<PAGE>
STATE OF NORTH CAROLINA
COUNTY OF DAVIDSON
STOCK GRANT AGREEMENT
THIS STOCK GRANT AGREEMENT (the "Agreement") is made and entered into as of
the 10th of March, 1998, (the "Effective Date"), by and among Home Savings,
Inc., SSB (the "Bank"), a North Carolina corporation, (the "Participant") and
James G. Hudson, Jr. (the "Participant") and Milton T. Riley, Jr., F. Stuart
Kennedy and Henry H. Darr (the "Trustees").
WHEREAS, a Management Recognition Plan (the "Plan ') was adopted by the
Board of Directors of the Bank (the "Bank") and approved by the Board of
Directors and by the shareholders of Century Bancorp, Inc., the holding company
of the Bank (the "Corporation") on February 17, 1998.
WHEREAS, it has been determined that it is desirable and in the best
interest of the Bank to make an award (the "Award") of certain shares of the
Common Stock of the Corporation, under the Plan, to the Participant, subject to
certain restrictions as specified below; and
WHEREAS, capitalized terms not otherwise defined herein shall have the same
meaning given to such terms in the Plan.
NOW, THEREFORE, the Parties agree as follows:
1. Date of Award. The date of making the Award under this Agreement is the
10th day of March, 1998. This Award has been made in recognition of the
Participant's status and service as an employee of Home Savings Bank, Inc. SSB.
The Participant is X or ____ is not a director or executive officer of the Bank.
2. Award of Plan Shares. The Participant is awarded, in the aggregate, Four
thousand seventy three ($4,073) shares of Common Stock (the "Plan Shares"),
which shares become vested and nonforfeitable pursuant to paragraph 5 of this
Agreement.
3. Investment Representation and Transfer Restrictions.
(a) Investment Representation. Participant makes and agrees to the
investment representation, if any, attached hereto as Annex A, and the Committee
may cause a legend to be placed on any certificate representing any of the Plan
Shares to make appropriate reference to such representation, as necessary.
(b) Securities Law and Regulations. The Participant agrees that the
Plan Shares shall be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange or
interdealer quotation system upon which the Common Stock is then listed and any
other applicable federal or state securities laws, rules or regulations, and the
Committee may cause a legend or legends to be placed on any certificate
representing any of the Plan Shares to make appropriate reference to such
restrictions.
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(c) Other Transfer Restrictions. (Intentionally omitted.)
4. Receipt by the Trustees. The Trustees acknowledge and agree that the
Plan Shares shall be held by the Trustees and distributed or transferred in
accordance with the Plan and as set forth herein.
5. Vesting and Delivery of Plan Shares by the Trustees.
(a) Periodic Vesting. Plan Shares shall vest and become nonforfeitable
in accordance with the following schedule:
1,018 shares on March 10 , 1998
----- -------- --
1,018 shares on March 10 , 1999
----- -------- --
1,018 shares on March 10 , 2000
----- -------- --
1,018 shares on March 10 , 2001
----- -------- --
In addition, Plan Shares shall become vested and nonforfeitable upon disability,
death and a change in control as set forth in the Plan.
(b) Delivery of Vested Plan Shares to the Participant. After the date
on which the Plan Shares have become vested as provided in this Agreement and in
the Plan, the Committee shall instruct the Trustees to deliver to the
Participant, the Participant's designee, such other person as shall have been
designated as Participant's beneficiary in accordance with this Agreement, or
any other permitted recipient pursuant to the Plan, as applicable, certificates
representing the Plan Shares which have become vested and nonforfeitable, as the
Committee shall determine, free from any restrictions imposed by this Agreement
other than such restrictions and conditions as may be deemed necessary by the
Committee pursuant to paragraph 3 above.
(c) Delivery of Forfeited Plan Shares. If the Plan Shares, or any of
them, are forfeited pursuant to the Plan, the Committee shall instruct the
Trustees concerning the disposition of such forfeited shares. Thereafter such
forfeited shares shall cease to be subject to this Agreement.
6. Payment of Dividends. As soon as practicable after the Plan Shares have
become vested and delivered, the Trustees shall pay to the Participant, the
Participant's designee, such other person as shall have been designated as
Participant's beneficiary in accordance with the Agreement or any other
permitted recipient pursuant to the Plan, the proportional amount of any cash or
stock dividend, or other cash or noncash distributions, including any interest
earned thereon, declared in respect of such vested Plan Shares, which had been
held in the Trust for the benefit of the above-named person(s).
7. Designation of Beneficiary. The Participant hereby designates the
person(s) described on Annex B as the beneficiary or beneficiaries who shall be
entitled to receive the Plan Shares and other assets, if any, distributable to
the Participant upon his death. The Participant may, from time to time, revoke
or change his beneficiary designation without the consent of any prior
beneficiary, if any, by filing a new designation with the Committee. The last
such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to the Participant's death, and
in no event shall it be effective as of a date prior to such receipt.
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If no such beneficiary designation is in effect at the time of the
Participant's death, or if no designated beneficiary survives the Participant,
or if such designation conflicts with law, the Participant's estate shall be
deemed to have been designated his beneficiary and shall receive the Plan Shares
and other assets, if any, distributable to the Participant upon his death. If
the Committee is in doubt as to the right of any person to receive such
distribution, the Committee may direct the Trustees to retain the Plan Shares
and other assets, without liability for any interest in respect thereof, until
the rights thereto are determined, or the Committee may direct the transfer of
such Plan Shares into any court of appropriate jurisdiction and such transfer
shall be deemed a complete discharge of the obligations of the Bank, the
Corporation, the Committee and Trustees hereunder.
8. Effect of Award on Status of Participant. The fact that an Award has
been made to the Participant under this Plan shall not confer on the Participant
any right to continued service on the Board, on the board of directors of the
Corporation or on the board of directors of any Subsidiary, nor to continued
employment with the Bank, the Corporation or any Subsidiary; nor shall it limit
the right of the Bank, the Corporation or of any Subsidiary to remove the
Participant from any such boards, or to terminate his employment at any time
without prior notice.
9. Impact of Award on Other Benefits of Participant. The value of the Plan
Shares on the date of the Award or at the time the Plan Shares becomes vested,
shall not be includable as compensation or earnings for purposes of any other
benefit plan offered by the Bank, the Corporation or any Subsidiary other than
any qualified employee benefit plan which provides that such value shall be
included as compensation or earnings for purposes of such plans.
10. Tax Withholding. All Plan Shares distributed pursuant to this Agreement
shall be subject to applicable federal, state and local withholding for taxes.
The Participant expressly acknowledges and agrees to such withholding without
regard to whether the Plan Shares may then be sold or otherwise transferred by
the Participant. The Participant acknowledges and agrees to the tax withholding
provisions which are set forth in the Plan.
11. Notices. Any notices or other communications required or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been sufficiently given if delivered personally or three business days after
deposit in the United States mail by Certified Mail, return receipt requested,
properly addressed and postage prepaid, if to the Bank, the Committee or the
Trustees at the Bank's principal office address at 22 Winston Street,
Thomasville, North Carolina 27360; and, if to the Participant, at his last
address appealing on the books of the Bank. The Bank and the Participant may
change their address or addresses by giving written notice of such chailge as
provided herein. Any notice or other communication hereunder shall be deemed to
have been given on the date actually delivered or as of the third (3rd) business
day following the date mailed as set forth above, as the case may be.
12. Construction Controlled by Plan. The Plan, a copy of which is attached
hereto as Annex C, is incorporated herein by reference. The Award of Restricted
Shares shall be subject to the terms and conditions of the Plan, and the
Participant hereby assumes and agrees to comply with all of the obligations
imposed upon the Participant in the Plan. This Agreement shall be construed so
as to be consistent with the Plan; and the provisions of the Plan shall be
deemed to be controlling in the event that any provision hereof should appear to
be inconsistent therewith.
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13. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be valid and enforceable under applicable
law, but if any provision of this Agreement is determined to be unenforceable,
invalid or illegal, the validity of any other provision or part thereof shall
not be affected thereby and this Agreement shall continue to be binding on the
parties hereto as if such unenforceable, invalid or illegal provision or part
thereof had not been included herein.
14. Governing Law. Without regard to the principles of conflicts of laws,
the laws of the State of North Carolina shall govem and control the validity,
interpretation, performance, and enforcement of this Agreement.
15. 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 or their successors in interest. No waiver hereunder shall constitute a
waiver with respect to any subsequent occurrence or other transaction hereunder
or of any other provision hereof
16. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto, and their respective heirs, legatees,
personal representatives, executors, and administrators, successors and assigns.
17. Entire Agreement. This Agreement and the Plan constitute and embody the
entire understanding and agreement of the parties hereto and, except as
otherwise provided hereunder, there are no other agreements or understandings,
written or oral, in effect between the parties hereto relating to the matters
addressed herein.
18. Counterparts. This Agreement may be executed in any number 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.
19. Substitution of Trustees. In the event any new trustee is substituted
for any Trustee pursuant to the Plan, such substitute trustee shall also be
substituted as a Trustee hereunder.
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IN WITNESS WHEREOF, the Bank has caused this instrument to be executed in
its corporate name by its President, or one of its Vice Presidents, and attested
by its Secretary or one of its Assistant Secretaries, and its corporate seal to
be hereto affixed, all by, authority of its Board of Directors first duly given;
and each individual party hereto has hereunto set his hand and adopted as his
seal the typewritten word "SEAL" appearing beside his name, all done this the
day and year first above written.
HOME SAVINGS, INC., SSB
By: /s/ James G. Hudson, Jr.
------------------------------------------
__________________ President
ATTEST:
/s/ Drema A. Michael
-------------------------------------------------
_______________Secretary
[Corporate Seal]
PARTICIPANT
/s/ James G. Hudson, Jr.
-----------------------------------------(SEAL)
/s/ Milton T. Riley, Jr.
-----------------------------------------(SEAL)
TRUSTEE
/s/ Henry H. Darr
-----------------------------------------(SEAL)
TRUSTEE
/s/ F. Stuart Kennedy
-----------------------------------------(SEAL)
TRUSTEE
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<PAGE>
ANNEX A
Investment Representation
-------------------------
<PAGE>
ANNEX B
Management Recognition Plan
---------------------------
Beneficiary Designation Form
----------------------------
As Beneficiary to receive any shares of stock distributable on my behalf
pursuant to the Home Savings, Inc., SSB Management Recognition Plan, I hereby
designate the following:
Name Address Relationship
Primary Beneficiary: Meredith J. Hudson 24 Culbreth Ave. Wife
---------------------------------------------------------
Thomasville, NC
---------------------------------------------------------
---------------------------------------------------------
Contingent Beneficiary:
(if any) _____________________________________________________
_____________________________________________________
_____________________________________________________
If more than one primary beneficiary is named, shares will be paid in equal
shares to surviving primary beneficiaries. Should the contingent beneficiaries
be eligible to receive the benefits (i.e., all primary beneficiaries are
deceased), such benefits will be paid in equal shares to such surviving
contingent beneficiaries.
Name of Spouse if not given above:____________________________________________
/s/ Drema A. Michael /s/ James G. Hudson, Jr.
--------------------------- -------------------------------------------------
Witness Participant
5/11/98
-------------------------------------------------
Date
<PAGE>
ANNEX C
Management Recognition Plan
---------------------------
<PAGE>
HOME SAVINGS, INC., SSB
MANAGEMENT RECOGNITION PLAN
Home Savings, Inc., SSB, a North Carolina chartered savings bank (the
"Bank"), does herein set forth the terms of its Management Recognition Plan (the
"Plan").
1. Purpose of this Plan. The purpose of this Plan is to provide to the
directors, officers and employees (the "Participants") of the Bank and of any
corporation or other entity of which the Bank owns, directly or indirectly, not
less than fifty percent (50%) of any class of the equity securities thereof (a
"Subsidiary"), an ownership interest in the Bank's parent holding company,
Century Bancorp, Inc. (the "Corporation") by making awards (hereinafter referred
to as "Awards" or singularly, "Award") of shares of common stock of the
Corporation (the "Common Stock"). The Board of Directors of the Bank (the
"Board") and the Board of Directors of the Corporation believe that
participation in the ownership of the Corporation will induce Participants to
continue to serve the Bank or any Subsidiary as directors, officers and/or
employees and encourage them to contribute to the future growth and profits of
the Bank and the Corporation. In addition, the existence of this Plan will make
it possible for the Bank and its Subsidiaries to attract capable individuals to
serve as directors or officers of the Bank and its Subsidiaries. The Board
believes that the existence of this Plan will provide incentives to the
directors, officers and employees of the Bank and any Subsidiaries which will
contribute materially to the success of such companies.
2. Administration of this Plan.
(a) This Plan shall be administered by a committee of the Board (the
"Committee") which shall consist of not less than three non-employee members of
the Board who are "disinterested persons" as described in Rule 16b-3(c)(2)(i) of
the Rules and Regulations under the Securities Exchange Act of 1934 (the
"Exchange Act"). In the absence of a duly appointed Committee, the Plan shall
be administered by those members of the Board who are "disinterested persons,"
and by the Board if there are less than three "disinterested persons." The
Committee shall have full power and authority to construe, interpret and
administer this Plan. All actions, decisions, determinations, or
interpretations of the Committee shall be final, conclusive, and binding upon
all parties. Members of the Committee shall serve at the pleasure of the Board.
(b) The Committee shall decide (i) to whom Awards shall be made under this
Plan, except as provided in subparagraph 3(b) and paragraph 5 hereof, (ii) the
number of shares of Common Stock subject to each award except as provided in
subparagraph 3(b) and paragraph 5 hereof, (iii) the number of additional shares,
if any, to be purchased or allocated for the purposes of this Plan, (iv) the
determination of leaves of absence which may be granted to Participants without
constituting a termination of their employment for purposes of the Plan and (v)
such additional terms and conditions for Awards as the Committee shall deem
appropriate, including, without limitation, any determinations as to the
restrictions or conditions on transfer of shares of Common Stock that are
necessary or appropriate to satisfy all applicable securities laws, rules,
regulations, and listing requirements.
(c) The Committee may designate any officers or employees of the Bank or of
any Subsidiary to assist in the administration of this Plan. The Committee may
<PAGE>
authorize such individuals to execute documents on its behalf and may delegate
to them such other ministerial and limited discretionary duties as the Committee
may see fit.
(d) Any unallocated, undistributed or forfeited shares of Common Stock held
under this Plan shall be held by ________________________, _____________________
and ____________________ (the "Trustees") and any successor or successors who
from time to time may be appointed by the Board.
3. Shares of Common Stock Available Under the Plan.
(a) The Plan shall acquire a number of shares of Common Stock of the
Corporation equal to four percent (4%) of the shares of Common Stock issued in
connection with the conversion of the Bank from a North Carolina chartered
mutual savings bank to a North Carolina chartered stock savings bank on
_____________, 1996 (the "Conversion"). Such shares of Common Stock may be
purchased by the Plan in the open market, or, subject to approval of the Board
of Directors of the Corporation, may be acquired through the issuance by the
Corporation to the Plan of authorized but unissued shares of Common Stock on
such terms as may be approved by the Committee and the Board of Directors of the
Corporation. Such shares (the "Plan Shares") shall be held by the Trustees
until they have been allocated and distributed pursuant to the terms of this
Plan.
(b) Upon the purchase of the Plan Shares as provided in subparagraph (a)
above, such Plan Shares shall be allocated as provided in paragraph 5 hereof.
4. Eligibility. The Participants in this Plan to whom Awards may be made
shall be the following: members of the Board, members of the Board of Directors
of any Subsidiary, and such officers and employees of the Bank and/or of any
Subsidiary as may be designated by the Board. Notwithstanding the foregoing, no
member of the Committee is eligible to receive any grants or any awards of
shares under this Plan during the one-year period prior to serving on the
Committee or during such service, except for Awards of Plan Shares which are
distributed pursuant to the provisions of paragraph 5 hereof.
In addition, (i) no individual participant shall be awarded more than
twenty-five (25) percent of the Plan Shares to be issued pursuant to this Plan,
(ii) no participant who is a non-employee director of the Bank or a Subsidiary
shall be awarded more than five (5) percent of the Plan Shares to be issued
pursuant to this Plan and (iii) all participants who are non-employee directors
of the Bank or a Subsidiary shall be awarded no more than thirty (30) percent of
the Plan Shares to be issued pursuant to this Plan.
5. Award of Plan Shares. Subject to the provisions of paragraph 7
hereof, effective after this Plan is approved by a majority of the shareholders
of the Corporation, the Plan Shares shall be awarded and distributed to
Participants listed in, and in the amounts set forth in, Exhibit A. Awards of
Plan Shares under this Plan shall be effective upon execution and delivery of
the Stock Grant Agreement described in paragraph 7.
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6. Vesting of Shares.
(a) Shares granted under this Plan shall vest and the right of a
Participant to the Plan Shares shall be nonforfeitable in accordance with the
following schedule:
Date When Plan Shares Percentage of Plan
Become Vested Shares Vested
------------------- -------------------
First Anniversary of Award of Plan Shares 20%
Second Anniversary of Award of Plan Shares 20%
Third Anniversary of Award of Plan Shares 20%
Fourth Anniversary of Award of Plan Shares 20%
Fifth Anniversary of Award of Plan Shares 20%
(b) In determining the number of shares vested under the above vesting
schedule, a Participant shall not receive fractional shares. If the product
resulting from multiplying the vested percentage times the allocated shares
results in a fractional share, then a Participant's vested right shall be
rounded down to the nearest whole number of shares.
(c) In the event any Participant shall no longer be either a director or an
employee of the Bank or any Subsidiary for any reason, other than as provided in
subparagraph 6(d)below, and such Participant does not have a 100% vested
interest in his or her shares under the Plan, then any shares which are not
vested, based upon the applicable schedule in subparagraph 6(a) above, shall be
forfeited and, provided this Plan has not terminated pursuant to paragraph 18
below, shall be available again for Awards to Participants as may be determined
by the Committee.
(d) In the event that a Participant shall no longer be an employee or a
director of the Bank or any Subsidiary because of such Participant's disability
or death, prior to the date when all shares allocated to him or her would be
100% vested in accordance with the schedule in subparagraph 6(a) above, then,
notwithstanding the foregoing schedule in subparagraph 6(a) above, all shares
allocated to such Participant shall immediately become fully vested and
nonforfeitable. For purposes of this Plan, the term "disability" shall be
defined in the same manner as such term is defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code").
7. Action Required of Participants.
(a) If required by the Committee, each Participant receiving an Award of
shares under this Plan shall represent to and agree with the Corporation, the
Bank, the Committee and the Trustees (i) that he is acquiring such shares on his
own behalf as an investment and not with a present intention of distribution or
re-sale and (ii) that there shall be placed upon the certificates representing
such shares a legend setting forth these representations and agreements or a
reference thereto. Such shares shall be transferable thereafter only if the
proposed transfer shall be permissible under this Plan and if, in the opinion of
counsel for the Corporation, such transfer shall at such time be in compliance
with all applicable federal and state securities laws and regulations.
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(b) Each Participant receiving an Award of Plan Shares under this Plan
shall deliver to the Bank a Stock Grant Agreement, substantially in the form
attached hereto as Exhibit B, as modified as the Committee deems necessary or
desirable (a "Stock Grant Agreement"), which shall be signed by such
Participant.
8. Restrictions.
(a) Plan Shares subject to an award made under this Plan shall forthwith,
after the Participant makes any representations required by paragraph 7 hereof,
be issued in a certificate or certificates for such shares which shall be
prepared in the name of such Participant or any transferee permitted by
paragraph 12(a) (a "Permitted Transferee"). Such Participant or transferee
shall thereupon be a shareholder with respect to all of the shares represented
by such certificate or certificates and shall have all of the rights of a
shareholder with respect to all of such shares, including the right to vote such
shares and to receive all dividends and other distributions with respect thereto
subject to possible forfeiture as set forth in paragraph 6 and subject to the
provisions of paragraph 10 hereof.
(b) Certificates of stock representing shares subject to an Award made
under this Plan shall be imprinted with a legend to the effect that the shares
represented are subject to restrictions on transfer and potential forfeiture in
accordance with the terms of the Stock Grant Agreement and this Plan, and the
transfer agent for Common Stock shall be instructed to that effect with respect
to such shares. In aid of such restrictions, the Participant or Permitted
Transferee shall, immediately upon receipt of the certificate or certificates,
deposit such certificate or certificates together with a stock power or other
instrument of transfer, appropriately endorsed in blank, with the Trustees or
with such other escrow agent as may be designated by the Trustees, with the
expenses of any such escrow arrangement to be borne by the Bank.
(c) In addition, all Plan Shares which are awarded with respect to
Participants who are directors or executive officers of the Bank, without the
written consent of the Administrator of the Savings Institutions Division of the
North Carolina Department of Commerce, may not be sold during a period of one
year following the effective date of the Conversion, except upon death of the
director or executive officer. Certificates of stock representing Plan Shares
awarded with respect to Participants who are directors and executive officers of
the Bank (including those transferred to Permitted Transferees) shall be
imprinted with a legend to that effect, and the transfer agent for such Plan
Shares shall be instructed to that effect with respect to such shares.
(d) In the event that, as the result of a stock split or stock dividend or
combination of shares or any other change or exchange for other securities by
reclassification, reorganization, merger, consolidation, recapitalization, or
otherwise, a Participant or Permitted Transferee shall, as the owner of the
shares subject to an Award made under this Plan and subject to the restrictions
hereunder, be entitled to new or additional or different shares of Common Stock
or other securities, the certificate or certificates for, or other evidence of,
such new or additional or different shares or other securities, together with a
stock power or other instrument of transfer appropriately endorsed, shall also
be imprinted with one or more legends as provided in subparagraph 8(b) and 8(c)
above and deposited by such Participant or Permitted Transferee with the
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Trustees, and all provisions of this Plan relating to vesting, restrictions and
lapse of restrictions herein set forth shall thereupon be applicable to such new
or additional or different shares or other securities to the extent applicable
to the shares with respect to which they were distributed; provided, however,
that if a Participant or Permitted Transferee should receive rights, warrants or
fractional interests in respect of any of such shares then being held under the
terms of this Plan, such rights or warrants may be held, exercised, sold or
otherwise disposed of, and such fractional interests may be settled, by such
Participant or Permitted Transferee free and clear of the restrictions herein
set forth.
(e) The restriction to which shares subject to an Award made under this
Plan shall be subject is that if the directorship or employment of the
Participant with respect to whom an Award is made (whichever position resulted
in the Award) should be terminated for any reason during the "restricted period"
(as defined in subparagraph 12(b) hereof), except as otherwise specifically
provided in paragraph 6 hereof, the Participant's or Permitted Transferee's
interest in the shares issued under this Plan shall be forfeited as provided in
the applicable schedule in subparagraph 6(a) hereof.
9. Effect of Award on Status of Participant. The fact that an Award is
made to a Participant under this Plan shall not confer on such Participant any
right to continued service on the Board or on the Board of Directors of any
Subsidiary, nor any right to continued employment with the Bank or any
Subsidiary; nor shall it limit the right of the Bank, the Corporation, or any
Subsidiary to remove such Participant from any such boards, or to terminate his
or her employment at any time.
10. Voting Rights; Dividends; Other Distributions. After an Award of Plan
Shares to a Participant or Permitted Transferee, the Participant or Permitted
Transferee shall have the full power to vote all of the Plan Shares held by the
Trustees in his name from time to time and shall be entitled to receive all cash
dividends declared upon any such Plan Shares held by the Trustees in his name
from time to time. All shares of Common Stock or other securities, including
but not limited to stock dividends, issued in respect of such Plan Shares or in
substitution thereof, whether by the Corporation or by another issuer, shall be
held by the Trustees and shall be subject to all terms and conditions of this
Plan and shall be redelivered to a Participant or Permitted Transferee or
delivered as instructed by the Committee under the same circumstances as the
shares with respect to, or in substitution for, which they were issued;
provided, however, that if a Participant or Permitted Transferee should receive
rights, warrants or fractional interests in respect of any of the shares held by
the Trustees in his name, such rights or warrants may be held, exercised, sold
or otherwise disposed of, and such fractional interests may be settled, by such
Participants or Permitted Transferees free and clear of the restrictions herein
set forth.
Notwithstanding the foregoing, if a Participant or Permitted Transferee
hereunder forfeits any Plan Shares pursuant to the terms of this Plan, the
Participant or Permitted Transferee, as applicable, shall, within 30 days after
the effective date of such forfeiture, pay the Corporation an amount equal to
the dividends received by such Participant or Permitted Transferee with respect
to such forfeited Plan Shares. In the alternative, at the option of the Bank or
a Subsidiary, the amount to be repaid may be withheld by the Bank or Subsidiary
from the final compensation or fees payable to the Participant.
11. Adjustment Upon Changes in Capitalization; Dissolution or Liquidation.
In the event of a change in the number or type of shares of Common Stock
outstanding, or in the event shares of Common Stock are decreased, changed into
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or exchanged for securities of a different entity, by reason of a
reclassification, recapitalization, reorganization, or other similar capital
adjustment; merger or consolidation of the Corporation; or the sale by the
Corporation of all or a substantial portion of its assets, or the occurrence of
any other event which could affect the implementation of this Plan and the
realization of its objectives, the number or kind of shares subject to Awards
which have occurred, or could occur, under this Plan shall be proportionately
and equitably adjusted by the Committee.
12. Non-Transferability.
(a) Any shares subject to an Award made under this Plan shall not be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of during
the "restricted period." Nothing herein shall preclude a Participant from
making a gift of any such shares to a spouse, child, stepchild, grandchild,
parent or sibling, or legal dependent of such Participant, to a trust of which
the beneficiary or beneficiaries of the trust shall be either a person
designated herein or such Participant, or to a civic or charitable organization
designated by the Participant; provided, however, that any such shares so given
by a Participant shall remain subject to the restrictions, obligations and
conditions set forth in this Plan, including, but not limited to, the escrow
provisions set forth in paragraph 8(b). In addition, such shares may be
tendered in response to a tender offer for or a request or invitation to tenders
of greater than fifty percent (50%) of the outstanding Common Stock and may be
surrendered in a merger, consolidation or share exchange involving the
Corporation; provided, however, in each case, that except as otherwise provided
herein, the securities or other consideration received in exchange therefor
shall thereafter be subject to the restrictions and conditions set forth in this
Plan, including, but not limited to, the escrow provisions set forth in
paragraph 8(b)
(b) The term "restricted period" with respect to shares subject to an Award
made under this Plan shall be the period commencing on the date of making such
Award of such shares to a Participant and ending on the date on which such
shares are no longer subject to forfeiture as provided in paragraph 6 hereof.
The date of making an Award shall be the date of execution by a Participant of a
Stock Grant Agreement in the form referred to in subparagraph 7(b) hereof.
13. Impact of Award on Other Benefits of Participant. The value of any
Award, either on the date of the Award or at the time such shares become vested,
shall not be includable as compensation or earnings for purposes of any other
benefit plan offered by the Bank, the Corporation or any Subsidiary.
14. Corporate Action. The making of an Award under this Plan shall not
affect in any way the right or power of the Corporation or its shareholders or
the Bank or its shareholders or any Subsidiary or its shareholders to make or
authorize any adjustment, recapitalization, reorganization, or other change in
the Corporation's, the Bank's or any Subsidiary's capital structure or its
business, or any merger or consolidation of the Corporation, the Bank or any
Subsidiary, or the issuance of any bonds, debentures, preferred or other capital
stock or rights with respect thereto, or the dissolution or liquidation of the
Corporation, the Bank or any Subsidiary, or any sale or transfer of all or any
part of the Corporation's, the Bank's or any Subsidiary's assets or business.
15. Tax Withholding. The Bank, the Corporation or any Subsidiary shall
have the right to deduct or otherwise effect a withholding of any amount
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required by federal or state laws to be withheld with respect to the making of
an Award or the sale of shares acquired under this Plan in order for the Bank,
the Corporation or any Subsidiary to obtain a tax deduction otherwise available
as a consequence of such Award or sale, as the case may be.
16. Exculpation and Indemnification. In connection with this Plan, no
member of the Board, no member of the Board of Directors of the Corporation, no
member of the Committee and no Trustee shall be personally liable for any act or
omission to act in his capacity as a member of the Board, the Board of Directors
of the Corporation or the Committee or as a Trustee, 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 Bank shall indemnify, defend and
hold harmless the members of the Board, the members of the Board of Directors of
the Corporation and the Committee and each Trustee and each other officer or
employee of the Bank, the Corporation or of any Subsidiary to whom any duty or
power 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.
17. Amendment and Modification of this Plan. The Board may at any time,
and from time to time, amend or modify this Plan (including the form of Stock
Grant Agreement) in any respect; provided, however, any amendment or
modification of this Plan shall not in any manner affect any Award of shares
theretofore made to a Participant under this Plan without the consent of such
Participant or any permitted transferee of such Participant and further provided
that no amendment shall be made to paragraph 5 of the Plan more than once every
six months other than to comport with changes in the Code, Employee Retirement
Income Security Act or the rules thereunder.
18. Termination and Expiration of this Plan. This Plan may be abandoned,
suspended, or terminated, in whole or in part, at any time by the Board;
provided, however, that abandonment, suspension, or termination of this Plan
shall not affect any Award theretofore made under this Plan; and provided
further, that in no event shall this Plan be terminated at the time of or
following any merger or consolidation of the Corporation or the Bank, unless and
until the surviving entity shall have made provision for an equivalent benefit
for all the then current participants in the Plan. Unless sooner terminated,
this Plan shall terminate at the close of business on the day that is the tenth
(10th) anniversary of the date of approval of the Plan by a majority of the
shareholders of the Corporation; and no Award of shares may be made under this
Plan thereafter. Such termination shall not effect any Award of shares
theretofore made. In the event that the Board terminates this Plan in whole,
any shares held by the Trustees pursuant to paragraph 2(d) which have not been
allocated to eligible Participants, together with any other assets held by the
Trustees in their capacities as such, shall revert to the Bank.
19. Effective Date. This Plan has been adopted by the Board to be
effective as of the date of approval of the Plan by a majority of the
shareholders of the Corporation as required by the regulations of the Federal
Deposit Insurance Corporation.
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20. 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 hereof, 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.
21. Expenses of Administration of Plan. All costs and expenses incurred
in the operation and administration of this Plan shall be borne by the Bank or
by a Subsidiary.
22. 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.
23. Inspection of Plan. A copy of this Plan, and any amendments thereto,
shall be maintained by the Secretary of the Bank and shall be shown to any
proper person making inquiry about it.
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