LANCE, INC. 1997 INCENTIVE EQUITY PLAN (As Amended Through February 9, 2006)

 

Exhibit 10.3
LANCE, INC.
1997 INCENTIVE EQUITY PLAN
(As amended through February 9, 2006)
TABLE OF CONTENTS
             
Section 1.
  Purpose     1  
 
Section 2.
  Definitions     1  
 
Section 3.
  Administration     3  
 
Section 4.
  Duration of and Common Stock Subject to Plan     4  
 
Section 5.
  Eligibility     4  
 
Section 6.
  Stock Options     4  
 
Section 7.
  Stock Appreciation Rights     5  
 
Section 8.
  Restricted Awards     6  
 
Section 9.
  Performance Awards     8  
 
Section 10.
  Other Stock-Based and Combination Awards     9  
 
Section 11.
  Deferral Elections     9  
 
Section 12.
  Termination of Employment     9  
 
Section 13.
  Non-transferability of Awards     10  
 
Section 14.
  Adjustments Upon Changes in Capitalization, Etc.     10  
 
Section 15.
  Change in Control     11  
 
Section 16.
  Amendment and Termination     12  
 
Section 17.
  Miscellaneous     12  

 


 

LANCE, INC.
1997 INCENTIVE EQUITY PLAN
     Section 1. Purpose. The purpose of the Lance, Inc. 1997 Incentive Equity Plan (the “Plan”) isto attract and retain managerial and other key employees, and to reward such employees for makingmajor contributions to the success of Lance, Inc. (the “Company”). The Plan is designed to meetthese objectives by offering performance-based stock and cash incentives and other equity-basedincentive awards, thereby providing such employees a proprietary interest in the long term growthand performance of the Company.
     Section 2. Definitions. For purposes of the Plan, unless the context clearly indicatesotherwise, the following terms shall have the meanings set forth below:
     (a) “Award” (collectively, “Awards”) means an award or grant made to aParticipant under Sections 6 through 10, inclusive, of the Plan.
     (b) “Board” means the Board of Directors of the Company.
     (c) “Code” means the Internal Revenue Code of 1986, as in effect from time totime, or any successor thereto, together with rules, regulations and interpretationspromulgated thereunder.
     (d) “Common Stock” means the $.83 1/3 par value Common Stock of the Company orany security of the Company issued in substitution, exchange or lieu thereofpursuant to Section 14 hereof.
     (e) “Company” means Lance, Inc., a North Carolina corporation, and anysubsidiary corporations within the meaning of Section 424(f) of the Code, as well asany successor corporation or corporations thereto.
     (f) “Compensation Committee” means the committee of the Board constituted asprovided in Section 3 of the Plan.
     (g) “Disability” means the inability, by reason of physical or mental infirmityor both, of an individual to perform satisfactorily the duties then assigned to suchindividual or any other duties the Company is willing to assign to such individualfor which compensation is payable. Disability shall be determined by theCompensation Committee based upon such evidence as the Compensation Committee shalldeem sufficient and, upon medical evidence, if available, and, in the discretion ofthe Compensation Committee, upon certification of such Disability by an independentqualified physician.

 


 

     (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended and ineffect from time to time, or any successor statute.
     (i) “Fair Market Value,” with respect to a share of the Common Stock at aparticular time, shall be that value as determined by the Compensation Committeewhich shall be (i) if such Common Stock is listed on a national securities exchangeor traded on the National Market System, the mean between the highest price and thelowest price at which the Common Stock shall have been sold regular way on anational securities exchange or the National Market System on said date, or, if nosales occur on said date, then on the next preceding date on which there were suchsales of Common Stock, (ii) if the Common Stock shall not be listed on a nationalsecurities exchange or traded on the National Market System, the mean between thebid and asked prices last reported by the National Association of SecuritiesDealers, Inc. for the over-the-counter market on said date or, if no bid and askedprices are reported on said date, then on the next preceding date on which therewere such quotations, or (iii) if at any time quotations for the Common Stock shallnot be reported by the National Association of Securities Dealers, Inc. for theover-the-counter market and the Common Stock shall not be listed on any nationalsecurities exchange or traded on the National Market System, the fair market valuedetermined by the Compensation Committee in such manner as it may deem reasonable.
     (j) “Incentive Stock Option” means any Stock Option granted pursuant to theprovisions of Section 6 of the Plan that is intended to be and is specificallydesignated as an “incentive stock option” within the meaning of Section 422 of theCode.
     (k) “Non-Qualified Stock Option” means any Stock Option granted pursuant to theprovisions of Section 6 of the Plan that is not an Incentive Stock Option.
     (l) “Participant” means an employee of the Company who is granted an Awardunder the Plan.
     (m) “Performance Award” means an Award granted pursuant to the provisions ofSection 9 of the Plan the vesting of which is contingent on performance attainment.
     (n) “Performance Equity Grant” means an Award of units representing shares ofCommon Stock granted pursuant to the provisions of Section 9 of the Plan.
     (o) “Performance Unit Grant” means an Award of monetary units granted pursuantto the provisions of Section 9 of the Plan.

2


 

     (p) “Plan” means the Lance, Inc. 1997 Incentive Equity Plan as set forthherein, as the same may be hereafter amended and from time to time in effect.
     (q) “Restricted Award” means an Award granted pursuant to the provisions ofSection 8 of the Plan.
     (r) “Restricted Stock Grant” means an Award of shares of Common Stock grantedpursuant to the provisions of Section 8 of the Plan.
     (s) “Restricted Unit Grant” means an Award of units representing shares ofCommon Stock granted pursuant to the provisions of Section 8 of the Plan.
     (t) “Retirement” means the termination of an employee’s employment with theCompany at any time after the last day of the calendar month immediately precedingthe calendar month in which the employee attains the age of 60 years.
     (u) “Stock Appreciation Right” means an Award to benefit from the appreciationof Common Stock granted pursuant to the provisions of Section 7 of the Plan.
     (v) “Stock Option” means an Award to purchase shares of Common Stock grantedpursuant to the provisions of Section 6 of the Plan.
     (w) “First Effective Amendment Date” means that date on which the stockholdersof the Company approve the amendment to the Plan to increase the number of shares ofCommon Stock reserved for grants of Awards under the Plan by an additional 1,500,000shares of Common Stock.
     Section 3. Administration.
     (a) The Plan shall be administered by those members of the Compensation Committee of the Boardwho are “nonemployee directors” for purposes of Rule 16b-3 under the Exchange Act.
     (b) The Compensation Committee is authorized to grant Awards under the Plan, to construe andinterpret the Plan, to promulgate, amend and rescind rules and regulations relating to theimplementation of the Plan, and to make all other determinations necessary or advisable for theadministration of the Plan. Any determination, decision or action of the Compensation Committee inconnection with the construction, interpretation, administration or application of the Plan shallbe final, conclusive and binding upon all persons participating in the Plan and any person validlyclaiming under or through persons participating in the Plan. The Company shall effect the grantingof Awards under the Plan in accordance with the determinations made by the

3


 

Compensation Committee, by execution of instruments in writing in such form as are approved by theCompensation Committee.
     Section 4. Duration of and Common Stock Subject to Plan.
     (a) Term. The Plan shall be effective on April 18, 1997, subject to approval by a pluralityof the shares voting on approval of the Plan at the Annual Meeting of Stockholders held on saiddate or any adjournment thereof. The Plan shall terminate on March 31, 2007.
     (b) Shares of Common Stock Subject to Plan. The maximum number of shares of Common Stock withrespect to which Awards may be granted under the Plan, subject to adjustment as provided in Section14 of the Plan, shall be 1,500,000 shares of the total authorized shares of the Common Stock.Beginning on the First Effective Amendment Date, there is hereby reserved for grants of Awardsunder the Plan, subject to adjustment as provided in Section 14 of the Plan, an additional1,500,000 shares of Common Stock. For the purpose of computing the total number of shares ofCommon Stock available for Awards under the Plan, there shall be counted against the foregoinglimitation the number of shares of Common Stock subject to issuance upon exercise or settlement ofAwards and the number of shares of Common Stock which equal the value of Restricted Unit Grants andPerformance Equity Grants and other stock-based Awards in each case determined as of the dates onwhich such Awards are granted. If any Awards are forfeited, terminated, settled in cash in lieu ofstock, exchanged for other Awards, or expire unexercised, the shares of Common Stock which weretheretofore subject to such Awards shall again be available for Awards under the Plan to the extentof such forfeiture, termination, settlement, exchange or expiration. Further, any shares of CommonStock which are used as full or partial payment to the Company by a Participant of the purchaseprice of shares of Common Stock upon exercise of Stock Options shall again be available for Awardsunder the Plan, as shall any shares covered by Stock Appreciation Rights which are not issued aspayment upon exercise. Common Stock which may be issued under the Plan may be either authorizedand unissued shares or issued shares which have been reacquired by the Company. No fractionalshares of Common Stock shall be issued under the Plan.
     (c) Individual Award Limit. In no event shall a Participant receive an Award or Awards duringany one calendar year covering in the aggregate more than 150,000 shares of Common Stock.
     Section 5. Eligibility. Only managerial and other key employees shall be eligible to begranted Awards under the Plan. The Compensation Committee shall, from time to time, (i) determinethose managerial and other key employees to whom Awards shall be granted and the conditions of eachsuch Award or issue and sale and (ii) grant such Awards. No member of the Compensation Committeewhile serving as such shall be eligible to receive any Award hereunder.
     Section 6. Stock Options. Stock Options may be granted under the Plan in the form ofIncentive Stock Options or Non-Qualified Stock Options; and such Stock Options shall be subject tothe following terms and conditions and shall contain such additionalterms and

4


 

conditions, not inconsistent with theexpress provisions of the Plan, as the Compensation Committee shall determine:
     (a) Grant. Stock Options may be granted under the Plan on such terms andconditions not inconsistent with the provisions of the Plan and in such form as theCompensation Committee may from time to time approve. Stock Options may be grantedalone, in addition to or in combination with other Awards under the Plan.
     (b) Stock Option Price. The option exercise price per share of Common Stockpurchasable under a Stock Option shall be determined by the Compensation Committeeat the time of grant, but in no event shall the exercise price of an Incentive StockOption be less than 100% of the Fair Market Value of the Common Stock on the date ofthe grant of such Incentive Stock Option.
     (c) Option Term. The term of each Stock Option shall be fixed by theCompensation Committee; except that the term of Incentive Stock Options shall notexceed 10 years after the date the Incentive Stock Option is granted.
     (d) Exercisability. A Stock Option shall be exercisable at such time or timesand subject to such terms and conditions as shall be determined by the CompensationCommittee at the date of grant.
     (e) Method of Exercise. A Stock Option may be exercised, in whole or in part,by a Participant’s giving written notice of exercise to the Company specifying thenumber of shares to be purchased. Such notice shall be accompanied by payment infull of the purchase price in cash or, if acceptable to the Compensation Committeein its sole discretion, in shares of Common Stock already owned by the Participant,or by surrendering outstanding Awards denominated in stock or stock units.
     (f) Special Rule for Incentive Stock Options. With respect to Incentive StockOptions granted under the Plan, the aggregate Fair Market Value (determined as ofthe date the Incentive Stock Option is granted) of the number of shares with respectto which Incentive Stock Options are exercisable for the first time by a Participantduring any calendar year shall not exceed $100,000 or such other limit as may berequired by the Code.
     Section 7. Stock Appreciation Rights. Stock Appreciation Rights may be granted under the Plansubject to the following terms and conditions and shall contain such additional terms andconditions, not inconsistent with the express terms of the Plan, as the Compensation Committeeshall determine:
     (a) Stock Appreciation Rights. A Stock Appreciation Right is an Awardentitling a Participant to receive an amount equal to (or if the CompensationCommittee shall so determine at the time of grant, less than) the

5


 

excess of the Fair Market Value of a share of Common Stock on the date of exerciseover the Fair Market Value of a share of Common Stock on the date of grant of theStock Appreciation Right, or such other price as is set by the CompensationCommittee, multiplied by the number of shares of Common Stock with respect to whichthe Stock Appreciation Right shall have been exercised.
     (b) Grant. A Stock Appreciation Right may be granted in combination with, inaddition to or completely independent of a Stock Option or any other Award under thePlan.
     (c) Exercise. A Stock Appreciation Right may be exercised by a Participant inaccordance with procedures established by the Compensation Committee, except that inno event shall a Stock Appreciation Right be exercisable within the first six monthsafter the date of grant. The Compensation Committee may also provide that a StockAppreciation Right shall be automatically exercised on one or more specified dates.
     (d) Form of Payment. Payment upon exercise of a Stock Appreciation Right maybe made in cash, in shares of Common Stock, or any combination thereof, as theCompensation Committee shall determine; provided, however, that any StockAppreciation Right exercised upon or subsequent to the occurrence of a Change inControl (as defined in Section 15) shall be paid in cash.
     Section 8. Restricted Awards. Restricted Awards may be granted under the Plan in the form ofeither Restricted Stock Grants or Restricted Unit Grants. Restricted Awards shall be subject tothe following terms and conditions and shall contain such additional terms and conditions, notinconsistent with the express provisions of the Plan, as the Compensation Committee shalldetermine:
     (a) Restricted Stock Grants. A Restricted Stock Grant is an Award of shares ofCommon Stock to a Participant subject to such terms and conditions as theCompensation Committee deems appropriate, including, without limitation,restrictions on the sale, assignment, transfer or other disposition of such sharesand the requirement that the Participant forfeit such shares back to the Companyupon termination of employment prior to vesting.
     (b) Restricted Unit Grants. A Restricted Unit Grant is an Award of units to bepaid in cash upon vesting (with each unit having a value equivalent to the FairMarket Value of one share of Common Stock) granted to a Participant subject to suchterms and conditions as the Compensation Committee deems appropriate, including,without limitation, the requirement that the Participant forfeit such units upontermination of employment prior to vesting.
     (c) Grants of Awards. Restricted Awards may be granted under the Plan in suchform and on such terms and conditions as the Compensation Committee may from time totime approve. Restricted Awards may be granted

6


 

alone, in addition to or in combination with other Awards under the Plan. Subjectto the terms of the Plan, the Compensation Committee shall determine the number ofRestricted Awards to be granted to a Participant and the Compensation Committee mayimpose different terms and conditions on any particular Restricted Award made to anyParticipant. Each Participant receiving a Restricted Stock Grant shall be issued astock certificate in respect of such shares of Common Stock. Such certificate shallbe registered in the name of such Participant, shall be accompanied by a stock powerduly executed by such Participant, and shall bear an appropriate legend referring tothe terms, conditions and restrictions applicable to such Award; which certificateevidencing such shares shall be held in custody by the Company until therestrictions thereon shall have lapsed.
     (d) Restriction Period. Restricted Awards shall provide that in order for aParticipant’s rights to vest in such Awards, the Participant must remain in theemployment of the Company, subject to relief for specified reasons, for a period oftime commencing on the date of the Award and ending on such later date or dates asthe Compensation Committee may designate at the time of the Award (“RestrictionPeriod”). During the Restriction Period, a Participant may not sell, assign,transfer, pledge, encumber or otherwise dispose of shares of Common Stock receivedunder a Restricted Stock Grant. The Compensation Committee, in its sole discretion,may provide for the lapse of restrictions in installments during the RestrictionPeriod. Upon expiration of the applicable Restriction Period (or lapse ofrestrictions during the Restriction Period where the restrictions lapse ininstallments), the Participant shall be entitled to receive his or her RestrictedAward or portion thereof, as the case may be.
     (e) Payment of Awards. A Participant shall be entitled to receive payment fora Restricted Unit Grant (or portion thereof) upon expiration of the applicableRestriction Period. Payment in settlement of a Restricted Unit Grant shall be madeas soon as practicable following the expiration of the Restriction Period in cash,in shares of Common Stock equal to the number of units granted under the RestrictedUnit Grant with respect to which such payment is made, or in any combinationthereof, as the Compensation Committee in its sole discretion shall determine. TheCompensation Committee may also, in its discretion, permit a Participant to elect toreceive, in lieu of shares of unrestricted stock at the conclusion of a RestrictionPeriod, a cash payment equal to the Fair Market Value of the Restricted Stockvesting on the date the restrictions expire.
     (f) Rights as a Stockholder. A Participant shall have, with respect to theshares of Common Stock received under a Restricted Stock Grant, all of the rights ofa Stockholder of the Company, including the right to vote the shares, and the rightto receive any cash dividends. Stock dividends issued with respect to the sharescovered by a Restricted Stock Grant shall be treated as additional shares under theRestricted Stock Grant and shall be subject to the same restrictions and

7


 

other terms and conditions that apply to shares under the Restricted Stock Grantwith respect to which such dividends are issued.
     Section 9. Performance Awards. Performance Awards may be granted under the Plan in the formof either Performance Equity Grants or Performance Unit Grants. Performance Awards may be subjectto the following terms and conditions and may contain such additional terms and conditions, notinconsistent with the express provisions of the Plan, as the Compensation Committee shalldetermine:
     (a) Performance Equity Grants. A Performance Equity Grant is an Award of units(with each unit equivalent in value to one share of Common Stock as it variesthroughout the term of the designated performance period) to a Participant and maybe subject to such terms and conditions as the Compensation Committee deemsappropriate, including, without limitation, the requirement that the Participantforfeit such units or a portion of such units in the event certain performancecriteria are not met within a designated period of time.
     (b) Performance Unit Grants. A Performance Unit Grant is an Award of units tobe paid in cash upon vesting (with each unit representing such monetary amount asdesignated by the Compensation Committee) to a Participant subject to such terms andconditions as the Compensation Committee deems appropriate, including, withoutlimitation, the requirement that the Participant forfeit such units or a portion ofsuch units in the event certain performance criteria are not met within a designatedperiod of time.
     (c) Grants of Awards. Performance Awards may be granted under the Plan in suchform as the Compensation Committee may from time to time approve. PerformanceAwards may be granted alone, in addition to or in combination with other Awardsunder the Plan. Subject to the terms of the Plan, the Compensation Committee shalldetermine the number of Performance Awards to be granted to a Participant and theCompensation Committee may impose different terms and conditions on any particularPerformance Award made to any Participant.
     (d) Performance Goals and Performance Periods. Performance Awards shallprovide that in order for a Participant’s rights to vest in such Awards the Companyor the Participant, or a combination thereof, must achieve certain performance goals(“Performance Goals”) over a designated performance period (“Performance Period”).The Performance Goals and Performance Period shall be established by theCompensation Committee, in its sole discretion. The Compensation Committee shallestablish Performance Goals for each Performance Period before, or as soon aspracticable after, the commencement of the Performance Period. The CompensationCommittee may also establish a schedule or formula for such Performance Periodsetting forth the portion of the Performance Award which will be earned or forfeitedbased on the degree of achievement of the Performance Goals actually achieved orexceeded. In setting

8


 

Performance Goals, the Compensation Committee may use such measures of performanceas it deems appropriate.
     (e) Payment of Awards. In the case of a Performance Equity Grant, theParticipant shall be entitled to receive payment for each unit earned in an amountequal to the Fair Market Value of a share of Common Stock on the date on which theCompensation Committee determines the number of units earned by the Participant. Inthe case of a Performance Unit Grant, the Participant shall be entitled to receivepayment for each unit earned in an amount equal to the dollar value of each unittimes the number of units earned. Payment in settlement of a Performance Awardshall be made as soon as practicable following the conclusion of the respectivePerformance Period in cash, in shares of Common Stock, or in any combinationthereof, as the Compensation Committee in its sole discretion shall determine.
     Section 10. Other Stock-Based and Combination Awards.
     (a) The Compensation Committee may grant other Awards under the Plan pursuant to which CommonStock is or may in the future be acquired, or Awards denominated in stock units, including onesvalued using measures other than market value. Such other stock-based Awards may be granted eitheralone, in addition to or in combination with any other type of Award granted under the Plan.
     (b) The Compensation Committee may also grant Awards under the Plan in combination with otherAwards or in exchange of Awards, or in combination with or as alternatives to grants or rightsunder any other employee plan of the Company, including the plan of any acquired entity.
     (c) Subject to the provisions of the Plan, the Compensation Committee shall have authority todetermine the individuals to whom and the time or times at which such Awards shall be made, thenumber of shares of Common Stock to be granted or covered pursuant to such Awards, and any and allother conditions and/or terms of the Awards.
     Section 11. Deferral Elections. The Compensation Committee may permit a Participant to electto defer his or her receipt of the payment of cash or the delivery of shares of Common Stock thatwould otherwise be due to such Participant by virtue of the exercise or earn out of an Award madeunder the Plan. If any such election is permitted, the Compensation Committee may establish rulesand procedures for such payment deferrals, including the possible (a) payment or crediting ofreasonable interest on such deferred amounts credited in cash, and (b) the payment or creditingdividend equivalents in respect of deferrals credited in units of Common Stock.
     Section 12. Termination of Employment. The terms and conditions under which an Award may beexercised after a Participant’s termination of employment shall be determined by the CompensationCommittee.

9


 

     Section 13. Non-transferability of Awards. No Award under the Plan, and no rights orinterests therein, shall be assignable or transferable by a Participant except by will or the lawsof descent and distribution. During the lifetime of a Participant, Stock Options and StockAppreciation Rights are exercisable only by, and payments in settlement of Awards will be payableonly to, the Participant or his or her legal representative.
     Section 14. Adjustments Upon Changes in Capitalization, Etc.
     (a) The existence of the Plan and the Awards granted hereunder shall not affect or restrict inany way the right or power of the Board or the Stockholders of the Company to make or authorize anyadjustment, recapitalization, reorganization or other change in the Company’s capital structure orits business, any merger or consolidation of the Company, any issue of bonds, other debentures,preferred or prior preference stocks, the dissolution or liquidation of the Company or any sale ortransfer of all or any part of its assets or business, or any other corporate act or proceeding.
     (b) In the event that a dividend shall be declared upon the Common Stock payable in shares ofCommon Stock, the number of shares of Common Stock then subject to any Award and the number ofshares reserved for issuance pursuant to the Plan but not yet covered by an Award shall be adjustedby adding to each such share the number of shares which would be distributable thereon if suchshare had been outstanding on the date fixed for determining the Stockholders entitled to receivesuch stock dividend. In the event that the outstanding shares of Common Stock shall be changedinto or exchanged for a different number or kind of shares of stock or other securities of theCompany or of another corporation, or changed into or exchanged for cash or property or the rightto receive cash or property (but not including any dividend payable in cash or property other thana liquidating distribution), whether through reorganization, recapitalization, stock split-up,combination of shares, merger or consolidation, then there shall be substituted for each share ofCommon Stock subject to any Award and for each share of Common Stock reserved for issuance pursuantto the Plan but not yet covered by an Award, the number and kind of shares of stock or othersecurities or cash or property or right to receive cash or property into which each outstandingshare of Common Stock shall be so changed or for which each such share shall be exchanged. In theevent there shall be any change other than as specified above in this Section 14, in the number orkind of outstanding shares of Common Stock or of any stock or other securities into which suchCommon Stock shall have been changed or for which it shall have been exchanged, then if theCompensation Committee shall in its sole discretion determine that such change equitably requiresan adjustment in the number or kind of shares theretofore reserved for issuance pursuant to thePlan but not yet covered by an Award and of the shares then subject to an Award or Awards, suchadjustment shall be made by the Compensation Committee and shall be effective and binding for allpurposes of the Plan and each agreement entered into with a Participant under the Plan. In thecase of any such substitution or adjustment as provided for in this Section 14, the Award price foreach share covered thereby prior to such substitution or adjustment will be the Award price for allshares of stock or other securities or cash or property or right to receive cash or property whichshall have been substituted for such share or to which such share shall have been adjusted pursuantto thisSection 14. No adjustment or substitution provided for in this Section 14 shall require theCompany in any agreement with a Participant to issue a fractional share and the total substitution

10


 

or adjustment with respect to each agreement with a Participant shall be limited accordingly. Inthe event that the number of shares of Common Stock subject to an Award is adjusted pursuant to theprovisions of this Section 14, then any Stock Appreciation Rights related to such Award shall beappropriately and equitably adjusted.
     (c) In the event of (i) a dissolution or liquidation of the Company, (ii) a sale of all orsubstantially all of the Company’s assets, (iii) a merger or consolidation involving the Company inwhich the Company is not the surviving corporation or (iv) a merger or consolidation involving theCompany in which the Company is the surviving corporation but the holders of shares of theCompany’s Common Stock receive securities of another corporation and/or other property, includingcash, the Compensation Committee shall, in its absolute discretion, have the power to cancel,effective immediately prior to the occurrence of such event, each Stock Option and each StockAppreciation Right outstanding immediately prior to such event (whether or not then exercisable)and, in consideration of such cancellation, the Company will pay to the Participant an amount incash for each share of Common Stock subject to such Stock Option or Stock Appreciation Right equalto the excess of (A) the value as determined by the Compensation Committee, in its absolutediscretion, of the property (including cash) received by the holder of one share of Common Stock asa result of such event over (B) the exercise price of such Stock Option or Stock AppreciationRight; or provide for the exchange of each Stock Option and Stock Appreciation Right outstandingimmediately prior to such event (whether or not then exercisable) for an option on or stockappreciation right with respect to, as appropriate, some or all of the property which a holder ofthe number of shares of Common Stock subject to such Stock Option or Stock Appreciation Right wouldhave received in such transaction and, incident thereto, make an equitable adjustment as determinedby the Compensation Committee, in its absolute discretion, in the exercise price of the option orstock appreciation right, or the number of shares or amount of property subject to the option orstock appreciation right or, if appropriate, provide for a cash payment to the Participant to whomsuch Stock Option or Stock Appreciation Right was granted in partial consideration for the exchangeof the Stock Option or Stock Appreciation Right.
     Section 15. Change in Control.
     (a) In the event of a Change in Control (as defined below) of the Company, (i) all StockOptions or Stock Appreciation Rights then outstanding shall become fully exercisable as of the dateof the Change in Control, whether or not then exercisable, (ii) all restrictions and conditions ofall Restricted Stock Grants and Restricted Unit Grants then outstanding shall be deemed satisfiedas of the date of the Change in Control, and (iii) all Performance Equity Grants and PerformanceUnit Grants shall be deemed to have been fully earned as of the date of the Change in Control.
     (b) “Change in Control” means the acquisition or contracting to acquire or otherwise controlbeneficial ownership of in excess of thirty-five percent (35%) of the then outstanding votingsecurities of the Company by any person, corporation or other entity and its “affiliates”(as defined in Rule 13d-5(b)(1) promulgated under the Exchange Act, as amended from time to time)excluding, however, for purposes of determining such ownership (but not the number of sharesoutstanding) voting securities beneficially owned by members of the Van Every Family

11


 

and any trust,custodian or fiduciary account for the benefit of any one or more members of the Van Every Family.Van Every Family means the lineal descendants of Salem A. Van Every, Sr. (whether by blood oradoption) and their spouses.
     Section 16. Amendment and Termination. Without further approval of the Stockholders, the Boardmay at any time terminate the Plan, or may amend it from time to time in such respects as the Boardmay deem advisable, except that the Board may not, without approval of the Stockholders, make anyamendment which would (i) require Stockholder approval for Incentive Stock Options granted or to begranted under the Plan to qualify as incentive stock options within the meaning of Section 422 ofthe Code or (ii) require Stockholder approval under applicable law or the rules of any nationalsecurities exchange upon which the Common Stock is listed at the time such amendment is proposed.
     Section 17. Miscellaneous.
     (a) Tax Withholding. The Company shall have the right to deduct from any settlement,including the delivery or vesting of shares, made under the Plan any federal, state or local taxesof any kind required by law to be withheld with respect to such payments or to take such otheraction as may be necessary in the opinion of the Company to satisfy all obligations for the paymentof such taxes. If Common Stock is used to satisfy tax withholding, such stock shall be valuedbased on the Fair Market Value when the tax withholding is required to be made.
     (b) No Right To Employment. Neither the adoption of the Plan nor the granting of any Awardhereunder shall confer upon any employee of the Company any right to continued employment with theCompany, nor shall it interfere in any way with the right of the Company to terminate theemployment of any of its employees at any time, with or without cause.
     (c) Unfunded Plan. The Plan shall be unfunded and the Company shall not be required tosegregate any assets that may at any time be represented by Awards under the Plan. Any liabilityof the Company to any person with respect to any Award under the Plan shall be based solely uponany contractual obligations that may be effected pursuant to the Plan. No such obligation of theCompany shall be deemed to be secured by any pledge of, or other encumbrance on, any property ofthe Company.
     (d) Payments to Trust. The Compensation Committee is authorized to cause to be established atrust agreement or several trust agreements whereunder the Company may make payments of amounts dueor to become due to Participants in the Plan.
     (e) Engaging in Competition With Company. In the event a Participant’s employment with theCompany is terminated for any reason whatsoever, and within 18 months after the date thereof suchParticipant accepts employment with any competitor of, or otherwise engages in competition with,the Company, the Compensation Committee, in its sole discretion,may require such Participant to return to the Company the economic value of any Award which isrealized or obtained (measured at the date of exercise, vesting or payment) by such Participant atany time during the period beginning on that date which is six months prior to the date of suchParticipant’s termination of employment with the Company.

12


 

     (f) Securities Law Restrictions. No shares of Common Stock shall be issued under the Planunless counsel for the Company shall be satisfied that such issuance will be in compliance withapplicable Federal and state securities laws. Certificates for shares of Common Stock deliveredunder the Plan may be subject to such stop-transfer orders and other restrictions as theCompensation Committee may deem advisable under the rules, regulations, and other requirements ofthe Securities and Exchange Commission, any stock exchange upon which the Common Stock is thenlisted, and any applicable federal or state securities law. The Compensation Committee may cause alegend or legends to be put on any such certificates to make appropriate reference to suchrestrictions.
     (g) Award Agreement. Each Participant receiving an Award under the Plan shall enter into anagreement with the Company in a form specified by the Compensation Committee agreeing to the termsand conditions of the Award and such related matters as the Compensation Committee shall, in itssole discretion, determine.
     (h) Costs of Plan. The costs and expenses of administering the Plan shall be borne by theCompany.
     (i) Governing Law. The Plan and all actions taken thereunder shall be governed by andconstrued in accordance with the laws of the State of North Carolina.

13