EXHIBIT 10.3
LANCE, INC.
1997 INCENTIVE EQUITY PLAN
(As amended through October 21, 2004)
TABLE OF CONTENTS
SECTION 1. PURPOSE...................................................... 1
SECTION 2. DEFINITIONS.................................................. 1
SECTION 3. ADMINISTRATION............................................... 3
SECTION 4. DURATION OF AND COMMON STOCK SUBJECT TO PLAN................. 4
SECTION 5. ELIGIBILITY.................................................. 4
SECTION 6. STOCK OPTIONS................................................ 4
SECTION 7. STOCK APPRECIATION RIGHTS.................................... 5
SECTION 8. RESTRICTED AWARDS............................................ 6
SECTION 9. PERFORMANCE AWARDS........................................... 8
SECTION 10. OTHER STOCK-BASED AND COMBINATION AWARDS..................... 9
SECTION 11. DEFERRAL ELECTIONS........................................... 9
SECTION 12. TERMINATION OF EMPLOYMENT.................................... 9
SECTION 13. NON-TRANSFERABILITY OF AWARDS................................ 9
SECTION 14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.............. 10
SECTION 15. CHANGE IN CONTROL............................................ 11
SECTION 16. AMENDMENT AND TERMINATION.................................... 12
SECTION 17. MISCELLANEOUS................................................ 12
LANCE, INC.
1997 INCENTIVE EQUITY PLAN
(As amended through January 30, 2001)
SECTION 1. PURPOSE. The purpose of the Lance, Inc. 1997 Incentive Equity
Plan (the "Plan") is to attract and retain managerial and other key employees,
and to reward such employees for making major contributions to the success of
Lance, Inc. (the "Company"). The Plan is designed to meet these objectives by
offering performance-based stock and cash incentives and other equity-based
incentive awards, thereby providing such employees a proprietary interest in the
long term growth and performance of the Company.
SECTION 2. DEFINITIONS. For purposes of the Plan, unless the context
clearly indicates otherwise, the following terms shall have the meanings set
forth below:
(a) "Award" (collectively, "Awards") means an award or grant made to a
Participant under Sections 6 through 10, inclusive, of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as in effect from
time to time, or any successor thereto, together with rules, regulations
and interpretations promulgated thereunder.
(d) "Common Stock" means the $.83 1/3 par value Common Stock of the
Company or any security of the Company issued in substitution, exchange or
lieu thereof pursuant to Section 14 hereof.
(e) "Company" means Lance, Inc., a North Carolina corporation, and any
subsidiary corporations within the meaning of Section 424(f) of the Code,
as well as any successor corporation or corporations thereto.
(f) "Stock Award Committee" means the committee of the Board
constituted as provided in Section 3 of the Plan.
(g) "Disability" means the inability, by reason of physical or mental
infirmity or both, of an individual to perform satisfactorily the duties
then assigned to such individual or any other duties the Company is willing
to assign to such individual for which compensation is payable. Disability
shall be determined by the Stock Award Committee based upon such evidence
as the Stock Award Committee shall deem sufficient and, upon medical
evidence, if available, and, in the discretion of the Stock Award
Committee, upon certification of such Disability by an independent
qualified physician.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor statute.
(i) "Fair Market Value," with respect to a share of the Common Stock
at a particular time, shall be that value as determined by the Stock Award
Committee which shall be (i) if such Common Stock is listed on a national
securities exchange or traded on the National Market System, the mean
between the highest price and the lowest price at which the Common Stock
shall have been sold regular way on a national securities exchange or the
National Market System on said date, or, if no sales occur on said date,
then on the next preceding date on which there were such sales of Common
Stock, (ii) if the Common Stock shall not be listed on a national
securities exchange or traded on the National Market System, the mean
between the bid and asked prices last reported by the National Association
of Securities Dealers, Inc. for the over-the-counter market on said date
or, if no bid and asked prices are reported on said date, then on the next
preceding date on which there were such quotations, or (iii) if at any time
quotations for the Common Stock shall not be reported by the National
Association of Securities Dealers, Inc. for the over-the-counter market and
the Common Stock shall not be listed on any national securities exchange or
traded on the National Market System, the fair market value determined by
the Stock Award Committee in such manner as it may deem reasonable.
(j) "Incentive Stock Option" means any Stock Option granted pursuant
to the provisions of Section 6 of the Plan that is intended to be and is
specifically designated as an "incentive stock option" within the meaning
of Section 422 of the Code.
(k) "Non-Qualified Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of the Plan that is not an
Incentive Stock Option.
(l) "Participant" means an employee of the Company who is granted an
Award under the Plan.
(m) "Performance Award" means an Award granted pursuant to the
provisions of Section 9 of the Plan the vesting of which is contingent on
performance attainment.
(n) "Performance Equity Grant" means an Award of units representing
shares of Common Stock granted pursuant to the provisions of Section 9 of
the Plan.
(o) "Performance Unit Grant" means an Award of monetary units granted
pursuant to the provisions of Section 9 of the Plan.
2
(p) "Plan" means the Lance, Inc. 1997 Incentive Equity Plan as set
forth herein, as the same may be hereafter amended and from time to time in
effect.
(q) "Restricted Award" means an Award granted pursuant to the
provisions of Section 8 of the Plan.
(r) "Restricted Stock Grant" means an Award of shares of Common Stock
granted pursuant to the provisions of Section 8 of the Plan.
(s) "Restricted Unit Grant" means an Award of units representing
shares of Common Stock granted pursuant to the provisions of Section 8 of
the Plan.
(t) "Retirement" means the termination of an employee's employment
with the Company at any time after the last day of the calendar month
immediately preceding the calendar month in which the employee attains the
age of 60 years.
(u) "Stock Appreciation Right" means an Award to benefit from the
appreciation of Common Stock granted pursuant to the provisions of Section
7 of the Plan.
(v) "Stock Option" means an Award to purchase shares of Common Stock
granted pursuant to the provisions of Section 6 of the Plan.
(w) "First Effective Amendment Date" means that date on which the
stockholders of the Company approve the amendment to the Plan to increase
the number of shares of Common Stock reserved for grants of Awards under
the Plan by an additional 1,500,000 shares of Common Stock.
SECTION 3. ADMINISTRATION.
(a) The Plan shall be administered by those members of the Stock Award
Committee of the Board who are "nonemployee directors" for purposes of Rule
16b-3 under the Exchange Act.
(b) The Stock Award Committee is authorized to grant Awards under the Plan,
to construe and interpret the Plan, to promulgate, amend and rescind rules and
regulations relating to the implementation of the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan. Any
determination, decision or action of the Stock Award Committee in connection
with the construction, interpretation, administration or application of the Plan
shall be final, conclusive and binding upon all persons participating in the
Plan and any person validly claiming under or through persons participating in
the Plan. The Company shall effect the granting of Awards under the Plan in
accordance with the determinations made by the
3
Stock Award Committee, by execution of instruments in writing in such form as
are approved by the Stock Award Committee.
SECTION 4. DURATION OF AND COMMON STOCK SUBJECT TO PLAN.
(a) Term. The Plan shall be effective on April 18, 1997, subject to
approval by a plurality of the shares voting on approval of the Plan at the
Annual Meeting of Stockholders held on said date or any adjournment thereof. The
Plan shall terminate on March 31, 2007.
(b) Shares of Common Stock Subject to Plan. The maximum number of shares of
Common Stock with respect to which Awards may be granted under the Plan, subject
to adjustment as provided in Section 14 of the Plan, shall be 1,500,000 shares
of the total authorized shares of the Common Stock. Beginning on the First
Effective Amendment Date, there is hereby reserved for grants of Awards under
the Plan, subject to adjustment as provided in Section 14 of the Plan, an
additional 1,500,000 shares of Common Stock. For the purpose of computing the
total number of shares of Common Stock available for Awards under the Plan,
there shall be counted against the foregoing limitation the number of shares of
Common Stock subject to issuance upon exercise or settlement of Awards and the
number of shares of Common Stock which equal the value of Restricted Unit Grants
and Performance Equity Grants and other stock-based Awards in each case
determined as of the dates on which such Awards are granted. If any Awards are
forfeited, terminated, settled in cash in lieu of stock, exchanged for other
Awards, or expire unexercised, the shares of Common Stock which were theretofore
subject to such Awards shall again be available for Awards under the Plan to the
extent of such forfeiture, termination, settlement, exchange or expiration.
Further, any shares of Common Stock which are used as full or partial payment to
the Company by a Participant of the purchase price of shares of Common Stock
upon exercise of Stock Options shall again be available for Awards under the
Plan, as shall any shares covered by Stock Appreciation Rights which are not
issued as payment upon exercise. Common Stock which may be issued under the Plan
may be either authorized and unissued shares or issued shares which have been
reacquired by the Company. No fractional shares of Common Stock shall be issued
under the Plan.
(c) Individual Award Limit. In no event shall a Participant receive an
Award or Awards during any one calendar year covering in the aggregate more than
150,000 shares of Common Stock.
SECTION 5. ELIGIBILITY. Only managerial and other key employees shall be
eligible to be granted Awards under the Plan. The Stock Award Committee shall,
from time to time, (i) determine those managerial and other key employees to
whom Awards shall be granted and the conditions of each such Award or issue and
sale and (ii) grant such Awards. No member of the Stock Award Committee while
serving as such shall be eligible to receive any Award hereunder.
SECTION 6. STOCK OPTIONS. Stock Options may be granted under the Plan in
the form of Incentive Stock Options or Non-Qualified Stock Options; and such
Stock Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the express
provisions of the Plan, as the Stock Award Committee shall determine:
4
(a) Grant. Stock Options may be granted under the Plan on such terms
and conditions not inconsistent with the provisions of the Plan and in such
form as the Stock Award Committee may from time to time approve. Stock
Options may be granted alone, in addition to or in combination with other
Awards under the Plan.
(b) Stock Option Price. The option exercise price per share of Common
Stock purchasable under a Stock Option shall be determined by the Stock
Award Committee at the time of grant, but in no event shall the exercise
price of an Incentive Stock Option be less than 100% of the Fair Market
Value of the Common Stock on the date of the grant of such Incentive Stock
Option.
(c) Option Term. The term of each Stock Option shall be fixed by the
Stock Award Committee; except that the term of Incentive Stock Options
shall not exceed 10 years after the date the Incentive Stock Option is
granted.
(d) Exercisability. A Stock Option shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by
the Stock Award Committee at the date of grant.
(e) Method of Exercise. A Stock Option may be exercised, in whole or
in part, by a Participant's giving written notice of exercise to the
Company specifying the number of shares to be purchased. Such notice shall
be accompanied by payment in full of the purchase price in cash or, if
acceptable to the Stock Award Committee in its sole discretion, in shares
of Common Stock already owned by the Participant, or by surrendering
outstanding Awards denominated in stock or stock units.
(f) Special Rule for Incentive Stock Options. With respect to
Incentive Stock Options granted under the Plan, the aggregate Fair Market
Value (determined as of the date the Incentive Stock Option is granted) of
the number of shares with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any calendar year
shall not exceed $100,000 or such other limit as may be required by the
Code.
SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted under the Plan subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the express
terms of the Plan, as the Stock Award Committee shall determine:
(a) Stock Appreciation Rights. A Stock Appreciation Right is an Award
entitling a Participant to receive an amount equal to (or if the Stock
Award Committee shall so determine at the time of grant, less than) the
excess of the Fair Market Value of a share of Common Stock on the date of
exercise over the Fair Market Value of a share of Common Stock on the date
of grant of the Stock
5
Appreciation Right, or such other price as is set by the Stock Award
Committee, multiplied by the number of shares of Common Stock with respect
to which the Stock Appreciation Right shall have been exercised.
(b) Grant. A Stock Appreciation Right may be granted in combination
with, in addition to or completely independent of a Stock Option or any
other Award under the Plan.
(c) Exercise. A Stock Appreciation Right may be exercised by a
Participant in accordance with procedures established by the Stock Award
Committee, except that in no event shall a Stock Appreciation Right be
exercisable within the first six months after the date of grant. The Stock
Award Committee may also provide that a Stock Appreciation Right shall be
automatically exercised on one or more specified dates.
(d) Form of Payment. Payment upon exercise of a Stock Appreciation
Right may be made in cash, in shares of Common Stock, or any combination
thereof, as the Stock Award Committee shall determine; provided, however,
that any Stock Appreciation Right exercised upon or subsequent to the
occurrence of a Change in Control (as defined in Section 15) shall be paid
in cash.
SECTION 8. RESTRICTED AWARDS. Restricted Awards may be granted under the
Plan in the form of either Restricted Stock Grants or Restricted Unit Grants.
Restricted Awards shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
express provisions of the Plan, as the Stock Award Committee shall determine:
(a) Restricted Stock Grants. A Restricted Stock Grant is an Award of
shares of Common Stock to a Participant subject to such terms and
conditions as the Stock Award Committee deems appropriate, including,
without limitation, restrictions on the sale, assignment, transfer or other
disposition of such shares and the requirement that the Participant forfeit
such shares back to the Company upon termination of employment prior to
vesting.
(b) Restricted Unit Grants. A Restricted Unit Grant is an Award of
units to be paid in cash upon vesting (with each unit having a value
equivalent to the Fair Market Value of one share of Common Stock) granted
to a Participant subject to such terms and conditions as the Stock Award
Committee deems appropriate, including, without limitation, the requirement
that the Participant forfeit such units upon termination of employment
prior to vesting.
(c) Grants of Awards. Restricted Awards may be granted under the Plan
in such form and on such terms and conditions as the Stock Award Committee
may from time to time approve. Restricted Awards may be granted alone, in
addition to or in combination with other Awards under the Plan. Subject to
the terms of the Plan, the Stock Award Committee shall determine the number
6
of Restricted Awards to be granted to a Participant and the Stock Award
Committee may impose different terms and conditions on any particular
Restricted Award made to any Participant. Each Participant receiving a
Restricted Stock Grant shall be issued a stock certificate in respect of
such shares of Common Stock. Such certificate shall be registered in the
name of such Participant, shall be accompanied by a stock power duly
executed by such Participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Award; which certificate evidencing such shares shall be held in custody by
the Company until the restrictions thereon shall have lapsed.
(d) Restriction Period. Restricted Awards shall provide that in order
for a Participant's rights to vest in such Awards, the Participant must
remain in the employment of the Company, subject to relief for specified
reasons, for a period of time commencing on the date of the Award and
ending on such later date or dates as the Stock Award Committee may
designate at the time of the Award ("Restriction Period"). During the
Restriction Period, a Participant may not sell, assign, transfer, pledge,
encumber or otherwise dispose of shares of Common Stock received under a
Restricted Stock Grant. The Stock Award Committee, in its sole discretion,
may provide for the lapse of restrictions in installments during the
Restriction Period. Upon expiration of the applicable Restriction Period
(or lapse of restrictions during the Restriction Period where the
restrictions lapse in installments), the Participant shall be entitled to
receive his or her Restricted Award or portion thereof, as the case may be.
(e) Payment of Awards. A Participant shall be entitled to receive
payment for a Restricted Unit Grant (or portion thereof) upon expiration of
the applicable Restriction Period. Payment in settlement of a Restricted
Unit Grant shall be made as soon as practicable following the expiration of
the Restriction Period in cash, in shares of Common Stock equal to the
number of units granted under the Restricted Unit Grant with respect to
which such payment is made, or in any combination thereof, as the Stock
Award Committee in its sole discretion shall determine. The Stock Award
Committee may also, in its discretion, permit a Participant to elect to
receive, in lieu of shares of unrestricted stock at the conclusion of a
Restriction Period, a cash payment equal to the Fair Market Value of the
Restricted Stock vesting on the date the restrictions expire.
(f) Rights as a Stockholder. A Participant shall have, with respect to
the shares of Common Stock received under a Restricted Stock Grant, all of
the rights of a Stockholder of the Company, including the right to vote the
shares, and the right to receive any cash dividends. Stock dividends issued
with respect to the shares covered by a Restricted Stock Grant shall be
treated as additional shares under the Restricted Stock Grant and shall be
subject to the same restrictions and other terms and conditions that apply
to shares under the Restricted Stock Grant with respect to which such
dividends are issued.
7
SECTION 9. PERFORMANCE AWARDS. Performance Awards may be granted under the
Plan in the form of either Performance Equity Grants or Performance Unit Grants.
Performance Awards may be subject to the following terms and conditions and may
contain such additional terms and conditions, not inconsistent with the express
provisions of the Plan, as the Stock Award Committee shall determine:
(a) Performance Equity Grants. A Performance Equity Grant is an Award
of units (with each unit equivalent in value to one share of Common Stock
as it varies throughout the term of the designated performance period) to a
Participant and may be subject to such terms and conditions as the Stock
Award Committee deems appropriate, including, without limitation, the
requirement that the Participant forfeit such units or a portion of such
units in the event certain performance criteria are not met within a
designated period of time.
(b) Performance Unit Grants. A Performance Unit Grant is an Award of
units to be paid in cash upon vesting (with each unit representing such
monetary amount as designated by the Stock Award Committee) to a
Participant subject to such terms and conditions as the Stock Award
Committee deems appropriate, including, without limitation, the requirement
that the Participant forfeit such units or a portion of such units in the
event certain performance criteria are not met within a designated period
of time.
(c) Grants of Awards. Performance Awards may be granted under the Plan
in such form as the Stock Award Committee may from time to time approve.
Performance Awards may be granted alone, in addition to or in combination
with other Awards under the Plan. Subject to the terms of the Plan, the
Stock Award Committee shall determine the number of Performance Awards to
be granted to a Participant and the Stock Award Committee may impose
different terms and conditions on any particular Performance Award made to
any Participant.
(d) Performance Goals and Performance Periods. Performance Awards
shall provide that in order for a Participant's rights to vest in such
Awards the Company or the Participant, or a combination thereof, must
achieve certain performance goals ("Performance Goals") over a designated
performance period ("Performance Period"). The Performance Goals and
Performance Period shall be established by the Stock Award Committee, in
its sole discretion. The Stock Award Committee shall establish Performance
Goals for each Performance Period before, or as soon as practicable after,
the commencement of the Performance Period. The Stock Award Committee may
also establish a schedule or formula for such Performance Period setting
forth the portion of the Performance Award which will be earned or
forfeited based on the degree of achievement of the Performance Goals
actually achieved or exceeded. In setting Performance Goals, the Stock
Award Committee may use such measures of performance as it deems
appropriate.
8
(e) Payment of Awards. In the case of a Performance Equity Grant, the
Participant shall be entitled to receive payment for each unit earned in an
amount equal to the Fair Market Value of a share of Common Stock on the
date on which the Stock Award Committee determines the number of units
earned by the Participant. In the case of a Performance Unit Grant, the
Participant shall be entitled to receive payment for each unit earned in an
amount equal to the dollar value of each unit times the number of units
earned. Payment in settlement of a Performance Award shall be made as soon
as practicable following the conclusion of the respective Performance
Period in cash, in shares of Common Stock, or in any combination thereof,
as the Stock Award Committee in its sole discretion shall determine.
SECTION 10. OTHER STOCK-BASED AND COMBINATION AWARDS.
(a) The Stock Award Committee may grant other Awards under the Plan
pursuant to which Common Stock is or may in the future be acquired, or Awards
denominated in stock units, including ones valued using measures other than
market value. Such other stock-based Awards may be granted either alone, in
addition to or in combination with any other type of Award granted under the
Plan.
(b) The Stock Award Committee may also grant Awards under the Plan in
combination with other Awards or in exchange of Awards, or in combination with
or as alternatives to grants or rights under any other employee plan of the
Company, including the plan of any acquired entity.
(c) Subject to the provisions of the Plan, the Stock Award Committee shall
have authority to determine the individuals to whom and the time or times at
which such Awards shall be made, the number of shares of Common Stock to be
granted or covered pursuant to such Awards, and any and all other conditions
and/or terms of the Awards.
SECTION 11. DEFERRAL ELECTIONS. The Stock Award Committee may permit a
Participant to elect to defer his or her receipt of the payment of cash or the
delivery of shares of Common Stock that would otherwise be due to such
Participant by virtue of the exercise or earn out of an Award made under the
Plan. If any such election is permitted, the Stock Award Committee may establish
rules and procedures for such payment deferrals, including the possible (a)
payment or crediting of reasonable interest on such deferred amounts credited in
cash, and (b) the payment or crediting dividend equivalents in respect of
deferrals credited in units of Common Stock.
SECTION 12. TERMINATION OF EMPLOYMENT. The terms and conditions under which
an Award may be exercised after a Participant's termination of employment shall
be determined by the Stock Award Committee.
SECTION 13. NON-TRANSFERABILITY OF AWARDS. No Award under the Plan, and no
rights or interests therein, shall be assignable or transferable by a
Participant except by will or the laws of descent and distribution. During the
lifetime of a Participant, Stock Options and Stock
9
Appreciation Rights are exercisable only by, and payments in settlement of
Awards will be payable only to, the Participant or his or her legal
representative.
SECTION 14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.
(a) The existence of the Plan and the Awards granted hereunder shall not
affect or restrict in any way the right or power of the Board or the
Stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, other debentures, preferred or prior preference stocks, the
dissolution or liquidation of the Company or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding.
(b) In the event that a dividend shall be declared upon the Common Stock
payable in shares of Common Stock, the number of shares of Common Stock then
subject to any Award and the number of shares reserved for issuance pursuant to
the Plan but not yet covered by an Award shall be adjusted by adding to each
such share the number of shares which would be distributable thereon if such
share had been outstanding on the date fixed for determining the Stockholders
entitled to receive such stock dividend. In the event that the outstanding
shares of Common Stock shall be changed into or exchanged for a different number
or kind of shares of stock or other securities of the Company or of another
corporation, or changed into or exchanged for cash or property or the right to
receive cash or property (but not including any dividend payable in cash or
property other than a liquidating distribution), whether through reorganization,
recapitalization, stock split-up, combination of shares, merger or
consolidation, then there shall be substituted for each share of Common Stock
subject to any Award and for each share of Common Stock reserved for issuance
pursuant to the Plan but not yet covered by an Award, the number and kind of
shares of stock or other securities or cash or property or right to receive cash
or property into which each outstanding share of Common Stock shall be so
changed or for which each such share shall be exchanged. In the event there
shall be any change other than as specified above in this Section 14, in the
number or kind of outstanding shares of Common Stock or of any stock or other
securities into which such Common Stock shall have been changed or for which it
shall have been exchanged, then if the Stock Award Committee shall in its sole
discretion determine that such change equitably requires an adjustment in the
number or kind of shares theretofore reserved for issuance pursuant to the Plan
but not yet covered by an Award and of the shares then subject to an Award or
Awards, such adjustment shall be made by the Stock Award Committee and shall be
effective and binding for all purposes of the Plan and each agreement entered
into with a Participant under the Plan. In the case of any such substitution or
adjustment as provided for in this Section 14, the Award price for each share
covered thereby prior to such substitution or adjustment will be the Award price
for all shares of stock or other securities or cash or property or right to
receive cash or property which shall have been substituted for such share or to
which such share shall have been adjusted pursuant to this Section 14. No
adjustment or substitution provided for in this Section 14 shall require the
Company in any agreement with a Participant to issue a fractional share and the
total substitution or adjustment with respect to each agreement with a
Participant shall be limited accordingly. In the event that the number of shares
of Common Stock subject to an Award is adjusted pursuant
10
to the provisions of this Section 14, then any Stock Appreciation Rights related
to such Award shall be appropriately and equitably adjusted.
(c) In the event of (i) a dissolution or liquidation of the Company, (ii) a
sale of all or substantially all of the Company's assets, (iii) a merger or
consolidation involving the Company in which the Company is not the surviving
corporation or (iv) a merger or consolidation involving the Company in which the
Company is the surviving corporation but the holders of shares of the Company's
Common Stock receive securities of another corporation and/or other property,
including cash, the Stock Award Committee shall, in its absolute discretion,
have the power to cancel, effective immediately prior to the occurrence of such
event, each Stock Option and each Stock Appreciation Right outstanding
immediately prior to such event (whether or not then exercisable) and, in
consideration of such cancellation, the Company will pay to the Participant an
amount in cash for each share of Common Stock subject to such Stock Option or
Stock Appreciation Right equal to the excess of (A) the value as determined by
the Stock Award Committee, in its absolute discretion, of the property
(including cash) received by the holder of one share of Common Stock as a result
of such event over (B) the exercise price of such Stock Option or Stock
Appreciation Right; or provide for the exchange of each Stock Option and Stock
Appreciation Right outstanding immediately prior to such event (whether or not
then exercisable) for an option on or stock appreciation right with respect to,
as appropriate, some or all of the property which a holder of the number of
shares of Common Stock subject to such Stock Option or Stock Appreciation Right
would have received in such transaction and, incident thereto, make an equitable
adjustment as determined by the Stock Award Committee, in its absolute
discretion, in the exercise price of the option or stock appreciation right, or
the number of shares or amount of property subject to the option or stock
appreciation right or, if appropriate, provide for a cash payment to the
Participant to whom such Stock Option or Stock Appreciation Right was granted in
partial consideration for the exchange of the Stock Option or Stock Appreciation
Right.
SECTION 15. CHANGE IN CONTROL.
(a) In the event of a Change in Control (as defined below) of the Company,
(i) all Stock Options or Stock Appreciation Rights then outstanding shall become
fully exercisable as of the date of the Change in Control, whether or not then
exercisable, (ii) all restrictions and conditions of all Restricted Stock Grants
and Restricted Unit Grants then outstanding shall be deemed satisfied as of the
date of the Change in Control, and (iii) all Performance Equity Grants and
Performance Unit Grants shall be deemed to have been fully earned as of the date
of the Change in Control.
(b) "Change in Control" means the acquisition or contracting to acquire or
otherwise control beneficial ownership of in excess of thirty-five percent (35%)
of the then outstanding voting securities of the Company by any person,
corporation or other entity and its "affiliates" (as defined in Rule 13d-5(b)(1)
promulgated under the Exchange Act, as amended from time to time) excluding,
however, for purposes of determining such ownership (but not the number of
shares outstanding) voting securities beneficially owned by members of the Van
Every Family and any trust, custodian or fiduciary account for the benefit of
any one or more members of the
11
Van Every Family. Van Every Family means the lineal descendants of Salem A. Van
Every, Sr. (whether by blood or adoption) and their spouses.
SECTION 16. AMENDMENT AND TERMINATION. Without further approval of the
Stockholders, the Board may at any time terminate the Plan, or may amend it from
time to time in such respects as the Board may deem advisable, except that the
Board may not, without approval of the Stockholders, make any amendment which
would (i) require Stockholder approval for Incentive Stock Options granted or to
be granted under the Plan to qualify as incentive stock options within the
meaning of Section 422 of the Code or (ii) require Stockholder approval under
applicable law or the rules of any national securities exchange upon which the
Common Stock is listed at the time such amendment is proposed.
SECTION 17. MISCELLANEOUS.
(a) Tax Withholding. The Company shall have the right to deduct from any
settlement, including the delivery or vesting of shares, made under the Plan any
federal, state or local taxes of any kind required by law to be withheld with
respect to such payments or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of such taxes.
If Common Stock is used to satisfy tax withholding, such stock shall be valued
based on the Fair Market Value when the tax withholding is required to be made.
(b) No Right To Employment. Neither the adoption of the Plan nor the
granting of any Award hereunder shall confer upon any employee of the Company
any right to continued employment with the Company, nor shall it interfere in
any way with the right of the Company to terminate the employment of any of its
employees at any time, with or without cause.
(c) Unfunded Plan. The Plan shall be unfunded and the Company shall not be
required to segregate any assets that may at any time be represented by Awards
under the Plan. Any liability of the Company to any person with respect to any
Award under the Plan shall be based solely upon any contractual obligations that
may be effected pursuant to the Plan. No such obligation of the Company shall be
deemed to be secured by any pledge of, or other encumbrance on, any property of
the Company.
(d) Payments to Trust. The Stock Award Committee is authorized to cause to
be established a trust agreement or several trust agreements whereunder the
Company may make payments of amounts due or to become due to Participants in the
Plan.
(e) Engaging in Competition With Company. In the event a Participant's
employment with the Company is terminated for any reason whatsoever, and within
18 months after the date thereof such Participant accepts employment with any
competitor of, or otherwise engages in competition with, the Company, the Stock
Award Committee, in its sole discretion, may require such Participant to return
to the Company the economic value of any Award which is realized or obtained
(measured at the date of exercise, vesting or payment) by such Participant at
any time during the period beginning on that date which is six months prior to
the date of such Participant's termination of employment with the Company.
12
(f) Securities Law Restrictions. No shares of Common Stock shall be issued
under the Plan unless counsel for the Company shall be satisfied that such
issuance will be in compliance with applicable Federal and state securities
laws. Certificates for shares of Common Stock delivered under the Plan may be
subject to such stop-transfer orders and other restrictions as the Stock Award
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed, and any applicable federal or state
securities law. The Stock Award Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.
(g) Award Agreement. Each Participant receiving an Award under the Plan
shall enter into an agreement with the Company in a form specified by the Stock
Award Committee agreeing to the terms and conditions of the Award and such
related matters as the Stock Award Committee shall, in its sole discretion,
determine.
(h) Costs of Plan. The costs and expenses of administering the Plan shall
be borne by the Company.
(i) Governing Law. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of North
Carolina.
13