Document:

exv10w3xay

 

EXHIBIT 10.3(a)

OILGEAR VARIABLE COMPENSATION PROGRAM

For Corporate Officers and Key Employees

1) PURPOSE

     
The Plan is intended to provide variable compensation for
corporate officers and other key employees of the Company based
on the profitability of the Company and the Company’s
return on equity. In particular, the plan has been designed to
respond to increasing market pressures to provide competitive
compensation packages to officers and key employees.

2) ELIGIBILITY 

     
Participation shall be limited to corporate officers and
selected key employees. The number of units assigned to each
corporate officer will be established by the Compensation
Committee of the Board of Directors at the beginning of each
year and will be determined by an evaluation of each
individual’s responsibility, ability, experience, past
performance and other factors. In a similar manner, the number
of units assigned to selected key employees will be established
by corporate management.

3) INCENTIVE BONUS CALCULATION

     
a) Participants in the Oilgear Variable Compensation Program for
corporate officers and key employees will receive incentive
payments which will not exceed 40% of the total compensation of
all the participants. In the event that the total payout
calculated as below shall exceed this amount, then each
participant’s bonus shall be reduced pro rata.

     
b) No incentive payment shall be made unless the
Corporation’s net income shall exceed the lesser of
$1,000,000 or 4% of shareholders’ equity. For the purposes
of this plan, the term shareholders’ equity shall be the
amount at the beginning of the year and shall include any amount
shown as the minimum pension liability adjustment on the
company’s statement of shareholders’ equity.

     
c) The basic value of each bonus unit is equal to a defined
percentage of available corporate net income.

		
	 	     
    i) Available corporate net income is defined as net income,
    excluding any net gain arising from the sale of the Leeds
    facility, reduced by a carve out amount which is 4% of
    shareholders’ equity minus the remainder of the percent
    return on shareholders’ equity minus 4%, multiplied by
    shareholders’ equity. ( If return on shareholders’
    equity is 8% or greater, the carveout is zero)
	 
	 	     
    ii) The defined percentage is as follows: .15% if the return on
    shareholders’ equity is under 8%; .15% plus an additional
    .005% for each 1% that the return on shareholders’ equity
    exceeds 7% if the return on equity is between 8% and 23%; and
    the return on equity divided by 100 if return on equity exceeds
    23%.

     
d) The basic value of a bonus unit may be increased by up to 50%
based on an individual or a groups performance against specific
financial targets which are set in selected key result areas.
The targets may vary by group and are changed as appropriate.
Each target is worth 0 to 50 points. If a target is achieved it
is worth 50 points but if only a part of the target is achieved
it is worth the result of 50 points multiplied by the percentage
achieved. The total points from all target goals are averaged
and become the percentage used to increase the basic bonus. Key
result areas may include operating margins, return on assets,
inventory turnover, revenue growth and other goals.

4) TERMINATION

     
If a participant’s employment terminates during the year,
the amount of incentive payment, if any, shall be determined by
the Compensation Committee of the Board of Directors. A
participant’s bonus becomes vested on December 31 of
each year and will not be affected by termination after the
completion of the year.

 

5) PAYMENT OF BONUS

     
a) The Company, at the discretion of corporate management, may
make quarterly payments of up to 75% of the bonus accrued, based
on unaudited financial statements.

     
b) Final payment of the full incentive will be made within
75 days after the end of each year, but not before the
Corporate audit is complete.Ex-10.1

 

EXHIBIT 10.1

April 11, 2005 Amendment to the Comprehensive Equity

Compensation Plan for Directors and Employees (the “Plan”)

     1. Section 6(d) of the Plan is hereby amended to remove the last sentence of such section.
Accordingly, after this amendment, Section 6(d) of the Plan shall read as follows:

“(d) The Committee shall determine the time or times at which an Option may be
exercised in whole or in part, and the method or methods by which, and the form or
forms, including, without limitation, cash, Shares, other Awards, or other property,
or any combination thereof, having a Fair Market Value on the exercise date equal to
the relevant exercise price, in which payment of the exercise price with respect
thereto may be made or deemed to have been made.”

     2. Other than the above amendment, the Plan remains in full force and effect unamended hereby.

	 	 	 	 	 
	 	LSB BANCSHARES, INC.Ex-10.2

 

	 	 	 	 	 

EXHIBIT 10.2

AMENDMENT

2003 INCENTIVE STOCK OPTION AGREEMENT

     THIS AMENDMENT is made effective at 5:00 p.m. on the 11th day of April, 2005 (the
“Effective Time”), by the Stock Option and Compensation Committee (the “Committee”) of the Board of
Directors of LSB Bancshares, Inc., a North Carolina corporation (the “Company”). This Amendment
applies to each of the award agreements (the “2003 Award Agreements”) with respect to the stock
options awarded to employees on December 9, 2003 (the “2003 Employee Options”), under the LSB
Bancshares, Inc. Omnibus Stock Incentive Plan (the “Plan”). All capitalized terms used but not
defined herein or in the 2003 Award Agreements have the same meaning given them in the Plan. Each
of the 2003 Award Agreements is amended as specified below.

	1.  	A new Sections 2(e) shall be added to each 2003 Award Agreement as follows:

	 	e.  	Accelerated Vesting. Notwithstanding Section 2(b), vesting of the 2003
Employee Options is accelerated as provided in this Section 2(e).

	 	i.  	The portion of the Participant’s 2003 Employee Option that
would have become first exercisable with respect to one-fifth of the Award
Shares in December of 2005 pursuant to Section 2(b) of the 2003 Award Agreement
shall instead become immediately vested and exercisable at the Effective Time.
	 
	 	ii.  	If the Participant is not at the Effective Time one of the
Company’s “named executive officers” as defined in the Company’s proxy
statement for the 2005 annual meeting of shareholders (the “Named Executives”),
the portion of the Participant’s 2003 Employee Option that would have become
first exercisable with respect to one-fifth of the Award Shares in each of 2007
and 2008 pursuant to Section 2(b) of the 2003 Award Agreement shall instead
become immediately vested and exercisable at the Effective Time.
	 
	 	iii.  	The portion of the Participant’s 2003 Employee Option that has
been deemed to be a Non-Qualified Stock Option with respect to any Award Shares
as a result of the application of the $100,000 limit specified in Section 6.07
of the Plan but that is not yet exercisable shall be immediately vested and
exercisable at the Effective Time.
	 
	 	iv.  	If the Participant is at the Effective Time a Named Executive
other than the Company’s Chief Executive Officer, the portion of the
Participant’s 2003 Employee Option that would have become first exercisable
with respect to one-fifth of the Award Shares in 2008 pursuant to Section 2(b)
of the 2003 Award Agreement shall instead be immediately vested and exercisable
at the Effective Time.
	 
	 	v.  	The portion of the Participant’s 2003 Employee Option that does
not become immediately vested and exercisable with respect to any Award Shares
at the Effective Time pursuant to subsections (i), (ii), (iii) and (iv) above
shall become exercisable in accordance with the provisions of Section 2(b) at
the time or times

 

 

	 	   	it would have become exercisable with respect to such Award Shares in the
absence of subsections (i), (ii), (iii) and (iv) above.
	 
	 	vi.  	To the extent the 2003 Employee Option has become vested and
exercisable in accordance with this Section 2(e), the provisions of subsections
(i) and (ii) of Section 2(b) shall also remain applicable to such exercisable
portion of such Option.

	2.  	A new Sections 2(f) shall be added to each 2003 Award Agreement as follows:

	 	f.  	Definitions With Respect to Section 2(e). For purposes of Section 2(e), the
following terms shall have the meanings set forth below:
	 
	 	   	“Effective Time” means 5:00 p.m. on the 11th day of April, 2005.
	 
	 	   	“2003 Award Agreements” means each of the award agreements with respect to the 2003
Employee Options.
	 
	 	   	“2003 Employee Options” means the Options awarded to employees on December 9, 2003,
under the Plan.

	3.  	The remaining provisions of the 2003 Award Agreements, including but not limited to Sections
3, 4 and 5 regarding exercise following death or termination of employment, shall remain in
full force and effect and shall apply to all of the Participant’s 2003 Employee Options
including those that have vested and become exercisable under Section 2(e). Options that
become fully vested and exercisable pursuant to Section 2(e) will lapse and cease to be
exercisable following death or termination of employment in accordance with Sections 3, 4 and
5 of the 2003 Award Agreements.

     IN WITNESS WHEREOF, the Chairman of the Stock Option and Compensation Committee has signed
this Amendment on behalf of the Committee.

	 	 	 	 	 
	 	LSB BANCSHARES, INC.

 	 
	 	By:  	/s/ Robert B. Smith, Jr.
 	 
	 	 	Robert B. Smith, Jr., Chairman 	 
	 	Date: April 15, 2005 	 

2Ex-10.3

 

	 	 	 	 	 

EXHIBIT 10.3

AMENDMENT

2004 INCENTIVE STOCK OPTION AWARD AGREEMENT FOR AN EMPLOYEE

     THIS AMENDMENT is made effective at 5:00 p.m. on the 11th day of April, 2005 (the
“Effective Time”), by the Stock Option and Compensation Committee (the “Committee”) of the Board of
Directors of LSB Bancshares, Inc., a North Carolina corporation (the “Company”). This Amendment
applies to each of the award agreements (the “2004 Award Agreements”) with respect to the stock
options awarded to employees on December 21, 2004 (the “2004 Employee Options”), under the LSB
Bancshares, Inc. Comprehensive Equity Compensation Plan for Directors and Employees (the “Plan”).
All capitalized terms used but not defined herein or in the 2004 Award Agreements have the same
meaning given them in the Plan. Each of the 2004 Award Agreements is amended as specified below.

	1.  	A new Sections 2(f) shall be added to each 2004 Award Agreement as follows:

	 	f.  	Accelerated Vesting. Notwithstanding Section 2(b), vesting of the 2004
Employee Options is accelerated as provided in this Section 2(f).

	 	vii.  	If the Participant is not at the Effective Time one of the
Company’s “named executive officers” as defined in the Company’s proxy
statement for the 2005 annual meeting of shareholders (the “Named Executives”),
the Participant’s 2004 Employee Option shall become immediately vested and
exercisable with respect to all of the Award Shares at the Effective Time.
	 
	 	viii.  	The portion of the Participant’s 2004 Employee Option that has
been deemed to be a Non-Qualified Stock Option with respect to any Award Shares
pursuant to Section 2(e)(i) shall be immediately vested and exercisable at the
Effective Time.
	 
	 	ix.  	If the Participant is at the Effective Time a Named Executive,
the portion of the Participant’s 2004 Employee Option that would have become
first exercisable with respect to one-fifth of the Award Shares pursuant to
Section 2(b) of the 2004 Award Agreement on the first anniversary of the Date
of Grant shall instead be immediately vested and exercisable at the Effective
Time.
	 
	 	x.  	The portion, if any, of the Participant’s 2004 Employee Option
that does not become immediately vested and exercisable with respect to any
Award Shares at the Effective Time pursuant to subsections (i), (ii) and (iii)
above shall become exercisable in accordance with the provisions of Section
2(b) at the latest time or times it would have become exercisable with respect
to such Award Shares in the absence of subsections (i), (ii) and (iii) above.
For example, if pursuant to subsection (i), (ii) and (iii) above a 2004
Employee Option with respect to 1,000 Award Shares becomes immediately vested
and exercisable with respect to all 200 Award Shares scheduled to become
exercisable on the first anniversary of the Date of Grant, with respect to 150
Award Shares on the second anniversary of the Date of Grant, and with respect
to 100 Award Shares on the third anniversary of the Date of Grant, then such
Option shall become exercisable with respect to the remaining 550 Award Shares
as follows: 50 Award Shares on the second anniversary of the Date of Grant, 100
Award Shares on the third anniversary of the Date of Grant, 200 Award Shares on
the fourth anniversary of

 

 

	 	   	the Date of Grant, and 200 Award Shares on the fifth anniversary of the Date
of Grant.

	 	xi.  	To the extent the 2004 Employee Option has become vested and
exercisable in accordance with this Section 2(f), the provisions of subsections
(i) and (ii) of Section 2(b) shall also remain applicable to such exercisable
portion of such Option.

	2.  	A new Sections 2(g) shall be added to each 2004 Award Agreement as follows:

	 	g.  	Definitions With Respect to Section 2(f). For purposes of Section 2(f), the
following terms shall have the meanings set forth below:
	 
	 	   	“Effective Time” means 5:00 p.m. on the 11th day of April, 2005.
	 
	 	   	“2004 Award Agreements” means each of the award agreements with respect to the 2004
Employee Options.
	 
	 	   	“2004 Employee Options” means the Options awarded to employees on December 21, 2004,
under the Plan.

	3.  	The remaining provisions of the 2004 Award Agreements, including but not limited to Section 3
regarding exercise following death or termination of employment, shall remain in full force
and effect and shall apply to all of the Participant’s 2004 Employee Options including those
that have vested and become exercisable under Section 2(f). Options that become fully vested
and exercisable pursuant to Section 2(f) will lapse and cease to be exercisable following
death or termination of employment in accordance with Section 3 of the 2004 Award Agreements
and Section 6(f) of the Plan.

     IN WITNESS WHEREOF, the Chairman of the Stock Option and Compensation Committee has signed
this Amendment on behalf of the Committee.

	 	 	 	 	 
	 	LSB BANCSHARES, INC.

 	 
	 	By:  	/s/ Robert B. Smith, Jr.
 	 
	 	 	Robert B. Smith, Jr., Chairman 	 
	 	Date: April 15, 2005 	 
	 

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