Exhibit 10(vii)(d)
RESTRICTED STOCK GRANT AGREEMENT
THIS RESTRICTED STOCK GRANT AGREEMENT (the "Agreement") is made and
entered into as of the 21st of July, 2006 (the "Effective Date"), by and between
BNC Bancorp, a North Carolina Corporation, Bank of North Carolina (the "Bank"),
a state chartered commercial bank and Ralph N. Strayhorn III (the
"Participant").
WHEREAS, BNC Bancorp (the "Corporation") is the holding company of the
Bank and the BNC Bancorp Omnibus Stock Option Long Term Incentive Plan was
approved by the Corporation's board of directors and by its shareholders on May
18, 2004, as it may be amended from time to time (the "Plan").
WHEREAS, Participant is an employee of the Bank, and the Boards of
Directors of the Corporation and the Bank have determined that it is desirable
and in the best interest of the Bank to make an award (the "Award") of certain
shares of the common stock of the Corporation, under the Plan, to the
Participant, subject to certain restrictions as specified below; and
WHEREAS, capitalized terms not otherwise defined herein shall have the
same meaning given to such terms in the Plan.
NOW, THEREFORE, the Parties agree as follows:
1. Date of Award. The date of making the Award under this
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Agreement is July 20, 2006. This Award has been made in connection with the
merger of SterlingSouth Bank & Trust Company with and into the Bank and the
continued employment of the Participant by the Bank. The Participant is [X]
or [ ] is not a director or executive officer of the Bank or the Company.
2. Award of Plan Shares. The Participant is awarded, no purchase
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price per share, in the aggregate, the right to receive Five Thousand (5,000)
shares of common stock (the "Plan Shares"), which shares become vested and
nonforfeitable pursuant to paragraph 5 of this Agreement.
3. Representations, Warranties and Transfer Restrictions.
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(a) Representations and Warranties. Participant makes and
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agrees to the representations and warranties, if any, attached hereto as Annex
A. The Committee may cause a legend to be placed on any certificate representing
any of the Plan Shares to make appropriate reference to restrictions on
transfer, as necessary.
(b) Securities Law and Regulations. The Participant
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agrees that the Plan Shares shall be subject to such stop-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange or interdealer quotation system upon which the common stock
is then listed and any other applicable federal or state securities laws, rules
or regulations, and the Committee may cause a legend or legends to be placed on
any certificate representing any of the Plan Shares to make appropriate
reference to such restrictions.
(c) Other Transfer Restrictions. No portion of the Plan
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Shares or Rights granted hereunder may be sold transferred, assigned, pledged or
otherwise encumbered or disposed of by Participant until such portion of the
Plan Shares become fully vested in accordance with paragraph 5 of this
Agreement.
4. Shares Held in Trust. The Plan Shares shall be held in trust
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by the Bank and distributed or transferred in accordance with the Plan, as
determined by the Committee and as set forth herein.
5. Vesting and Delivery of Plan Shares by the Bank.
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(a) Immediate Vesting. Plan Shares shall vest and become
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nonforfeitable upon execution of this Agreement.
(b) Delivery of Vested Plan Shares to the Participant.
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After the date on which the Plan Shares have become vested as provided in this
Agreement and in the Plan, the Committee shall instruct the Bank to deliver to
the Participant, the Participant's designee, such other person as shall have
been designated as Participant's beneficiary in accordance with this Agreement,
or any other permitted recipient pursuant to the Plan, as applicable,
certificates representing the Plan Shares which have become vested and
nonforfeitable, as the Committee shall determine, free from any restrictions
imposed by this Agreement other than such restrictions and conditions as may be
deemed necessary by the Committee pursuant to paragraph 3 above. The parties
agree to execute any further instrument and to take such action as may be
reasonable necessary to carry out the intent of this Agreement
(c) Delivery of Forfeited Plan Shares. If the Plan
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Shares, or any of them, are forfeited pursuant to the Plan, the Committee shall
instruct the Bank concerning the disposition of such forfeited shares.
Thereafter such forfeited shares shall cease to be subject to this Agreement.
6. Payment of Dividends. As soon as practicable after the Plan
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Shares have become vested and delivered, the Bank shall pay to the Participant,
the Participant's designee, such other person as shall have been designated as
Participant's beneficiary in accordance with the Agreement or any other
permitted recipient pursuant to the Plan, the proportional amount of any cash or
stock dividend, or other cash or noncash distributions, including any interest
earned thereon, declared in respect of such vested Plan Shares, which had been
held in trust by the Bank for the benefit of the above-named person(s).
7. Designation of Beneficiary. The Participant hereby designates
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the person(s) described on Annex B as the beneficiary or beneficiaries who shall
be entitled to receive the vested Plan Shares and other assets, if any,
distributable to the Participant upon his death. The Participant may, from time
to time, revoke or change his beneficiary designation without the consent of any
prior beneficiary, if any, by filing a new designation with the Committee. The
last such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to the Participant's death, and
in no event shall it be effective as of a date prior to such receipt.
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If no such beneficiary designation is in effect at the time of
the Participant's death, or if no designated beneficiary survives the
Participant, or if such designation conflicts with law, the Participant's estate
shall be deemed to have been designated his beneficiary and shall receive the
vested Plan Shares and other assets, if any, distributable to the Participant
upon his death. If the Committee is in doubt as to the right of any person to
receive such distribution, the Committee may direct the Bank to retain the
vested Plan Shares and other assets, without liability for any interest in
respect thereof, until the rights thereto are determined, or the Committee may
direct the transfer of such Plan Shares into any court of appropriate
jurisdiction and such transfer shall be deemed a complete discharge of the
obligations of the Bank, and the Corporation, the Committee hereunder.
8. Effect of Award on Status of Participant. The fact that an
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Award has been made to the Participant under this Plan shall not confer on the
Participant any right to continued service on the boards of directors of the
Bank, the Corporation or of any Subsidiary, nor to continued employment with the
Bank, the Corporation or any Subsidiary; nor shall it limit the right of the
Bank, the Corporation or of any Subsidiary to remove the Participant from any
such boards, or to terminate his employment at any time without prior notice.
9. Impact of Award on Other Benefits of Participant. The value of
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the Plan Shares on the date of the Award or at the time the Plan Shares becomes
vested, shall not be includable as compensation or earnings for purposes of any
other benefit plan offered by the Bank, the Corporation or any Subsidiary other
than any qualified employee benefit plan which provides that such value shall be
included as compensation or earnings for purposes of such plans.
10. Tax and Tax Withholding. Participant has reviewed with
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Participant's own tax and financial advisors the federal, state and local tax
consequences of this agreement and receipt of the Plan shares. All vested Plan
Shares distributed pursuant to this Agreement shall be subject to applicable
federal, state and local withholding for taxes. The Participant expressly
acknowledges and agrees to such withholding without regard to whether the Plan
Shares may then be sold or otherwise transferred by the Participant. The
Participant acknowledges and agrees to the tax withholding provisions which are
set forth in the Plan.
11. Notices. Any notices or other communications required or
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permitted to be given under this Agreement shall be in writing and shall be
deemed to have been sufficiently given if delivered personally or three business
days after deposit in the United States mail by Certified Mail, return receipt
requested, properly addressed and postage prepaid, if to the Bank, the Committee
or the Trustees at the Bank's principal office address at 831 Julian Avenue,
Thomasville, North Carolina 27360; and, if to the Participant, at his last
address appearing on the books of the Bank. The Bank and the Participant may
change their address or addresses by giving written notice of such change as
provided herein. Any notice or other communication hereunder shall be deemed to
have been given on the date actually delivered or as of the third (3rd) business
day following the date mailed as set forth above, as the case may be.
12. Construction Controlled by Plan. The Plan, a copy of which is
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attached hereto as Annex C, is incorporated herein by reference. The Award of
Restricted Shares shall be subject to the terms and conditions of the Plan, and
the Participant hereby assumes and agrees to comply with all of the obligations
imposed upon the Participant in the Plan. This Agreement shall be construed so
as to be consistent with the Plan; and the provisions of the Plan shall be
deemed to be controlling in the event that any provision hereof should appear to
be inconsistent therewith.
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13. Severability. Whenever possible, each provision of this
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Agreement shall be interpreted in such a manner as to be valid and enforceable
under applicable law, but if any provision of this Agreement is determined to be
unenforceable, invalid or illegal, the validity of any other provision or part
thereof shall not be affected thereby and this Agreement shall continue to be
binding on the parties hereto as if such unenforceable, invalid or illegal
provision or part thereof had not been included herein.
14. Governing Law. Without regard to the principles of conflicts
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of laws, the laws of the State of North Carolina shall govern and control the
validity, interpretation, performance, and enforcement of this Agreement.
15. Modification of Agreement; Waiver. This Agreement may be
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modified, amended, suspended or terminated, and any terms, representations or
conditions may be waived, but only by a written instrument signed by each of the
parties hereto or their successors in interest. No waiver hereunder shall
constitute a waiver with respect to any subsequent occurrence or other
transaction hereunder or of any other provision hereof.
16. Binding Effect. This Agreement shall be binding upon and
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shall inure to the benefit of the parties hereto, and their respective heirs,
legatees, personal representatives, executors, and administrators, successors
and assigns.
17. Entire Agreement. This Agreement and the Plan constitute and
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embody the entire understanding and agreement of the parties hereto and, except
as otherwise provided hereunder, there are no other agreements or
understandings, written or oral, in effect between the parties hereto relating
to the matters addressed herein.
18. Counterparts. This Agreement may be executed in any number
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of counterparts, each of which when executed and delivered shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Corporation and the Bank have caused this
instrument to be executed in its corporate name by its President, or one of its
Vice Presidents, and attested by its Secretary or one of its Assistant
Secretaries, and its corporate seal to be hereto affixed, all by, authority of
its Board of Directors first duly given; and each individual party hereto has
hereunto set his hand and adopted as his seal the typewritten word "SEAL"
appearing beside his name, all done this the day and year first above written.
THE BANK OF NORTH CAROLINA
By: /s/ W. Swope Montgomery, Jr.
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W. Swope Montgomery, Jr., President
ATTEST:
By: /s/ Drema A. Michael
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Assistant Secretary
[Corporate Seal]
BNC BANCORP
By: /s/ W. Swope Montgomery, Jr.
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W. Swope Montgomery, Jr., President
ATTEST:
By: /s/ Drema A. Michael
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Assistant Secretary
[Corporate Seal]
PARTICIPANT
/s/ Ralph N. Strayhorn (SEAL)
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Ralph N. Strayhorn III
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ANNEX A
REPRESENTATIONS AND WARRANTIES
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Participant represents to the Corporation that:
(a) The Plan Shares were not offered or transferred to Participant
by means of any form of general solicitation or general advertising, and in
connection therewith, Participant did not: (i) receive or review any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio whether
closed circuit or generally available or (ii) attend any seminar meeting or
industry investor conference whose attendees were invited by any general
solicitation or general advertising.
(b) Participant has received a copy of the Plan and represents
that he is familiar with the terms and provisions thereof, and hereby accepts
the Plan Shares subject to all of the terms and provisions of the Plan except as
otherwise specifically stated in this Agreement. Participant hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Committee (both as defined in the Plan) upon any questions arising under the
Plan. Participant acknowledges that the Plan Shares may only be transferred or
otherwise disposed of pursuant to (i) a registration statement on Form S-8 upon
delivery of a resale prospectus to the recipient of the Plan Shares, as long as
Participant is an affiliate of the Corporation, (ii) an effective registration
statement under the Securities Act of 1933, as amended (the "Act") or (iii)
pursuant to an exemption from registration under the Act.
(c) Participant acknowledges that he must therefore hold the Plan
Shares indefinitely unless a subsequent disposition of the Plan Shares is
permitted under the terms of this Agreement.
(d) Participant acknowledges that, given the restrictions on
transfer acknowledged above, he is able to bear the economic risk of holding the
Plan Shares for an indefinite period of time and can afford a complete loss of
the value of the Plan Shares.
(e) Participant agrees and acknowledges that the Corporation may,
if it so desires and subject to paragraph 3 of this Agreement, permit the
transfer of the Plan Shares out of Participant's name only when Participant's
request for transfer is accompanied by an opinion of counsel reasonably
satisfactory to the Corporation and its counsel that neither the sale nor the
proposed transfer results in violation of the Act or any state securities or
"blue sky" laws (collectively, "Securities Laws"). Participant agrees to hold
the Corporation and its directors, officers, agents and controlling persons and
their respective heirs, representatives, successors and assigns harmless and to
indemnify them from and against all liabilities, costs and expenses incurred by
them as a result of any misrepresentation made by Participant contained herein
or any sale or distribution by Participant in violation of the Securities Laws.
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(f) Participant represents that the receipt of the Plan Shares by
Participant will not result in the violation by Participant of any law, statute,
rule, regulation, order, writ, injunction, judgment or decree of any court or
governmental authority to or by which Participant is bound, including, without
limitation, United States laws and other laws that may be applicable to
Participant and will not conflict with, or result in a material breach or
violation of, any of the terms or provisions of, or constitute (with due notice
or lapse of time or both) a material default under, any material lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or
instrument to which Participant is a party or by which Participant is bound or
to which Participant's material properties or assets is subject, nor result in
the creation or imposition of any lien upon any of the material properties or
assets of Participant.
(g) Participant acknowledges and agrees that this Agreement is not
a contract of employment and that nothing in this Agreement shall confer upon
Participant any right with respect to continuation of service to or employment
by the Corporation or the Bank, nor shall it interfere in any way with his right
or the Corporation's or the Bank's right to terminate his service to or
employment by the Corporation or the Bank at any time, with or without cause.
(h) Participant acknowledges and agrees that the vesting of shares
pursuant to this Agreement is earned only through Participant's continued
compliance with the non-compete and non-disclosure covenants contained in the
letter agreement dated July 20, 2006 by and between the Participant and the Bank
and not through the grant of the Plan Shares hereunder.
(i) Participant hereby accepts this Agreement subject to all of
the terms and provisions hereof. Participant has reviewed this Agreement in its
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement, and fully understands all provisions of the Agreement.
(j) Participant acknowledges that the Corporation and its counsel
are entitled to rely on the representations made above.
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ANNEX B
BNC OMNIBUS STOCK OPTION AND
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LONG TERM INCENTIVE PLAN
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BENEFICIARY DESIGNATION FORM
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As Beneficiary to receive any shares of stock distributable on my
behalf pursuant to the BNC Bancorp Omnibus Stock Option and Long Term Incentive
Plan, I hereby designate the following:
Name Address Relationship
Primary Beneficiary:
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Contingent Beneficiary:
(if any)
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If more than one primary beneficiary is named, shares will be paid in equal
shares to surviving primary beneficiaries. Should the contingent beneficiaries
be eligible to receive the benefits (i.e., all primary beneficiaries are
deceased), such benefits will be paid in equal shares to such surviving
contingent beneficiaries.
Name of Spouse if not given above:
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- --------------------------- ------------------------------------------
Witness Participant
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Date
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ANNEX C
BNC BANCORP
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OMNIBUS STOCK OWNERSHIP AND
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LONG TERM INCENTIVE PLAN
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THIS IS THE OMNIBUS STOCK OWNERSHIP AND LONG TERM INCENTIVE PLAN
("Plan") of BNC Bancorp (the "Company"), a North Carolina corporation with its
principal office in 831 Julian Avenue, Thomasville, Davidson County, North
Carolina, under which Incentive Stock Options and Non-Qualified Options to
acquire shares of the Stock, Restricted Stock, Stock Appreciation Rights and/or
Units may be granted from time to time to Eligible Directors and Eligible
Employees of the Company and of any of its Subsidiaries (the "Subsidiaries"),
subject to the following provisions:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings set forth below. Additional
terms defined in this Plan shall have the meanings ascribed to them when first
used herein.
BANK. Bank of North Carolina, Thomasville, North Carolina.
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BOARD. The Board of Directors of BNC Bancorp.
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CHANGE IN CONTROL TRANSACTION. A transaction in which (i) any "person"
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(as such term is defined in Section 3(a)(9) and 13(d)(3) of the 1934 Act),
directly or indirectly, acquires beneficial ownership of voting stock, or
acquires irrevocable proxies or any combination of voting stock and irrevocable
proxies, representing twenty-five percent (25%) or more of any class of voting
securities of either the Company or the Bank, or acquires in any manner control
of the election of a majority of the directors of either the Company or the
Bank, (ii) either the Company or the Bank consolidates or merges with or into
another corporation, association or entity, or is otherwise reorganized, where
neither the Company nor the Bank is the surviving corporation in such
transaction, or (iii) all or substantially all of the assets of either the
Company or the Bank are sold or otherwise transferred to, or are acquired by,
any other entity or group.
CODE. The Internal Revenue Code of 1986, as amended.
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COMMITTEE. The Compensation Committee of the Board, which shall be
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composed solely of two or more members of the Board who are "non-employee
directors" as described in Rule 16(b)(3) of the Rules and Regulations under the
Securities Exchange Act of 1934, as amended.
COMMON STOCK. The Common Stock, no par value, of the Company.
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DEATH. The date and time of death of an Eligible Director or Eligible
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Employee who has received Rights, as established by the relevant death
certificate.
DISABILITY. The date on which (A) an Eligible Employee who has received
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Rights becomes totally and permanently disabled as determined (i) by the
Company's disability insurance carrier (if the Eligible Employee is covered by a
Company-owned disability policy) or by his or her disability insurance carrier
(if the Eligible Employee is not covered by a Company-owned disability policy),
(ii) under federal Social Security laws and regulations, or (iii) by a physician
acceptable to the Company; and (B) an Eligible Director who has received Rights
becomes totally and permanently disabled as determined (i) under federal Social
Security laws or (ii) by a physician acceptable to the Company.
EFFECTIVE DATE. Pursuant to the action of the Board adopting the Plan,
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the date as of which this Plan is effective shall be the date it is approved by
the Company's shareholders.
ELIGIBLE DIRECTORS. Those individuals who are duly elected directors of
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the Company or any of its subsidiaries who are serving in such capacity and who
have been selected by the Committee as a person to whom a Right or Rights shall
be granted under the Plan.
ELIGIBLE EMPLOYEES. Those individuals who meet the following
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eligibility requirements:
(i) Such individual must be a full time employee of the
Company or a Subsidiary. For this purpose, an individual shall be
considered to be an "employee" only if there exists between the Company
or a Subsidiary and the individual the legal and bona fide relationship
of employer and employee. In determining whether such relationship
exists, the regulations of the United States Treasury Department
relating to the determination of such relationship for the purpose of
collection of income tax at the source on wages shall be applied.
(ii) If the Registration shall not have occurred, such
individual must have such knowledge and experience in financial and
business matters that he or she is capable of evaluating the merits and
risks of the investment involved in the receipt and/or exercise of a
Right.
(iii) Such individual, being otherwise an Eligible Employee
under the foregoing items, shall have been selected by the Committee as
a person to whom a Right or Rights shall be granted under the Plan.
FAIR MARKET VALUE. With respect to the Company's Common Stock, the
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market price per share of such Common Stock determined by the Committee,
consistent with the requirements of Section 422 of the Code and to the extent
consistent therewith, as follows, as of the date specified in the context within
which such term is used: (i) if the Common Stock was traded on a stock exchange
on the date in question, then the Fair Market Value will be equal to the closing
price reported by the applicable composite-transactions report for such date;
(ii) if transactions in the Common Stock were quoted on the Nasdaq National
Market on the date in question, then the Fair Market Value will be equal to the
last-transaction price quoted by the Nasdaq National Market;
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(iii) if transactions in the Common Stock were quoted on a system of The Nasdaq
Stock Market, Inc., but not the Nasdaq National Market, then the Fair Market
Value will be equal to the average of the last reported representative bid and
asked prices quoted by The National Stock Market, Inc. for such date; and (iv)
if none of the foregoing provisions is applicable, then the Fair Market Value
will be determined by the Committee in good faith on such basis as it deems
appropriate. The Committee shall maintain a written record of its method of
determining Fair Market Value.
ISO. An "incentive stock option" as defined in Section 422 of the Code.
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NON-QUALIFIED OPTION. Any Option granted under Article III whether
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designated by the Committee as a Non-Qualified Option or otherwise, other than
an Option designated by the Committee as an ISO, or any Option so designated but
which, for any reason, fails to qualify as an ISO pursuant to Section 422 of the
Code and the rules and regulations thereunder.
OPTION AGREEMENT. The agreement between the Company and an Optionee
----------------
with respect to Options granted to such Optionee, including such terms and
provisions as are necessary or appropriate under Article III.
OPTIONS. ISOs and Non-Qualified Options are collectively referred to
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herein as "Options;" provided, however, whenever reference is specifically made
only to ISOs or Non-Qualified Options, such reference shall be deemed to be made
to the exclusion of the other.
PLAN POOL. A total of 150,000 shares of authorized, but unissued,
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Common Stock and as adjusted pursuant to Section 2.3(b), which shall be
available as Stock under this Plan.
REGISTRATION. The registration by the Company under the 1933 Act and
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applicable state "Blue Sky" and securities laws of this Plan, the offering of
Rights under this Plan, the offering of Stock under this Plan, and/or the Stock
acquirable under this Plan.
RESTRICTED STOCK. The Stock which a Holder (as defined in Section
----------------
4.1(a)) shall be entitled to receive when, as and in the amounts described in
Article IV.
RESTRICTED STOCK AGREEMENT. The agreement between the Company and a
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Holder with respect to Rights to receive Restricted Stock, including such terms
and provisions as are necessary or appropriate under Article IV.
RIGHTS. The rights to exercise, purchase or receive the Options,
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Restricted Stock, and SARs described herein.
RIGHTS AGREEMENT. An Option Agreement, a Restricted Stock Agreement, a
----------------
SAR Agreement or a Book Value Share Agreement.
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SAR. The Right of a SAR Recipient (as defined in Section 5.1(a)) to
---
receive cash when, as and in the amounts described in Article V.
SAR AGREEMENT. The agreement between the Company and a SAR Recipient
-------------
with respect to the SAR awarded to the SAR Recipient, including such terms and
conditions as are necessary or appropriate under Article V.
SEC. The Securities and Exchange Commission.
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STOCK. The shares of Common Stock in the Plan Pool available for
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issuance pursuant to the valid exercise of a Right or on which the cash value of
a Right is to be based.
TAX WITHHOLDING LIABILITY. All federal and state income taxes, social
-------------------------
security tax, and any other taxes applicable to the compensation income arising
from the transaction required by applicable law to be withheld by the Company.
TRANSFER. The sale, assignment, transfer, conveyance, pledge,
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hypothecation, encumbrance, loan, gift, attachment, levy upon, assignment for
the benefit of creditors, by operation of law (by will or descent and
distribution), transfer by a qualified domestic relations order, a property
settlement or maintenance agreement, transfer by result of the bankruptcy laws
or otherwise of a share of Stock or of a Right.
1933 ACT. The Securities Act of 1933, as amended.
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1934 ACT. The Securities Exchange Act of 1934, as amended.
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ARTICLE II
GENERAL
SECTION 2.1. PURPOSE. The purposes of this Plan are to encourage and
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motivate directors and key employees to contribute to the successful performance
of the Company and its Subsidiaries and the growth of the market value of the
Common Stock; to achieve a unity of purpose among such directors, key employees
and the Company's shareholders by providing ownership opportunities, and a unity
of interest among such parties in the achievement of the Company's primary long
term performance objectives; and to retain key employees by rewarding them with
potentially tax-advantageous future compensation. These objectives will be
promoted through the granting of Rights to designated Eligible Directors and
Eligible Employees pursuant to the terms of this Plan.
SECTION 2.2. ADMINISTRATION.
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(a) The Plan shall be administered by the Committee which
meets, and shall continue to meet, the standards of Rule 16b-3(d)(1)
promulgated by the SEC under the 1934 Act. Subject to the provisions of
SEC Rule 16b-3(d)(1), the Committee may designate any officers or
employees of the Company or any Subsidiary to assist in the
administration of the Plan, to execute documents on behalf of the
Committee and to perform such other ministerial duties as may be
delegated to them by the Committee.
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(b) Subject to the provisions of the Plan, the determinations
and the interpretation and construction of any provision of the Plan by
the Committee shall be final and conclusive upon all persons affected
thereby. By way of illustration and not of limitation, the Committee
shall have the discretion (a) to construe and interpret the Plan and
all Rights granted hereunder and to determine the terms and provisions
(and amendments thereof) of the Rights granted under the Plan (which
need not be identical); (b) to define the terms used in the Plan and in
the Rights granted hereunder; (c) to prescribe, amend and rescind the
rules and regulations relating to the Plan; (d) to determine the
Eligible Employees to whom and the time or times at which such Rights
shall be granted, the number of shares of Stock, as and when
applicable, to be subject to each Right, the exercise, other relevant
purchase price or value pertaining to a Right, and the determination of
leaves of absence which may be granted to Eligible Employees without
constituting a termination of their employment for the purposes of the
Plan; and (e) to make all other determinations necessary or advisable
for the administration of the Plan. Only the full Board of Directors
has the discretion to determine the Eligible Directors to whom and the
time or times at which such Rights shall be granted , the number of
shares of Stock, as and when applicable, to be subject to each Right,
the exercise, and other relevant purchase price or value pertaining to
a Right. References to the Committee contained in this Agreement will
also mean the Board wherever Rights of Eligible Directors are
addressed.
(c) It shall be in the discretion of the Committee to grant
Options to purchase shares of Stock which qualify as ISOs under the
Code or which will be given tax treatment as Non-Qualified Options. Any
Options granted which fail to satisfy the requirements for ISOs shall
become Non-Qualified Options.
(d) The intent of the Company is to register the (i) offering
of shares of Stock pertaining to or underlying the Rights and the
offering of Rights pursuant to this Plan, (ii) this Plan and (iii) the
Rights, to the extent required, under the 1933 Act and applicable state
securities and "Blue Sky" laws (the "Registration"). In such event, the
Company shall make available to Eligible Directors and Eligible
Employees receiving Rights, and/or shares of Stock in connection
therewith, all disclosure documents required under such federal and
state laws. If such Registration shall not occur, the Committee shall
be responsible for supplying the recipient of a Right, and/or shares of
Stock in connection therewith, with such information about the Company
as is contemplated by the federal and state securities laws in
connection with exemptions from the registration requirements of such
laws, as well as providing the recipient of a Right with the
opportunity to ask questions and receive answers concerning the Company
and the terms and conditions of the Rights granted under this Plan. In
addition, if such Registration shall not occur, the Committee shall be
responsible for determining the maximum number of Eligible Directors
and Eligible Employees and the suitability of particular persons to be
Eligible Directors and Eligible Employees in order to comply with
applicable federal and state securities statutes and regulations
governing such exemptions.
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(e) In determining the Eligible Directors and Eligible
Employees to whom Rights shall be granted and the number of shares of
stock to be covered by each Right, the Committee shall take into
account the nature of the services rendered by such Eligible Directors
and Eligible Employees, their present and potential contributions to
the success of the Company and/or the Subsidiaries and such other
factors as the Committee shall deem relevant. An Eligible Director or
Eligible Employee who has been granted a Right under the Plan may be
granted additional Rights under the Plan if the Committee shall so
determine.
If, pursuant to the terms of the Plan, or otherwise in
connection with the Plan, it is necessary that the percentage of stock
ownership of an Eligible Director or Eligible Employee be determined,
the ownership attribution provisions set forth in Section 424(d) of the
Code shall be controlling.
(f) The granting of Rights pursuant to this Plan is in the
exclusive discretion of the Committee, and until the Committee acts, no
individual shall have any rights under this Plan. The terms of this
Plan shall be interpreted in accordance with this intent.
SECTION 2.3. STOCK AVAILABLE FOR RIGHTS.
----------- --------------------------
(a) Shares of the Stock shall be subject to, or underlying,
grants of Options, Restricted Stock, SARs and Units under this Plan.
The total number of shares of Stock for which, or with respect to
which, Rights may be granted (including the number of shares of Stock
in respect of which SARs and Units may be granted) under this Plan
shall be those designated in the Plan Pool. In the event that a Right
granted under the Plan to any Eligible Director or Eligible Employee
expires or is terminated unexercised as to any shares of Stock covered
thereby, such shares thereafter shall be deemed available in the Plan
Pool for the granting of Rights under this Plan; provided, however, if
the expiration or termination date of a Right is beyond the term of the
Plan as described in Section 8.3, then any shares of Stock covered by
unexercised or terminated Rights shall not reactivate the existence of
this Plan and therefore shall not be available for additional grants of
Rights under this Plan.
(b) In the event the outstanding shares of Common Stock are
increased, decreased, changed into or exchanged for a different number
or kind of securities as a result of a stock split, reverse stock
split, stock dividend, recapitalization, merger, share exchange
acquisition, combination or reclassification appropriate proportionate
adjustments will be made in: (i) the aggregate number and/or kind of
shares of Stock in the Plan Pool that may be issued pursuant to the
exercise of, or that are underlying, Rights granted hereunder; (ii) the
exercise or other purchase price and the number and/or kind of shares
of Stock called for with respect to, or underlying, each outstanding
Right granted hereunder;
14
and (iii) other rights and matters determined on a per share basis
under this Plan or any Rights Agreement. Any such adjustments will be
made only by the Committee, subject to ratification by the Board, and
when so made will be effective, conclusive and binding for all purposes
with respect to this Plan and all Rights then outstanding. Except as
provided in Section 5.2(g), no such adjustments will be required by
reason of (i) the issuance or sale by the Company for cash of
additional shares of its Common Stock or securities convertible into or
exchangeable for shares of its Common Stock, or (ii) the issuance of
shares of Common Stock in exchange for shares of the capital stock of
any corporation, financial institution or other organization acquired
by the Company or any subsidiary in connection therewith.
(c) The grant of a Right pursuant to this Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassification, reorganizations or changes of its
capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its
business or assets.
(d) No fractional shares of Stock shall be issued under this
Plan for any adjustment under Section 2.3(b).
ARTICLE III
OPTIONS
SECTION 3.1. GRANT OF OPTIONS.
----------- ----------------
(a) The Company may grant Options to Eligible Directors and
Eligible Employees as provided in this Article III. Options will be
deemed granted pursuant to this Article III only upon (i) authorization
by the Committee, and (ii) the execution and delivery of an Option
Agreement by the Eligible Director or Eligible Employee optionee (the
"Optionee") and a duly authorized officer of the Company. Options will
not be deemed granted hereunder merely upon authorization of such grant
by the Committee. The aggregate number of shares of Stock potentially
acquirable under all Options granted shall not exceed the total number
of shares of Stock in the Plan Pool, less all shares of Stock
potentially acquired under, or underlying, all other Rights outstanding
under this Plan.
(b) The Committee shall designate Options at the time a grant
is authorized as either ISOs or Non-Qualified Options. The aggregate
Fair Market Value (determined as of the time an ISO is granted) of the
shares of Stock as to which an ISO may first become exercisable by an
Optionee in a particular calendar year (pursuant to Article III and all
other plans of the Company and/or its Subsidiaries) may not exceed
$100,000 (the "$100,000 Limitation"). If an Optionee is granted Options
in excess of the $100,000 Limitation, or if such Options otherwise
become exercisable with respect to the number of shares of Stock which
would exceed the $100,000 Limitation, such excess Options shall be
Non-Qualified Options.
15
SECTION 3.2. EXERCISE PRICE. The exercise price of each Option granted
----------- --------------
under the Plan (the "Exercise Price") shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock on the date of grant of the
Option. In the case of ISOs granted to a shareholder who owns capital stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of the capital stock of the Company (a "10% Shareholder"),
the Exercise Price of each Option granted under the Plan to such 10% Shareholder
shall not be less than one hundred and ten percent (110%) of the Fair Market
Value of the Common Stock on the date of grant of the Option.
SECTION 3.3. TERMS AND CONDITIONS OF OPTIONS.
----------- -------------------------------
(a) All Options must be granted within ten (10) years of the
Effective Date.
(b) The Committee may grant ISOs and Non-Qualified Options,
either separately or jointly, to an Eligible Employee.
(c) The grant of Options shall be evidenced by an Option
Agreement in form and substance satisfactory to the Committee in its
discretion, consistent with the provisions of this Article III.
(d) At the discretion of the Committee, an Optionee, as a
condition to the granting of the Option, must execute and deliver to
the Company a confidential information agreement approved by the
Committee.
(e) Nothing contained in Article III, any Option Agreement or
in any other agreement executed in connection with the granting of an
Option under this Article III will confer upon any Optionee any right
with respect to the continuation of his or her status as an employee or
director of the Company or any of its Subsidiaries.
(f) Except as otherwise provided herein, each Option Agreement
may specify the period or periods of time within which each Option or
portion thereof will first become exercisable (the "Vesting Period")
with respect to the total number of shares of Stock acquirable
thereunder. Such Vesting Periods will be fixed by the Committee in its
discretion, and may be accelerated or shortened by the Committee in its
discretion; provided that the Committee may, at the time of grant of an
Option, designate that, notwithstanding any otherwise applicable
Vesting Period, such Option shall vest immediately prior and subject to
the consummation of a Change In Control Transaction(which may cause an
Option granted as an ISO to be deemed a Non-Qualified Option).
(g) Not less than one hundred (100) shares of Stock may be
purchased at any one time through the exercise of an Option unless the
number purchased is the total number at that time purchasable under all
Options granted to the Optionee.
16
(h) An Optionee shall have no rights as a shareholder of the
Company with respect to any shares of Stock underlying such Option
until payment in full of the Exercise Price by such Optionee for the
stock being purchased. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is
prior to the date such Stock is fully paid for, except as provided in
Section 2.3(b).
(i) All shares of Stock obtained pursuant to an Option which
qualifies as an ISO shall be held in escrow for a period which ends on
the later of (i) two (2) years from the date of the granting of the ISO
or (ii) one (1) year after the issuance of such shares pursuant to the
exercise of the ISO. Such shares of Stock shall be held by the Company
or its designee. The Optionee who has exercised the ISO shall have all
rights of a shareholder, including, but not limited, to the rights to
vote, receive dividends and sell such shares. The sole purpose of the
escrow is to inform the Company of a disqualifying disposition of the
shares of Stock acquired within the meaning of Section 422 of the Code,
and it shall be administered solely for this purpose.
SECTION 3.4. EXERCISE OF OPTIONS.
----------- -------------------
(a) An Optionee must at all times be an Eligible Employee from
the date of grant until the exercise of the Options granted, except as
provided in Section 3.5(b).
(b) An Option may be exercised to the extent exercisable (i)
by giving written notice of exercise to the Company, specifying the
number of shares of Stock to be purchased and, if applicable,
accompanied by full payment of the Exercise Price thereof and the
amount of withholding taxes pursuant to Section 3.4(c) below; and (ii)
by giving assurances satisfactory to the Company that the shares of
Stock to be purchased upon such exercise are being purchased for
investment and not with a view to resale in connection with any
distribution of such shares in violation of the 1933 Act; provided,
however, that in the event of the prior occurrence of the Registration
or in the event resale of such Stock without such Registration would
otherwise be permissible, the second condition will be inoperative if,
in the opinion of counsel for the Company, such condition is not
required under the 1933 Act or any other applicable law, regulation or
rule of any governmental agency.
(c) As a condition to the issuance of the Stock upon full or
partial exercise of a Non-Qualified Option, the Optionee will pay to
the Company in cash, or in such other form as the Committee may
determine in its discretion, the amount of the Company's Tax
Withholding Liability required in connection with such exercise.
(d) The Exercise Price of an Option shall be payable to the
Company either (i) in United States dollars, in cash or by check, bank
draft or money order payable to the order of the Company, or (ii) at
the discretion of the Committee, through the delivery of outstanding
shares of the Common Stock owned by the Optionee with a Fair Market
Value at the date of delivery equal to the Exercise Price, or (iii) at
the discretion of the Committee by a combination of (i) and (ii) above.
No shares of Stock shall be delivered until full payment has been made.
17
SECTION 3.5. TERM AND TERMINATION OF OPTION.
----------- ------------------------------
(a) The Committee shall determine, and each Option Agreement
shall state, the expiration date or dates of each Option, but such
expiration date shall be not later than ten (10) years after the date
such Option is granted (the "Option Period"). In the event an ISO is
granted to a 10% Shareholder, the expiration date or dates of each
Option Period shall be not later than five (5) years after the date
such Option is granted. The Committee, in its discretion, may extend
the expiration date or dates of an Option Period after such date was
originally set; provided, however, such expiration date may not exceed
the maximum expiration date described in this Section 3.5(a).
(b) To the extent not previously exercised, each Option will
terminate upon the expiration of the Option Period specified in the
Option Agreement; provided, however, that each such Option will
terminate upon the earlier of: (i) twelve (12) months after the date
that the Optionee ceases to be an Eligible Employee by reason of Death
or Disability; or (ii) immediately as of the date that the Optionee
ceases to be an Eligible Director or Eligible Employee for any reason
other than Death or Disability. Any portions of Options not exercised
within the foregoing periods shall terminate.
SECTION 3.6. CHANGE IN CONTROL TRANSACTION. All or any part of the
----------- -----------------------------
Options theretofore granted under this Article III shall become immediately
exercisable in full and may thereafter be exercised on the date of consummation
of the Change in Control Transaction. Any Option that has not been fully
exercised on or before the date of consummation of the Change in Control
Transaction shall terminate on such date, unless a provision has been made in
writing in connection with such transaction for the assumption of all Options
theretofore granted, or the substitution for such Options of options to acquire
the voting stock of a successor employer corporation, or a parent or a
subsidiary thereof, with appropriate adjustments in the number and kind of
shares and prices, in which event the Options theretofore granted shall continue
in the manner and under the terms so provided.
SECTION 3.7. RESTRICTIONS ON TRANSFER. An Option granted under Article
----------- ------------------------
III may not be Transferred except by will or the laws of descent and
distribution and, during the lifetime of the Optionee to whom it was granted,
may be exercised only by such Optionee.
SECTION 3.8. STOCK CERTIFICATES. Certificates representing the Stock
----------- ------------------
issued pursuant to the exercise of Options will bear all legends required by law
and necessary to effectuate the provisions hereof. The Company may place a "stop
transfer" order against such shares of Stock until all restrictions and
conditions set forth in this Article III, the applicable Option Agreement, and
in the legends referred to in this Section 3.8 have been complied with.
18
SECTION 3.9. AMENDMENT AND DISCONTINUANCE. The Board may at any time
----------- ----------------------------
alter, suspend, terminate or discontinue the Plan, subject to any applicable
regulatory requirements and any required shareholder approval or any shareholder
approval which the Board may deem advisable for any reason, such as for the
purpose of obtaining or retaining any statutory or regulatory benefits under
tax, securities or other laws or satisfying applicable stock exchange or
quotation system listing requirements. The Board may not, without the consent of
the holder of an Option previously granted, make any alteration which would
deprive the optionee of his rights with respect thereto.
SECTION 3.10. COMPLIANCE WITH RULE 16b-3. With respect to persons
------------ --------------------------
subject to Section 16 of the 1934 Act, transactions under this Article III are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the 1934 Act. To the extent any provision of this Article III
or action by the Board or the Committee fails so to comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Committee.
ARTICLE IV
RESTRICTED STOCK GRANTS
SECTION 4.1. GRANTS OF RESTRICTED STOCK.
----------- --------------------------
(a) The Company may grant Restricted Stock or Rights to
receive Restricted Stock to Eligible Directors and Eligible Employees
as provided in this Article IV. Shares of Restricted Stock, or Rights
thereto, will be deemed granted only upon (i) authorization by the
Committee and (ii) the execution and delivery of a Restricted Stock
Agreement by the Eligible Director or Eligible Employee to whom such
Restricted Stock is to be issued (the "Holder") and a duly authorized
officer of the Company. Restricted Stock will not be deemed to have
been granted merely upon authorization by the Committee. The aggregate
number of shares of Restricted Stock potentially acquirable under all
Rights to acquire Restricted Stock shall not exceed the total number of
shares of Stock in the Plan Pool, less all shares of Stock potentially
acquirable under, or underlying, all other Rights outstanding under
this Plan.
(b) Each grant of Restricted Stock, or Rights thereto,
pursuant to this Article IV will be evidenced by a Restricted Stock
Agreement between the Company and the Holder in form and substance
satisfactory to the Committee in its sole discretion, consistent with
this Article IV. Each Restricted Stock Agreement will specify the
purchase price per share (the "Purchase Price"), if any, with respect
to the Restricted Stock to be issued to the Holder thereunder. The
purchase price will be fixed by the Committee in its discretion. The
Purchase Price will be payable to the Company in United States dollars
in cash or by check or such other legal consideration as may be
approved by the Committee, in its discretion.
(c) Without limiting the foregoing, each Restricted Stock
Agreement shall include the following terms and conditions:
19
(i) Nothing contained in this Article IV, any Restricted Stock
Agreement or in any other agreement executed in connection
with the issuance of Restricted Stock under this Article IV
will confer upon any Holder any right with respect to the
continuation of his or her status as an employee or director
of the Company or any of its Subsidiaries.
(ii) Except as otherwise provided herein, each Restricted
Stock Agreement may specify the period or periods of time
within which each Right to receive Restricted Stock or portion
thereof will first become exercisable (the "Vesting Period")
with respect to the total number of shares of Restricted Stock
acquirable thereunder. Such Vesting Periods will be fixed by
the Committee in its discretion, and may be accelerated or
shortened by the Committee in its discretion; provided that
the Committee may, at the time of grant of a Restricted Stock,
designate that, notwithstanding any otherwise applicable
Vesting Period, such Restricted Stock shall vest immediately
prior and subject to the consummation of a Change In Control
Transaction.
SECTION 4.2. RESTRICTIONS ON TRANSFER OF RESTRICTED STOCK.
----------- --------------------------------------------
(a) Rights to acquire Restricted Stock may not be Transferred,
and shares of Restricted Stock acquired by a Holder may be Transferred
only in accordance with the specific limitations on the Transfer of
Restricted Stock imposed by applicable state or federal securities laws
and set forth below, and subject to certain undertakings of the
transferee set forth in Section 4.2(c). All Transfers of Restricted
Stock not meeting the conditions set forth in this Section 4.2(a) are
expressly prohibited.
(b) Any Transfer of Rights to acquire Restricted Stock and any
prohibited Transfer of Restricted Stock is void and of no effect.
Should such a Transfer purport to occur, the Company may refuse to
carry out the Transfer on its books, attempt to set aside the Transfer,
enforce any undertaking or right under this Section 4.2(b), or exercise
any other legal or equitable remedy.
(c) Any Transfer of Restricted Stock that would otherwise be
permitted under the terms of this Plan is prohibited unless the
transferee executes such documents as the Company may reasonably
require to ensure the Company's rights under a Restricted Stock
Agreement and this Article IV are adequately protected with respect to
the Restricted Stock so Transferred. Such documents may include,
without limitation, an agreement by the transferee to be bound by all
of the terms of this Plan applicable to Restricted Stock, and of the
applicable Restricted Stock Agreement, as if the transferee were the
original Holder of such Restricted Stock.
(d) To facilitate the enforcement of the restrictions on
Transfer set forth in this Article IV, the Committee may, at its
discretion, require the Holder of shares of Restricted Stock to deliver
the certificate(s) for such shares with a stock power executed in blank
by Holder and Holder's spouse, to the Secretary of the Company or his
or her designee, to hold said certificate(s) and stock power(s) in
escrow and to take all such actions and to effectuate all such
Transfers and/or releases as are in accordance with the terms of this
Plan.
20
The certificates may be held in escrow so long as the shares of
Restricted Stock whose ownership they evidence are subject to any
restriction on Transfer under this Article IV or under a Restricted
Stock Agreement. Each Holder acknowledges that the Secretary of the
Company (or his or her designee) is so appointed as the escrow holder
with the foregoing authorities as a material inducement to the issuance
of shares of Restricted Stock under this Article IV, that the
appointment is coupled with an interest, and that it accordingly will
be irrevocable. The escrow holder will not be liable to any party to a
Restricted Stock Agreement (or to any other party) for any actions or
omissions unless the escrow holder is grossly negligent relative
thereto. The escrow holder may rely upon any letter, notice or other
document executed by any signature purported to be genuine.
SECTION 4.3. TERMINATION.
----------- -----------
(a) The Committee shall determine, and each Restricted Stock
Agreement shall state, the expiration date or dates of each Right to
receive Restricted Stock, but such expiration date shall not be later
than ten (10) years after the date such Rights are granted (the
"Restricted Stock Period"). The Committee, in its discretion, may
extend the expiration date or dates of a Restricted Stock Period after
such date was originally set; provided, however, such expiration date
may not exceed the maximum expiration date described in this Section
4.3(a).
(b) To the extent not previously exercised, each grant of
Rights to receive Restricted Stock will terminate upon the expiration
of the Restricted Stock Period specified in the Restricted Stock
Agreement; provided, however, that each such grant of Rights to receive
Restricted Stock will terminate upon the earlier of: (i) twelve (12)
months after the date that the Holder ceases to be an Eligible Director
or Eligible Employee by reason of Death or Disability; or (ii)
immediately as of the date that the Holder ceases to be an Eligible
Employee for any reason other than death or disability. Any portions of
the grant of Rights to acquire Restricted Stock to a Holder not
exercised within the foregoing periods shall terminate.
SECTION 4.4. CHANGE IN CONTROL TRANSACTION. All or any part of the
----------- -----------------------------
grants of Rights to receive Restricted Stock theretofore made under the Plan
shall become immediately exercisable in full and may thereafter be exercised on
the date of consummation of the Change in Control Transaction. Any grant of a
Right to receive Restricted Stock that has not been fully exercised on or before
the date of consummation of the Change in Control Transaction shall terminate on
such date, unless a provision has been made in writing in connection with such
transaction for the assumption of all grants of Restricted Stock, or Rights
thereto, theretofore made, or the substitution for such grants of Restricted
Stock, or Rights thereto, of grants of Restricted Stock to acquire the voting
stock of a successor employer corporation, or a parent or a subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices, in
which event the grants of Restricted Stock, or Rights thereto, theretofore made
shall continue in the manner and under the terms so provided.
21
SECTION 4.5. COMPLIANCE WITH LAW. Notwithstanding any other provision
----------- -------------------
of this Article IV, Restricted Stock may be issued pursuant to this Article IV
only after there has been compliance with all applicable federal and state
securities laws, and such issuance will be subject to this overriding condition.
The Company may include shares of Restricted Stock in a Registration, but will
not be required to register or qualify Restricted Stock with the SEC or any
state agency, except that the Company will register with, or as required by
local law, file for and secure an exemption from such registration requirements
from, the applicable securities administrator and other officials of each
jurisdiction in which an Eligible Director or Eligible Employee would be issued
Restricted Stock hereunder prior to such issuance.
SECTION 4.6. STOCK CERTIFICATES. Certificates representing the
----------- ------------------
Restricted Stock issued pursuant to this Article IV will bear all legends
required by law and necessary to effectuate the provisions hereof. The Company
may place a "stop transfer" order against shares of Restricted Stock until all
restrictions and conditions set forth in this Article IV, the applicable
Restricted Stock Agreement and in the legends referred to in this Section 4.6,
have been complied with.
SECTION 4.7. MARKET STANDOFF. To the extent requested by the Company
----------- ---------------
and any underwriter of securities of the Company in connection with a firm
commitment underwriting, no Holder of any shares of Restricted Stock will sell
or otherwise Transfer any such shares not included in such underwriting, or not
previously registered in a Registration, during the one hundred twenty (120) day
period following the effective date of the registration statement filed with the
SEC in connection with such offering.
SECTION 4.8. AMENDMENT AND DISCONTINUANCE. The Board may at any time
----------- ----------------------------
alter, suspend, terminate or discontinue the Plan, subject to any applicable
regulatory requirements and any required shareholder approval or any shareholder
approval which the Board may deem advisable for any reason, such as for the
purpose of obtaining or retaining any statutory or regulatory benefits under
tax, securities or other laws or satisfying applicable stock exchange or
quotation system listing requirements. The Board may not, without the consent of
the Holder of a Restricted Share previously granted, make any alteration which
would deprive the Holder of his rights with respect thereto.
SECTION 4.9. COMPLIANCE WITH RULE 16B-3. With respect to persons
----------- --------------------------
subject to Section 16 of the 1934 Act, transactions under this Article IV are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the 1934 Act. To the extent any provision of this Article IV or
action by the Board or the Committee fails so to comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
22
ARTICLE V
STOCK APPRECIATION RIGHTS
SECTION 5.1. GRANTS OF SARs.
----------- --------------
(a) The Company may grant SARs to Eligible Directors and
Eligible Employees under this Article V. SARs will be deemed granted
only upon (i) authorization by the Committee and (ii) the execution and
delivery of a SAR Agreement by the Eligible Director or Eligible
Employee to whom the SARs are to be granted (the "SAR Recipient") and a
duly authorized officer of the Company. SARs will not be deemed granted
merely upon authorization by the Committee. The aggregate number of
shares of Stock which shall underlie SARs granted hereunder shall not
exceed the total number of shares of Stock in the Plan Pool, less all
shares of Stock potentially acquirable under, or underlying, all other
Rights outstanding under this Plan.
(b) Each grant of SARs pursuant to this Article V shall be
evidenced by a SAR Agreement between the Company and the SAR Recipient,
in form and substance satisfactory to the Committee in its sole
discretion, consistent with this Article V.
SECTION 5.2. TERMS AND CONDITIONS OF SARs.
----------- ----------------------------
(a) All SARs must be granted within ten (10) years of the
Effective Date.
(b) Each SAR issued pursuant to this Article V shall have an
initial base value (the "Base Value") equal to the Fair Market Value of
a share of Common Stock on the date of issuance of the SAR (the "SAR
Issuance Date").
(c) In its discretion and subject to the provisions of Section
5.2(b) (as to the establishment of the Base Value of a SAR), the
Committee may establish that the Base Value of a SAR shall be adjusted,
upward or downward, on a quarterly basis, based upon the market value
performance of the Common Stock in comparison with the aggregate market
value performance of a selected index or at a stated annual percentage
rate.
(d) Nothing contained in this Article V, any SAR Agreement or
in any other agreement executed in connection with the granting of a
SAR under this Article V will confer upon any SAR Recipient any right
with respect to the continuation of his or her status as an employee or
director of the Company or any of its Subsidiaries.
(e) Except as otherwise provided herein, each SAR Agreement
may specify the period or periods of time within which each SAR or
portion thereof will first become exercisable (the "SAR Vesting
Period") with respect to the total Cash Payment (as defined in Section
5.4(b)) receivable thereunder. Such SAR Vesting Periods will be fixed
by the Committee in its discretion, and may be accelerated or shortened
by the Committee in its discretion.
(f) SARs relating to no less than one hundred (100) shares of
Stock may be exercised at any one time unless the number exercised is
the total number at that time exercisable under all SARs granted to the
SAR Recipient.
(g) A SAR Recipient shall have no rights as a shareholder of
the Company with respect to any shares of Stock covered by such SAR.
However, adjustment shall be made to each SAR granted for dividends
(ordinary or extraordinary, whether in cash, securities or other
property), and upon the sale by the Company for cash of additional
shares of its Common Stock.
23
SECTION 5.3. RESTRICTIONS ON TRANSFER OF SARs. Each SAR granted under
----------- --------------------------------
this Article V may not be Transferred except by will or the laws of descent and
distribution and, during the lifetime of the SAR Recipient to whom it was
granted, may be exercised only by such SAR Recipient.
SECTION 5.4. EXERCISE OF SARs.
----------- ----------------
(a) A SAR Recipient, or his or her executors or
administrators, or heirs or legatees, shall exercise a SAR of the SAR
Recipient by giving written notice of such exercise to the Company.
SARs may be exercised only upon the completion of the SAR Vesting
Period applicable to such SAR.
(b) Within ten (10) days of the SAR Exercise Date applicable
to a SAR exercised in accordance with Section 5.4(a), the SAR Recipient
shall be paid in cash the difference between the Base Value of such SAR
(as adjusted, if applicable, under Section 5.2(f) as of the most
recently preceding quarterly period) and the Fair Market Value of the
Common Stock as of the SAR Exercise Date, reduced by the Tax
Withholding Liability arising from such exercise.
SECTION 5.5. TERMINATION OF SARs.
----------- -------------------
(a) The Committee shall determine in its sole discretion, and
each SAR Agreement shall state, the expiration date or dates of each
SAR, but such expiration date shall not be later than ten (10) years
after the date such SAR is granted (the "SAR Period"). The Committee,
in its discretion, may extend the expiration date or dates of a SAR
Period after such date was originally set; provided, however, such
expiration date may not exceed the maximum expiration date described in
this Section 5.5(a).
(b) To the extent not previously exercised, each SAR will
terminate upon the expiration of the SAR Period specified in the SAR
Agreement; provided, however, that each such SAR will terminate upon
the earlier of: (i) twelve (12) months after the date that the SAR
Recipient ceases to be an Eligible Director or Eligible Employee by
reason of Death or Disability; or (ii) immediately as of the date that
the SAR Recipient ceases to be an Eligible Director or Eligible
Employee for any reason other than by Death or Disability. Any SARs not
exercised within the foregoing periods shall terminate.
SECTION 5.6. CHANGE IN CONTROL TRANSACTION. All or any part of the
----------- -----------------------------
SARs theretofore granted under this Article V shall become immediately
exercisable in full and may thereafter be exercised on the date of consummation
of the Change in Control Transaction. Any SAR that has not been fully exercised
on or before the date of consummation of the Change in Control Transaction shall
terminate on such date, unless a provision has been made in writing in
connection with such transaction for the assumption of all SARs theretofore
granted, or the substitution for such SARs of grants of stock appreciation
rights having comparable characteristics under a stock appreciation rights plan
of a successor employer corporation, or a parent or a subsidiary thereof, with
appropriate adjustments, in which event the SARs theretofore granted shall
continue in the manner and under the terms so provided.
24
SECTION 5.7. DESIGNATION OF BENEFICIARIES. A SAR Recipient may
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designate a beneficiary or beneficiaries to receive all or part of the cash to
be paid to the SAR Recipient under this Article V in case of Death. A
designation of beneficiary may be replaced by a new designation or may be
revoked by the SAR Recipient at any time. A designation or revocation shall be
on a form to be provided for that purpose and shall be signed by the SAR
Recipient and delivered to the Company prior to the SAR Recipient's Death. In
case of the SAR Recipient's Death, the amounts to be distributed to the SAR
Recipient under this Article V with respect to which a designation of
beneficiary has been made (to the extent it is valid and enforceable under
applicable law) shall be distributed in accordance with this Article V to the
designated beneficiary or beneficiaries. The amount distributable to a SAR
Recipient upon Death and not subject to such a designation shall be distributed
to the SAR Recipient's estate. If there shall be any question as to the legal
right of any beneficiary to receive a distribution under this Article V, the
amount in question may be paid to the estate of the SAR Recipient, in which
event the Company shall have no further liability to anyone with respect to such
amount.
SECTION 5.8. AMENDMENT AND DISCONTINUANCE. The Board may at any time
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alter, suspend, terminate or discontinue the Plan, subject to any applicable
regulatory requirements and any required shareholder approval or any shareholder
approval which the Board may deem advisable for any reason, such as for the
purpose of obtaining or retaining any statutory or regulatory benefits under
tax, securities or other laws or satisfying applicable stock exchange or
quotation system listing requirements. The Board may not, without the consent of
the SAR Recipient, make any alteration which would deprive the SAR Recipient of
his rights with respect thereto.
SECTION 5.9. COMPLIANCE WITH RULE 16B-3. With respect to persons
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subject to Section 16 of the 1934 Act, transactions under this Article V are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the 1934 Act. To the extent any provision of this Article V or
action by the Board or the Committee fails so to comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. APPLICATION OF FUNDS. The proceeds received by the
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Company from the sale of Stock pursuant to the exercise of Rights will be used
for general corporate purposes.
SECTION 6.2. NO OBLIGATION TO EXERCISE RIGHT. The granting of a Right
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shall impose no obligation upon the recipient to exercise such Right.
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SECTION 6.3. TERM OF PLAN. Except as otherwise specifically provided
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herein, Rights may be granted pursuant to this Plan from time to time within ten
(10) years from the Effective Date.
SECTION 6.4. CAPTIONS AND HEADINGS; GENDER AND NUMBER. Captions and
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paragraph headings used herein are for convenience only, do not modify or affect
the meaning of any provision herein, are not a part, and shall not serve as a
basis for interpretation or construction of this Plan. As used herein, the
masculine gender shall include the feminine and neuter, and the singular number
shall include the plural, and vice versa, whenever such meanings are
appropriate.
SECTION 6.5. EXPENSES OF ADMINISTRATION OF PLAN. All costs and
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expenses incurred in the operation and administration of this Plan shall be
borne by the Company or by one or more Subsidiaries. The Company shall
indemnify, defend and hold each member of the Committee harmless against all
claims, expenses and liabilities arising out of or related to the exercise of
the Committee's powers and the discharge of the Committee's duties hereunder.
SECTION 6.6. GOVERNING LAW. Without regard to the principles of
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conflicts of laws, the laws of the State of North Carolina shall govern and
control the validity, interpretation, performance, and enforcement of this Plan.
SECTION 6.7. INSPECTION OF PLAN. A copy of this Plan, and any
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amendments thereto, shall be maintained by the Secretary of the Company and
shall be shown to any proper person making inquiry about it.
SECTION 6.8. SEVERABLE PROVISIONS. The Company intends that the
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provisions of Articles III, IV and V, in each case together with Articles I, II
and VI, shall each be deemed to be effective on an independent basis, and that
if one or more of such Articles, or the operative provisions thereof, shall be
deemed invalid, void or voidable, the remainder of such Articles shall continue
in full force and effect.
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