the Board. The Plan shall not be effective until approved by the Commissioner of
Banks and the holders of two thirds of the outstanding shares of Common Stock.

         20. 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 hereof, and shall not serve as a
basis for interpretation or in construction of this Plan. As used herein, the
masculine gender shall include the feminine and neuter, the singular number, the
plural, and vice versa, whenever such meanings are appropriate.

         21. Expenses of Administration of Plan. All costs and expenses incurred
in the operation and administration of this Plan shall be borne by the
Corporation.

         22. 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. Inspection of Plan. A copy of this Plan, and any amendments thereto
or modifications thereof, 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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