Exhibit 10.2
THE AMENDED AND RESTATED SHARE OPTION PLAN
FOR DIRECTORS AND EXECUTIVE AND KEY EMPLOYEES OF
TANGER FACTORY OUTLET CENTERS, INC.
Tanger Factory Outlet Centers, Inc., a corporation organized under the
laws of the state of North Carolina (the "Company"), adopted the Stock Option
Plan for Directors and Executive and Key Employees of Tanger Factory Outlet
Centers, Inc., (the "Plan") on May 28, 1993. The Plan has subsequently been
amended from time to time. In order to conform the Plan document to such
amendments and to further amend the Plan in certain respects, the Plan has been
amended and restated, effective as of July 29, 1998. This Amended and Restated
Share Option Plan for Directors and Executive and Key Employees of Tanger
Factory Outlet Centers, Inc., constitutes a complete amendment and restatement
of the Plan in its entirety and a continuation of the Plan.
The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its Directors, and
executive and key Employees (as defined below) who have been or will be given
responsibility for the management or administration of the Company's business
affairs, by assisting them to become owners of the Company's Common Shares and
thus to benefit directly from such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of the types
of professional, technical and managerial employees and directors considered
essential to the long range success of the Company by providing and offering
them an opportunity to become owners of the Company's Common Shares under
options, including options that are intended to qualify as "incentive stock
options" under Section 422 of the Code (as defined below).
ARTICLE I.
DEFINITIONS
Wherever the following terms are used in this Plan they shall have the
meanings specified below, unless the context clearly indicates otherwise. The
masculine pronoun shall include the feminine and neuter and the singular shall
include the plural, where the context so indicates.
Section 1.1. Award Limit
"Award Limit" shall mean 60,000 Common Shares.
Section 1.2. Board
Board" shall mean the Board of Directors of the Company.
Section 1.3. Change in Control
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding Common Shares (the "Outstanding Common Shares")
or (ii) the combined voting power of the then outstanding "voting securities of
the Company") entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for purposes
of this subsection (a), the following acquisitions shall not constitute a Change
in Control: (i) any acquisition directly from the Company, (ii) any acquisition
by the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this
Section 1.3; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company or
the acquisition of assets of another corporation (a "Business Combination"), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Common Shares and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Common Shares and Outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns,
- -2-
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of he members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
For purposes of this Plan, the "Partnership Units" of the Tanger
Properties Limited Partnership shall be treated as, and aggregated with, the
Common Shares and/or the "voting securities of the Company" to the extent such
Partnership Units are convertible into Common Shares or voting securities,
respectively.
Section 1.4. Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.5. Committee
"Committee" shall mean the Share and Unit Option Committee of the Board,
appointed as provided in Section 6.1.
Section 1.6. Common Shares
"Common Shares" shall mean the Common Shares of the Company, par value
$0.01 per share.
Section 1.7. Company
"Company" shall mean Tanger Factory Outlet Centers, Inc., a North
Carolina corporation.
Section 1.8. Director
"Director" shall mean a member of the Board.
Section 1.9. Employee
"Employee" shall mean any employee (as defined in accordance with
Section 3401(c) of the Code) of the Company, or of any corporation which is a
Subsidiary.
- -3-
Section 1.10. Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
Section 1.11. Fair Market Value
"Fair Market Value" of a Common Share as of a given date shall be (i)
the closing price of the Common Shares on the principal exchange on which Common
Shares are trading on the trading day previous to such date, or, if Common
Shares were not traded on the day previous to such date, then on the next
preceding trading day during which a sale occurred; (ii) if such Common Shares
are not traded on an exchange but are quoted on NASDAQ or a successor quotation
system, (A) the last sales price (if the Common Shares are then listed as
National Market Issue under the NASD National Market System) or (B) the mean
between the closing representative bid and asked prices for the Common Shares on
the trading day previous to such date as reported by NASDAQ or such successor
quotation system; or (iii) if such Common Shares are is not publicly traded on
an exchange and not quoted on NASDAQ or a successor quotation system, the fair
market value of a Common Share as established by the Committee (or the Board in
the case of Options granted to Independent Directors) acting in good faith.
Section 1.12. Incentive Share Option
"Incentive Share Option" shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
Incentive Share Option by the Committee.
Section 1.13. Independent Director
"Independent Director" shall mean a member of the Board who is not an
Employee of the Company.
Section 1.14. Non-Qualified Share Option
"Non-Qualified Share Option" shall mean an Option which is not
designated as an Incentive Share Option by the Committee.
Section 1.15. Operating Partnership
"Operating Partnership" shall mean Tanger Properties Limited
Partnership, a partnership organized under the laws of the state of North
Carolina.
Section 1.16. Option
- -4-
"Option" shall mean an option to purchase Common Shares granted under
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee, be either a Non-Qualified Share Option or an Incentive Share
Option; provided, however, that Options granted to Independent Directors shall
be Non-Qualified Share Options.
Section 1.17. Optionee
"Optionee" shall mean an Employee or Independent Director granted an
Option under this Plan.
Section 1.18. Plan
"Plan" shall mean The Amended and Restated Share Option Plan for
Directors and Executive and Key Employees of Tanger Factory Outlet Centers, Inc.
Section 1.19. Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act,
as such Rule may be amended from time to time.
Section 1.20. Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.21. Section 162(m) Participant
"Section 162(m) Participant" shall mean any Company Employee designated
by the Committee as a Company Employee whose compensation for the fiscal year in
which the Company Employee is so designated or a future fiscal year may be
subject to the limit on deductible compensation imposed by Section 162(m) of the
Code.
Section 1.22. Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns securities possessing 50
percent or more of the total combined voting power of all classes of securities
in one of the other corporations in such chain.
Section 1.23. Termination of Directorship
"Termination of Directorship" shall mean the time when an Optionee who
is an Independent Director ceases to be a Director for any reason, including,
but not by way of limitation, a termination by resignation, failure to be
elected, death or retirement. The Board, in
- -5-
its sole discretion, shall determine the effect of all matters and questions
relating to Termination of Directorship with respect to Independent Directors.
Section 1.24. Termination of Employment
"Termination of Employment" shall mean the time when the
employee-employer relationship between an Optionee and the Company, the
Operating Partnership or any subsidiary of either of them is terminated for any
reason, with or without cause, including, but not by way of limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding (i) a termination where there is a simultaneous reemployment or
continuing employment of such Optionee by the Company, the Operating Partnership
or any subsidiary of either of them, (ii) at the discretion of the Committee,
termination which results in a temporary severance of the employee-employer
relationship, and (iii) at the discretion of the Committee, a termination which
is followed by the simultaneous establishment of a consulting relationship by
the Company, the Operating Partnership or any subsidiary of either of them with
the former employee. The Committee, in its sole discretion, shall determine the
effect of all matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination of Employment;
provided, however, that, unless otherwise determined by the Committee in its
discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section. Notwithstanding any other provision of
this Plan, the Company, the Operating Partnership and any subsidiary has an
absolute and unrestricted right to terminate an Employee's employment at any
time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
- -6-
ARTICLE II.
SHARES SUBJECT TO PLAN
Section 2.1. Shares Subject to Plan
(a) The aggregate number of Common Shares which may be issued upon
exercise of Options under the Plan shall not exceed 1,500,000; provided, that
effective as of the date of the next succeeding annual meeting of shareholders
such number shall be increased to 1,750,000 if the shareholders approve such
increase at such annual meeting. Such aggregate number shall be reduced by one
for each unit in the Operating Partnership that is issued pursuant to the
Operating Partnership's Unit Option Plan. The Common Shares issuable upon
exercise of Options may be either previously authorized but unissued shares or
treasury shares.
(b) The maximum number of Common Shares which may be subject to Options
granted under the Plan to any individual in any calendar year shall not exceed
the Award Limit. To the extent required by Section 162(m) of the Code, shares
subject to Options which are canceled continue to be counted against the Award
Limit and if, after grant of an Option, the price of shares subject to such
Option is reduced, the transaction will be treated as a cancellation of the
Option and a grant of a new Option and both the Option deemed to be canceled and
the Option deemed to be granted will be counted against the Award Limit.
Section 2.2. Add-back of Options
If any Option expires or is canceled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration, cancellation or exercise may
again be optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1. Common Shares which are delivered by the Optionee or withheld by
the Company upon the exercise of any Option or other award under this Plan, in
payment of the exercise price thereof, may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. Furthermore, any Common
Shares subject to Options which are adjusted pursuant to Section 7.3 and become
exercisable with respect to equity interests of another entity shall be
considered canceled and may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1.
ARTICLE III.
GRANTING OF OPTIONS
Section 3.1. Eligibility
Any Employee selected by the Committee pursuant to Section 3.3(a)(i)
shall be eligible to be granted an Option. Any Independent Director selected by
the Board pursuant to Section 3.3(b)(i) shall be eligible to be granted an
Option.
- -7-
Section 3.2. Qualification of Incentive Share Options
No Incentive Share Option shall be granted to any person who is not an
Employee.
Section 3.3. Granting of Options
(a) The Committee shall from time to time, in its sole discretion, and
subject to applicable limitations of this Plan:
(i) Determine which Employees are executive or other key
Employees and select from among them (including Employees who have
previously received Options) such of them as in its opinion should be
granted Options;
(ii) Subject to the Award Limit, determine the number of shares
to be subject to such Options granted to the selected Employees;
(iii) Subject to Section 3.2, determine whether such Options are
to be Incentive Share Options or Non-Qualified Share Options and whether
such Options are to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan; provided, however, that the terms and
conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the
Code.
(b) The Board shall from time to time, in its sole discretion, and
subject to applicable limitations of this Plan:
(i) Determine which Independent Directors (including Independent
Directors who have previously received Options) such of them as in its
opinion should be granted Options; and
(ii) Determine the terms and conditions of such Options,
consistent with this Plan.
(c) Upon the selection of an Employee or Independent Director to be
granted an Option, the Committee (or Board, as applicable) shall instruct the
Secretary to issue the Option and may impose such conditions on the grant of the
Option as it deems appropriate. Without
- -8-
limiting the generality of the preceding sentence, the Committee (or Board, as
applicable) may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option that the Optionee surrender for
cancellation some or all of the unexercised Options or other rights which have
been previously granted to him under this Plan or otherwise. An Option, the
grant of which is conditioned upon such surrender, may have an exercise price
lower (or higher) than the exercise price of such surrendered Option or other
right, may cover the same (or a lesser or greater) number of shares as such
surrendered Option or other right, may contain such other terms as the Committee
deems appropriate, and shall be exercisable in accordance with its terms,
without regard to the number of shares, exercise price, exercise period or any
other term or condition of such surrendered Option or other right.
ARTICLE IV.
TERMS OF OPTIONS
Section 4.1. Option Agreement
Each Option shall be evidenced by a written Option Agreement, which
shall be executed by the Optionee and an authorized officer of the Company and
which shall contain such terms and conditions as the Committee (the Board in the
case of Options granted to Independent Directors) shall determine, and which may
be amended by agreement of the parties thereto, consistent with this Plan.
Option Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code, and Option Agreements evidencing Incentive Share
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
Section 4.2. Exercise Price
The exercise price per share of the shares subject to each Option shall
be set by the Committee in its discretion (the Board with respect to Options
granted to Independent Directors); provided, however, that such price shall be
no less than the Fair Market Value of a Common Share on the date the Option is
granted, and, in the case of Incentive Share Options granted to an individual
then owning (within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of shares of the Company or any
Subsidiary or parent corporation thereof (within the meaning of Section 422 of
the Code) such price shall not be less than 110% of the Fair Market Value of a
Common Share on the date the Option is granted.
Section 4.3. Option Term
The term of an Option shall be set by the Committee (the Board in the
case of Options granted to Independent Directors) in its discretion; provided,
however, that (i) in the case of Incentive Share Options, the term shall not be
more than ten (10) years from the date the
- -9-
Incentive Share Option is granted, or five (5) years from such date if the
Incentive Share Option is granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of shares of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 422 of the Code). Except as
limited by requirements of Section 422 of the Code and regulations and rulings
thereunder applicable to Incentive Share Options, the Committee (the Board in
the case of Options granted to Independent Directors) may extend the term of any
outstanding Option in connection with any Termination of Employment or
Termination of Directorship, or amend any other term or condition of such Option
relating to such a termination.
Section 4.4. Option Vesting
(a) The period during which the right to exercise an Option in whole or
in part vests in the Optionee shall be set by the Committee (the Board with
respect to Options granted to Independent Directors) and the Committee (or
Board, as applicable) may determine that an Option may not be exercised in whole
or in part for a specified period after it is granted. At any time after grant
of an Option, the Committee (the Board with respect to Options granted to an
Independent Directors) may, in its sole discretion and subject to whatever terms
and conditions it selects, accelerate the period during which an Option vests.
(b) No portion of an Option which is unexercisable at Termination of
Employment or Termination of Directorship shall thereafter become exercisable,
except as may be otherwise provided by the Committee (other than with respect to
Options granted to Independent Directors) either in the Option Agreement or by
action of the Committee following the grant of the Option.
(c) To the extent that the aggregate fair market value of shares with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by an Optionee during any calendar year (under the Plan and all
other incentive stock option plans of the Company and any Subsidiary) exceeds
$100,000, such options shall be treated as non-qualified stock options to the
extent required by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking options into account in the order in which
they were granted. For purposes of this Section 4.4(c), the fair market value of
shares shall be determined as of the time the option with respect to such shares
is granted.
(d) In the event of a Change in Control, each Option granted to an
Independent Director or to an Employee shall be exercisable as to all shares
covered thereby immediately prior to the consummation of such Change in Control
and subject to such consummation, notwithstanding anything to the contrary in
this Section 4.4 or the vesting schedule of such Option.
Section 4.5. Consideration
- -10-
In consideration of the granting of an Option, the Optionee shall agree,
in the written Option Agreement, to remain in the employ of the Company, the
Operating Partnership or a subsidiary of either of them for a period of one year
from the date of Option grant. Nothing in this Plan or in any Option Agreement
hereunder shall confer upon any Optionee any right to continue in the employ of
or as a director of the Company, the Operating Partnership or any subsidiary of
either of them, or shall interfere with or restrict in any way the rights of the
Company, the Partnership or any such subsidiary, which are hereby expressly
reserved, to discharge any Optionee at any time for any reason whatsoever, with
or without good cause.
ARTICLE V.
EXERCISE OF OPTIONS
Section 5.1. Partial Exercise
An exercisable Option may be exercised in whole or in part. However, an
Option shall not be exercisable with respect to fractional shares and the
Committee (or the Board, in the case of Options granted to Independent
Directors) may require that, by the terms of the Option, a partial exercise be
with respect to a minimum number of shares.
Section 5.2. Manner of Exercise
All or a portion of an exercisable Option shall be deemed exercised upon
delivery of all of the following to the Secretary or his office prior to the
time when such Option or such portion becomes unexercisable under the Plan or
the applicable Option Agreement:
(a) A written notice complying with the applicable rules established by
the Committee (or the Board, in the case of Options granted to Independent
Directors) stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Optionee or other person then entitled to exercise
the Option or such portion of the Option;
(b) Such representations and documents as the Committee (or the Board,
in the case of Options granted to Independent Directors), in its sole
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its sole discretion, also take whatever additional actions it deems appropriate
to effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant to Section
7.1 by any person or persons other than the Optionee, appropriate proof of the
right of such person or persons to exercise the Option; and
- -11-
(d) Full cash payment to the Secretary for the shares with respect to
which the Option, or portion thereof, is exercised. However, the Committee (or
the Board, in the case of Options granted to Independent Directors), may in its
discretion (i) allow a delay in payment up to thirty (30) days from the date the
Option, or portion thereof, is exercised; (ii) allow payment, in whole or in
part, through the delivery of Common Shares owned by the Optionee, duly endorsed
for transfer to the Company with a Fair Market Value on the date of delivery
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iii) allow payment, in whole or in part, through the surrender of
Common Shares then issuable upon exercise of the Option having a Fair Market
Value on the date of Option exercise equal to the aggregate exercise price of
the Option or exercised portion thereof; (iv) allow payment, in whole or in
part, through the delivery of property of any kind which constitutes good and
valuable consideration; (v) allow payment, in whole or in part, through the
delivery of a full recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Committee or the Board; (vi)
allow payment, in whole or in part, through the delivery of a notice that the
Optionee has placed a market sell order with a broker with respect to Common
Shares then issuable upon exercise of the Option, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price; or (vii) allow payment
through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii), (iv), (v) and (vi). In the case of a promissory note,
the Committee (or the Board, in the case of Options granted to Independent
Directors) may also prescribe the form of such note and the security to be given
for such note. The Option may not be exercised, however, by delivery of a
promissory note or by a loan from the Company when or where such loan or other
extension of credit is prohibited by law.
Section 5.3. Conditions to Issuance of Share Certificates
The Company shall not be required to issue or deliver any certificate
for Common Shares purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such series or class of shares is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory body
which the Committee or Board shall, in its sole discretion, deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee (or Board, in the case of
Options granted to Independent Directors) shall, in its sole discretion,
determine to be necessary or advisable;
- -12-
(d) The lapse of such reasonable period of time following the exercise
of the Option as the Committee (or Board, in the case of Options granted to
Independent Directors) may establish from time to time for reasons of
administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax;
provided that under no circumstance may an Optionee exercise an Option and
acquire a Common Share, and if an Optionee does exercise an Option, such
exercise shall be null and void and of no effect, if such exercise could, in the
sole discretion of the Committee, result in income to the Company which, when
considered in light of the Company's other income, could cause the Company to
fail to satisfy the gross income limitations set forth in Code Section 856(c) or
otherwise impair the Company's status as a REIT.
Section 5.4. Rights as Shareholders
The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.
Section 5.5. Ownership and Transfer Restrictions
The Committee (or Board, in the case of Options granted to Independent
Directors), in its sole discretion, may impose such restrictions on the
ownership and transferability of the shares purchasable upon the exercise of an
Option as it deems appropriate. Any such restriction shall be set forth in the
respective Option Agreement or other written agreement between the Company and
the Optionee and may be referred to on the certificates evidencing such shares.
ARTICLE VI.
ADMINISTRATION
Section 6.1. Share and Unit Option Committee
The Share and Unit Option Committee shall consist of two or more
Directors, appointed by and holding office at the pleasure of the Board, none of
whom shall be an Employee and each of whom is both a "non-employee director" as
defined by Rule 16b-3 and an "outside director" for purposes of Section 162(m)
of the Code. Appointment of Committee members shall be effective upon acceptance
of appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.
Section 6.2. Duties and Powers of Committee
- -13-
It shall be the duty of the Committee to conduct the general
administration of this Plan in accordance with its provisions. The Committee
shall have the power to interpret this Plan, the Option Agreements and to adopt
such rules for the administration, interpretation and application of this Plan
as are consistent therewith and to interpret, amend or revoke any such rules.
Any such interpretations and rules with respect to Incentive Share Options shall
be consistent with the provisions of Section 422 of the Code. Notwithstanding
the foregoing, the full Board, acting by a majority of its members in office,
shall conduct the general administration of the Plan with respect to Options
granted to Independent Directors. Any grant or award under this Plan need not be
the same with respect to each Optionee. In its sole discretion, the Board may at
any time and from time to time exercise any and all rights and duties of the
Committee under this Plan except with respect to matters which under Rule 16b-3
or Section 162(m) of the Code (as each may be applicable), or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Committee.
Section 6.3. Majority Rule
The Committee shall act by a majority of its members in attendance at a
meeting where quorum is present or by a memorandum or other written instrument
signed by all members of the Committee.
Section 6.4. Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Optionees, the Company and all other
interested persons. No members of the Committee or the Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to this Plan or any Option, and all members of the Committee and the
Board shall be fully protected by the Company in respect of any such action,
determination or interpretation.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.1. Not Transferable
(a) Options under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and
distribution or, with the consent of the Committee, pursuant to a transfer to
the spouse and/or lineal descendants of the Optionee and/or
- -14-
to a trust, partnership or other entity the sole beneficiaries, partners or
other members of which are such Optionee's spouse and/or lineal descendants,
unless and until such Options have been exercised, or the shares underlying such
Options have been issued, and all restrictions applicable to such shares have
lapsed. No Option or interest or right therein shall be liable for the debts,
contracts or engagements of the Optionee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
(b) During the lifetime of the Optionee, only he may exercise an Option
(or any portion thereof) granted to him under the Plan, unless it has been
disposed of pursuant to the foregoing paragraph. After the death of the Optionee
(or transferee), any exercisable portion of an Option may, prior to the time
when such portion becomes unexercisable under the Plan or the applicable Option
Agreement or other agreement, be exercised by the personal representative of, or
by any person empowered to do so under, the deceased Optionee's (or
transferee's) will or under the then applicable laws of descent and
distribution.
Section 7.2. Amendment, Suspension or Termination of this Plan
Except as otherwise provided in this Section 7.2, this Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Board or the Committee. However, without
approval of the Company's shareholders given within twelve months before or
after the action by the Board or the Committee, no action of the Board or the
Committee may, except as provided in Section 7.3, increase the limits imposed in
Section 2.1 on the maximum number of shares which may be issued under this Plan,
and no action of the Board or the Committee may be taken that would otherwise
require shareholder approval as a matter of applicable law, regulation or rule.
The Award Limit may be increased by the Board or the Committee at any time and
from time to time, and Options may be granted with respect to a number of shares
not in excess of such increased Award Limit; provided, however, that no such
increase of the Award Limit shall be effective unless and until such increase is
approved by the Company's shareholders and if such approval is not obtained all
Options granted with respect to a number of shares in excess of the Award Limit
in effect prior to such increase shall be canceled and shall become null and
void. No amendment, suspension or termination of this Plan shall, without the
consent of the Optionee alter or impair any rights or obligations under any
Options theretofore granted, unless the Option Agreement itself otherwise
expressly so provides. No Option may be granted during any period of suspension
or after termination of this Plan, and in no event may any Incentive Share
Option be granted under this Plan after May 28, 2003.
- -15-
Section 7.3. Changes in Common Shares or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events
(a) Subject to Section 7.3(d), in the event that the Committee (or the
Board, in the case of Options granted to Independent Directors) determines that
any dividend or other distribution (whether in the form of cash, Common Shares,
other securities, or other property), recapitalization, reclassification, share
split, reverse share split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer,
exchange or other disposition of all or substantially all of the assets of the
Company (including, but not limited to, a Change in Control), or exchange of
Common Shares or other securities of the Company, issuance of warrants or other
rights to purchase Common Shares or other securities of the Company, or other
similar corporate transaction or event, in the Committee's sole discretion (or
in the case of Options granted to Independent Directors, the Board's sole
discretion), affects the Common Shares such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan
or with respect to an Option, then the Committee (or the Board, in the case of
Options granted to Independent Directors) shall, in such manner as it may deem
equitable, adjust any or all of
(i) the number and kind of Common Shares (or other securities or
property) with respect to which Options may be granted
(including, but not limited to, adjustments of the
limitations in Section 2.1 on the maximum number and kind of
shares which may be issued and adjustments of the Award
Limit),
(ii) the number and kind of Common Shares (or other securities or
property) subject to outstanding Options, and
(iii) the grant or exercise price with respect to any Option.
(b) Subject to Sections 7.3(b)(vi) or Section 7.3(d), in the event of
any Change in Control or other transaction or event described in Section 7.3(a)
or any unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Committee (or the Board, in the case of Options granted to
Independent Directors) in its discretion is hereby authorized to take any one or
more of the following actions whenever the Committee (or the Board, in the case
of Options granted to Independent Directors) determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to any Option, to facilitate such transactions or events or to give effect to
such changes in laws, regulations or principles:
- -16-
(i) In its sole discretion, and on such terms and conditions as
it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may
provide, either by the terms of the Option Agreement or by
action taken prior to the occurrence of such transaction or
event and either automatically or upon the request of the
Optionee, for either the purchase of any such Option for an
amount of cash equal to the amount that could have been
attained upon the exercise of such Option had such Option
been currently exercisable or payable or fully vested or the
replacement of such Option with other rights or property
selected by the Committee (or the Board, in the case of
Options granted to Independent Directors) in its sole
discretion;
(ii) In its sole discretion, the Committee (or the Board, in the
case of Options granted to Independent Directors) may
provide, either by the terms of such Option or by action
taken prior to the occurrence of such transaction or event
that it cannot be exercised after such event;
(iii) In its sole discretion, and on such terms and conditions as
it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may
provide, either by the terms of such Option or by action
taken prior to the occurrence of such transaction or event,
that for a specified period of time prior to such
transaction or event, such Option shall be exercisable as to
all shares covered thereby, notwithstanding anything to the
contrary in (i) Section 4.4 or (ii) the provisions of such
Option;
(iv) In its sole discretion, and on such terms and conditions as
it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may
provide, either by the terms of such Option or by action
taken prior to the occurrence of such transaction or event,
that upon such event, such Option be assumed by the
successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options
covering the shares of the successor or survivor
corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares
and prices; and
(v) In its sole discretion, and on such terms and conditions as
it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may make
adjustments in the number and type of Common Shares (or
other securities or
- -17-
property) subject to outstanding Options and/or in the terms
and conditions of (including the grant or exercise price),
and the criteria included in, outstanding Options and
Options which may be granted in the future.
(vi) None of the foregoing discretionary actions taken under this
Section 7.3(b) shall be permitted with respect to Options
granted under Section 3.3(b) to Independent Directors to the
extent that such discretion would be inconsistent with the
applicable exemptive conditions of Rule 16b-3. In the event
of a Change in Control, each Option granted to an
Independent Director shall be exercisable as to all shares
covered thereby immediately prior to the consummation of
such Change in Control and subject to such consummation,
notwithstanding anything to the contrary in Section 4.4 or
the vesting schedule of such Options.
(c) Subject to Section 7.3(d) and 7.6, the Committee (or the Board, in
the case of Options granted to Independent Directors) may, in its discretion,
include such further provisions and limitations in any Option agreement or
certificate, as it may deem equitable and in the best interests of the Company.
(d) With respect to any Option granted to any Section 162(m) Participant
that is intended to qualify as performance-based compensation under Section
162(m)(4)(C), no adjustment or action described in this Section 7.3 or in any
other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Option to fail to so qualify under Section
162(m)(4)(C), or any successor provision thereto unless the Committee determines
that such Option should no longer so qualify. Furthermore, no such adjustment or
action shall be authorized to the extent such adjustment or action would result
in short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Committee (or the Board, in the case of
Options granted to Independent Directors) determines that the Option is not to
comply with such exemptive conditions. The number of Common Shares subject to
any Option shall always be rounded to the next whole number.
Section 7.4. Tax Withholding
The Company shall be entitled to require payment in cash or deduction
from other compensation payable to each Optionee of any sums required by
federal, state or local tax law to be withheld with respect to the issuance,
vesting, exercise or payment of any Option. The Committee (or the Board, in the
case of Options granted to Independent Directors) may in its discretion and in
satisfaction of the foregoing requirement allow such Optionee to elect to have
the Company withhold Common Shares otherwise issuable under such Option (or
allow the return of Common Shares) having a Fair Market Value equal to the sums
required to be withheld.
- -18-
Section 7.5. Loans
The Committee may, in its discretion, extend one or more loans to
Employees in connection with the exercise or receipt of an Option granted under
this Plan. The terms and conditions of any such loan shall be set by the
Committee.
Section 7.6. Limitations Applicable to Section 16 Persons and Performance-
Based Compensation
Notwithstanding any other provision of this Plan, this Plan, and any
Option granted to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan and Options granted hereunder shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule. Furthermore,
notwithstanding any other provision of this Plan, any Option which is granted to
a Section 162(m) Participant and is intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall be subject
to any additional limitations set forth in Section 162(m) of the Code (including
any amendment to Section 162(m) of the Code) or any regulations or rulings
issued thereunder that are requirements for qualification as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and this Plan
shall be deemed amended to the extent necessary to conform to such requirements.
Section 7.7. Effect of Plan Upon Options and Compensation Plans
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Subsidiary. Nothing in this
Plan shall be construed to limit the right of the Company (i) to establish any
other forms of incentives or compensation for Employees or Directors of the
Company or any Subsidiary or (ii) to grant or assume Options or other rights or
awards otherwise than under this Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
Options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, securities or assets of any
corporation, partnership, limited liability company, firm or association.
Section 7.8. Compliance with Laws
This Plan, the granting and vesting of Options under this Plan and the
issuance and delivery of Common Shares and the payment of money under this Plan
or under Options granted hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith.
- -19-
Any securities delivered under this Plan shall be subject to such restrictions,
and the person acquiring such securities shall, if requested by the Company,
provide such assurances and representations to the Company as the Company may
deem necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan, or Options
granted hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
Section 7.9. Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Plan.
Section 7.10. Governing Law
This Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of North Carolina
without regard to conflicts of laws thereof.
- -20-