INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made this, the 15th day of December, 1998, by and
between PLUMA, INC., a North Carolina corporation (hereinafter called the
"Company"), __________________________, (hereinafter called "Employee").
WHEREAS, the Employee is a valued and productive member of the Company's
management team; and
WHEREAS, the Company considers it desirable and in its best interests
that the Employee be given an inducement to acquire and/or add to his
proprietary interest in the Company in the form of options to purchase common
shares of the Company; and
WHEREAS, the stock option granted hereunder is granted pursuant to the
terms of the Pluma, Inc. Stock Option Plan, dated October 26, 1995, and is to be
an Incentive Stock Option as defined in Section 422 of the Internal Revenue Code
of 1986, as may be amended from time to time.
NOW, THEREFORE, in consideration of the premises, it is agreed as
follows:
1. Grant of Option. The Company grants to the Employee the right and
option to purchase from it, on the terms and conditions following, all or any
part of an aggregate of ________________________ (________) shares of the
authorized, issued and outstanding no par value common shares of the Company.
The purchase price shall be $2.00 per share. The Employee is hereby granted the
option to purchase _________________________ (______) shares of common stock in
the company effective December 16, 1998.
2. Time of Exercise of Option. All granted options must be exercised, if
at all, by the Employee on or before December 15, 2008 (hereinafter referred to
as the "Terminal Date"), provided that the aggregate fair market value of stock
with respect to which incentive stock options are exercisable under this
Agreement for the first time by the Employee during any calendar year shall not
exceed One Hundred Thousand Dollars ($100,000.00).
3. Method of Exercise. The option shall be exercised by written notice
directed to the Company at its principal place of business, accompanied by check
in payment of the option price for the number of shares specified and paid for.
The Company shall make immediate delivery of such shares, provided that if any
law or regulation requires the Company to take any action with respect to the
shares specified in such notice before the issuance thereof, then the date of
delivery of such shares shall be extended for the period necessary to take such
action.
Incentive Stock Option Agreement/ Page 4 of 4
4. Termination of Option. Except as otherwise stated in this Agreement,
the option, to the extent not previously exercised, shall terminate as provided
below:
(a) If the Employee's employment by or contractual relationship
with the Company terminates by reason of the Employee's death, the stock
option may thereafter be exercised, to the extent exercisable at the
date of death, or if the Employee dies within the three (3) month period
following the termination of employment (excluding an Employee
discharged for cause as provided in subparagraph (c), below), by the
legal representative or legatee of the Employee, for a period of six (6)
months from the date of the Employee's death, or until the expiration of
the stated term of the option, if earlier.
(b) Any stock option held by the Employee, whose employment by or
contractual relationship with the Company is terminated by reason of
disability (as such term is defined in the Pluma, Inc. 1995 Stock Option
Plan) may thereafter be exercised, to the extent it was exercisable at
the time of such termination, for a period of six (6) months from the
date of such termination of employment, or until the expiration of the
stated term of the option, if earlier.
(c) If the Employee's employment by or contractual relationship
with the Company has been terminated for cause (as defined in the
Company's 1995 Stock Option Plan), any stock option held by such
Employee shall immediately terminate and be of no further force and
effect; provided, however, the Company, acting through the appropriate
committee of its Board of Employees, may, in its sole discretion,
provide that such stock option can be exercised for a period of up to
thirty (30) days from the date of termination of employment or until the
expiration of the stated term of the option, if earlier.
(d) If the Employee's tenure as an Employee with the Company
terminates for any reason other than Death, Disability or for Cause, any
stock option held by the Employee may thereafter be exercised, to the
extent it was exercisable on the date of termination for three (3)
months from the date of termination or until the expiration of the
stated term of the option, if earlier.
5. Limitations. In accordance with the terms of Section 422 of the
Internal Revenue Code of 1986, the option granted under this Agreement is
limited so that the aggregate fair market value of the stock which the Employee
may purchase hereunder in any calendar year does not exceed $100,000.
Incentive Stock Option Agreement/ Page 2 of 4
6. Limitation Upon Transfer.
(a) During the lifetime of the Employee, this option and all rights
granted in this Agreement shall be exercisable only by the Employee, and except
as paragraph 4 otherwise provides, this option and all rights granted under this
contract shall not be transferred, assigned, pledged, or hypothecated in any way
(whether by operation of law or otherwise), other than by will or the laws of
descent and distribution of the state of residence of Employee, or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended, 26 United States Code Section 1, et seq., or Title I of the
Employee Retirement Income Security Act or the rules thereunder. Furthermore,
this option shall not be subject to execution, attachment, or similar process.
Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose
of such option or of such rights contrary to the provisions in this Agreement,
or upon the levy of any attachment or similar process upon such option or such
rights, such option and such rights shall immediately become null and void.
(b) The underlying shares of stock acquired by the Employee as a result
of the exercise of any stock option granted herein shall be held by the Employee
and shall not be transferred, assigned, pledged or hypothecated in any way by
the Employee (other than by will or the laws of descent and distribution of the
state of residence of the Employee, or pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986, as amended, 26
United States Code Section 1, et seq., or Title I of the Employee Retirement
Security Act or the rules thereunder), and shall not be subject to execution,
attachment, or similar process, for a period of two years and one day from the
date of grant of the stock option so exercised, or for a period of one year and
one day after the stock is transferred to the Employee, whichever is later.
7. Reclassification, Consolidation, or Merger. If and to the extent that
the number of issued common shares of the Company shall be increased or reduced
by a change in par value, split-up, reclassification, distribution of a dividend
payable in shares, or the like, the number of shares subject to option and the
option price for them shall be proportionately adjusted. If the Company is
reorganized or consolidated or merged with another corporation, the Employee
shall be entitled to receive options covering shares of such reorganized,
consolidated, or merged company in the same proportion, at an equivalent price,
and subject to the same conditions. For purposes of the preceding sentence, the
excess of the aggregate fair market value of the shares subject to the option
immediately after the reorganization, consolidation, or merger over the
aggregate option price of such shares shall not be more than the excess of the
aggregate fair market value of all shares subject to the option immediately
before such reorganization, consolidation, or merger over the aggregate option
price of such shares. The new option or assumption of the old option shall not
give the Employee additional benefits which he did not have under the old
option.
Incentive Stock Option Agreement/ Page 3 of 4
8. Rights Prior to Exercise of Option. The option is nontransferable by
the Employee, except as herein otherwise provided in paragraph 4 (a) hereof, and
during his lifetime is exercisable only by him, and the Employee shall have no
rights as a shareholder in the option shares until payment of the option price
and delivery to him of such shares as herein provided.
9. Approval by Shareholders. The granting of the option is being made
pursuant to a plan adopted by the Board of Employees of the Company on October
26, 1995, which includes the aggregate number of 264,960 common shares of the
Company which may be issued as incentive stock options, and which specifies that
the Employee is a member of the class of employees eligible to receive such
options. Such plan was approved by the shareholders of the Company on October
26, 1995.
10. Notices. Any notice to be given under the terms of this Agreement
shall be addressed to the Company in care of its Secretary at Pluma, Inc., 801
Fieldcrest Road, Eden, NC 27288, or at such other address as either party may
hereafter designate in writing to the other. Any such notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper addressed as
herein required, certified and deposited (postage and certification fee prepaid)
in a post office or branch post office regularly maintained by the United States
Government.
11. Binding Effect. This Agreement shall be binding upon the heirs,
executors, administrators, and successors of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
PLUMA, INC.
[Corporate Seal] By: _______________________________
R. Duke Ferrell, Jr., President
ATTEST:
- -----------------------------
George G. Wade, Secretary
____________________________(SEAL)
__________________, Employee
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