SECURITY CAPITAL BANCORP
OMNIBUS STOCK OWNERSHIP AND
LONG TERM INCENTIVE PLAN
THIS IS THE OMNIBUS STOCK OWNERSHIP AND LONG TERM INCENTIVE
PLAN ("Plan") of Security Capital Bancorp (the "Company"), a
North Carolina corporation with its principal office in
Salisbury, Rowan County, North Carolina, under which ISOs and Non-
Qualified Options to acquire shares of the Stock, Restricted
Stock, SARs, and/or Units may be granted from time to time to
Eligible Employees of the Company and of any of its subsidiaries
(the "Subsidiaries"), subject to the following provisions:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings set forth below.
Additional terms defined in this Plan shall have the meanings
ascribed to them when first used herein.
Board. The Board of Directors of Security Capital Bancorp.
Code. The Internal Revenue Code of 1986 as amended.
Committee. The Compensation and Personnel Committee of the
Board.
Common Stock. The Common Stock, no par value per share, of
the Company.
Death. The date and time of death of an Eligible Employee
who has received Rights as an Optionee, a Holder, a Unit
Recipient and/or a SAR Recipient as established by the relevant
death certificate.
Disability. The date on which an Eligible Employee who has
received Rights becomes totally and permanently disabled as
determined (i) by the Company's disability insurance carrier (if
the Eligible Employee is covered by a Company-owned disability
policy) or by his or her disability insurance carrier (if the
Eligible Employee is not covered by a Company-owned disability
policy), (ii) under federal Social Security laws and regulations,
or (iii) by a physician acceptable to the Company.
Effective Date. The date as of which this Plan is effective
shall be the date it is adopted by the
Board.
Eligible Employees. Those individuals who meet the
following eligibility requirements:
(i) Such individual must be a full time employee of
the Company or a Subsidiary. For this purpose, an
individual shall be considered to be an "employee" only if
there exists between the Company or a Subsidiary and the
individual the legal and bona fide relationship of employer
and employee. In determining whether such relationship
exists, the regulations of the United States Treasury
Department relating to the determination of such
relationship for the purpose of collection of income tax at
the source on wages shall be applied.
(ii) Such individual falls within the job grade
classifications set forth in Schedule 1. Such job grade
classification mat be amended, expanded, restricted or
otherwise modified by the Committee, subject to ratification
of such action by the Board.
(iii) If the Registration shall not have occurred,
such individual must have such knowledge and experience in
financial and business matters that he or she is capable of
evaluating the merits and risks of the investment involved
in the receipt and/or exercise of a Right.
(iv) Such individual, being otherwise an Eligible
Employee under the foregoing items shall have been selected
by the Committee as a person to whom a Right or Rights shall
be granted under the Plan.
Fair Market Value. With respect to the Company's Common
Stock, the market price per share of such Common Stock determined
by the Committee, consistent with the requirements of Section 422
of the Code and to the extent consistent therewith, as follows,
as of the date specified in the context within which such term is
used: (i) if the Common Stock was traded on a stock exchange on
the date in question, then the Fair Market Value will be equal to
the closing price reported by the applicable composite-
transactions report for such date; (ii) if the Common Stock was
traded over-the-counter on the date in question and was
classified as a national market issue, then the Fair Market Value
will be equal to the last-transaction price quoted by the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), National Market System ("NMS"); (iii) if the
Common Stock was traded over-the-counter on the date in question
but was not classified as a national market issue, then the Fair
Market Value will be equal to the average of the last reported
representative bid and asked prices quoted by the NASDAQ for such
date; and (iv) if none of the foregoing provisions is applicable,
then the Fair Market Value will be determined by the Committee in
good faith on such basis as it deems appropriate. The Committee
shall maintain a written record of its method of determining Fair
Market Value.
ISO. An "incentive stock option" as defined in Section 422
of the Code.
Just Cause Termination. A termination by the Company or a
Subsidiary of an Eligible Employee's employment by the Company or
the Subsidiary in connection with the good faith determination of
the Board or the Board of Directors of the Subsidiary, as
applicable, that the Eligible Employee has engaged in any acts
involving dishonesty or moral turpitude or in any acts that
materially and adversely affect the business, affairs or
reputation of the Company or the Subsidiary.
Non-Qualified Option. Any Option granted under Article III
whether designated by the Committee as a Non-Qualified Option or
otherwise, other than an Option designated by the Committee as an
ISO, or any Option so designated but which, for any reason, fails
to qualify as an ISO pursuant to Section 422 of the Code and the
rules and regulations thereunder.
Option Agreement. The agreement between the Company and an
Optionee with respect to Options granted to such Optionee,
including such terms and provisions as are necessary or
appropriate under Article III.
Options. ISOs and Non-Qualified Options are collectively
referred to herein as "Options;" provided, however, whenever
reference is specifically made only to ISOs or Non-Qualified
Options, such reference shall be deemed to be made to the
exclusion of the other.
Plan Pool. A total of 300,000 shares of authorized, but
unissued, Common Stock, as adjusted pursuant to Section 2.3(b).
which shall be available as Stock under this Plan.
Registration. The registration by the Company under the
1933 Act and applicable state "Blue Sky" and securities laws of
this Plan, the offering of Rights under this Plan, the offering
of Stock under this Plan, and/or the Stock acquirable under this
Plan.
Restricted Stock. The Stock which a Holder shall be
entitled to purchase when, as, in the amounts and for the
Purchase Price(s) described in Article IV.
Restricted Stock Purchase Agreement. The agreement between
the Company and a Holder with respect to Rights to purchase
Restricted Stock, including such terms and provisions as are
necessary or appropriate under Article IV.
Retirement. "Retirement" shall mean (i) the termination of
an Eligible Employee's employment under conditions which would
constitute "normal retirement" or "early retirement" under any
tax qualified retirement plan maintained by the Company or a
Subsidiary, or (ii) termination of employment after attaining age
65.
Rights. The rights to exercise, purchase or receive the
Options, Restricted Stock, Units and SARs described herein.
Rights Agreement. An Option Agreement, a Restricted Stock
Purchase Agreement, a Unit Agreement or a SAR Agreement.
SAR. The Right of a SAR Recipient to receive cash when, as
and in the amounts described in Article VI.
SAR Agreement. The agreement between the Company and a SAR
Recipient with respect to the SAR awarded to the SAR Recipient,
including such terms and conditions as are necessary or
appropriate under Article VI.
SEC. The Securities and Exchange Commission.
Stock. The shares of Common Stock in the Plan Pool
available for issuance pursuant to the valid exercise of a Right
or on which the cash value of a Right is to be based.
Tax Withholding Liability. All federal and state income
taxes, social security tax, and any other taxes applicable to the
compensation income arising from the transaction required by
applicable law to be withheld by the Company.
Transfer. The sale, assignment, transfer, conveyance,
pledge, hypothecation, encumbrance, loan, gift, attachment, levy
upon, assignment for the benefit of creditors, by operation of
law (by will or descent and distribution), transfer by a
qualified domestic relations order, a property settlement or
maintenance agreement, transfer by result of the bankruptcy laws
or otherwise of a share of Stock or of a Right.
Units. The Right of a Unit Recipient to receive a
combination of cash and Stock when, and as in the amounts
described in Article V.
Unit Agreement. The agreement between the Company and Unit
Recipient with respect to the award of Units to the Unit
Recipient, including such terms and conditions as are necessary'
or appropriate under Article V.
1933 Act. The Securities Act of 1933, as amended.
1934 Act. The Securities Exchange Act of 1934, as amended.
ARTICLE II
GENERAL
Section 2.1. Purpose. The purposes of this Plan are to
encourage and motivate employees within specified job grade
classifications to contribute to the successful performance of
the Company and its Subsidiaries and the growth of the market
value of the Company's Common Stock; to achieve a unity of
purpose between such employees and shareholders by providing
ownership opportunities, and, when viewed in conjunction with
benefit plans for members of the Board and the Boards of
Directors of certain Subsidiaries, to achieve a unity of purpose
between such employees and directors in the achievement of the
Company's primary long term performance objectives; and to retain
such employees by rewarding them with potentially tax-
advantageous future compensation. These objectives will be
promoted through the granting of Rights to designated Eligible
Employees pursuant to the terms of this Plan.
Section 2.2. Administration.
(a) The Plan shall be administered by the Committee
which meets, and shall continue to meet, the standards of
Rule l6b-3(c)(2)(i) promulgated by the SEC under the 1934
Act. Subject to the provisions of SEC Rule 16b-3(c)(2)(i),
the Committee may designate any officers or employees of the
Company or any Subsidiary to assist in the administration of
the Plan, to execute documents on behalf of the Committee
and to perform such other ministerial duties as may be
delegated to them by the Committee.
(b) Subject to the provisions of the Plan, the
determinations and the interpretation and construction of
any provision of the Plan by the Committee shall be final
and conclusive upon all persons affected thereby. By way of
illustration and not of limitation, the Committee shall have
the discretion (a) to construe and interpret the Plan and
all Rights granted hereunder and to determine the terms and
provisions (and amendments thereof) of the Rights granted
under the Plan (which need not be identical); (b) to define
the terms used in the Plan and in the Rights granted
hereunder; (c) to prescribe, amend and rescind the rules and
regulations relating to the Plan; (d) to determine the
Eligible Employees to whom and the time or times at which
such Rights shall be granted, the number of shares of Stock,
as and when applicable, to be subject to each Right, the
exercise price or, other relevant purchase price or value
pertaining to a Right, and the determination of leaves of
absence which may be granted to Eligible Employees without
constituting a termination of their employment for the
purposes of the Plan; and (e) to make all other
determinations and interpretations necessary or advisable
for the administration of the Plan.
(c) Notwithstanding the foregoing, or any other
provision of this Plan, the Committee will have no
authority:
(i) to grant Rights to any of its members, whether or
not approved by the Board; or
(ii) to determine any matters, or exercise any
discretion, to the extent that the power to make such
determinations or to exercise such discretion would cause
one or more members of the Committee no longer to be
"Disinterested Directors" within the meaning of SEC Rule 16b-
3.
(d) It shall be in the discretion of the Committee to
grant Options to purchase shares of Stock which qualify as
ISOs under the Code or which will be given tax treatment as
Non-Qualified Options. Any Options granted which fail to
satisfy the requirements for ISOs shall become Non-Qualified
Options.
(e) The intent of the Company is to effect the
Registration. In such event, the Company shall make
available to Eligible Employees receiving Rights and/or
shares of Stock in connection therewith all disclosure
documents required under such federal and state laws. If
such Registration shall not occur, the Committee shall be
responsible for supplying the recipient of a Right and/or
shares of Stock in connection therewith with such
information about the Company as is contemplated by the
federal and state securities laws in connection with
exemptions from the registration requirements of such laws,
as well as providing the recipient of a Right with the
opportunity to ask questions and receive answers concerning
the Company and the terms and conditions of the Rights
granted under this Plan. In addition, if such Registration
shall not occur, the Committee shall be responsible for
determining the maximum number of Eligible Employees and the
suitability of particular persons to be Eligible Employees
in order to comply with applicable federal and state
securities statutes and regulations governing such
exemptions.
(f) In determining the Eligible Employees to whom
Rights may be granted and the number of shares of Stock to
be covered by each Right, the Committee shall take into
account the nature of the services rendered by such Eligible
Employees, their present and potential contributions to the
success of the Company and/or a Subsidiary and such other
factors as the Committee shall deem relevant. An Eligible
Employee who has been granted a Right under this Plan may be
granted an additional Right or Rights under this Plan if the
Committee shall so determine.
If, pursuant to the terms of this Plan, or otherwise in
connection with this Plan, it is necessary that the
percentage of stock ownership of an Eligible Employee be
determined, the ownership attribution provisions set forth
in Section 424(d) of the Code shall be controlling.
(g) The granting of Rights pursuant to this Plan is in
the exclusive discretion of the Committee, and until the
Committee acts, no individual shall have any rights under
this Plan The terms of this Plan shall be interpreted in
accordance with this intent.
Section 2.3. Stock Available For Rights.
(a) Shares of the Stock shall be subject to, or underlying,
grants of Options, Restricted Stock, SARs and Units under this
Plan. The total number of shares of Stock for which, or with
respect to which, Rights may be granted (including the number of
shares of Stock in respect of which SARs and Units may be
granted) under this Plan shall be those designated in the Plan
Pool. In the event that a Right granted under this Plan to any
Eligible Employee expires or is terminated unexercised as to any
shares of Stock covered thereby, such shares thereafter shall be
deemed available in the Plan Pool for the granting of Rights
under this Plan; provided, however, if the expiration or
termination date of a Right is beyond the term of existence of
this Plan as described in Section 7.3, then any shares of Stock
covered by unexercised or terminated Rights shall not reactivate
the existence of this Plan and therefore shall not be available
for additional grants of Rights under this Plan.
(b) In the event the outstanding shares of Common Stock are
increased, decreased changed into or exchanged for a different
number or kind of securities as a result of a stock split reverse
stock split, stock dividend, recapitalization, merger, share
exchange acquisition combination or reclassification appropriate
proportionate adjustments will be made in: (i) the aggregate
number and/or kind of shares of Stock in the Plan Pool that may
be issued pursuant to the exercise of, or that are underlying,
Rights granted hereunder; (ii) the exercise or other purchase
price or value pertaining to, and the number and/or kind of
shares of Stock called for with respect to, or underlying, each
outstanding Right granted hereunder; and (iii) other rights and
matters determined on a per share basis under this Plan or any
Rights Agreement. Any such adjustments will be made only by the
Committee, subject to ratification by the Board, and when so made
will be effective, conclusive and binding for all purposes with
respect to this Plan and all Rights then outstanding. No such
adjustments will be required by reason of (i) the issuance or
sale by the Company for cash of additional shares of its Common
Stock or securities convertible into or exchangeable for shares
of its Common Stock, or (ii) the issuance of shares of Common
Stock in exchange for shares of the capital stock of any
corporation, financial institution or other organization acquired
by the Company or any Subsidiary in connection therewith.
(c) The grant of a Right pursuant to this Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassification, reorganizations or changes of its
capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell. or transfer all or any part of its
business or assets
(d) No fractional shares of Stock shall be issued under
this Plan for any adjustment under Section 2.3(b).
Section 2.4. Severable Provisions. The Company intends that the
provisions of each of Articles III, IV, V and VI, in each case
together with Articles I, II and VII, shall each be deemed to be
effective on an independent basis, and that if one or more of
such Articles, or the operative provisions thereof, shall be
deemed invalid, void or voidable, the remainder of such Articles
shall continue in full force and effect.
ARTICLE Ill
OPTIONS
Section 3.1. Grant of Options.
(a) The Company may grant Options to Eligible Employees as
provided in this Article III. Options will be deemed granted
pursuant to this Article 111 only upon (i) authorization by the
Committee, and (ii) the execution and delivery of an Option
Agreement by the Eligible Employee optionee (the "Optionee") and
a duly authorized officer of the Company. Options will not be
deemed granted hereunder merely upon authorization of such grant
by the Committee. The aggregate number of shares of Stock
potentially acquirable under all Options granted shall not exceed
the total number of shares of Stock in the Plan Pool, less all
shares of Stock potentially acquired under, or underlying, all
other Rights outstanding under this Plan.
(b) The Committee shall designate Options at the time a
grant is authorized as either ISOs or Non-Qualified Options.
The aggregate Fair Market Value (determined as of the date an ISO
is granted) of the shares of Stock as to which an ISO may first
become exercisable by an Optionee in a particular calendar year
(pursuant to Article III and all other plans of the Company
and/or its Subsidiaries) may not exceed $100,000 (the "$100,000
Limitation"). If an Optionee is granted Options in excess of the
$100,000 Limitation, or if such Options otherwise become
exercisable with respect to the number of shares of Stock which
would exceed the $100,000 Limitation, such excess Options shall
be Non-Qualified Options.
Section 3.2. Exercise Price.
(a) The initial exercise price of each Option granted under
this Plan (the "Exercise Price") shall be not less than one
hundred percent (100%) of the Fair Market Value of the Common
Stock on the date of grant of the Option. In the case of ISOs
granted to a shareholder who owns capital stock of the Company
possessing more than ten percent (10%) of the total combined
voting power of all classes of the capital stock of the Company
(a "10% Shareholder"), the Exercise Price of each Option granted
under the Plan to such 10% Shareholder shall not be less than one
hundred and ten percent (110%) of the Fair Market Value of the
Common Stock on the date of grant of the Option.
(b) In its discretion and subject to the provisions of
Section 3.2(a) (as to the establishment of the Exercise Price of
an Option on the date of grant), the Committee may establish that
the Exercise Price of an Option shall be adjusted, upward or
downward, on a quarterly basis, based upon the market value
performance of the Common Stock in comparison with the aggregate
market value performance of one or more indices composed of
publicly-traded financial institutions and financial institution
holding companies deemed by the Committee to be similar (in terms
of asset size, capitalization, trading volumes and other factors
deemed relevant by the Committee) to the Company an "Index" and
the "Indices"; provided, however, that the Exercise Price of an
ISO shall not be adjustable if, under the Code, such adjustable
Exercise Price would disqualify the ISO as an ISO. The Committee
may utilize Indices published by third parties and/or may
construct one or more Indices meeting the characteristics
described above. The Indices utilized will be recalculated
quarterly, including in such quarterly recalculation such
adjustments for stock splits, reverse stock splits and stock
dividends of the companies in the indices and of the Company as
are appropriate. Each such Index shall include no fewer than
fifteen (15) publicly-traded financial institutions and financial
institution holding companies. If more than one Index is
utilized by the Committee, it may give such weighting to each
Index utilized as the Committee may determine in its sole
discretion, consistent with the provisions of this Article III.
Section 3.3. Terms and Conditions of Options.
(a) All Options must be granted within ten (10) years of
the Effective Date.
(b) The Committee may grant ISOs and Non-Qualified Options,
either separately or jointly, to an Eligible Employee.
(c) Each grant of Options shall be evidenced by an Option
Agreement in form and substance satisfactory to the Committee in
its discretion, consistent with the provisions of this Article
III.
(d) At the discretion of the Committee, an Optionee, as a
condition to the granting of an Option, must execute and deliver
to the Company a confidential information agreement approved by
the Committee.
(e) Nothing contained in Article III, any Option Agreement
or in any other agreement executed in connection with the
granting of an Option under this Article III will confer upon any
Optionee any right with respect to the continuation of his or her
status as an employee of, consultant or independent contractor
to, or director of the Company or any of its Subsidiaries.
(f) Except as otherwise provided herein, each Option
Agreement may specify the period or periods of time within which
each Option or portion thereof will first become exercisable (the
"Vesting Period") with respect to the total number of shares of
Stock acquirable thereunder. Such Vesting Periods will be fixed
by the Committee in its discretion, and may be accelerated or
shortened by the Committee in its discretion; provided, however,
that the Vesting Period for each ISO shall be at least two years
(2) from the date such Option was granted.
(g) Not less than one hundred (100) shares of Stock may be
purchased at any one time through the exercise of an Option
unless the number purchased is the total number at that time
purchasable under all Options granted to the Optionee.
(h) An Optionee shall have no rights as a shareholder of
the Company with respect to any shares of Stock covered by
Options granted to the Optionee until payment in full of the
Exercise Price by such Optionee for the shares being purchased.
No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior
to the date such Stock is fully paid for, except as provided in
Sections 2.3(b) and 3.2(b).
(i) All shares of Stock obtained pursuant to an Option
which qualifies as an ISO shall be held in escrow for a period
which ends on the later of (i) two (2) years from the date of the
granting of the ISO or (ii) one (1) year after the issuance of
such shares pursuant to the exercise of the ISO. Such shares of
Stock shall be held by the Company or its designee. The Optionee
who has exercised the ISO shall have all rights of a shareholder,
including, but not limited, to the rights to vote, receive
dividends and sell such shares. The sole purpose of the escrow
is to inform the Company of a disqualifying disposition of the
shares of Stock acquired within the meaning of Section 422 of the
Code, and it shall be administered solely for this purpose.
(j) Additionally and notwithstanding any other provisions
of this Article III, no shares of Stock obtained pursuant to an
Option may be Transferred until at least six (6) months and one
(1) day shall have elapsed since the date such Option was
granted.
Section 3.4. Exercise of Options.
(a) An Optionee must be an Eligible Employee at all times
from the date of grant until the exercise of the Options granted,
except as provided in Section 3.5(b).
(b) An Option may be exercised to the extent exercisable
(i) by giving written notice of exercise to the Company,
specifying the number of full shares of Stock to be purchased
and, if applicable, accompanied by full payment of the Exercise
Price thereof and the amount of the Tax Withholding Liability
pursuant to Section 3.4(c) below; and (ii) by giving assurances
satisfactory to the Company that the shares of Stock to be
purchased upon such exercise are being purchased for investment
and not with a view to resale in connection with any distribution
of such shares in violation of the 1933 Act; provided, however,
that in the event the prior occurrence of the Registration or in
the event resale of such Stock without such Registration would
otherwise be permissible, this second condition will be
inoperative if, in the opinion of counsel for the Company, such
condition is not required under the 1933 Act or any other
applicable law, regulation or rule of any governmental agency.
All ISOs must be exercised sequentially in the order granted
( c) As a condition to the issuance of the shares of Stock
upon full or partial exercise of a Non-Qualified Option, the
Optionee will pay to the Company in cash, or in such other form
as the Committee may determine in its discretion, the amount of
the Company's Tax Withholding Liability required in connection
with such exercise.
(d) The Exercise Price of an Option shall be payable to the
Company either (i) in United States dollars, in cash or by check,
bank draft or money order payable to the order of the Company, or
(ii) at the discretion of the Committee, through the delivery of
outstanding shares of the Common Stock owned by the Optionee with
a Fair Market Value as of the date of delivery equal to the
Exercise Price, or (iii) at the discretion of the Committee by a
combination of (i) and (ii) above. No shares of Stock shall be
delivered until full payment has been made. Except as provided
in Sections 2.3(b) and 3.2(b), the Committee may not approve a
reduction of the Exercise Price of any such Option, or the
cancellation of any such Option and the regranting thereof to the
same Optionee at a lower Exercise Price, at a time when the Fair
Market Value of the Common Stock is lower than it was when such
Option was granted.
Section 3.S. Term and Termination of Option.
(a) The Committee shall determine, and each Option
Agreement shall state, the expiration date or dates of each
Option, but such expiration date shall be not later than ten (10)
years after the date such Option was granted (the "Option
Period"). In the event an ISO is granted to a 10% Shareholder,
the expiration date or dates of each Option Period shall be not
later than five (5) years after the date such Option is granted.
The Committee, in its discretion. may extend the expiration date
or dates of an Option Period after such date was originally set;
provided, however, such expiration date may not exceed the
maximum expiration date described in this Section 3.5(a).
(b) To the extent not previously exercised, each Option
will terminate upon the expiration of the Option Period specified
in the Option Agreement; provided, however, that, subject to the
provisions of Section 3.5(a), each such Option will terminate
upon the earlier of: (i) ninety (90) days after the date that
the Optionee ceases to be an Eligible Employee for any reason,
other than by reason of Death, Disability, Retirement or a Just
Cause Termination; (ii) twelve (12) months after the date that
the Optionee ceases to be an Eligible Employee by reason of
Death, Disability or Retirement; or (iii) immediately as of the
date that the Optionee ceases to be an Eligible Participant by
reason of a Just Cause Termination. Any portions of Options not
exercised within the foregoing periods shall terminate.
Section 3.6. Restrictions On Transfer. An Option granted
under Article III may not be Transferred except by will or the
laws of descent and distribution and, during the lifetime of the
Optionee to whom it was granted, may he exercised only by such
Optionee.
Section 3.7. Stock Certificates. Certificates
representing the Stock issued pursuant to the exercise of Options
will bear all legends required by law and necessary to effectuate
the provisions hereof. The Company may place a "stop transfer"
order against such shares of Stock until all restrictions and
conditions set forth in this Article Ill, the applicable Option
Agreement, and in the legends referred to in this Section 3.7
have been complied with.
Section 3.8. Amendment and Discontinuance. The Board may
amend, suspend or discontinue the provisions of this Article III
at any time or from time to time; provided that no action of the
Board will cause ISOs granted under this Plan not to comply with
Section 422 of the Code unless the Board specifically declares
such action to be made for that purpose; and, provided, further,
that no such action may, without the approval of the shareholders
of the Company, materially increase (other than by reason of an
adjustment pursuant to Section 2.3(b) hereof) the maximum
aggregate number of shares of Stock in the Plan Pool, materially
increase the benefits accruing to Eligible Employees or
materially modify eligibility requirements for participation
under this Article III. Moreover, no such action may alter or
impair any Option previously granted under this Article Ill
without the consent of the applicable Optionee.
Section 3.9. Compliance with Rule 16b-3. With respect to
persons subject to Section 16 of the 1934 Act, transactions under
this Article III are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act.
To the extent any provision of this Article III or action by the
Board or the Committee fails so to comply, it shall be deemed
null and void, to the extent permitted by law and deemed
advisable by the Committee.
ARTICLE IV
RESTRICTED STOCK GRANTS
Section 4.1. Grants of Restricted Stock.
(a) The Company may grant Rights to acquire Restricted
Stock to Eligible Employees as provided in this Article IV.
Rights to acquire shares of Restricted Stock will be deemed
granted only upon (i) authorization by the Committee and (ii) the
execution and delivery of a Restricted Stock Purchase Agreement
by the Eligible Employee to whom such Restricted Stock is to be
issued (the "Holder") and a duly authorized officer of the
Company. Rights to acquire shares of Restricted Stock will not
be deemed to have been granted merely upon authorization by the
Committee. The aggregate number of shares of Restricted Stock
potentially acquirable under all Rights to acquire Restricted
Stock shall not exceed the total number of shares of Stock in the
Plan Pool, less all shares of Stock potentially acquirable under,
or underlying, all other Rights outstanding under this Plan.
(b) Each grant of a Right to acquire Restricted Stock
pursuant to this Article IV will be evidenced by a Restricted
Stock Purchase Agreement between the Company and the Holder in
form and substance satisfactory to the Committee in its sole
discretion, consistent with this Article IV. Each Restricted
Stock Purchase Agreement will specify the purchase price per
share (the "Purchase Price") with respect to the Restricted Stock
to be issued to the Holder thereunder, to be fixed by the
Committee in its discretion. The Purchase Price will be payable
to the Company in United States dollars in cash or by check or,
such other legal consideration as may be approved by the
Committee, in its discretion.
(c) Without limiting the foregoing, each Restricted Stock
Purchase Agreement shall include the following terms and
conditions:
(i) At the discretion of the Committee, the Holder, as a
condition to such issuance, shall be required to execute and
deliver to the Company a confidential information agreement
approved by the Committee.
(ii) Nothing contained in this Article IV, any Restricted
Stock Purchase Agreement or in any other agreement executed
in connection with the issuance of Restricted Stock under
this Article IV will confer upon any Holder any right with
respect to the continuation of his or her status as an
employee of, consultant or independent contractor to, or
director of, the Company or any of its Subsidiaries.
(iii) Except as otherwise set forth in this Article IV, as
of the date of a grant of a Right to acquire Restricted
Stock (the "Grant Date"), all of the shares of Restricted
Stock to be issued pursuant to the Restricted Stock Purchase
Agreement (the "Total Award Shares") will be deemed Unvested
(i.e., not available for purchase by the Holder) and will
become Vested (i.e.. available for purchase by the Holder)
according to the following schedule:
(A) Upon and after such first anniversary of the
Grant Date, twenty-five percent (25%) of the Total
Award Shares will have become fully Vested, subject to
the Holder's remaining an Eligible Employee.
(B) The remaining Total Award Shares will become
Vested at rate six and one-quarter percent (6.25%) of
the Total Award Shares at the end of every period of
three (3) months that elapses after such first
anniversary of the Grant Date, so that all of the Total
Award Shares will have become Vested, subject to the
Holder's remaining an Eligible Employee through such
period, on the fourth anniversary of such Grant Date.
Section 4.2. Restrictions on Transfer of Restricted Stock.
(a) Rights to acquire Restricted Stock may not be
Transferred, and shares of Restricted Stock acquired by a Holder
may be Transferred only in accordance with the specific
limitations on the Transfer of Restricted Stock imposed by
applicable state or federal securities laws or set forth below,
and subject to certain undertakings of the transferee set forth
in Section 4.2(c). All Transfers of Restricted Stock not meeting
the conditions set forth in this Section 4.2(a) are expressly
prohibited.
(b) Any Transfer of Rights to acquire Restricted Stock and
any prohibited Transfer of Restricted Stock is void and of no
effect. Should such a Transfer purport to occur, the Company may
refuse to carry out the Transfer on its books, attempt to set
aside the Transfer, enforce any undertaking or right under this
Section 4.2(b), and/or exercise any other legal or equitable
remedy.
(c) Any Transfer of Restricted Stock that would otherwise
be permitted under the terms of this Plan is prohibited unless
the transferee executes such documents as the Company may
reasonably require to ensure the Company's rights under a
Restricted Stock Purchase Agreement and this Article IV are
adequately protected with respect to the Restricted Stock so
Transferred. Such documents may include, without limitation, an
agreement by the transferee to be bound by all of the terms of
this Plan applicable to Restricted Stock and of the applicable
Restricted Stock Purchase Agreement, as if the transferee were
the original Holder of such Restricted Stock.
(d) To facilitate the enforcement of the restrictions on
Transfer set forth in this Article IV, the Committee may, at its
discretion, require the Holder of shares of Restricted Stock to
deliver the certificate(s) for such shares with a stock power
executed in blank by the Holder and the Holder's spouse, to the
Secretary of the Company or his or her designee, and the Company
may hold said certificate(s) and stock power(s) in escrow and
take all such actions as are necessary to insure that all
Transfers and/or releases are made in accordance with the terms
of this Plan. The certificates may be held in escrow so long as
the shares of Restricted Stock whose ownership they evidence are
subject to any restriction on Transfer under this Article IV or
under an Restricted Stock Purchase Agreement. Each Holder
acknowledges that the Secretary of the Company (or his or her
designee) is so appointed as the escrow holder with the foregoing
authorities as a material inducement to the issuance of shares of
Restricted Stock under this Article IV, that the appointment is
coupled with an interest, and that it accordingly will be
irrevocable. The escrow holder will not be liable to any party
to an Restricted Stock Purchase Agreement (or to any other party)
for any actions or omissions unless the escrow holder is grossly
negligent relative thereto. The escrow holder may rely upon any
letter, notice or other document executed by any signature
purported to be genuine.
Section 4.3. Termination.
(a) The Committee shall determine, and each Restricted
Stock Purchase Agreement shall state, the expiration date or
dates of each grant of a Right to acquire Restricted Stock, but
such expiration date shall be not later than ten (10) years after
the date such grant of a Right to acquire Restricted Stock is
made (the "Restricted Stock Period"). The Committee, in its
discretion, may extend the expiration date or dates of a
Restricted Stock Period after such date was originally set;
provided, however, such expiration date may not exceed the
maximum expiration date described in this Section 4.3(a).
(b) To the extent not previously exercised, each grant of
Restricted Stock will terminate upon the expiration of the
Restricted Stock Period specified in the Restricted Stock
Purchase Agreement; provided however, that, subject to
Section 4.3(a), each such grant of Restricted Stock will
terminate upon the earlier of: (i) ninety (90) days after the
date that the Holder ceases to be an Eligible Employee for any
reason, other than by reason of Death, Disability, Retirement or
a Just Cause Termination; (ii) twelve (12) months after the date
that the Holder ceases to be an Eligible Employee by reason of
Death, Disability or Retirement; or (iii) immediately as of the
date that the Holder ceases to be an Eligible Participant by
reason of a Just Cause Termination. Any portions of the grant of
Restricted Stock to a Holder not exercised within the foregoing
periods shall terminate.
Section 4.4. Compliance with Law. Notwithstanding any other
provision of this Article IV, Restricted Stock may be issued
pursuant to this Article IV only after there has been compliance
with all applicable federal and state securities laws, and such
issuance will be subject to this overriding condition. The
Company may include shares of Restricted Stock in a Registration,
but will not be required to register or qualify Restricted Stock
with the SEC or any state agency, except that the Company will
register with, or as required by local law, file for and secure
an exemption from such registration requirements from, the
applicable securities administrator and other officials of each
jurisdiction in which an Eligible Employee would be issued
Restricted Stock hereunder prior to such issuance.
Section 4.5. Stock Certificates. Certificates representing the
Restricted Stock issued pursuant to this Article IV will bear all
legends required by law and necessary to effectuate the
provisions hereof. The Company may place a "stop transfer" order
against shares of Restricted Stock until all restrictions and
conditions set forth in this Article IV, the applicable
Restricted Stock Purchase Agreement and in the legends referred
to in this Section 4.5 have been complied with.
Section 4.6. Market Standoff. To the extent requested by the
Company and any underwriter of securities of the Company in
connection with a firm commitment underwriting, no Holder of any
shares of Restricted Stock will Transfer any such shares not
included in such underwriting, or not previously registered in a
Registration, during the one hundred twenty (120) day period
following the effective date of the registration statement filed
with the SEC under the 1933 Act in connection with such offering.
Section 4.7. Amendment and Discontinuance. The Board may
amend, suspend or discontinue this Article IV at any time or from
time to time; provided, that no such action of the Board shall
alter or impair any rights previously granted to Holders under
this Article IV without the consent of such affected Holders; and
provided, further, that no such action may, without the approval
of the Company's shareholders, materially increase (other than by
reason of an adjustment pursuant to Section 2.3(b) hereof) the
maximum aggregate number of shares of Stock in the Plan Pool,
materially increase the benefits accruing to Eligible Employees
under this Article IV or materially modify the requirements as to
eligibility for participation under this Article IV. Moreover,
no such action may alter or impair any Right to acquire
Restricted Stock previously granted under this Article IV with
the consent of the applicable Holder.
Section 4.8. Compliance with Rule 16b-3. With respect to
persons subject to Section 16 of the 1934 Act, transactions under
this Article IV are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act.
To the extent any provision of this Article IV or action by the
Board or the Committee fails so to comply, it shall be deemed
null and void to the extent permitted by law and deemed advisable
by the Committee.
ARTICLE V
LONG-TERM INCENTIVE COMPENSATION UNITS
Section 5.1. Awards of Units.
(a) The Committee may grant awards of Units to Eligible
Employees as provided in this Article V. Units will be deemed
granted only upon (i) authorization by the Committee and (ii) the
execution and delivery of a Unit Agreement by the Eligible
Employee to whom Units are to be granted (a "Unit Recipient") and
an authorized officer of the Company. Units will not be deemed
granted merely upon authorization by the Committee. Units may be
granted in each of the years 1994 through 2002 in such amounts
and to such Unit Recipients as it may determine in its sole
discretion subject to the limitation in Section 5.2 below.
(b) Each grant of Units pursuant to this Article V will be
evidenced by a Unit Award Agreement between the Company and the
Unit Recipient in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Article V.
(c) Except as otherwise provided herein, Units will be
distributed only after the end of a performance period of two or
more years ("Performance "Period") beginning with the year in
which such Units were awarded. The Performance Period shall be
set by the Committee for each year's awards.
(d) The percentage of the Units awarded under this
Section 5.1 or credited pursuant to Section 5.5 that will be
distributed to Unit Recipients shall depend on the levels of
financial performance and other performance objectives achieved
during each year of the Performance Period; provided, however,
that the Committee may adopt one or more performance categories
or eliminate all performance categories other than financial
performance. Financial performance shall be based on the
consolidated results of the Company and its Subsidiaries prepared
on the same basis as the financial statements published for
financial reporting purposes and determined in accordance with
Section 5.1(e) below. Other performance categories adopted by
the Committee shall be based on measurements of performance as
the Committee shall deem appropriate.
(e) Distributions of Units awarded will be based on the
Company's financial performance with results from other
performance categories applied as a factor, not exceeding one
(1), against financial results. The annual financial and other
performance results will be averaged over the Performance Period
and translated into percentage factors according to graduated
criteria established by the Committee for the entire Performance
Period. The resulting percentage factors shall determine the
percentage of Units to be distributed.
No distributions of Units, based on financial performance
and other performance, shall he made if a minimum average
percentage of the applicable measurement of performance, to be
established by the Committee, is not achieved for the Performance
Period. The performance levels achieved for each Performance
Period and percentage of Units to be distributed shall be
conclusively determined by the Committee.
(f) The percentage of Units awarded which Unit Recipients
become entitled to receive based on the levels of performance
(including those Units credited under Section 5.5) will be
determined as soon as practicable after each Performance Period
and are called "Retained Units."
(g) As soon as practical after determination of the number
of Retained Units, such Retained Units shall be distributed in
the form of a combination of shares and cash consisting of a
number of shares of Stock equal to sixty percent (60%) of the
number of Retained Units and cash equal in value to forty percent
(40%) of the number of Retained Units, as determined under
Section 5.7(e). The Units awarded, but which Unit Recipients do
not become entitled to receive, shall be canceled
(h) Notwithstanding any other provision in this Article V,
the Committee, if it determines in its sole discretion that it is
necessary or advisable under the circumstances, may adopt rules
pursuant to which Eligible Employees by virtue of hire, or
promotion or upgrade to a higher job grade classification, or
special individual circumstances, may be granted the total award
of Units or any portion thereof, with respect to one or more
Performance Periods that began in prior years and at the time of
the awards have not yet been completed.
Section 5.2. Limitations. The aggregate number of shares of
Stock potentially distributable under all Units granted,
including those Units credited pursuant to Section 5.5, shall not
exceed the total number of shares of Stock in the Plan Pool, less
all shares of Stock potentially acquirable under. or underlying,
all other Rights outstanding under this Plan.
Section 5.3. Terms and Conditions.
(a) All awards of Units must be made within ten (10) years
of the Effective Date.
(b) The award of Units shall be evidenced by a Unit Award
Agreement in form and substance satisfactory to the Committee in
its discretion, consistent with the provisions of this Article V.
(c) At the discretion of the Committee, a Unit Recipient,
as a condition to the award of Units, must execute and deliver to
the Company a confidential information agreement approved by the
Committee.
(d) Nothing contained in this Article V, any Unit Award
Agreement or in any other agreement executed in connection with
the award of Units under this Article V will confer upon any Unit
Recipient any right with respect to the continuation of his or
her status as an employee of, consultant or independent
contractor to, or director of, the Company or any of its
Subsidiaries.
(e) A Unit Recipient shall have no rights as a shareholder
of the Company with respect to any Units until the distribution
of shares of Stock in connection therewith. No adjustment shall
be made in the number of Units for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior
to the date such Stock is fully paid for, except as provided in
Sections 2.3(b) and 5.6.
Section 5.4. Special Distribution Rules.
(a) Except as otherwise provided in this Section 5.4, a
Unit Recipient must be an Eligible Employee from the date a Unit
is awarded to him or her continuously through and including the
date of distribution of such Unit.
(b) In case of the Death or Disability of a Unit Recipient
prior to the end of any Performance Period, whether before or
after any event set forth in Section 5.4(b) below, the number of
Units awarded to the Unit Recipient for such Performance Period
shall be reduced pro rata based on the number of months remaining
in the Performance Period after the month of Death or Disability.
The remaining Units, reduced in the discretion of the Committee
to the percentage indicated by the levels of performance achieved
prior to the date of Death or Disability, if any, shall be
distributed within a reasonable time after Death or Disability.
All other Units awarded to the Unit Recipient for such
Performance Period shall be canceled.
(c) If a Unit Recipient enters into Retirement prior to the
end of any Performance Period, the Units awarded to such Unit
Recipient under this Article V, and not yet distributed, shall be
prorated to the end of the year in which such Retirement occurs
and distributed at the end of the Performance Period based upon
the Company's performance for such period.
(d) In case of the termination of the Unit Recipient's
status as an Eligible Employee prior to the end of any
Performance Period for any reason other than Death, Disability or
Retirement, all Units awarded to the Unit Recipient with respect
to any such Performance Period shall be immediately forfeited and
canceled.
(e) Upon a Unit Recipient's promotion to a higher job grade
classification, the Committee may award to the Unit Recipient the
total Units, or any portion thereof, which are associated with
the higher job grade classification for the current Performance
Period.
Notwithstanding any other provision of the Plan, the
Committee may reduce or eliminate awards to a Unit Recipient who
has been demoted to a lower job grade classification, and where
circumstances warrant, may permit continued participation,
proration or early distribution, or a combination thereof, of
awards which would otherwise be canceled.
Section 5.5. Dividend Equivalent Units. On each record date
for dividends on the Common Stock, an amount equal to the
dividend payable on one share of Common Stock will be determined
and credited (the "Dividend Equivalent Credit") on the payment
date to each Unit Recipient's account for each Unit which has
been awarded to the Unit Recipient and not distributed or
canceled. Such amount will be converted within the account to an
additional number of Units equal to the number of shares of
Common Stock that could be purchased at Fair Market Value on such
dividend payment date. These Units will be treated for purposes
of this Article V in the same manner as those Units granted
pursuant to Section 5.1.
Section 5.6. Adjustments. In addition to the provisions of
Section 2.3(b), if an extraordinary change occurs during a
Performance Period which significantly alters the basis upon
which the performance levels were established under Section 5.1
for that Performance Period, to avoid distortion in the operation
of this Article V, but subject to Section 5.2, the Committee may
make adjustments in such performance levels to preserve the
incentive features of this Article V, whether before or after the
end of the Performance Period, to the extent it deems appropriate
in its sole discretion, which adjustments shall be conclusive and
binding upon all parties concerned. Such changes may include,
without limitation, adoption of, or changes in, accounting
practices tax laws and regulatory or other laws or regulations;
economic changes not in the ordinary course of business cycles;
or compliance with judicial decrees or other legal authorities.
Section 5.7. Other Conditions.
(a) No person shall have any claim to be granted an award
of Units under this Article V and there is no obligation for
uniformity of treatment of Eligible Employees or Unit Recipients
under this Article IV.
(b) The Company shall have the right to deduct from any
distribution or payment in cash under this Article V, and the
Unit Recipient or other person receiving shares of Stock under
this Article V shall be required to pay to the Company, any Tax
Withholding Liability. The number of shares of Stock to be
distributed to any individual Unit Recipient may be reduced by
the number of shares of Stock, the Fair Market Value of which on
the Distribution Date (as defined in Section 5.7(d) below) is
equivalent to the cash necessary to pay any Tax Withholding
Liability, where the cash to be distributed is not sufficient to
pay such Tax Withholding Liability, or the Unit Recipient may
deliver to the Company cash sufficient to pay such Tax
Withholding Liability.
(c) Any distribution of shares of Stock under this Article
V may be delayed until the requirements of any applicable laws or
regulations, and any stock exchange or NASDAQ-NMS requirements,
are satisfied. The shares of Stock distributed under this
Article V shall be subject to such restrictions and conditions on
disposition as counsel for the Company shall determine to be
desirable or necessary under applicable law.
(d) For the purpose of distribution of Units in cash, the
value of a Unit shall be the Fair Market Value on the
Distribution Date. The "Distribution Date" shall be the first
business day of March 15th in the year of distribution, except
that in the case of special distributions the Distribution Date
shall be the first business day of the month in which the
Committee determines the distribution.
(e) Notwithstanding any other provision of this Article V,
no Dividend Equivalent Credits shall be made and no distributions
of Units shall be made if at the time a Dividend Equivalent
Credit or distribution would otherwise have been made:
(i) The regular quarterly dividend on the Common Stock
has been omitted and not subsequently paid or there exists
any default in payment of dividends on any such outstanding
shares of capital stock of the Company;
(ii) The rate of dividends on the Common Stock is lower
than at the time the Units to which the Dividend Equivalent
Credit relates were awarded, adjusted for any change of the
type referred to in Section 2.3(b).
(iii) Estimated consolidated net income of the Company
for the twelve-month period preceding the month the Dividend
Equivalent Credit or distribution would otherwise have been
made is less than the sum of the amount of the Dividend
Equivalent Credits and Units eligible for distribution under
this Article V in that month plus all dividends applicable
to such period on an accrual basis, either paid, declared or
accrued at the most recently paid rate, on all outstanding
shares of Common Stock; or
(iv) The Dividend Equivalent Credit or distribution
would result in a default in any agreement by which the
Company is bound.
(f) In the event net income available under Section 5.7(e)
above for Dividend Equivalent Credits and awards eligible for
distribution under this Article V is sufficient to cover part but
not all of such amounts, the following order shall be applied in
making payments: (i) Dividend Equivalent Credits, (ii) Units
eligible for distribution under this Article V.
Section 5.8. Designation of Beneficiaries. A Unit Recipient may
designate a beneficiary or beneficiaries to receive all or part
of the Stock and/or cash to be distributed to the Unit Recipient
under this Article V in case of Death. A designation of
beneficiary, may be replaced by a new designation or may be
revoked by the Unit Recipient at any time. A designation or
revocation shall be on a form to be provided for that purpose and
shall be signed by the Unit Recipient and delivered to the
Company prior to the Unit Recipient's Death. In case of the Unit
Recipient's Death, the amounts to be distributed to the Unit
Recipient under this Article V with respect to which a
designation of beneficiary has been made (to the extent it is
valid and enforceable under applicable law) shall be distributed
in accordance with this Article V to the designated beneficiary
or beneficiaries. The amount distributable to a Unit Recipient
upon Death and not subject to such a designation shall be
distributed to the Unit Recipient's estate. If there shall be
any question as to the legal right of any beneficiary to receive
a distribution under this Article V, the amount in question may
be paid to the estate of the Unit Recipient, in which event the
Company shall have no further liability to anyone with respect to
such amount.
Section 5.9. Restrictions On Transfer. Units granted under
Article V may not be Transferred, except as provided in Section
5.8, and, during the lifetime of the Unit Recipient to whom it
was awarded, cash and stock receivable with respect to Units may
be received only by such Unit Recipient.
Section 5.10. Amendment and Discontinuance. No award of Units
may be granted under this Article V after April 27, 2002. The
Board may amend, suspend or discontinue the provisions of this
Article V at any time or form time to time, provided, that no
such action may, without the approval of the shareholders of the
Company, materially increase (other than by reason of an
adjustment pursuant to Section 2.3(b) hereof) the maximum number
of shares of Stock in the Plan Pool, materially increase the
benefits accruing to Eligible Employees under this Article V or
materially modify the eligibility requirements for participation
under this Article V.
Section 5.11. Compliance with Rule 16b-3. With respect to
persons subject to Section 16 of the 1934 Act, transactions under
this Article V are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act.
To the extent any provision of this Article V or action by the
Board or the Committee fails so to comply, it shall be deemed
null and void, to the extent permitted by law and deemed
advisable by the Committee.
ARTICLE VI
STOCK APPRECIATION RIGHTS
Section 6.1. Grants of SARs.
(a) The Company may grant SARs under this Article VI. SARs
will be deemed granted only upon (i) authorization by the
Committee and (ii) the execution and delivery of a SAR Agreement
by the Eligible Employee to whom the SARs are to be granted (the
"SAR Recipient") and a duly authorized officer of the Company.
SARs will not be deemed granted merely upon authorization by the
Committee. The aggregate number of shares of Stock which shall
underlie SARs granted hereunder shall not exceed the total number
of shares of Stock in the Plan Pool less all shares of Stock
potentially acquirable under, or underlying, all other Rights
outstanding under this Plan.
(b) Each grants of SARs pursuant to this Article VI shall
be evidenced by a SAR Agreement between the Company and the SAR
Recipient, in form and substance satisfactory to the Committee in
its sole discretion, consistent with this Article VI.
Section 6.2. Terms and Conditions of SARs.
(a) All SARs must be granted within ten (10) years of the
Effective Date.
(b) Each SAR issued pursuant to this Article VI shall have
an initial base value (the "Base Value") equal to the Fair Market
Value of a share of Common Stock on the date of issuance of the
SAR (the "SAR Issuance Date").
(c) In its discretion and subject to the provisions of
Section 6.2(b) (as to the establishment of the initial Base Value
of a SAR), the Committee may establish that the Base Value of a
SAR shall be adjusted, upward or downward, on a quarterly basis,
based upon the market value performance of the Common Stock in
comparison with the aggregate market value performance of the
Index or Indices utilized under Section 3.2(b).
(d) At the discretion of the Committee, a SAR Recipient, as
a condition to the granting of a SAR, must execute and deliver to
the Company a confidential information agreement approved by the
Committee.
(f) Nothing contained in this Article VI, any SAR Agreement
or in any other agreement executed in connection with the
granting of a SAR under this Article VI will confer upon any SAR
Recipient any right with respect to the continuation of his or
her status as an employee of, consultant or independent
contractor to, or director of, the Company or any of its
Subsidiaries.
(g) Except as otherwise provided herein, each SAR Agreement
may specify the period or periods of time within which each SAR
or portion thereof will first become exercisable (the "SAR
Vesting Period"). Such SAR Vesting Periods will be fixed by the
Committee in its discretion, and may be accelerated or shortened
by the Committee 10 its discretion.
(h) SARs relating to no less than one hundred (100) shares
of Stock may be exercised at any one time unless the number
exercised is the total number at that time exercisable under all
SARs granted to the SAR Recipient.
(i) A SAR Recipient shall have no rights as a shareholder of
the Company with respect to any shares of Stock covered by such
SAR. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior
to the date such Stock is fully paid for, except as provided in
Sections 2.3(b) and 6.2(c).
Section 6.3. Restrictions on Transfer of SARs. No SAR granted
under this Article VI may be Transferred, except as provided in
Section 6.6, and during the lifetime of the SAR Recipient to whom
it was granted, may be exercised only by such SAR Recipient.
Section 6.4. Exercise of SARs.
(a) A SAR Recipient, or his or her executors or
administrators, or heirs or legatees, shall exercise a SAR of the
SAR Recipient by giving written notice of such exercise to the
Company. SARs may be exercised only upon the completion of the
SAR Vesting Period applicable to such SAR.
(b) Within ten (10) days of the SAR Exercise Date
applicable to a SAR exercised in accordance with Section 6.4(a),
the SAR Recipient shall be paid in cash the difference between
the Base Value of such SAR (as adjusted, if applicable, under
Section 6.2(c) as of the most recently preceding quarterly
period) and the Fair Market Value of the Common Stock as of the
SAR Exercise Date.
Section 6.5. Termination of SARs.
(a) The Committee shall determine, and each SAR Agreement
shall state, the expiration date or dates of each SAR, but such
expiration date shall be not later than ten (10) years after the
date such SAR is granted (the "SAR Period"). The Committee, in
its discretion, may extend the expiration date or dates of a SAR
Period after such date was originally set; provided, however,
such expiration date may not exceed the maximum expiration date
described in this Section 6.5(a).
(b) To the extent not previously exercised, each SAR will
terminate upon the expiration of the SAR Period specified in the
SAR Agreement; provided, however, that, subject to Section
6.5(a), each such SAR will terminate upon the earlier of: (i)
ninety (90) days after the date that the SAR Recipient ceases to
be an Eligible Employee for any reason, other than by reason of
Death, Disability, Retirement or a Just Cause Termination; (ii)
twelve (12) months after the date that the SAR Recipient ceases
to be an Eligible Employee by reason of Death, Disability or
Retirement; or (iii) immediately as of the date that the SAR
Recipient ceases to be an Eligible Participant by reason of a
Just Cause Termination. Any SARs not exercised within the
foregoing periods shall terminate.
Section 6.6. Designation of Beneficiaries. A SAR Recipient may
designate a beneficiary or beneficiaries to receive all or part
of the cash to be paid to the SAR Recipient under this Article VI
in case of Death. A designation of beneficiary may be replaced
by a new designation or may be revoked by the SAR Recipient at
any time. A designation or revocation shall be on a form to be
provided for that purpose and shall be signed by the SAR
Recipient and delivered to the Company prior to the SAR
Recipient's Death. In case of the SAR Recipient's Death, the
amounts to be distributed to the SAR Recipient under this Article
VI with respect to which a designation of beneficiary has been
made (to the extent it is valid and enforceable under applicable
law) shall be distributed in accordance with this Article VI to
the designated beneficiary or beneficiaries. The amount
distributable to a SAR Recipient upon Death and not subject to
such a designation shall be distributed to the SAR Recipient's
estate. If there shall be any question as to the legal right of
any beneficiary to receive a distribution under this Article VI,
the amount in question may be paid to the estate of the SAR
Recipient, in which event the Company shall have no further
liability to anyone with respect to such amount.
Section 6.7. Amendment and Discontinuance. The Board may amend,
suspend or discontinue the provisions of this Article VI at any
time or from time to time; provided that no action of the Board
may, without the approval of the shareholders of the Company,
materially increase (other than by reason of an adjustment
pursuant to Section 2.3(b) hereof) the maximum aggregate number
of shares of Stock in the Plan Pool, materially increase the
benefits accruing to Eligible Employees or materially modify
eligibility requirements for participation under this Article VI.
Moreover, no such action may alter or impair any SAR previously
granted under this Article VI without the consent of the
applicable SAR Recipient.
Section 6.8. Compliance With Rule 16b-3. With respect to
persons subject to Section 16 of the 1934 Act, transactions under
this Article VI are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act.
To the extent any provision of this Article VI or action by the
Board or the Committee fails so to comply, it shall be deemed
null and void, to the extent permitted by law and deemed
advisable by the Committee.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Application of Funds. The proceeds received by the
Company from the sale of Stock pursuant to the exercise of Rights
will be used for general corporate purposes.
Section 7.2. No Obligation to Exercise Right. The granting of
a Right shall impose no obligation upon the recipient to exercise
such Right.
Section 7.3. Term of Plan. Except as otherwise specifically
provided herein, Rights may be granted pursuant to this Plan from
time to time within ten (10) years from the Effective Date.
Section 7.4. Captions and Headings: Gender and Number. Captions
and paragraph headings used herein are for convenience only, do
not modify or affect the meaning of any provision herein, are not
a part, and shall not serve as a basis for interpretation or
construction of this Plan. As used herein, the masculine gender
shall include the feminine and neuter, and the singular number
shall include the plural, and vice versa, whenever such meanings
are appropriate.
Section 7.5. Expenses of Administration Plan. All costs and
expenses incurred in the operation and administration of this
Plan shall be borne by the Company or by one or more
Subsidiaries. The Company shall also indemnify, defend and hold
each member of the Committee harmless against all claims,
expenses and liabilities arising out of or related to the
exercise of the Committee's powers and the discharge of the
Committee's duties hereunder.
Section 7.6. Governing Law. Without regard to the principles of
conflicts of laws, the laws of the State of North Carolina shall
govern and control the validity, interpretation, performance, and
enforcement of this Plan.
Section 7.7. Inspection of Plan. A copy of this Plan, and any
amendments thereto, shall be maintained by the Secretary of the
Company and shall be shown to any proper person making inquiry
about it.
Effective: April 22, 1994
82-0614(F)
WSMAIN/153517.