Exhibit
10.1
KRISPY
KREME DOUGHNUTS, INC.
2000
STOCK INCENTIVE PLAN
(AMENDED
AS OF JUNE 16, 2009)
TABLE OF
CONTENTS
Page
|
ARTICLE
1.
|
ESTABLISHMENT,
PURPOSE, AND DURATION
|
1
|
|
1.1
|
Establishment
of the Plan
|
1
|
|
1.2
|
Purpose
of the Plan
|
1
|
|
1.3
|
Duration
of the Plan
|
1
|
|
ARTICLE
2.
|
DEFINITIONS
|
1
|
|
ARTICLE
3.
|
ADMINISTRATION
|
5
|
|
3.1
|
The
Committee
|
5
|
|
3.2
|
Authority
of the Committee
|
5
|
|
3.3
|
Decisions
Binding
|
5
|
|
3.4
|
Employees
in Foreign Countries
|
5
|
|
3.5
|
No
Option or SAR Repricing Without Shareholder Approval
|
5
|
|
ARTICLE
4.
|
SHARES
SUBJECT TO THE PLAN
|
6
|
|
4.1
|
Number
of Shares
|
6
|
|
4.2
|
Other
Plan Limits
|
6
|
|
4.3
|
Nonexclusivity
of the Plan
|
6
|
|
4.4
|
Adjustments
in Authorized Shares
|
6
|
|
ARTICLE
5.
|
ELIGIBILITY
AND PARTICIPATION
|
6
|
|
ARTICLE
6.
|
STOCK
OPTIONS
|
7
|
|
6.1
|
Grant
of Options
|
7
|
|
6.2
|
Agreement
|
7
|
|
6.3
|
Option
Price
|
7
|
|
6.4
|
Duration
of Options
|
7
|
|
6.5
|
Exercise
of Options
|
7
|
|
6.6
|
Payment
|
8
|
|
6.7
|
Transferability
|
8
|
|
6.8
|
Shareholder
Rights
|
9
|
|
ARTICLE
7.
|
STOCK
APPRECIATION RIGHTS
|
9
|
|
7.1
|
Grants
of SARs
|
9
|
|
7.2
|
Duration
of SARs
|
9
|
|
7.3
|
Exercise
of SAR
|
9
|
|
7.4
|
Determination
of Payment of Cash and/or Common Stock Upon Exercise of
SAR
|
9
|
|
7.5
|
Nontransferability
|
10
|
|
7.6
|
Shareholder
Rights
|
10
|
|
ARTICLE
8.
|
RESTRICTED
STOCK; STOCK AWARDS
|
10
|
|
8.1
|
Grants
|
10
|
|
8.2
|
Restricted
Period; Lapse of Restrictions
|
10
|
|
8.3
|
Rights
of Holder; Limitations Thereon
|
11
|
|
8.4
|
Delivery
of Unrestricted Shares
|
11
|
|
8.5
|
Nonassignability
of Restricted Stock
|
12
|
|
ARTICLE
9.
|
PERFORMANCE
UNIT AWARDS
|
12
|
|
9.1
|
Award
|
12
|
|
9.2
|
Earning
the Award
|
12
|
|
9.3
|
Payment
|
12
|
|
9.4
|
Shareholder
Rights
|
12
|
|
ARTICLE
10.
|
BENEFICIARY
DESIGNATION
|
13
|
|
ARTICLE
11.
|
DEFERRALS
|
13
|
|
ARTICLE
12.
|
RIGHTS
OF PARTICIPANTS
|
13
|
|
12.1
|
Employment
|
13
|
|
12.2
|
Participation
|
13
|
|
ARTICLE
13.
|
CHANGE
IN CONTROL
|
13
|
|
13.1
|
Definition
|
13
|
|
ARTICLE
14.
|
AMENDMENT,
MODIFICATION AND TERMINATION
|
14
|
|
14.1
|
Amendment,
Modification and Termination
|
14
|
|
14.2
|
Awards
Previously Granted
|
15
|
|
14.3
|
Compliance
With Code Section 162(m)
|
15
|
|
ARTICLE
15.
|
WITHHOLDING
|
15
|
|
15.1
|
Tax
Withholding
|
15
|
|
15.2
|
Share
Withholding
|
15
|
|
ARTICLE
16.
|
INDEMNIFICATION
|
15
|
|
ARTICLE
17.
|
SUCCESSORS
|
16
|
|
ARTICLE
18.
|
LEGAL
CONSTRUCTION
|
16
|
|
18.1
|
Gender
and Number
|
16
|
|
18.2
|
Severability
|
16
|
|
18.3
|
Requirements
of Law
|
16
|
|
18.4
|
Regulatory
Approvals and Listing
|
16
|
|
18.5
|
Securities
Law Compliance
|
16
|
|
18.6
|
Governing
Law
|
17
|
|
18.7
|
Section
409A
|
17
|
KRISPY
KREME DOUGHNUTS, INC.
2000
STOCK INCENTIVE PLAN
ARTICLE
1.
ESTABLISHMENT,
PURPOSE, AND DURATION
1.1
Establishment of the
Plan
.
Krispy
Kreme Doughnuts, Inc., a North Carolina corporation (hereinafter referred to as
the “Company”), hereby establishes a stock option and incentive award plan known
as the “Krispy Kreme Doughnuts, Inc. 2000 Stock Incentive Plan” (the “Plan”), as
set forth in this document. The Plan permits the grant of Incentive
Stock Options, Nonqualified Stock Options, Restricted Stock, Stock Awards,
Performance Unit Awards and Stock Appreciation Rights.
The Plan
shall become effective on July 1, 2000 (the “Effective Date”), having been
approved by the Board of Directors on June 6, 2000, and shall remain in effect
as provided in Section 1.3. This Plan reflects all amendments and
stock splits through and including June 16, 2009.
1.2
Purpose of the
Plan
.
The
purposes of the Plan are to promote greater stock ownership in the Company by
Employees, Directors, consultants, or other persons who perform services for the
Company and its Parent, Subsidiaries, and affiliates (the “Participants”); to
more closely link the personal interests of Participants to those of the
Company’s shareholders; and to provide flexibility to the Company in its ability
to motivate, attract and retain the services of Participants upon whose
judgment, interest and special effort the successful conduct of its operation
largely depends.
1.3
Duration of the
Plan
.
The Plan
shall commence on the Effective Date, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 14, until the day prior to the twelfth (12th) anniversary of
the Effective Date.
ARTICLE
2.
DEFINITIONS
Whenever
used in the Plan, the following terms shall have the meanings set forth
below:
|
(a)
|
“
Agreement
”
means an agreement entered into by each Participant and the Company,
setting forth the terms and provisions applicable to Awards granted to
Participants under this Plan.
|
|
(b)
|
“
Award
” means,
individually or collectively, a grant under this Plan of Incentive Stock
Options, Nonqualified Stock Options, Restricted Stock, Stock Awards,
Performance Unit Awards or Stock Appreciation
Rights.
|
|
(c)
|
“
Beneficial
Owner
” or “
Beneficial
Ownership
” shall have the meaning ascribed to such term in Rule
13d-3 of the General Rules and Regulations under the Exchange
Act.
|
|
(d)
|
“
Board
” or
“
Board of
Directors
” means the Board of Directors of the
Company.
|
|
(e)
|
“
Cause
”
means: (i) with respect to the Company or any Subsidiary which
employs the Participant or for which the Participant primarily performs
services, the commission by the Participant of an act of fraud,
embezzlement, theft or proven dishonesty, or any other illegal act or
practice (whether or not resulting in criminal prosecution or conviction),
or any act or practice which the Committee shall, in good faith, deem to
have resulted in the Participant’s becoming unbondable under the Company’s
or the Subsidiary’s fidelity bond; (ii) the willful engaging by the
Participant in misconduct which is deemed by the Committee, in good faith,
to be materially injurious to the Company or any Subsidiary, monetarily or
otherwise; or (iii) the willful and continued failure or habitual neglect
by the Participant to perform his duties with the Company or the
Subsidiary substantially in accordance with the operating and personnel
policies and procedures of the Company or the Subsidiary generally
applicable to all their employees. For purposes of this Plan,
no act or failure to act by the Participant shall be deemed to be
“willful” unless done or omitted to be done by the Participant not in good
faith and without reasonable belief that the Participant’s action or
omission was in the best interest of the Company and/or the
Subsidiary. Notwithstanding the foregoing, if the Participant
has entered into an employment agreement that is binding as of the date of
employment termination, and if such employment agreement defines “Cause,”
then the definition of “Cause” in such agreement shall apply to the
Participant in this Plan. “Cause” under either (i), (ii) or
(iii) shall be determined by the
Committee.
|
|
(f)
|
“
Code
” means the
Internal Revenue Code of 1986, as amended from time to time, or any
successor act thereto.
|
|
(g)
|
“
Committee
”
means (i) the committee appointed by the Board to administer the Plan with
respect to grants of Awards, as specified in Article 3; or (ii) in the
absence of such appointment, the Board
itself.
|
|
(h)
|
“
Common Stock
”
means the common stock of the Company, no par value per
share.
|
|
(i)
|
“
Company
” means
Krispy Kreme Doughnuts, Inc., a North Carolina corporation, or any
successor thereto as provided in Article
17.
|
|
(j)
|
“
Corresponding
SAR
” means an SAR that is granted in relation to a particular
Option and that can be exercised only upon the surrender to the Company,
unexercised, of that portion of the Option to which the SAR
relates.
|
|
(k)
|
“
Director
” means
any individual who is a member of the Board of Directors of the
Company.
|
|
(l)
|
“Disability”
shall mean a condition where the Participant either (i) is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or can be expected to last for a continuous period of not less
than 12 months; or (ii) is, by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than three (3)
months, receiving income replacement benefits for a period of not less
than three (3) months under an accident and health plan covering employees
of the Company.
|
|
(m)
|
“
Effective Date
”
shall have the meaning ascribed to such term in
Section 1.1.
|
|
(n)
|
“
Employee
” means
any employee of the Company or any Parent, Subsidiary, or affiliate of the
Company. Directors who are not otherwise employed by the
Company or a Parent, Subsidiary or affiliate of the Company are not
considered Employees under this
Plan.
|
|
(o)
|
“
Exchange Act
”
means the Securities Exchange Act of 1934, as amended from time to time,
or any successor act thereto.
|
|
(p)
|
“
Fair Market
Value
” shall be determined as
follows:
|
|
(i)
|
If,
on the relevant date, the Shares are traded on a national or regional
securities exchange or on The Nasdaq National Market System (“Nasdaq”) and
closing sale prices for the Shares are customarily quoted, on the basis of
the closing sale price on the principal securities exchange on which the
Shares may then be traded or, if there is no such sale on the relevant
date, then on the last previous day on which a sale was
reported;
|
|
(ii)
|
If,
on the relevant date, the Shares are not listed on any securities exchange
or traded on Nasdaq, but nevertheless are publicly traded and reported on
Nasdaq without closing sale prices for the Shares being customarily
quoted, on the basis of the mean between the closing bid and asked
quotations in such other over-the-counter market as reported by Nasdaq;
but, if there are no bid and asked quotations in the over-the-counter
market as reported by Nasdaq on that date, then the mean between the
closing bid and asked quotations in the over-the-counter market as
reported by Nasdaq on the immediately preceding day such bid and asked
prices were quoted; and
|
|
(iii)
|
If,
on the relevant date, the Shares are not publicly traded as described in
(i) or (ii), on the basis of the good faith determination of the
Committee.
|
|
(q)
|
“
Incentive Stock
Option
” or “
ISO
” means an
option to purchase Shares granted under Article 6 which is designated as
an Incentive Stock Option and is intended to meet the requirements of
Section 422 of the Code.
|
|
(r)
|
“
Initial Value
”
means, with respect to a Corresponding SAR, the Option Price per share of
the related Option, and with respect to an SAR granted independently of an
Option, the Fair Market Value of one share of Common Stock on the date of
grant.
|
|
(s)
|
“
Insider
” shall
mean an Employee who is, on the relevant date, an officer or a director,
or a beneficial owner of ten percent (10%) or more of any class of the
Company’s equity securities that is registered pursuant to Section 12 of
the Exchange Act or any successor provision, all as defined under Section
16 of the Exchange Act.
|
|
(t)
|
“
Named Executive
Officer
” means a Participant who, as of the date of vesting and/or
payout of an Award is one of the group of “covered employees,” as defined
in the regulations promulgated under Code Section 162(m), or any successor
statute.
|
|
(u)
|
“
Nonqualified Stock
Option
” or “
NQSO
” means an
option to purchase Shares granted under Article 6, and which is not
intended or otherwise fails to meet the requirements of Code Section
422.
|
|
(v)
|
“
Option
” means
an Incentive Stock Option or a Nonqualified Stock
Option.
|
|
(w)
|
“
Option Price
”
means the price at which a Share may be purchased by a Participant
pursuant to an Option, as determined by the
Committee.
|
|
(x)
|
“
Parent
” means a
“parent corporation,” whether now or hereafter existing as defined in
Section 424(e) of the Code.
|
|
(y)
|
“
Participant
”
means an Employee, Director, consultant or other person who performs
services for the Company or a Parent, Subsidiary, or affiliate of the
Company, who has been granted an Award under the Plan which is
outstanding.
|
|
(z)
|
“
Performance Unit
Award
” means an Award, which, in accordance with the terms of
Article 9 and the other provisions of the Plan and subject to an
Agreement, will entitle the Participant, or his estate or beneficiary in
the event of the Participant’s death, to receive cash, Common Stock or a
combination thereof.
|
|
(aa)
|
“
Person
” shall
have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) thereof.
|
|
(bb)
|
“
Plan
” means
this Krispy Kreme Doughnuts, Inc. 2000 Stock Incentive Plan, including any
amendments thereto.
|
|
(cc)
|
“
Restricted
Stock
” means an Award of Common Stock (or the right to receive a
share of Common Stock in the future) granted in accordance with the terms
of Article 8 and the other provisions of the Plan, and which is
nontransferable and subject to a substantial risk of
forfeiture. Shares of Common Stock shall cease to be Restricted
Stock when, in accordance with the terms hereof and the applicable
Agreement, they become transferable and free of substantial risk of
forfeiture.
|
|
(dd)
|
“
Retirement
”
shall mean retiring from employment with the Company or any Subsidiary on
or after attaining age sixty five (65), or pursuant to a policy or
agreement approved by the Board.
|
|
(ee)
|
“
SAR
” means a
stock appreciation right that entitles the holder to receive, with respect
to each share of Common Stock encompassed by the exercise of such SAR, the
amount determined by the Committee and specified in an
Agreement. In the absence of such specification, the holder
shall be entitled to receive in cash, with respect to each share of Common
Stock encompassed by the exercise of such SAR, the excess of the Fair
Market Value on the date of exercise over the Initial
Value. References to “SARs” include both Corresponding SARs and
SARs granted independently of Options, unless the context requires
otherwise.
|
|
(ff)
|
“
Shares
” means
the shares of Common Stock of the Company (including any new, additional
or different stock or securities resulting from the changes described in
Section 4.3).
|
|
(gg)
|
“
Stock Award
”
means a grant of Shares under Article 8 that is not generally subject to
restrictions and pursuant to which a certificate for the Shares is
transferred to the Employee.
|
|
(hh)
|
“
Subsidiary
”
means (i) in the case of an ISO, any company during any period in which it
is a “subsidiary corporation” (as that term is defined in Code Section
424(f)), and (ii) in the case of all other Awards, in addition to a
“subsidiary corporation” as defined above, a partnership, limited
liability company, joint venture or other entity in which the Company
controls fifty percent (50%) or more of the voting power or equity
interests.
|
ARTICLE
3.
ADMINISTRATION
3.1
The
Committee
.
The Plan
shall be administered by the Compensation Committee of the Board (or a
subcommittee thereof), or by any other committee or subcommittee appointed by
the Board that is granted authority to administer the Plan. The
members of the Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board of Directors. In the absence of
any such appointment, the Plan shall be administered by the Board.
3.2
Authority of the
Committee
.
Subject
to the provisions of the Plan, the Committee shall have full and exclusive power
to select the Participants who shall participate in the Plan (who may change
from year to year); determine the size and types of Awards; determine the terms
and conditions of Awards in a manner consistent with the Plan (including
conditions on the exercisability of all or a part of an Option or SAR,
restrictions on transferability, vesting provisions on Restricted Stock or
Performance Unit Awards and the duration of the Awards); construe and interpret
the Plan and any agreement or instrument entered into under the Plan; establish,
amend or waive rules and regulations for the Plan’s administration; and (subject
to the provisions of Article 14) amend the terms and conditions of any
outstanding Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan, including accelerating the
time any Option or SAR may be exercised and establishing different terms and
conditions relating to the effect of the termination of employment or other
services to the Company. Further, the Committee shall make all other
determinations which may be necessary or advisable in the Committee’s opinion
for the administration of the Plan. All expenses of administering
this Plan shall be borne by the Company.
3.3
Decisions
Binding
.
All
determinations and decisions made by the Committee pursuant to the provisions of
the Plan and all related orders and resolutions of the Board shall be final,
conclusive and binding on all Persons, including the Company, the shareholders,
Participants and their estates and beneficiaries.
3.4
Employees in Foreign
Countries
.
The
Committee shall have the authority to adopt such modifications, procedures,
appendices and subplans as may be necessary or desirable to comply with
provisions of the laws of foreign countries in which the Company or any
Subsidiary may operate to assure the viability of the benefits from Awards
granted to Employees employed in such countries and to meet the objectives of
the Plan.
3.5
No Option or SAR Repricing
Without Shareholder Approval
.
Except as
provided in Section 4.4 hereof relating to certain antidilution
adjustments, unless the approval of shareholders of the Company is obtained,
Options and SARs issued under the Plan shall not be amended to lower their
exercise price, Options and SARs issued under the Plan will not be exchanged for
other Options or
SARs with
lower exercise prices, and no other action shall be taken with respect to
Options or SARs that would be treated as a repricing under the rules of the
principal stock exchange on which the Shares are listed.
ARTICLE
4.
SHARES
SUBJECT TO THE PLAN
4.1
Number of
Shares
.
Subject
to adjustments under Section 4.4 below, the maximum number of Shares that may be
delivered to participants and their beneficiaries under the Plan shall be equal
to the sum of (i) 12,500,000; (ii) any Shares available for future awards under
the Company’s 1998 Stock Option Plan as of the effective date of this Plan; and
(iii) any Shares that are represented by awards granted under any prior plan of
the Company, which are forfeited, expire or are canceled without the delivery of
Shares or which result in the forfeiture of Shares back to the
Company. In addition, any Shares delivered under the Plan or any
prior plan of the Company which are forfeited back to the Company because of the
failure to meet an award contingency or condition shall again be available for
delivery pursuant to new awards granted under the Plan. Any Shares
covered by an award (or portion of an award) granted under the Plan or any prior
plan of the Company, which is forfeited or canceled, expires or is settled in
cash, including the settlement of tax withholding obligations using Shares,
shall be deemed not to have been delivered for purposes of determining the
maximum number of Shares available for delivery under the
Plan. Likewise, if any stock option is exercised by tendering Shares,
either actually or by attestation, to the Company as full or partial payment for
such exercise under this Plan or any prior plan of the Company, only the number
of Shares issued net of the Shares tendered shall be deemed delivered for
purposes of determining the maximum number of Shares available for delivery
under the Plan. Further, Shares issued under the Plan through the settlement,
assumption or substitution of outstanding awards or obligations to grant future
awards as a condition of or in connection with the Company acquiring another
entity shall not reduce the maximum number of Shares available for delivery
under the Plan.
4.2
Other Plan
Limits
. Subject
to adjustment under Section 4.4, the maximum number of Shares that may be issued
in connection with ISOs shall be 3,000,000.
4.3
Nonexclusivity of the
Plan
. This
Plan shall not be construed as creating any limitation on the power of the Board
to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of options and other awards otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
4.4
Adjustments in Authorized
Shares
. In
the event of (i) any change in corporate capitalization, such as a stock split,
reverse stock split, or stock dividend; (ii) any corporate transaction to which
Code Section 424(a) applies, or (iii) such other event which in the judgment of
the Committee necessitates an adjustment, such adjustment shall be made in the
maximum number and kind of Shares which may be delivered under the Plan as set
forth in Section 4.1 above, and in the number and kind of and/or price of Shares
subject to outstanding Awards granted under the Plan or prior plan, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number and the Committee shall make
such adjustments as are necessary to insure Awards of whole
Shares. Except as expressly provided herein, the issuance by the
Company of Shares of stock of any class, or securities convertible into Shares
of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares subject to an
outstanding Award.
ARTICLE
5.
ELIGIBILITY
AND PARTICIPATION
Any
Director or Employee, or any independent contractor, adviser or consultant to
the Company or a Parent, Subsidiary, or affiliate of the Company shall be
eligible to receive an Award under the Plan. In determining the
individuals to whom such an Award shall be granted and the number of Shares
which may be granted pursuant to that Award, the Committee shall take into
account the duties of the respective individual, his or her present and
potential contributions to the success of the Company or a Parent, Subsidiary,
or affiliate of the Company, and such other factors as the Committee shall deem
relevant in connection with accomplishing the purpose of the Plan.
ARTICLE
6.
STOCK
OPTIONS
6.1
Grant of
Options
. Subject
to the terms and provisions of the Plan, Options may be granted to Participants
at any time and from time to time as shall be determined by the
Committee. The Committee shall have sole discretion in determining
the number of Shares subject to Options granted to each
Participant. An Option may be granted with or without a Corresponding
SAR. No Participant may be granted ISOs (under the Plan and all other
incentive stock option plans of the Company and any Parent or Subsidiary) which
are first exercisable in any calendar year for Common Stock having an aggregate
Fair Market Value (determined as of the date an Option is granted) that exceeds
One Hundred Thousand Dollars ($100,000). The preceding annual limit
shall not apply to NQSOs. The Committee may grant a Participant ISOs,
NQSOs or a combination thereof, and may vary such Awards among
Participants. Subject to adjustments under the principles set forth
in Section 4.4 above, the maximum number of Shares subject to Options which can
be granted under the Plan during any calendar year to any individual is
1,000,000 Shares; provided, however, that to the extent that the maximum number
of Shares is not granted to a Participant in a calendar year, such amount may be
carried over into subsequent years.
6.2
Agreement
. Each
Option grant shall be evidenced by an Agreement that shall specify the Option
Price, the duration of the Option, the number of Shares to which the Option
pertains and such other provisions as the Committee shall
determine. The Option Agreement shall further specify whether the
Award is intended to be an ISO or an NQSO. Any portion of an Option
that is not designated as an ISO or otherwise fails or is not qualified as an
ISO (even if designated as an ISO) shall be a NQSO. If the Option is
granted in connection with a Corresponding SAR, the Agreement shall also specify
the terms that apply to the exercise of the Option and Corresponding
SAR. The Committee may provide in the Option Agreement for transfer
restrictions, repurchase rights, vesting requirements and other limitations on
the Shares to be issued pursuant to the exercise of an Option.
6.3
Option
Price
. The
Option Price shall not be less than one hundred percent (100%) of the Fair
Market Value of a Share on the date the Option is granted. In no
event, however, shall any Participant who owns (within the meaning of Section
424(d) of the Code) stock of the Company possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company be
eligible to receive an ISO at an Option Price less than one hundred ten percent
(110%) of the Fair Market Value of a Share on the date the ISO is
granted. The Committee is authorized to issue Options, whether ISOs
or NQSOs, at an Option Price in excess of the Fair Market Value on the date the
Option is granted (the so-called “Premium Price” Option) to encourage superior
performance.
6.4
Duration of
Options
. Each
Option shall expire at such time as the Committee shall determine at the time of
grant; provided, however, that no Option shall be exercisable later than the
tenth (10th) anniversary date of its grant; provided, further, however, that any
ISO granted to any Participant who at such time owns (within the meaning of
Section 424(d) of the Code) stock of the Company possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, shall not be exercisable later than the fifth (5th) anniversary date of
its grant.
6.5
Exercise of
Options
. Options
granted under the Plan shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each instance approve,
including conditions related to the employment of or provision of services by
the Participant with the Company or any Parent, Subsidiary or other entity,
which need not be the same for each grant or for each
Participant. Each Option shall be exercisable for such number of
Shares and at such time or times, including periodic installments, as may be
determined by the Committee at the time of the grant. The Committee
may provide in the Agreement for automatic accelerated vesting and other rights
upon the occurrence of a Change in Control (as defined in Section 13.1) of the
Company or upon the occurrence of other events as specified in the
Agreement. Except as otherwise provided in the Agreement and
Article 13, the right to purchase Shares that are exercisable in periodic
installments shall be cumulative so that when the right to purchase any Shares
has accrued, such Shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Option. The
exercise or partial exercise of either an Option or its Corresponding SAR shall
result in the termination of the other to the extent of the number of Shares
with respect to which the Option or Corresponding SAR is exercised.
6.6
Payment
. Options
shall be exercised by the delivery of a written notice of exercise to the
Company, setting forth the number of Shares with respect to which the Option is
to be exercised, accompanied by full payment for the Shares. The
Option Price upon exercise of any Option shall be payable to the Company in
full, either: (a) in cash, (b) in cash equivalent approved by the Committee, (c)
if approved by the Committee, by tendering previously acquired Shares (or
delivering a certification of ownership of such Shares) having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered and which were acquired directly from the
Company must have been held by the Participant for a period of at least six
months unless otherwise provided by the Committee), or (d) if approved by the
Committee, by a combination of (a), (b) and (c). The Committee also
may allow cashless exercises as permitted under Federal Reserve Board’s
Regulation T, subject to applicable securities law restrictions, or by any other
means which the Committee determines to be consistent with the Plan’s purpose
and applicable law. The Company may, in its discretion, make a loan
to the Participant for purposes of permitting the Participant to exercise an
Option and to pay any withholding taxes in connection with the exercise of the
Option. Such loan shall be on such terms and conditions as may be
determined by the Company. As soon as practicable after receipt of a
written notification of exercise and full payment, the Company shall deliver to
the Participant, in the Participant’s name, Share certificates in an appropriate
amount based upon the number of Shares purchased under the Option(s), and may
place appropriate legends on the certificates representing such
Shares.
6.7
Transferability
.
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(a)
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To Immediate Family
and Related Entities
. A Participant may transfer an
Option granted hereunder, including, but not limited to, transfers to
members of his or her Immediate Family (as defined below), to one or more
trusts for the benefit of such Immediate Family members, to one or more
partnerships where such Immediate Family members are the only partners, or
to one or more limited liability companies (or similar entities) where
such Immediate Family Members are the only members or beneficial owners of
the entity, if (i) the Participant does not receive any consideration in
any form whatsoever for such transfer, (ii) such transfer is permitted
under applicable tax laws, and (iii) if the Participant is an Insider,
such transfer is permitted under Rule 16b-3 of the Exchange Act as in
effect from time to time. For purposes hereof, “Immediate
Family” shall mean the Participant and the Participant’s spouse, children
and grandchildren.
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(b)
|
Transfers Incident to
Divorce
. A Participant may transfer a nonqualified stock
option granted hereunder to a former spouse incident to such Participant’s
divorce from the former spouse.
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(c)
|
Conditions
. Any
Option transferred pursuant to this Section 6.7 shall continue to be
subject to the same terms and conditions in the hands of the transferee as
were applicable to such Option immediately prior to the transfer
thereof. Any reference in any such Agreement to the employment
by or performance of services for the Company by the Participant shall
continue to refer to the employment of, or performance by, the
transferring Participant. Any Option that is granted pursuant
to any Agreement that did not initially expressly allow the transfer of
said Option and that has not been amended to expressly permit such
transfer, shall not be transferable by the Participant other than by will
or by the laws of descent and distribution and such Option thus shall be
exercisable in the Participant’s lifetime only by the
Participant.
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6.8
Shareholder
Rights
. No
Participant shall have any rights as a Shareholder with respect to Shares
subject to his Option until the issuance of such Shares to the Participant
pursuant to the exercise of such Option.
ARTICLE
7.
STOCK
APPRECIATION RIGHTS
7.1
Grants of
SARs
. The
Committee shall designate Participants to whom SARs are granted, and will
specify the number of Shares of Common Stock subject to each
grant. An SAR may be granted with or without a related
Option. All SARs granted under this Plan shall be subject to an
Agreement in accordance with the terms of this Plan. A payment to the
Participant upon the exercise of a SAR may not be more than the difference
between the Fair Market Value of the Shares with respect to the SAR on the date
of grant and the Fair Market Value of the Shares with respect to the SAR on the
date of exercise of the SAR. The maximum number of Shares subject to SARs which
can be granted under the Plan during any calendar year to any individual is
250,000 Shares; provided, however, that to the extent that the maximum number of
Shares is not granted to a Participant in a calendar year, such amount may be
carried over into subsequent years.
7.2
Duration of
SARs
. The
duration of an SAR shall be set forth in the Agreement as determined by the
Committee; provided, however, that no SAR shall be exercisable later than the
tenth (10th) anniversary date of its grant. An SAR that is granted as
a Corresponding SAR shall have the same duration as the Option to which it
relates. An SAR shall terminate due to the Participant’s termination
of employment at the same time as the date specified in Article 6 with respect
to Options, regardless of whether the SAR was granted in connection with the
grant of an Option.
7.3
Exercise of
SAR
. An
SAR may be exercised in whole at any time or in part from time to time and at
such times and in compliance with such requirements as the Committee shall
determine as set forth in the Agreement; provided, however, that a Corresponding
SAR that is related to an Incentive Stock Option may be exercised only to the
extent that the related Option is exercisable and only when the Fair Market
Value of the Shares exceeds the Option Price of the related ISO. An
SAR granted under this Plan may be exercised with respect to any number of whole
Shares less than the full number of Shares for which the SAR could be
exercised. A partial exercise of an SAR shall not affect the right to
exercise the SAR from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining Shares subject to the
SAR. The exercise of either an Option or Corresponding SAR shall
result in the termination of the other to the extent of the number of Shares
with respect to which the Option or its Corresponding SAR is
exercised.
7.4
Determination of Payment of
Cash and/or Common Stock Upon Exercise of
SAR
. At
the Committee’s discretion, the amount payable as a result of the exercise of an
SAR may be settled in cash, Common Stock, or a combination of cash and Common
Stock. A fractional Share shall not be deliverable upon the exercise
of an SAR, but a cash payment shall be made in lieu thereof.
7.5
Nontransferability
. Each
SAR granted under the Plan shall be nontransferable except by will or by the
laws of descent and distribution. During the lifetime of the
Participant to whom the SAR is granted, the SAR may be exercised only by the
Participant. No right or interest of a Participant in any SAR shall
be liable for, or subject to any lien, obligation or liability of such
Participant. A Corresponding SAR shall be subject to the same
restrictions on transfer as the ISO to which it
relates. Notwithstanding the foregoing, if the Agreement so provides,
a Participant may transfer an SAR (other than a Corresponding SAR that relates
to an Incentive Stock Option) under the same rules and conditions as are set
forth in Section 6.7.
7.6
Shareholder
Rights
. No
Participant shall have any rights as a Shareholder with respect to Shares
subject to an SAR until the issuance of Shares (if any) to the Participant
pursuant to the exercise of such SAR.
ARTICLE
8.
RESTRICTED STOCK; STOCK
AWARDS
8.1
Grants
. The
Committee may from time to time in its discretion grant Restricted Stock and
Stock Awards to Participants and may determine the number of Shares of
Restricted Stock or Stock Awards to be granted. The Committee shall
determine the terms and conditions of, and the amount of payment, if any, to be
made by the Participant for such Shares or Restricted Stock. A grant
of Restricted Stock may, in addition to other conditions, require the
Participant to pay for such Shares of Restricted Stock, but the Committee may
establish a price below Fair Market Value at which the Participant can purchase
the Shares of Restricted Stock. Each grant of Restricted Stock shall
be evidenced by an Agreement containing terms and conditions not inconsistent
with the Plan as the Committee shall determine to be appropriate in its sole
discretion. Subject to adjustments under the principles set forth in
Section 4.4 above, the maximum number of Shares of Restricted Stock which can be
granted under the Plan during any calendar year to any individual, if such grant
is intended to comply with Code Section 162(m), is 300,000 Shares.
8.2
Restricted Period; Lapse of
Restrictions
. At
the time a grant of Restricted Stock is made, the Committee shall establish a
period or periods of time (the “Restricted Period”) applicable to such grant
which, unless the Committee otherwise provides, shall not be less than three
years in the aggregate. Subject to the other provisions of this
Article 8, at the end of the Restricted Period all restrictions shall lapse and
the Restricted Stock shall vest in the Participant. At the time a
grant is made, the Committee may, in its discretion, prescribe conditions for
the incremental lapse of restrictions during the Restricted Period and for the
lapse or termination of restrictions upon the occurrence of other conditions in
addition to or other than the expiration of the Restricted Period with respect
to all or any portion of the Restricted Stock. Such conditions may,
but need not, include the following:
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(a)
|
The
death, Disability or Retirement of the Employee to whom Restricted Stock
is granted, or
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(b)
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The
occurrence of a Change in Control of the
Company.
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The
Committee may also, in its discretion, shorten or terminate the Restricted
Period, or waive any conditions for the lapse or termination of restrictions
with respect to all or any portion of the Restricted Stock at any time after the
date the grant is made.
8.3
Rights of Holder;
Limitations Thereon
. Upon
a grant of Restricted Stock, a stock certificate (or certificates) representing
the number of Shares of Restricted Stock granted to the Participant may be
registered in the Participant’s name and held in custody by the Company or a
bank selected by the Committee for the Participant’s
account. Following such registration, the Participant shall have the
rights and privileges of a Shareholder as to such Restricted Stock, including
the right to receive dividends, if and when declared by the Board of Directors,
and to vote such Restricted Stock, except that the right to receive cash
dividends shall be the right to receive such dividends either in cash currently
or by payment in Restricted Stock, as the Committee shall determine, and except
further that, the following restrictions shall apply:
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(a)
|
The
Participant shall not be entitled to delivery of a certificate until the
expiration or termination of the Restricted Period for the Shares
represented by such certificate and the satisfaction of any and all other
conditions prescribed by the
Committee;
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(b)
|
None
of the Shares of Restricted Stock may be sold, transferred, assigned,
pledged, or otherwise encumbered or disposed of during the Restricted
Period and until the satisfaction of any and all other conditions
prescribed by the Committee; and
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(c)
|
In
the event of the forfeiture of any Shares of Restricted Stock, such
forfeited Shares shall be transferred to the Company without further
action by the Participant and shall, in accordance with Section 4.1, again
be available for grant under the Plan. If the Participant paid
any amount for the Shares of Restricted Stock that are forfeited, the
Company shall pay the Participant the lesser of the Fair Market Value of
the Shares on the date they are forfeited or the amount paid by the
Participant.
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With
respect to any Shares received as a result of adjustments under Section 4.4
hereof and any Shares received with respect to cash dividends declared on
Restricted Stock, the Participant shall have the same rights and privileges, and
be subject to the same restrictions, as are set forth in this
Article 8.
8.4
Delivery of Unrestricted
Shares
. Upon
the expiration or termination of the Restricted Period for any Shares of
Restricted Stock and the satisfaction of any and all other conditions prescribed
by the Committee, the restrictions applicable to such Shares of Restricted Stock
shall lapse and a stock certificate for the number of Shares of Restricted Stock
with respect to which the restrictions have lapsed shall be delivered, free of
all such restrictions except any that may be imposed by law, a Shareholders’
agreement or any other agreement, to the holder of the Restricted
Stock. The Company shall not be required to deliver any fractional
Share but will pay, in lieu thereof, the Fair Market Value (determined as of the
date the restrictions lapse) of such fractional Share to the holder
thereof. Concurrently with the delivery of a certificate for
Restricted Stock, the holder shall be required to pay an amount necessary to
satisfy any applicable federal, state and local tax requirements as set out in
Article 15 below. Notwithstanding the foregoing, if a Participant is deemed on
the date of his or her ‘separation from service’ (within the meaning of Treas.
Reg. Section 1.409A-1(h)) with the Corporation to be a ‘specified employee’
(within the meaning of Treas. Reg. Section 1.409-1(i)), then with regard to any
payment that is considered deferred compensation under Section 409A payable on
account of a ‘separation from service’ that is required to be delayed pursuant
to Section 409(a)(2)(b) of the Code (after taking into account any applicable
exceptions to such requirement), such payment shall be made on the date that is
the earlier of (i) the expiration of the six (6)-month period measured from the
date of the Participant’s ‘separation from service;’ or (ii) the date of the
Participant’s death (the ‘Delay Period’). Upon the expiration of the
Delay Period, all payments delayed pursuant to this Section 8.4 shall be paid to
Participant in a lump sum.
8.5
Nonassignability of
Restricted Stock
. Unless
the Committee provides otherwise in the Agreement, no grant of, nor any right or
interest of a Participant in or to, any Restricted Stock, or in any instrument
evidencing any grant of Restricted Stock under the Plan, may be assigned,
encumbered or transferred except, in the event of the death of a Participant, by
will or the laws of descent and distribution.
8.6
Payment of Stock
Awards
. Upon the grant of a Stock Award, a Shares shall be
issued to the Participant not later than March 15 of the year following the year
in which the Stock Award is granted.
ARTICLE
9.
PERFORMANCE
UNIT AWARDS
9.1
Award
. The
Committee may designate Participants to whom Performance Unit Awards will be
granted from time to time for no consideration and specify the number of Shares
of Common Stock covered by the Award. Subject to adjustment under the
principles set forth in Section 4.4 above, the maximum number of Shares subject
for Performance Units which can be granted under the Plan during any calendar
year to any individual is 300,000 Shares (or the fair market value thereof). The
Committee shall set forth all of the material terms of any Performance Unit
Award in a written document that satisfies the requirements of Section 409A of
the Code, or that evidences that such Performance Unit Award does not provide
for deferred compensation subject to Section 409A of the Code.
9.2
Earning the
Award
. A
Performance Unit Award, or portion thereof, will be earned, and the Participant
will be entitled to receive Common Stock, a cash payment or a combination
thereof, only upon the achievement by the Participant, the Company, or a Parent
or Subsidiary of such performance objectives as the Committee, in its
discretion, shall prescribe on the date of grant.
The
Committee may in determining whether performance targets have been met adjust
the Company’s financial results to exclude the effect of unusual charges or
income items or other events, including acquisitions or dispositions of
businesses or assets, restructurings, reductions in force, currency fluctuations
or changes in accounting, which are distortive of financial results (either on a
segment or consolidated basis). In addition, the Committee will
adjust its calculations to exclude the effect on financial results of changes in
the Code or other tax laws, or the regulations relating thereto.
9.3
Payment
. In
the discretion of the Committee, the amount payable when a Performance Unit
Award is earned may be settled in cash, by the grant of Common Stock or a
combination of cash and Common Stock. The aggregate Fair Market Value
of the Common Stock received by the Participant pursuant to a Performance Unit
Award, together with any cash paid to the Participant, shall be equal to the
aggregate Fair Market Value, on the date the Performance Units are earned, of
the number of Shares of Common Stock equal to each Performance Unit
earned. A fractional Share will not be deliverable when a Performance
Unit Award is earned, but a cash payment will be made in lieu
thereof.
9.4
Shareholder
Rights
. No
Participant shall have, as a result of receiving a Performance Unit Award, any
rights as a Shareholder until and to the extent that the Performance Units are
earned and Common Stock is transferred to such Participant. If the
Agreement so provides, a Participant may receive a cash payment equal to the
dividends that would have been payable with respect to the number of Shares of
Common Stock covered by the Award between (a) the date that the Performance
Units are awarded and (b) the date that a transfer of Common Stock to the
Participant, cash settlement, or combination thereof is made pursuant to the
Performance Unit Award. A Participant may not sell, transfer, pledge,
exchange, hypothecate, or otherwise dispose of a Performance Unit Award or the
right to receive Common Stock thereunder other than by will or the laws of
descent and distribution. After a Performance Unit Award is earned
and paid in Common Stock, a Participant will have all the rights of a
Shareholder with respect to the Common Stock so awarded; provided that the
restrictions of any Shareholders’ agreement or other agreement shall, if
applicable, continue to apply.
ARTICLE
10.
BENEFICIARY
DESIGNATION
To the
extent applicable, each Participant under the Plan may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently or successively)
to whom any benefit under the Plan is to be paid in case of his or her death
before he or she receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same Participant, shall
be in a form prescribed by the Company and shall be effective only when filed by
the Participant, in writing, with the Company during the Participant’s
lifetime. In the absence of any such designation, benefits remaining
unpaid at the Participant’s death shall be paid to the Participant’s
estate. If required, the spouse of a married Participant domiciled in
a community property jurisdiction shall join in any designation of a beneficiary
or beneficiaries other than the spouse.
ARTICLE
11.
DEFERRALS
The
Committee may permit a Participant to defer to another plan or program such
Participant’s receipt of Shares or cash that would otherwise be due to such
Participant by virtue of any Award. If any such deferral election is
required or permitted, the Committee shall, in its sole discretion, establish
rules and procedures for such payment deferrals.
ARTICLE
12.
RIGHTS OF
PARTICIPANTS
12.1
Employment
. Nothing
in the Plan shall interfere with or limit in any way the right of the Company or
a Parent, Subsidiary, or affiliate of the Company to terminate any Participant’s
employment by, or performance of services for, the Company or any Parent,
Subsidiary, or affiliate of the Company at any time, nor confer upon any
Participant any right to continue in the employ or service of the Company or a
Parent, Subsidiary, or affiliate of the Company. For purposes of the
Plan, transfer of employment of a Participant between the Company and any one of
its affiliates (or between affiliates) shall not be deemed a termination of
employment.
12.2
Participation
. No
Employee shall have the right to be selected to receive an Award under this
Plan, or, having been so selected, to be selected to receive a future
Award.
ARTICLE
13.
CHANGE IN
CONTROL
13.1
Definition
. For
purposes of the Plan, a “Change in Control” means any of the following
events:
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(a)
|
The
acquisition (other than from the Company) by any Person of Beneficial
Ownership of fifty percent (50%) or more of the combined voting power of
the Company’s then outstanding voting securities within a twelve
(12)-month period; provided, however, that for purposes of this Section
13.1, Person shall not include any person who on the date hereof owns 25%
or more of the Company’s outstanding securities, and a Change in Control
shall not be deemed to occur solely because fifty percent (50%) or more of
the combined voting power of the Company’s then outstanding securities is
acquired by (i) a trustee or other fiduciary holding securities under one
or more employee benefit plans maintained by the Company or any of its
subsidiaries, or (ii) any corporation, which, immediately prior to such
acquisition, is owned directly or indirectly by the Shareholders of the
Company in the same proportion as their ownership of stock in the Company
immediately prior to such
acquisition.
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(b)
|
Approval
by Shareholders of the Company of (1) a merger or consolidation involving
the Company if the Shareholders of the Company, immediately before such
merger or consolidation do not, as a result of such merger or
consolidation, own, directly or indirectly, more than fifty percent (50%)
of the combined voting power of the then outstanding voting securities of
the corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the combined
voting power of the voting securities of the Company outstanding
immediately before such merger or consolidation, or (2) a complete
liquidation or dissolution of the Company, or (3) an agreement for the
sale or other disposition of all or substantially all of the assets of the
Company.
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(c)
|
A
change in the composition of the Board such that the individuals who, as
of the first date of such period, constitute the Board (such Board shall
be hereinafter referred to as the “
Incumbent Board
”) cease
for any reason to constitute at least a majority of the Board; provided,
however, for purposes of this
Section 13.1
that any
individual who becomes a member of the Board during such twelve (12)-month
whose election, or nomination for election by the Company’s Shareholders,
was approved by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; but, provided,
further, that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, including any successor to such Rule), or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board, shall not be so considered as a member of the
Incumbent Board.
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ARTICLE
14.
AMENDMENT,
MODIFICATION AND TERMINATION
14.1
Amendment, Modification and
Termination
. The
Board may, at any time and from time to time, alter, amend, suspend or terminate
the Plan in whole or in part; provided, that, unless approved by the holders of
a majority of the total number of Shares of the Company represented and voted at
a meeting at which a quorum is present, no amendment shall be made to the Plan
if such amendment would (a) materially modify the eligibility requirements
provided in Article 5; (b) increase the total number of Shares which may be
granted under the Plan (except as provided in Section 4.4); (c) extend the term
of the Plan; or (d) amend the Plan in any other manner which the Board, in its
discretion, determines should become effective only if approved by the
Shareholders even if such Shareholder approval is not expressly required by the
Plan or by law.
14.2
Awards Previously
Granted
. No
termination, amendment or modification of the Plan shall adversely affect in any
material way any Award previously granted under the Plan, without the written
consent of the Participant holding such Award. The Committee shall,
with the written consent of the Participant holding such Award, have the
authority to cancel Awards outstanding and grant replacement Awards
therefor.
14.3
Compliance With Code Section
162(m)
. At
all times when the Committee determines that compliance with Code Section 162(m)
is required or desired, all Awards granted under this Plan to Named Executive
Officers shall comply with the requirements of Code
Section 162(m). In addition, in the event that changes are made
to Code Section 162(m) to permit greater flexibility with respect to any Award
or Awards under the Plan, the Committee may, subject to this Article 14, make
any adjustments it deems appropriate.
The
vesting of any Restricted Stock Award granted pursuant to Section 8 above may,
and the payment of any Performance Unit granted pursuant to Section 9 above
shall, be made only upon certification by the Committee of the attainment, over
a performance period established by the Committee, of any one or more
quantifiable performance targets, which have been established by the
Committee. Such targets may be either absolute or relative and shall
be based on earnings, earnings per share, earnings before interest, taxes and
depreciation and amortization, growth in earnings per share, achievement of
annual operating profit plans, operating profit margin, return on equity
performance, total shareholder return, stock price, system-wide sales, customer
satisfaction, store income as a percentage of sales, comparable store sales
growth, number of new store operating weeks, achievement of new store sales
standards, EBITDA, return on assets, general administrative expenses as a
percentage of revenue, or aging of accounts receivable. The specific
performance targets for each participating executive officer shall be
established in writing by the Committee within 90 days after the commencement of
the fiscal year (or within such other time period as may be required by Section
162(m) of the Internal Revenue Code) to which the performance target
relates. The performance target shall be established in such a manner
that a third party having knowledge of the relevant facts could determine
whether the performance goal has been met.
ARTICLE
15.
WITHHOLDING
15.1
Tax
Withholding
. The
Company shall have the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy federal,
state and local taxes (including the Participant’s FICA obligation) required by
law to be withheld with respect to any taxable event arising in connection with
an Award under this Plan.
15.2
Share
Withholding
.
With respect to withholding required upon the exercise of Options, or upon any
other taxable event arising as a result of Awards granted hereunder which are to
be paid in the form of Shares, Participants may elect, subject to the approval
of the Committee, to satisfy the withholding requirement, in whole or in part,
by having the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to the minimum statutory total tax which could be
imposed on the transaction. In addition, Participants may elect,
subject to the approval of the Committee, to satisfy tax withholding
requirements by tendering Common Stock to the Company. All elections
shall be irrevocable, made in writing, signed by the Participant, and elections
by Insiders shall additionally comply with all legal requirements applicable to
Share transactions by such Participants.
ARTICLE
16.
INDEMNIFICATION
Each
person who is or shall have been a member of the Committee, or the Board, shall
be indemnified and held harmless by the Company against and from any loss, cost,
liability or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit or proceeding
to which he or she may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan and against and from
any and all amounts paid by him or her in settlement thereof, with the Company’s
approval, or paid by him or her in satisfaction of any judgment in any such
action, suit or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall be in addition
to any other rights of indemnification to which such persons may be entitled
under the Company’s Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE
17.
SUCCESSORS
All
obligations of the Company under the Plan, with respect to Awards granted
hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE
18.
LEGAL
CONSTRUCTION
18.1
Gender and
Number
. Except
where otherwise indicated by the context, any masculine term used herein shall
also include the feminine; the plural shall include the singular and the
singular shall include the plural.
18.2
Severability
. If
any provision of the Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision
had not been included.
18.3
Requirements of
Law
. The
granting of Awards and the issuance of Shares under the Plan shall be subject to
all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be
required.
18.4
Regulatory Approvals and
Listing
. The
Company shall not be required to issue any certificate or certificates for
Shares under the Plan prior to (i) obtaining any approval from any governmental
agency which the Company shall, in its discretion, determine to be necessary or
advisable, (ii) the admission of such Shares to listing on any national
securities exchange or Nasdaq on which the Company’s Shares may be listed, and
(iii) the completion of any registration or other qualification of such Shares
under any state or federal law or ruling or regulation of any governmental body
which the Company shall, in its sole discretion, determine to be necessary or
advisable.
To the
extent applicable, if required by the then-current Section 16 of the Exchange
Act, any “derivative security” or “equity security” offered pursuant to the Plan
to any Insider may not be sold or transferred for at least six (6) months after
the date of grant of such Award. The terms “equity security” and
“derivative security” shall have the meanings ascribed to them in the
then-current Rule 16(a) under the Exchange Act.
18.5
Securities Law
Compliance
. To
the extent applicable, with respect to Insiders, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provisions of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the
Committee.
18.6
Governing
Law
. To
the extent not preempted by Federal law, the Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
North Carolina.
18.7
Section
409A
. It
is intended that the Plan and Awards issued hereunder will comply with Section
409A of the Code (and any regulations and guidelines issued thereunder) to the
extent the Awards are subject thereto, and the Plan and such Awards shall be
interpreted on a basis consistent with such intent. The Plan and any
Award Agreements issued thereunder may be amended in any respect deemed by the
Board or the Committee to be necessary in order to preserve compliance with
Section 409A of the Code.