STOCK OPTION GRANT AND AGREEMENT
THE STOCK OPTION GRANT AND AGREEMENT ("Agreement'), being made according to
and subject to the terms and conditions of the STOCK OPTION PLAN of Century
Bancorp, Inc. ("PI&'), a copy of which is attached hereto as Annex A and is
hereby incorporated by reference and made a part of this Agreement, is herein
executed and effective the 10 day of March, 1998, between Century Bancorp, Inc.
(the "Corporation") and Xxxxx X. Xxxxxx, Xx. ("Optionee"):
1. Grant. As of the above date, the Corporation hereby grants to
the Optionee (applicable provisions are marked):
[X] an Incentive Stock Option [as that term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")] to purchase 10,183
shares of Common Stock of the Corporation at the price stated in this Agreement;
[ ] a Nonqualified Stock Option to purchase __________ shares of Common Stock of
the Corporation at the price stated in this Agreement.
The Option(s) granted under this section and as described in this Agreement is
(are) in all respects subject to and conditioned by the terms, definitions, and
provisions of this Agreement and of the Plan. Capitalized terms in this
Agreement which are not otherwise defined but which are defined in the Plan
shall have the same meaning given to those terms in the Plan.
The Optionee has been granted Options under the Plan as a result of the
Optionee's position as a [ ] director [X] employee of the Corporation or
the Bank.
2. Price. The Option price is $89,125 for each share.
3. Exercise of Option. The Option(s) granted under this Agreement
shall be exercisable pursuant to the terms and conditions of the
Plan and as set forth below:
(a) Right to Exercise: In addition to the terms and conditions imposed on
the Optionee's right to exercise his Options contained in the Plan, the
following terms and conditions are applicable:
N/A
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(b) [x] (Marked if applicable) Annual Installments: Subject to the terms
and conditions of the Plan, the Incentive Stock Options can be exercised in
annual installments as follows:
2546 shares beginning on March 10, 1998
---- --------
2546 shares beginning on March 10, 1999
---- --------
2546 shares beginning on March 10, 2000
---- --------
2545 shares beginning on March 10, 2001
---- --------
Subject to the terms and conditions of the Plan, the Nonqualified
Options can be exercised in annual installments as follows:
______________ shares beginning on _________________, 19___
______________ shares beginning on _________________, 19___
______________ shares beginning on _________________, 20___
______________ shares beginning on _________________, 20___
The right to exercise the Option(s) in annual installments shall be cumulative.
In addition, the option(s) shall be exercisable upon disability, death,
retirement and a change in control as set forth in the Plan.
(c) [ ] (Marked if applicable) Immediate Vesting: Subject to the terms and
conditions of the Plan, all of the Options are vested, nonforfeitable and
exercisable.
(d) Method of Exercise: The Options granted under this Agreement shall be
exercisable by a written notice to the Secretary of the Corporation which
shall:
(1) State the election to exercise the Option, the number of shares in
respect of which the Option is being exercised, the person in whose
name any stock certificate or certificates for such shares of Common
Stock is to be registered or to whom any cash is to be paid, his or
her address, and social security number;
(2) Contain any such representation and agreements as to Optionee's
investment intent with respect to shares of Common Stock as may be
required by the Committee;
(3) Be signed by the person entitled to exercise the Option and, if
the Option is being exercised by any person or persons other than the
Optionee, be accompanied by proof, satisfactory to the Corporation, of
the right of such person or persons to exercise the Option in
accordance with the Plan; and
(4) Be accompanied by payment of the purchase price of any shares with
respect to which the Option is being exercised which payment shall be
in form acceptable to the Committee pursuant to Section 6(b) of the
Plan.
(e) Representations and Warranties: In order to exercise an Option, the
person exercising the Option must make the representations and warranties
to the Corporation as may be required by any applicable law or regulation,
or as may otherwise be required pursuant to the Plan.
(f) Approvals. In order for an Option to be exercised, all filings and
approvals required by applicable law and regulations or pursuant to the
Plan must have been made and obtained.
4. Non-transferability. This Option may not be transferred in any manner
otherwise than by will or the laws of descent and distribution and
such Option may be exercised during the life of the Optionee only by
him or her.
5. Investment Purpose. This Option may not be exercised if the issuance of
shares or payment of cash upon such exercise would constitute a
violation of any applicable federal or state securities law or other
law or valid regulation.
6. Expiration. This Option shall expire on March 10, 2008.
7. Escrow. All stock purchased pursuant to an Incentive Stock Option 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 option or (ii) one (1) year
after the transfer of the stock pursuant to the exercise of the
Option. The stock shall be held by the Corporation or its designee.
The Optionee who has exercised the Option shall have all rights of a
stockholder, including, but not limited to, the rights to vote,
receive dividends and sell the stock. The sole purpose of the escrow
is to inform the Corporation of a disqualifying disposition of the
stock within the meaning of Section 422 of the Code, and it shall be
administered solely for this purpose.
8. Tax Withholding. All stock, cash and other assets distributed pursuant to
this Agreement shall be subject to applicable federal, state and local
withholding for taxes. The Optionee expressly acknowledges and agrees
to such withholding. The Optionee acknowledges and agrees to the tax
withholding provisions which are set forth in the Plan.
9. Resolution of Disputes. Any dispute or disagreement which should arise
under, or as a result of, or in any way relate to, the interpretation,
construction, or application of this Agreement or the Plan will be
deter -mined by the Committee designated in Section 2 of the Plan.
Any determination made by such Committee shall be final, binding, and
conclusive for all purposes.
10. Construction Controlled by Plan. The Options evidenced hereby shall be
subject to all of the requirements, conditions and provisions of 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 should appear to be
inconsistent therewith.
11. Severability. Whenever possible, each provision of this 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 hereof 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 hereof had
not been included herein.
12. Modification of Agreement, Waiver. This Agreement may be 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 and only subject to the limitations set forth in the
Plan. No waiver hereunder shall constitute a waiver with respect to
any subsequent occurrence or other transaction hereunder or of any
other provision.
13. Captions and Readings-, Gender and Number. Captions and 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 Agreement. 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.
14. Governing Law, Venue and Jurisdiction. Without regard to the principles of
conflicts of laws, the laws of the State of North Carolina shall
govern and control the validity, interpretation, performance, and
enforcement of this Agreement.
15. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the Corporation, and its successors and assigns, and
shall be binding upon and inure to the benefit of the Optionee, and
his or her heirs, legatees, personal representative, executor,
administrator and permitted assigns.
16. Entire Agreement. This Agreement and the Plan constitute and 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.
17. Counterparts. This Agreement may be executed in any number 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.
IN WITNESS WHEREOF, the parties have set their hands and seals the day and
year first above written.
ATTEST: CENTURY BANCORP, INC.
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxx, Xx.
------------------------------------------ ------------------------
(Corporate Seal) President
OPTIONEE:
/s/ Xxxxx X. Xxxxxx, Xx.
---------------------------------------------------(SEAL)
ADDENDUM TO THE
CENTURY BANCORP, INC.
STOCK OPTION GRANT AND AGREEMENT
This Addendum to the Stock Option Grant and Agreement, being made in
accordance with and subject to the terms and conditions of the Century Bancorp,
Inc. Stock Option Plan, is effective as of May 12, 1998.
WHEREAS, on March 10, 1998, Century Bancorp, Inc. (the "Corporation") and
the undersigned (the "Optionee") entered into a Stock Option Grant and Agreement
pursuant to which the Optionee was granted an Incentive Stock Option to purchase
10,183 shares of Common Stock of the Corporation at the price of $89.125 per
share;
WHEREAS, on April 6, 1998, the Corporation paid a one-time special dividend
of $30.00 per share on each share of the Corporation's issued and outstanding
Common Stock;
WHEREAS, pursuant to Section 16(b) of the Century Bancorp, Inc. Stock
Option Plan, in the event that the Corporation declares and pays a dividend that
results in a nontaxable return of capital, the exercise price per share of
outstanding options may be adjusted in such a manner as may be necessary to
reflect the effect of such dividend on the fair market value of a share of
Common Stock;
WHEREAS, the Board of Directors of the Corporation has determined that is
it in the best interest of the Corporation and the optionees to adjust the
option price pursuant to Section 1.425-1(e)(5)(ii)(b) of the Income Tax
Regulations of the Internal Revenue Service.
NOW, THEREFORE, in accordance with the Century Bancorp, Inc. Stock Option
Plan and the Stock Option Grant and Agreement, the parties agree as follows:
1. The option price is $20.45 per share effective May 12, 1998.
2. All of the other terms and provisions of the Stock Option Grant and
Agreement remain in full force and effect.
Dated: 6/8/98
----------------------------------
CENTURY BANCORP, INC.
By: /s/ Xxxxx X. Xxxxxx, Xx.
---------------------------------
Xxxxx X. Xxxxxx, Xx., President
Attest:
/s/ Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx, Secretary
[CORPORATE SEAL]
OPTIONEE:
/s/ Xxxxx X. Xxxxxx, Xx.
------------------------------------
ANNEX A
Stock Option Plan
-----------------
CENTURY BANCORP, INC.
STOCK OPTION PLAN
THIS IS THE STOCK OPTION PLAN ("Plan") of Century Bancorp, Inc. (the
"Corporation"), a North Carolina corporation, with its principal office in
Thomasville, Davidson County, North Carolina, adopted by the Board of Directors
of the Corporation and effective upon the approval of the Plan by the
shareholders of the Corporation, under which options may be granted from time to
time to eligible directors and employees of the Corporation, Home Savings, Inc.,
SSB (the "Bank") and of any corporation or other entity of which either the
Corporation or the Bank owns, directly or indirectly, not less than 50% of any
class of equity securities (a "Subsidiary"), to purchase shares of common stock
of the Corporation ("Common Stock"), subject to the provisions set forth below:
1. PURPOSE OF THE PLAN. The purpose of the Plan is to aid the
Corporation, the Bank and any Subsidiary in attracting and retaining capable
directors and employees and to provide a long range incentive for directors and
employees to remain in the management of the Corporation, the Bank or any
Subsidiary, to perform at increasing levels of effectiveness and to acquire a
permanent stake in the Corporation with the interest and outlook of an owner.
These objectives will be promoted through the granting of options to acquire
shares of Common Stock pursuant to the terms of this Plan.
2. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee"), which shall consist of not less than two members of the Board of
Directors of the Corporation (the "Board") who are "Non-Employee Directors" as
defined in Rule 16b-3(b)(3) of the Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Members of the Committee
shall serve at the pleasure of the Board. In the absence at any time of a duly
appointed Committee, this Plan shall be administered by the Board. The
Committee may designate any officers or employees of the Corporation, the Bank
or any Subsidiary to assist in the administration of the Plan and to execute
documents on behalf of the Committee and perform such other ministerial duties
as may be delegated to them by the Committee.
Subject to the provisions of the Plan, the determinations or 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 options granted hereunder and to
determine the terms and provisions (and amendments thereof) of the options
granted under the Plan (which need not be identical); (b) to define the terms
used in the Plan and in the options granted hereunder; (c) to prescribe, amend
and rescind the rules and regulations relating to the Plan; (d) to determine the
individuals to whom and the time or times at which such options shall be
granted, the number of shares to be subject to each option, the option price,
and the determination of leaves of absence which may be granted to participants
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.
It shall be in the discretion of the Committee to grant options which
qualify as "incentive stock options," as that term is defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the
1
"Code") ("Incentive Stock Options") or which do not qualify as Incentive Stock
Options ("Nonqualified Stock Options") (herein referred to collectively as
"Options;" however, whenever reference is specifically made only to "Incentive
Stock Options" or "Nonqualified Stock Options," such reference shall be deemed
to be made to the exclusion of the other). Any options granted which fail to
satisfy the requirements for Incentive Stock Options shall become Nonqualified
Stock Options.
3. STOCK AVAILABLE FOR OPTIONS. In the discretion of the Committee, the
stock to be subject to Options under the Plan shall be authorized but unissued
shares of Common Stock which are issued directly to optionees upon exercise of
options and/or shares of Common Stock which are acquired by the Plan or the
Corporation in the open market. The total number of shares of Common Stock for
which Options may be granted under the Plan is 40,733 shares, which is 10% of
the total number of shares of Common Stock issued by the Corporation in
connection with the conversion of the Bank from a North Carolina mutual savings
bank to a North Carolina stock savings bank on December 20, 1996 (the
"Conversion"). Such number of shares is subject to any capital adjustments as
provided in Section 16. In the event that an Option granted under the Plan is
forfeited, released, expires or is terminated unexercised as to any shares
covered thereby, such shares thereafter shall be available for the granting of
Options under the Plan; however, if the forfeiture, expiration, release or
termination date of an Option is beyond the term of existence of the Plan as
described in Section 21, then any shares covered by forfeited, unexercised,
released or terminated options shall not reactivate the existence of the Plan
and therefore may not be available for additional grants under the Plan. The
Corporation, during the term of the Plan, will reserve and keep available a
number of shares of Common Stock sufficient to satisfy the requirements of the
Plan.
4. ELIGIBILITY. Options shall be granted only to individuals who meet
all of the following eligibility requirements:
(a) Such individual must be an employee or a member of the Board of
Directors of the Corporation, the Bank or a Subsidiary. For this purpose,
an individual shall be considered to be an "employee" only if there exists
between the Corporation, the Bank 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.
(b) 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 exercise of the Options.
(c) Such individual, being otherwise eligible under this Section 4, shall
have been selected by the Committee as a person to whom an Option shall be
granted under the Plan.
In determining the directors and employees to whom Options shall be granted
and the number of shares to be covered by each Option, the Committee shall take
into account the nature of the services rendered by respective directors and
employees, their present and potential contributions to the success of the
Corporation, the Bank and any Subsidiary and such other factors as the Committee
shall deem
2
relevant. A director or employee who has been granted an Option under the Plan
may be granted an additional Option or Options under the Plan if the Committee
shall so determine.
If, pursuant to the terms of the Plan, it is necessary that the percentage
of stock ownership of any individual be determined, stock ownership in the
Corporation or of a related corporation which is owned (directly or indirectly)
by or for such individual's brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants or by or for any corporation,
partnership, estate or trust of which such employee is a shareholder, partner or
beneficiary shall be considered as owned by such director or employee.
5. OPTION GRANTS. Subject to the provisions of this Plan, Options shall
be awarded to the directors and employees in such amounts as are determined by
the Committee. The proper officers on behalf of the Corporation and each
Optionee shall execute a Stock Option Grant and Agreement (the "Option
Agreement") which shall set forth the total number of shares of Common Stock to
which it pertains, the exercise price, whether it is a Nonqualified Stock Option
or an Incentive Stock Option, and such other terms, conditions, restrictions and
privileges as the Committee in each instance shall deem appropriate, provided
they are not inconsistent with the terms, conditions and provisions of this
Plan. Each Optionee shall receive a copy of his executed Option Agreement. Any
Option granted with the intention that it will be an Incentive Stock Option but
which fails to satisfy a requirement for Incentive Stock Options shall continue
to be valid and shall be treated as a Nonqualified Stock Option.
6. OPTION PRICE.
(a) The option price of each Option granted under the Plan shall be not
less than 100% of the market value of the stock on the date of grant of the
Option. In the case of incentive stock options granted to a shareholder
who owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Corporation, the Bank or a Subsidiary (a
"ten percent shareholder"), the option price of each Option granted under
the Plan shall not be less than I IO% of the market value of the stock on
the date of grant of the Option. If the Common Stock is listed on a
national securities exchange (including for this purpose the Nasdaq Stock
Market, Inc. National Market) on the date in question, then the market
value per share shall be not less than the average of the highest and
lowest selling price on such exchange on such date, or if there were no
sales on such date, then the market price per share shall be equal to the
average between the bid and asked price on such date. If the Common Stock
is traded otherwise than one national securities exchange (including for
this purpose the Nasdaq Stock Market, Inc. National Market) the date in
question, then the market price per share shall be equal to the average
between the bid and asked price on such date, or, if there is no bid and
asked price on such date, then on the next prior business day on which
there was a bid and asked price. If no such bid and asked price is
available, then the market value per share shall be its fair market value
as determined by the Committee, in its sole and absolute discretion. The
Committee shall maintain a written record of its method of determining such
value.
(b) The option price shall be payable to the Corporation either (i) in cash
or by check, bank draft or money order payable to the order of the
Corporation, or (ii) at the discretion of the Committee, through the
delivery of shares of the common stock of the Corporation owned by the
optionee with a market value (determined in a manner consistent with (i)
3
above) equal to the option price, or (iii) at the discretion of the
Committee by a combination of (i) and (ii) above. No shares shall be
delivered until full payment has been made.
7. EXPIRATION OF OPTIONS. The Committee shall determine the expiration
date or dates of each Option, but such expiration date shall be not later than
10 years after the date such Option is granted. In the event an Incentive Stock
Option is granted to a ten percent shareholder, the expiration date or dates of
each Option shall be not later than 5 years after the date such Option is
granted. The Committee, in its discretion, may extend the expiration date or
dates of an Option after such date was originally set; however, such expiration
date may not exceed the maximum expiration date described in this Section 7.
8. TERMS AND CONDITIONS OF OPTIONS.
(a) All Options must be granted within 10 years of the Effective Date of
this Plan as defined in Section 20.
(b) The Committee may grant Options which are intended to be Incentive
Stock Options and Nonqualified Stock Options, either separately or jointly,
to an eligible employee.
(c) The grant of Options shall be evidenced by a written instrument (an
Option Agreement) containing terms and conditions established by the
Committee consistent with the provisions of this Plan.
(d) Not less than 100 shares may be purchased at any one time unless the
number purchased is the total number at that time purchasable under the
Plan.
(e) The recipient of an Option shall have no rights as a shareholder with
respect to any shares covered by his Option until payment in fall by him
for the shares 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 16.
(f) The aggregate fair market value of the stock (determined as of the time
the Option is granted) with respect to which Incentive Stock Options are
exercisable for the first time by any participant during any calendar year
(under all benefit plans of the Corporation, the Bank or any Subsidiary, if
applicable) shall not exceed $100,000; provided, however, that such
$100,000 limit of this subsection (f) shall not apply to the grant of
Nonqualified Stock Options. The Committee may grant Options which are
exercisable in excess of the foregoing limitations, in which case Options
granted which are exercisable in excess of such limitation shall be
Nonqualified Stock Options.
(g) All stock obtained pursuant to an option which qualifies as an
Incentive Stock Option 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 Option
or (ii) one (1) year after the transfer of the stock pursuant to the
exercise of the Option. The stock shall be held by the Corporation or its
designee. The employee who has exercised the Option shall during such
holding period have all rights of a shareholder, including but not limited
to the rights to vote, receive dividends and sell the stock. The sole
4
purpose of the escrow is to inform the Corporation of a disqualifying
disposition of the stock within the meaning of Section 422 of the Code, as
amended, and it shall be administered solely for that purpose.
9. EXERCISE OF OPTIONS.
(a) Options granted to an optionee by virtue of his position as a
nonemployee director of the Corporation or the Bank (as stated in the
Option Agreement) or to an employee by virtue of his position as an
employee (as stated in the Option Agreement) shall become vested and
exercisable at the times, at the rate and subject to such limitations as
may be set forth in the Option Agreement executed in connection therewith;
provided, however, that all outstanding and nonforfeited options shall be
exercisable, if not sooner, on the day prior to the expiration date thereof
(b) Unless the Committee shall specifically state otherwise at the
time an Option is granted, all Options granted hereunder shall become
vested and exercisable upon the optionee's death, retirement or disability
within the meaning of Section 22(e)(3) of the Code, and in the event of a
change in control as set forth in Section 13 of this Plan.
(c) The exercise of any Option must be evidenced by written notice to
the Corporation that the optionee intends to exercise his Option. In no
event shall an Option be deemed granted by the Corporation or exercisable
by a recipient prior to the mutual execution by the Corporation and the
recipient of an Option Agreement which comports with the requirements of
Section 5 and Section 8(c).
(d) Any right to exercise Options in annual installments shall be
cumulative and any vested installments may be exercised, in whole or in
part, at the election of the optionee.
(e) The inability of the Corporation or Bank to obtain approval from
any regulatory body or authority deemed by counsel to be necessary to the
lawful issuance and sale of any shares of Common Stock hereunder shall
relieve the Corporation and the Bank of any liability in respect of the
non-issuance or sale of such shares. As a condition to the exercise of an
option, the Corporation may require the person exercising the Option to
make such representations and warranties as may be necessary to assure the
availability of an exemption from the registration requirements of federal
or state securities laws.
(f) The Committee shall have the discretionary authority to impose in
the Option Agreements such restrictions on shares of Common Stock as it may
deem appropriate or desirable, including but not limited to the authority
to impose a right of first refusal or to establish repurchase rights or
both of these restrictions.
(g) Notwithstanding anything to the contrary herein, an optionee
receiving the grant of an Option by virtue of his or her position as a
director or as an employee of the Corporation, the Bank or a Subsidiary (as
stated in the Option Agreement), shall be required to exercise his or her
Options within the periods set forth in Sections 10, 11 and 12 below.
5
10. TERMINATION OF EMPLOYMENT - EXCEPT BY DISABILITY,
RETIREMENT OR DEATH. If any optionee receiving the grant of an Option by virtue
of his position as a director (as stated in the Option Agreement) ceases to be a
director of the Corporation, the Bank or any Subsidiary for any reason other
than death, retirement (as defined in Section 11) or disability (as defined in
Section 11) or if any optionee receiving the grant of an Option by virtue of his
position as an employee (as stated in the Option Agreement) ceases to be an
employee of the Corporation, the Bank or any Subsidiary for any reason other
than death, retirement (as defined in Section 11) or disability (as defined in
Section 11), he may, (i) at any time within three (3) months after his date of
termination, but not later than the date of expiration of the Option, exercise
any Option designated in the Option Agreement as an Incentive Stock Option and
(ii) at any time prior to the date of expiration of the Option, exercise any
option designated in the Option Agreement as a Nonqualified Stock Option.
However, in either such event the optionee may exercise any Option only to the
extent it was vested and he or she was entitled to exercise the Option on the
date of termination. Any Options or portions of Options of terminated optionees
not so exercised shall terminate and be forfeited.
11. TERMINATION OF EMPLOYMENT - DISABILITY OR RETIREMENT. If any
optionee receiving the grant of an Option by virtue of his position as a
director (as stated in the Option Agreement) ceases to be a director of the
Corporation, the Bank or any Subsidiary due to his becoming disabled within the
meaning of Section 22(e)(3) of the Code, or if any employee receiving the grant
of an Option by virtue of his position as an employee (as stated in the Option
Agreement) ceases to be employed by the Corporation, the Bank or any Subsidiary
due to his becoming disabled within the meaning of Section 22(e)(3) of the Code,
all unvested and forfeitable Options of such optionee shall immediately become
vested and nonforfeitable and he may, (i) at any time within 12 months after his
date of termination, but not later than the date of expiration of the Option,
exercise any option designated in the Option Agreement as an Incentive Stock
Option with respect to all shares subject thereto and (ii) at any time prior to
the date of expiration of the Option, exercise any Option designated in the
Option Agreement as a Nonqualified Stock Option with respect to all shares
subject thereto. Any Options or portions of Options of optionees who are
terminated because they become disabled which are not so exercised shall
terminate.
If any optionee receiving the grant of an Option by virtue of his position
as a director (as stated in the Option Agreement) ceases to be a director of the
Corporation, the Bank or any Subsidiary due to his retirement, or if any
employee receiving the grant of an Option by virtue of his position as an
employee (as stated in the Option Agreement) ceases to be employed by the
Corporation, the Bank or any Subsidiary due to his retirement, all unvested and
forfeitable Options of such optionee shall immediately become vested and
nonforfeitable and he may at any time prior to the date of expiration of the
Option, exercise such Option, provided, however, that if the Option is exercised
more than three (3) months after such retirement, the Option may be treated as a
Nonqualified Stock Option. Any Options or portions of Options of retired
directors or employees not so exercised shall terminate. For purposes of this
Plan, the term "retirement," as it relates to any optionee receiving a grant of
an Option as a result of his or her position as an employee of the Corporation,
the Bank or any Subsidiary, shall mean (i) the termination of the optionee's
employment under conditions which would constitute retirement under any tax
qualified retirement plan maintained by the Corporation, the Bank or a
Subsidiary, or (ii) termination of employment after attaining age 65. The term
"retirement," as it relates to any optionee receiving a grant of an Option as a
result of his or her position as a director of the Corporation, the Bank or any
Subsidiary, shall mean the cessation of membership on such board of directors at
the election of the optionee at any time after not less than 20 years of service
as a member of such board of directors.
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12. TERMINATION OF EMPLOYMENT - DEATH. If an optionee receiving
the grant of an Option by virtue of his position as a director (as stated in the
Option Agreement) dies while a director of the Corporation, the Bank or any
Subsidiary or if any employee receiving the grant of an option by virtue of his
position as an employee (as stated in the Option Agreement) dies while in the
employment of the Corporation, the Bank or a Subsidiary, all unvested and
forfeitable Options of such optionee shall immediately become vested and
nonforfeitable and the person or persons to whom the Option is transferred by
will or by the laws of descent and distribution may exercise the Option at any
time until the term of the Option has expired, with respect to all shares
subject thereto, to the same extent and upon the same terms and conditions the
optionee would have been entitled to do so had he lived. Any Options or
portions of Options of deceased directors or employees not so exercised shall
terminate.
13. CHANGE IN CONTROL. In the event that an optionee ceases to be
an employee or a director of the Corporation, the Bank or a Subsidiary (which
position resulted in his or her receipt of an Option pursuant to this Plan) for
any reason after the occurrence of a "change in control" and prior to the time
that all shares allocated to him or her would be 100% vested, nonforfeitable and
exercisable in accordance with Sections 9 and 10 above, then, notwithstanding
Sections 9 and 10 above, all Options granted to such optionee shall immediately
become fully vested and nonforfeitable. For purposes of this Plan, a "change in
control" shall mean (i) a change in control of a nature that would be required
to be reported by the Corporation in response to Item 1 of the Current Report on
Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Exchange Act; (ii) such time as any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) (other than the Corporation or an
affiliate of the Corporation) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Corporation or Bank representing 25% or more of the combined voting power of
the outstanding Common Stock of the Corporation or outstanding common stock of
the Bank, as applicable; or (iii) individuals who constitute the Board or the
board of directors of the Bank on the date hereof (the "Incumbent Board" and
"Incumbent Bank Board," respectively) cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the hicurnbent Board or Incumbent
Bank Board, as applicable, or whose nomination for election by the Corporation's
or Bank's shareholders was approved by the Corporation's or Bank's Board of
Directors or Nominating Committee, shall be considered as though he or she were
a member of the hicumbent Board or Incumbent Bank Board, as applicable; or (iv)
either the Corporation or the Bank consolidates or merges with or into another
corporation, association or entity or is otherwise reorganized, where neither
the Corporation nor the Bank, respectively, is the surviving corporation in such
transaction; or (v) all or substantially all of the assets of either the
Corporation or the Bank are sold or otherwise transferred to or are acquired by
any other entity or group.
As set forth in Section 10, in the event of such a termination after a
change in control, the Optionee must exercise any Incentive Stock Options within
three (3) months after his date of termination, but in no event later than the
date of expiration of the Option and may exercise any Nonqualified Stock Options
at any time prior to the date of expiration of the Option.
14. OPTIONAL CASH PAYMENT. Upon the exercise of an Option, at the
written request of the optionee, the Committee, in its sole and absolute
discretion, may make a cash payment to the optionee, in whole or in part, in
lieu of the delivery of shares of Common Stock. Such cash payment to be paid in
lieu of delivery of Common Stock shall be equal to the difference between the
market value per share (determined as set forth in Section 6 above) of Common
Stock on the date of the Option exercise and the exercise price per share of the
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Option. Such cash payment shall be in exchange for the cancellation of such
Option. Notwithstanding the above, such cash payment shall not be made in the
event that such transaction would result in liability to the optionee and the
Company under Section 16(b) of the Exchange Act, and the regulations promulgated
thereunder.
15. RESTRICTIONS ON TRANSFER. An Option granted under this Plan
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.
16. CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK.
(a) If the outstanding shares of Common Stock of the Corporation are
increased, decreased, changed into or exchanged for a different number or
kind of shares or other securities of the Corporation or another entity as
a result of a recapitalization, reclassification, stock dividend, stock
split, amendment to the Corporation's Certificate of Incorporation, reverse
stock split, merger or consolidation, an appropriate adjustment shall be
made in the number and/or kind of securities allocated to the Options
previously and subsequently granted under the Plan, without change in the
aggregate purchase price applicable to the unexercised portion of the
outstanding Options but with a corresponding adjustment in the price for
each share or other unit of any security covered by the Options.
(b) In the event that the Corporation shall declare and pay any
dividend with respect to the Common Stock (other than a dividend payable in
shares of the Corporation's Common Stock or a regular quarterly cash
dividend), including a dividend which results in a nontaxable return of
capital to the holders of shares of Common Stock for federal income tax
purposes, or otherwise than by dividend makes distribution of property to
the holders of its shares of Common Stock, the Committee, in its discretion
applied uniformly to all outstanding Options, may adjust the exercise price
per share of outstanding Options in such a manner as the Committee may
determine to be necessary to reflect the effect of the dividend or other
distribution on the fair market value of a share of Common Stock. In
adjusting the exercise price per share of outstanding Options, the
Committee may, in its discretion, (i) require all holders of outstanding
Options to return such Options and reissue new Options with a new exercise
price or (ii) adjust the Option Price without any such return and
reissuance.
(c) To the extent that the foregoing adjustments described in Sections
16(a) and (b) above relate to particular Options or to particular stock or
securities of the Corporation subject to Option under this Plan, such
adjustments shall be made by the Committee, whose determination in that
respect shall be final and conclusive.
(d) The grant of an Option pursuant to this Plan shall not affect in
any way the right or power of the Corporation to make adjustments,
reclassifications, 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.
(e) No fractional shares of stock shall be issued under the Plan for
any such adjustment.
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(f) Any adjustment made pursuant to this Section 16, shall be made, to
the extent practicable, in such manner as not to constitute a modification
of any outstanding Incentive Stock Options within the meaning of Section
424(h) of the Code.
17. INVESTMENT PURPOSE. At the discretion of the Committee, any
Option Agreement may provide that the optionee shall, by accepting the Option,
represent and agree, for himself and his transferees by will or the laws of
descent and distribution, that all shares of stock purchased upon the exercise
of the Option will be acquired for investment and not for resale or
distribution, and that upon each exercise of any portion of an Option, the
person entitled to exercise the same shall furnish evidence of such facts which
is satisfactory to the Corporation. Certificates for shares of stock acquired
under the Plan may be issued bearing such restrictive legends as the Corporation
and its counsel may deem necessary to ensure that the optionee is not an
"underwriter" within the meaning of the regulations of the Securities and
Exchange Commission.
18. APPLICATION OF FUNDS. The proceeds received by the Corporation
from the sale of Common Stock pursuant to Options will be used for general
corporate purposes.
19. NO OBLIGATION TO EXERCISE. The granting of an Option shall
impose no obligation upon the optionee to exercise such Option.
20. EFFECTIVE DATE OF PLAN. The Plan will become effective upon
the approval of the Plan by the shareholders of the Corporation and receipt of
any necessary regulatory approvals.
21. TERM OF PLAN. Options and may be granted pursuant to this Plan
from time to time within ten (10) years from the effective date of the Plan.
22. TIME OF GRANTING OF OPTIONS. Nothing contained in the Plan or
in any resolution adopted or to be adopted by the Committee or the shareholders
of the Corporation and no action taken by the Committee shall constitute the
granting of any Option hereunder. The granting of an Option pursuant to the
Plan shall take place only when an Option Agreement shall have been duly
executed and delivered by and on behalf of the Corporation at the direction of
the Committee.
23. WITHHOLDING TAXES. Whenever the Corporation proposes or is
required to cause to be issued or transferred shares of stock, cash or other
assets pursuant to this Plan, the Corporation shall have the right to require
the optionee to remit to the Corporation an amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to the issuance
of any certificate or certificates for such shares or delivery of such cash or
other assets. Alternatively, the Corporation may issue or transfer such shares
of stock or make other distributions of cash or other assets net of the number
of shares or other amounts sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the shares of stock, cash and other
assets to be distributed shall be valued on the date the withholding obligation
is incurred.
24. TERMINATION AND AMENDMENT. The Board may at any time alter,
suspend, terminate or discontinue the Plan, subject to any applicable regulatory
requirements and any required stockholder approval or any stockholder 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,
9
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.
25. CAPTIONS AND HEADINGS-. GENDER AND NUMBER. Captions and
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.
26. COST OF PLAN, EXCULPATION AND INDEMNIFICATION. All
costs and expenses incurred in the operation and administration of the Plan
shall be home by the Corporation, the Bank and the Subsidiaries. In connection
with this Plan, no member of the Board, no member of the board of directors of
the Bank, and no member of the board of directors of any Subsidiary, and no
member of the Committee shall be personally liable for any act or omission to
act, nor for any mistake in judgment made in good faith, unless arising out of,
or resulting from, such person's own bad faith, willful misconduct or criminal
acts. To the extent permitted by applicable law and regulation, the Corporation
shall indemnify, def=d and hold harmless the members of the Board, the members
of the board of directors of the Bank and the members of the board of directors
of any Subsidiary, and members of the Committee, and each other officer or
employee of the Bank, the Corporation or of any Subsidiary to whom any power or
duty relating to the administration or interpretation of this Plan may be
assigned or delegated, from and against any and all liabilities (including any
amount paid in settlement of a claim with the approval of the Board), and any
costs or expenses (including counsel fees) incurred by such persons arising out
of or as a result of, any act or omission to act, in connection with the
performance of such person's duties, responsibilities and obligations under this
Plan, other than such liabilities, costs, and expenses as may arise out of, or
result from the bad faith, willful misconduct or criminal acts of such persons.
27. GOVERNING LAW. Without regard to the principles of conflicts of
laws, the laws of the State of North Carolina shall govern and control the
validity, interpretation, performance, and enforcement of this Plan.
28. INSPECTION OF PLAN. A copy of this Plan, and any amendments
thereto, shall be maintained by the Secretary of the Corporation and shall be
shown to any proper person making inquiry about it.
29. OTHER PROVISIONS. The Option Agreements authorized under this
Plan shall contain such other provisions not inconsistent with the foregoing,
including, without limitation, increased restrictions upon the exercise of
Options, as the Committee may deem advisable.
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