Exhibit 10
NationsBank Corporation Key Employee Stock Plan
Contents Page
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Article 1. Establishment, Purpose, and Duration 40
Article 2. Definitions 40
Article 3. Administration 45
Article 4. Shares Subject to the Plan 46
Article 5. Eligibility and Participation 47
Article 6. Stock Options 47
Article 7. Stock Appreciation Rights 49
Article 8. Restricted Stock 51
Article 9. Performance Shares 52
Article 10. Performance Measures 53
Article 11. Beneficiary Designation 54
Article 12. Deferrals 54
Article 13. Rights of Key Employees 54
Article 14. Change in Control 55
Article 15. Amendment, Modification, and Termination 57
Article 16. Withholding 58
Article 17. Indemnification 58
Article 18. Successors 58
Article 19. Legal Construction 58
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NationsBank Corporation
Key Employee Stock Plan
Article 1. Establishment, Purpose, and Duration
1.1 Establishment of the Plan. NationsBank Corporation, a North Carolina
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "NationsBank Corporation Key
Employee Stock Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock and
Performance Shares.
Subject to approval by the Company's shareholders, the Plan shall
become effective as of January 1, 1995 (the "Effective Date") and shall remain
in effect as provided in Section 1.3 hereof.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
success and enhance the value of the Company by linking the personal interests
of Participants to those of the Company's shareholders, and by providing
Participants with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants upon
whose judgment, interest and special effort the successful conduct of its
operation largely is dependent.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date,
as described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 15 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan after December 31, 2004.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings
set forth below and, when the meaning is intended, the initial letter of the
word is capitalized:
2.1 "Award" means, individually or collectively, a grant under this Plan
of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock or Performance Shares.
2.2 "Award Agreement" means an agreement entered into by the Company and
each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.
2.3 "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
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2.4 "Board" or "Board of Directors" means the Board of Directors of the
Company.
2.5 "Change in Control" of the Company means, and shall be deemed to have
occurred upon, any of the following events:
(a) The acquisition by any Person of Beneficial Ownership of twenty-five
percent (25%) or more of either:
(i) The then-outstanding Shares (the "Outstanding Shares"); or
(ii) The combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
Directors (the "Outstanding Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change in Control: (A) any
acquisition directly from the Company or pursuant to a written agreement to
which the Company is a party, as such written agreement is more particularly
described in Section 55-9A-01(b)(3)f and g of the North Carolina Business
Corporation Act as ratified by the North Carolina General Assembly on June 8,
1989, (B) any acquisition by the Company or any of its Subsidiaries, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its Subsidiaries, (D) any acquisition by
any corporation with respect to which, following such acquisition, more than
fifty percent (50%) of, respectively, the then-outstanding shares of common
stock of such corporation and the combined voting power of the then-outstanding
voting securities of such corporation entitled to vote generally in the
election of directors are then beneficially owned by all or substantially all
of the Persons who were the Beneficial Owners, respectively, of the Outstanding
Shares and Outstanding Voting Securities immediately prior to such acquisition
in substantially the same proportions as their Beneficial Ownership,
immediately prior to such acquisition, of the Outstanding Shares and
Outstanding Voting Securities, as the case may be; or
(b) Individuals who, as of the Effective Date, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board of Directors; provided, however, that any individual who
becomes a Director subsequent to the Effective Date and whose election, or
whose nomination for election by the Company's shareholders, to the Board of
Directors was either (i) approved by a vote of at least a majority of the
Directors then comprising the Incumbent Board or (ii) recommended by a
Nominating Committee comprised entirely of Directors who are then Incumbent
Board members shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act), other actual or threatened
solicitation of proxies or consents or an actual or threatened tender offer; or
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(c) Approval by the Company's shareholders of a reorganization, merger,
or consolidation, in each case, with respect to which all or substantially all
of the Persons who were the Beneficial Owners, respectively, of the Outstanding
Shares and Outstanding Voting Securities immediately prior to such
reorganization, merger, or consolidation do not, following such reorganization,
merger, or consolidation, beneficially own more than fifty percent (50%) of,
respectively, the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger, or consolidation in substantially
the same proportions as their Beneficial Ownership, immediately prior to such
reorganization, merger, or consolidation, of the Outstanding Shares and
Outstanding Voting Securities, as the case may be; or
(d) Approval by the Company's shareholders of:
(i) A complete liquidation or dissolution of the Company; or
(ii) The sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect to which
following such sale or other disposition, more than fifty percent (50%) of,
respectively, the then-outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned by all or substantially all of the Persons who were the
Beneficial Owners, respectively, of the Outstanding Shares and Outstanding
Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their Beneficial Ownership, immediately
prior to such sale or other disposition, of the Outstanding Shares and
Outstanding Voting Securities, as the case may be.
2.6 "Code" means the Internal Revenue Code of 1986, as amended from time
to time. References to the Code shall include the valid and binding
governmental regulations, court decisions and other regulatory and judicial
authority issued or rendered thereunder.
2.7 "Committee" means the Stock Option Committee of the Board, as
specified in Article 3 herein, appointed by the Board to administer the Plan
with respect to grants of Awards.
2.8 "Company" means NationsBank Corporation, a North Carolina
corporation, and any successor as provided in Article 18 herein.
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2.9 "Director" means any individual who is a member of the Board of
Directors of the Company.
2.10 "Disability," with respect to a Participant, means "disability" as
defined from time to time under any long-term disability plan of the Company or
Subsidiary with which the Participant is employed.
2.11 "Earnings Per Share" means "earnings per common share" of the
Company determined in accordance with generally accepted accounting principles
that would be reported in the Company's Annual Report to Shareholders.
2.12 "Effective Date" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.14 "Fair Market Value" shall be determined on the basis of the closing
sale price on the New York Stock Exchange (or such other principal securities
exchange on which the Shares are traded if the Shares are no longer traded on
the New York Stock Exchange) or, if there is no such sale on the relevant date,
then on the last previous day on which a sale was reported.
2.15 "Freestanding SAR" means an SAR that is granted independently of any
Options.
2.16 "Incentive Stock Option" or "ISO" means an option to purchase
Shares, granted under Article 6 herein, and which is designated as an Incentive
Stock Option which is intended to meet the requirements of Section 422 of the
Code.
2.17 "Insider" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.18 "Key Employee" means an employee of the Company, including an
officer of the Company, in a managerial or other important position who, by
virtue of such employee's ability, qualifications and performance, has made
important contributions to the Company, all as determined by the Committee in
its discretion.
2.19 "Named Executive Officer" means, for a calendar year, a Participant
who is one of the group of "covered employees" for such calendar year within
the meaning of Code Section 162(m) or any successor statute.
2.20 "Net Income" means "net income" of the Company determined in
accordance with generally accepted accounting principles that would be reported
in the Company's Annual Report to Shareholders.
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2.21 "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares granted to Key Employees under Article 6 herein, and which is not
intended to meet the requirements of Code Section 422.
2.22 "Option" means an Incentive Stock Option or a Nonqualified
Stock Option.
2.23 "Option Price" means the price at which a Share may be purchased by
a Participant pursuant to an Option.
2.24 "Participant" means a Key Employee who has outstanding an Award
granted under the Plan.
2.25 "Performance-Based Exception" means the performance-based exception
set forth in Code Section 162(m)(4)(C) from the deductibility limitations of
Code Section 162(m).
2.26 "Performance Share" means an Award granted to an Key Employee, as
described in Article 9 herein.
2.27 "Period of Restriction" means the period during which the transfer
of Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, at its discretion), and the Shares are
subject to a substantial risk of forfeiture, as provided in Article 8 herein.
2.28 "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.
2.29 "Restricted Stock" means an Award granted to a Participant pursuant
to Article 8 herein.
2.30 "Retirement" of a Participant means the Participant's termination of
employment with the Company and Subsidiaries (other than by reason of death)
after the Participant has attained both (i) age fifty (50) and (ii) a combined
age and years of "Vesting Service" under the NationsBank Pension Plan equal to
at least seventy-five (75).
2.31 "Return on Assets" means "return on average assets" of the Company
determined in accordance with generally accepted accounting principles that
would be reported in the Company's Annual Report to Shareholders.
2.32 "Return on Equity" means "return on average common shareholders'
equity" of the Company determined in accordance with generally accepted
accounting principles that would be reported in the Company's Annual Report to
Shareholders.
2.33 "Shares" means the shares of Common Stock of the Company.
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2.34 "Stock Appreciation Right" or "SAR" means an Award, granted alone or
in connection with a related Option, designated as an SAR, pursuant to the
terms of Article 7 herein.
2.35 "Subsidiary" means any corporation, partnership, joint venture,
affiliate, or other entity in which the Company has an ownership interest, and
which the Committee designates as a participating entity in the Plan.
2.36 "Tandem SAR" means an SAR that is granted in connection with a
related Option, the exercise of which shall require forfeiture of the right to
purchase a Share under the related Option (and when a Share is purchased under
the Option, the Tandem SAR shall similarly be canceled).
2.37 "Total Shareholder Return" means the percentage change of an initial
investment in Shares over a specified period assuming reinvestment of all
dividends during the period.
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the Stock Option
Committee of the Board or by any other Committee appointed by the Board
consisting of not less than two (2) Directors. All of the members of the
Committee shall comply with the "disinterested administration" rules of Rule
16b-3 under the Exchange Act. The members of the Committee shall be appointed
from time to time by, and shall serve at the discretion of, the Board of
Directors. In addition, any action taken with respect to Named Executive
Officers for purposes of meeting the Performance-Based Exception shall be taken
by the Committee only if all of the members of the Committee are "outside
directors" within the meaning of Code Section 162(m). If all of the members of
the Committee are not "outside directors," such action shall be taken by a
subcommittee of the Committee comprised of at least two (2) members who are
"outside directors."
3.2 Authority of the Committee. Except as limited by law, or by the
Articles of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Key Employees
who shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan; establish, amend, or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 15 herein),
amend the terms and conditions of any outstanding Award to the extent such
terms and conditions are within the discretion of the Committee as provided in
the Plan. Further, the Committee shall make all other determinations which may
be necessary or advisable for the administration of the Plan. As permitted by
law, the Committee may delegate its authority as identified herein.
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3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its shareholders, employees, Participants, and their
estates and beneficiaries.
Article 4. Shares Subject to the Plan
4.1 Number of Shares Available for Grants. Beginning on the Effective
Date, there is hereby reserved for issuance under the Plan a number of shares
equal to:
(a) seventy-five one hundredths of a percent (0.75%) of the outstanding
Shares as of the first business day of each calendar year beginning with
calendar year 1995 and continuing through calendar year 2004; plus
(b) the Shares available for issuance under the Company's 1986 Restricted
Stock Award Plan (the "1986 Plan") as of January 31, 1995.
Such Shares available for grants of Awards in any year shall be increased
by the number of Shares available under this Section 4.1 in previous years but
not covered by Awards granted under this Plan in those years plus any Shares as
to which Awards granted under this Plan have lapsed, expired, terminated, or
been canceled. In addition, any Shares as to which Awards under the Company's
1986 Plan may lapse, expire, terminate, or be canceled, shall also be reserved
and available for issuance or reissuance under this Section 4.1 in any calendar
year. No further awards are to be granted under the 1986 Plan after January 31,
1995; provided that any outstanding awards under the 1986 Plan shall continue
to remain outstanding in accordance with the terms thereof. The number of
Shares reserved for issuance under this Section 4.1 shall be subject to
adjustment as provided in Section 4.3.
In no event shall a Participant receive an Award or Awards during any one
(1) calendar year covering in the aggregate more than Two Hundred Fifty
Thousand (250,000) Shares.
4.2 Lapsed Awards. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any change
in corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether
or not such reorganization comes within the definition of such term in Code
Section 368) or any partial or complete liquidation of the Company, such
adjustment shall be made in the number and class of Shares which may be
delivered under the Plan, and in the number and class of and/or price of Shares
subject to outstanding Awards granted under the Plan, as may be determined to
be appropriate and equitable by the Committee, in its sole discretion, to
prevent dilution or enlargement of rights; provided, however, that the number
of Shares subject to any Award shall always be a whole number.
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Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan are all Key
Employees of the Company, as determined by the Committee, including Key
Employees who are Directors, but excluding Directors who are not Key Employees.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Key Employees those
to whom Awards shall be granted and shall determine the nature and amount of
each Award.
5.3 Foreign Employees. Notwithstanding any provision of the Plan to the
contrary, in order to foster and promote achievement of the purposes of the
Plan or to comply with provisions of laws in other countries in which the
Company operates or has employees, the Committee, in its sole discretion, shall
have the power and authority to (i) determine which Key Employees (if any)
employed outside the United States are eligible to participate in the Plan,
(ii) modify the terms and conditions of any Awards made to such Key Employees
and (iii) establish subplans, modified Option exercise and other terms and
procedures to the extent such actions may be necessary or advisable.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Key Employees in such number, and upon such terms,
and at any time and from time to time as shall be determined by the Committee.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Section 422 of the Code,
or an NQSO whose grant is intended not to fall under Code Section 422.
6.3 Option Price. The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted.
6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant.
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6.5 Exercise of Options. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve and which shall be set forth in
the applicable Award Agreement, which need not be the same for each grant or
for each Participant.
6.6 Payment. Options shall be exercised by the delivery of a written
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares which are
tendered must have been held by the Participant for at least six (6) months
prior to their tender to satisfy the Option Price), or (c) by a combination of
(a) and (b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
6.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable Federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws
applicable to such Shares.
6.8 Termination of Employment. Each Participant's Option Award Agreement
shall set forth the extent to which the Participant shall have the right to
exercise the Option following termination of the Participant's employment with
the Company and its Subsidiaries. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with Participants, need not be uniform among all Options issued
pursuant to this Article 6, and may reflect distinctions based on the reasons
for termination of employment. In that regard, if an Award Agreement permits
exercise of an Option following the death of the Participant, the Award
Agreement shall provide that such Option shall be exercisable to the extent
provided therein by any person that may be empowered to do so under the
Participant's will, or if the Participant shall fail to make a testamentary
disposition of the Option or shall have died intestate, by the Participant's
executor or other legal representative.
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6.9 Nontransferability of Options.
(a) Incentive Stock Options. No ISO granted under this Article 6 may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
ISOs granted to a Participant under the Plan shall be exercisable during his or
her lifetime only by such Participant.
(b) Nonqualified Stock Options. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6 may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, except
as otherwise provided in a Participant's Award Agreement, all NQSOs granted to
a Participant under this Article 6 shall be exercisable during his or her
lifetime only by such Participant.
6.10 No Rights. A Participant granted an Option shall have no rights as a
shareholder of the Company with respect to the Shares covered by such Option
except to the extent that Shares are issued to the Participant upon the due
exercise of the Option.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and conditions of the Plan, SARs
may be granted to Key Employees at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market
Value of a Share on the date of grant of the SAR. The grant price of Tandem
SARs shall equal the Option Price of the related Option.
7.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the under-
lying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may
be exercised only when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.
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7.3 Exercise of Freestanding SARs. Freestanding SARs may be exercised
upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon them.
7.4 SAR Agreement. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Committee shall determine.
7.5 Term of SARs. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
7.6 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the date
of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be
in cash, in Shares of equivalent value, or in some combination thereof.
7.7 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of an SAR
(including, without limitation, the right of the Committee to limit the time of
exercise to specified periods) as may be required to satisfy the requirements
of Section 16 (or any successor rule) of the Exchange Act.
7.8 Termination of Employment. Each SAR Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of
employment. In that regard, if an Award Agreement permits exercise of an SAR
following the death of the Participant, the Award Agreement shall provide that
such SAR shall be exercisable to the extent provided therein by any person that
may be empowered to do so under the Participant's will, or if the Participant
shall fail to make a testamentary disposition of the SAR or shall have died
intestate, by the Participant's executor or other legal representative.
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7.9 Nontransferability of SARs. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.
7.10 No Rights. A Participant granted an SAR shall have no rights as a
shareholder of the Company with respect to the Shares covered by such SAR
except to the extent that Shares are issued to the Participant upon the due
exercise of the SAR.
Article 8. Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to eligible Key Employees in such amounts as the Committee
shall determine.
8.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or Periods, the number of Shares of Restricted Stock granted, and
such other provisions as the Committee shall determine.
8.3 Transferability. Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction established by the Committee and specified in
the Restricted Stock Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock Agreement. All rights with respect to the Restricted
Stock granted to a Participant under the Plan shall be available during his or
her lifetime only to such Participant.
8.4 Other Restrictions. The Committee shall impose such other conditions
and/or restrictions on any Shares of Restricted Stock granted pursuant to the
Plan as it may deem advisable including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Share of Restricted
Stock, restrictions based upon the achievement of specific performance goals
(Company-wide, divisional, and/or individual), time-based restrictions on
vesting following the attainment of the performance goals, and/or restrictions
under applicable Federal or state securities laws.
The Company shall retain the certificates representing Shares of
Restricted Stock in the Company's possession until such time as all conditions
and/or restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted
Stock covered by each Restricted Stock grant made under the Plan shall become
freely transferable by the Participant after the last day of the Period of
Restriction.
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8.5 Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.6 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the underlying Shares
while they are so held. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate.
In the event that any dividend constitutes a "derivative security" or an
"equity security" pursuant to Rule 16(a) under the Exchange Act, such dividend
shall be subject to a vesting period equal to the remaining vesting period of
the Shares of Restricted Stock with respect to which the dividend is paid.
8.7 Termination of Employment. Each Restricted Stock Award Agreement
shall set forth the extent to which the Participant shall have the right to
receive unvested Restricted Shares following termination of the Participant's
employment with the Company and its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreement entered into with Participants, need not be uniform among all
Shares of Restricted Stock issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination of employment. In
amplification but not limitation of the foregoing, in the case of an award of
Restricted Stock to a Named Executive Officer which is intended to qualify for
the Performance-Based Exception, the Award Agreement may provide that such
Restricted Stock may become payable in the event of a termination of employment
by reason of death, Disability or Change in Control, such payment not to occur
before attainment of the related performance goal.
Article 9. Performance Shares
9.1 Grant of Performance Shares. Subject to the terms of the Plan,
Performance Shares may be granted to eligible Key Employees in such amount and
upon such terms, and at any time and from time to time, as shall be determined
by the Committee. The number and/or vesting of Performance Shares granted, in
the Committee's discretion, shall be contingent upon the degree of attainment
of specified performance goals or other conditions over a specified period (the
"Performance Period"). The terms and conditions of an Award of Performance
Shares shall be evidenced by an appropriate Award Agreement.
9.2 Value of Performance Shares. The value of a Performance Share at any
time shall equal the Fair Market Value of a Share at such time.
9.3 Form and Timing of Payment of Performance Shares. During the course
of a Performance Period, the Committee shall determine the number of
Performance Shares as to which the Participant has earned a right to be paid
pursuant to the terms of the applicable Award Agreement. The Committee shall
pay any earned Performance Shares as soon as practical after they are earned in
the form of cash, Shares or a combination thereof (as determined by the
Committee) having an aggregate Fair Market Value equal to the value of the
earned Performance Shares as of the date they are earned. Any Shares used to
pay out earned Performance Shares may be granted subject to any restrictions
deemed appropriate by the Committee. In addition, the Committee, in its
discretion, may cancel any earned Performance Shares and grant Stock Options to
the Participant which the Committee determines to be of equivalent value based
on a conversion formula stated in the Performance Shares Award Agreement.
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The Committee, in its discretion, may also grant dividend equivalents
rights with respect to earned but unpaid Performance Shares as evidenced by the
applicable Award Agreement. Performance Shares shall not have any voting
rights.
Prior to the beginning of a Performance Period (or at such other time as
determined by the Committee), Participants may elect to defer the receipt of
payment of any Performance Shares or other amounts (e.g., dividend equivalents
rights) earned pursuant to the Award Agreement upon such terms as the Committee
deems appropriate and as set forth in the applicable Award Agreement.
9.4 Termination of Employment. Each Performance Share Award Agreement
shall set forth the extent to which the Participant shall have the right to
receive unearned Performance Shares following termination of the Participant's
employment with the Company and its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreements entered into with Participants, need not be uniform among all
Performance Shares awarded pursuant to the Plan, and may reflect distinctions
based on the reasons of termination of employment. In amplification but not
limitation of the foregoing, in the case of an award of Performance Shares to a
Named Executive Officer which is intended to qualify for the Performance-Based
Exception, the Award Agreement may provide that such Performance Shares may
become payable in the event of a termination of employment by reason of death,
Disability or Change in Control, such payment not to occur before attainment of
the related performance goal.
9.5 Nontransferability. Except as otherwise provided in a Participant's
Award Agreement, Performance Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant.
Article 10. Performance Measures
The performance measure(s) to be used for purposes of Awards to Named
Executive Officers which are designed to qualify for the Performance-Based
Exception shall be chosen from among the following alternatives:
(a) Earnings Per Share;
(b) Net Income;
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(c) Return On Assets;
(d) Return On Equity; or
(e) Total Shareholder Return.
The Committee shall have the discretion to adjust the determinations of
the degree of attainment of the preestablished performance goals; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception, and which are held by Named Executive Officers, may not be adjusted
upward (the Committee shall retain the discretion to adjust such Awards
downward).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval.
Article 11. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death
before he or she receives any or all of such benefit. Each such designation
shall revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
Article 12. Deferrals
The Committee may permit a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise
be due to such Participant by virtue of the exercise of an Option or SAR, the
lapse or waiver of restrictions with respect to Restricted Stock, or the satis-
faction of any requirements or goals with respect to Performance Shares. If any
such deferral election is required or permitted, the Committee shall, in its
sole discretion, establish rules and procedures for such payment deferrals.
Article 13. Rights of Key Employees
13.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of
the Company.
For purposes of this Plan, a transfer of a Participant's employment
between the Company and a Subsidiary, or between Subsidiaries, shall not be
deemed to be a termination of employment. Upon such a transfer, the Committee
may make such adjustments to outstanding Awards as it deems appropriate to
reflect the changed reporting relationships.
13.2 Participation. No Key Employee shall have the right to be selected
to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.
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Article 14. Change in Control
14.1 Treatment of Outstanding Awards. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their entire
term;
(b) Any restriction periods and restrictions imposed on shares of
Restricted Stock shall lapse;
(c) The target payout opportunities attainable under all outstanding
Awards of Restricted Stock and Performance Shares shall be deemed to have been
fully earned for the entire Performance Period(s) as of the effective date of
the Change in Control, and the vesting of all Awards shall be accelerated as of
the effective date of the Change in Control; and
(d) Subject to Article 15 herein, the Committee shall have the authority
to make any modifications to the Awards as determined by the Committee to be
appropriate before the effective date of the Change in Control.
14.2 Limitation on Change-in-Control Benefits. It is the intention of the
Company and the Participants to reduce the amounts payable or distributable to
a Participant hereunder if the aggregate Net After Tax Receipts (as defined
below) to the Participant would thereby be increased, as a result of the
application of the excise tax provisions of Section 4999 of the Code.
Accordingly, anything in this Plan to the contrary notwithstanding, in the
event that the certified public accountants regularly employed by the Company
immediately prior to any "change" described below (the "Accounting Firm") shall
determine that receipt of all Payments (as defined below) would subject the
Participant to tax under Section 4999 of the Code, it shall determine whether
some amount of Payments would meet the definition of a "Reduced Amount," (as
defined below). If the Accounting Firm determines that there is a Reduced
Amount, the aggregate Payments shall be reduced to such Reduced Amount in
accordance with the provisions of Section 14.2(b) below.
(a) For purposes of this Section 14.2(a):
(i) A "Payment" shall mean any payment or distribution in the nature
of compensation to or for the benefit of a Participant who is a "disqualified
individual" within the meaning of Section 280G(c) of the Code and which is
contingent on a "change" described in Section 280G(b)(2)(A)(i) of the Code with
respect to the Company, whether paid or payable pursuant to this Plan or
otherwise;
(ii) "Plan Payment" shall mean a Payment paid or payable pursuant to
this Plan (disregarding this Section 14.2);
(iii)"Net After Tax Receipt" shall mean the Present Value of a
Payment, net of all taxes imposed on the Participant with respect thereto under
Sections 1 and 4999 of the Code, determined by applying the highest marginal
rate under Section 1 of the Code which applied to the Participant's Federal
taxable income for the immediately preceding taxable year;
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(iv) "Present Value" shall mean such value determined in accordance
with Section 280G(d)(4) of the Code; and
(v) "Reduced Amount" shall mean the smallest aggregate amount of
Payments which (A) is less than the sum of all Payments and (B) results in
aggregate Net After Tax Receipts which are equal to or greater than the Net
After Tax Receipts which would result if all Payments were paid to or for the
benefit of the Participant.
(b) If the Accounting Firm determines that aggregate Payments should be
reduced to the Reduced Amount, the Committee shall promptly give the
Participant notice to that effect and a copy of the detailed calculation
thereof, and the Participant may then elect, in the Participant's sole
discretion, which and how much of the Payments, including without limitation
Plan Payments, shall be eliminated or reduced (as long as after such election
the Present Value of the aggregate Payments is equal to the Reduced Amount),
and shall advise the Committee in writing of such election within ten (10) days
of the Participant's receipt of notice. If no such election is made by the
Participant within such ten (10) day period, the Committee may elect
which of the Payments, including without limitation Plan Payments, shall be
eliminated or reduced (as long as after such election the Present Value of the
aggregate Payments is equal to the Reduced Amount) and shall notify the
Participant promptly of such election. All determinations made by the
Accounting Firm under this Section 14.2 shall be binding upon the Company and
the Participant and shall be made within sixty (60) days immediately following
the event constituting the "change" referred to above. As promptly as
practicable following such determination, the Company shall pay to or
distribute for the benefit of the Participant such Payments as are then due to
the Participant under this Plan.
(c) At the time of the initial determination by the Accounting Firm
hereunder, it is possible that amounts will have been paid or distributed by
the Company to or for the benefit of the Participant pursuant to this Plan
which should not have been so paid or distributed ("Overpayment") or that
additional amounts which will have not been paid or distributed by the Company
to or for the benefit of the Participant pursuant to this Plan could have been
so paid or distributed ("Underpayment"), in each case, consistent with the
calculation of the Reduced Amount hereunder. In the event that the Accounting
Firm, based either upon the assertion of a deficiency by the Internal Revenue
Service against the Company or the Participant which the Accounting Firm
believes has a high probability of success or controlling precedent or other
substantial authority, determines that an Overpayment has been made, any such
Overpayment paid or distributed by the Company to or for the benefit of the
Participant shall be treated for all purposes as a loan ab initio to the
Participant which the Participant shall repay to the Company together with
interest at the applicable Federal rate provided for in Section 7872(f)(2) of
the Code; provided, however, that no such loan shall be deemed to have been
made and no amount shall be payable by the Participant to the Company if and to
the extent such deemed loan and payment would not either reduce the amount on
which the Participant is subject to tax under Section 1 and Section 4999 of the
Code or generate a refund of such taxes.
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In the event that the Accounting Firm, based upon controlling
precedent or other substantial authority, determines that an Underpayment has
occurred, any such Underpayment shall be promptly paid by the Company to or for
the benefit of the Participant together with interest at the applicable Federal
rate provided for in Section 7872(f)(2) of the Code.
14.3 Termination, Amendment, and Modifications of Change-in-Control
Provisions. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 14 may not be terminated,
amended, or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior
written consent of the Participant with respect to said Participant's
outstanding Awards; provided, however, the Board of Directors, upon
recommendation of the Committee, may terminate, amend, or modify this Article
14 at any time and from time to prior to the date of a Change in Control.
Article 15. Amendment, Modification, and Termination
15.1 Amendment, Modification, and Termination. The Board may at any time
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part; provided, however, that no amendment which requires shareholder
approval in order for the Plan to continue to comply with Rule 16b-3 under the
Exchange Act, including any successor to such Rule, shall be effective unless
such amendment shall be approved by the requisite vote of shareholders of the
Company entitled to vote thereon.
The Committee shall not have the authority to cancel outstanding Awards
and issue substitute Awards in replacement thereof.
15.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award.
15.3 Acceleration of Award Vesting; Waiver of Restrictions.
Notwithstanding any provision of this Plan or any Award Agreement provision to
the contrary, the Committee, in its sole and exclusive discretion, shall have
the power at any time to (i) accelerate the vesting of any Award granted under
the Plan, including without limitation, acceleration to such a date that would
result in said Awards becoming immediately vested, or (ii) waive any
restrictions of any Award granted under the Plan.
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Article 16. Withholding
16.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising as a result of this Plan.
16.2 Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted
Stock, or upon any other taxable event arising as a result of Awards granted
hereunder, Participants may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All such elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.
Article 17. Indemnification
Each person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against
him or her, provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company's Articles of
Incorporation of Bylaws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.
Article 18. Successors
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.
Article 19. Legal Construction
19.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural
shall include the singular and the singular shall include the plural.
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19.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
19.3 Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
19.4 Securities Law Compliance. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions or Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
the plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
19.5 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of North Carolina.
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