EXHIBIT 10.1
PHARMANETICS, INC. 1995 STOCK PLAN
(formerly the Cardiovascular Diagnostics, Inc. 1995 Stock Plan)
As amended by the Board of Directors and the Shareholders through
May 9, 2000
1. Purpose. This 1995 Stock Plan (the "Plan") is intended to provide
incentives:
(a) to employees of Cardiovascular Diagnostics, Inc. (the
"Company"), or its parent, PharmaNetics, Inc. (the "Parent") or any of its
present or future subsidiaries (collectively, "Related Corporations"), by
providing them with opportunities to purchase Common Stock (as defined below) of
the Parent pursuant to options granted hereunder that qualify as "incentive
stock options" ("ISOs") under Section 422 of the Internal Revenue Code of 1986,
as amended, or any successor statute (the "Code");
(b) to directors, employees and consultants of the Company and
Related Corporations by providing them with opportunities to purchase Common
Stock (as defined below) of the Parent pursuant to options granted hereunder
that do not qualify as ISOs (nonstatutory stock options, or "NSOs");
(c) to employees and consultants of the Company and Related
Corporations by providing them with bonus awards of Common Stock (as defined
below) of the Parent ("Stock Bonuses"); and
(d) to employees and consultants of the Company and Related
Corporations by providing them with opportunities to make direct purchases of
Common Stock (as defined below) of the Parent ("Purchase Rights").
Both ISOs and NSOs are referred to hereafter individually as "Options",
and Options, Stock Bonuses and Purchase Rights are referred to hereafter
collectively as "Stock Rights". As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation",
respectively, as those terms are defined in Section 424 of the Code.
2. Administration of the Plan.
(a) Procedure. The Plan shall be administered by (A) the Board
or (B) a committee designated by the Board, which committee shall be constituted
in such a manner as to satisfy the legal requirements relating to the
administration of incentive stock option plans, if any, of applicable state and
federal corporate and securities laws, of the Code and of any applicable stock
exchange or market (collectively, the "Applicable Laws"). Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.
(b) Subject to ratification of the grant or authorization of
each Stock Right by the Board (if so required by applicable law), and subject to
the terms of the Plan, the Committee, if so appointed, shall have the authority
to:
(i) determine the employees of the Company and Related
Corporations (from among the class of employees eligible under Section 3 to
receive ISOs) to whom ISOs may be granted, and to determine (from among the
class of individuals and entities eligible under Section 3 to receive NSOs,
Stock Bonuses and Purchase Rights to whom NSOs, Stock Bonuses and Purchase
Rights may be granted;
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(ii) determine the time or times at which Options, Stock
Bonuses or Purchase Rights may be granted;
(iii) determine the option price of shares subject to each
Option, which price shall not be less than the minimum price specified in
Section 6 hereof, as appropriate, and the purchase price of shares subject to
each Purchase Right;
(iv) determine whether each Option granted shall be an ISO
or NSO;
(v) determine (subject to Section 7) the time or times when
each Option shall become exercisable and the duration of the exercise period;
(vi) determine whether restrictions such as repurchase
options are to be imposed on shares subject to Options, Stock Bonuses and
Purchase Rights and the nature of such restrictions, if any; and
(vii) interpret the Plan and prescribe and rescind rules
and regulations relating to it.
If the Committee determines to issue a NSO, it shall take
whatever actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such Option is not treated as
an ISO. The interpretation and construction by the Committee of any provisions
of the Plan or of any Stock Right granted under it shall be final unless
otherwise determined by the Board. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock Right
granted under it.
(c) The Committee may select one of its members as its
chairman, and shall hold meetings at such time and places as it may determine.
Acts by a majority of the Committee, or acts reduced to or approved in writing
by a majority of the members of the Committee, shall be the valid acts of the
Committee. All references in this Plan to the Committee shall mean the Board if
no Committee has been appointed. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members thereof and thereafter directly
administer the Plan.
3. Eligible Employees and Others. ISOs may be granted to any employee
of the Company or any Related Corporation. Those officers of the Company who are
not employees may not be granted ISOs under the Plan. NSOs, Stock Bonuses and
Purchase Rights may be granted to any director, employee or consultant of the
Company or any Related Corporation; provided, however, that, no director of the
Company who is not also an employee of the Parent shall be eligible to receive
any Stock Right under the Plan after the time when the Parent shall have
registered its equity securities under Section 12 of the Exchange Act. Granting
of any Stock Right to any individual or entity shall neither entitle that
individual or entity to, nor disqualify him or her from, participation in any
other grant of Stock Rights.
4. Stock. The stock subject to Stock Rights shall be authorized but
unissued shares of Common Stock of the Parent, $.001 par value per share, or
such shares of the Parent's capital stock into which such class of shares may be
converted pursuant to any reorganization, recapitalization, merger,
consolidation or the like (the "Common Stock"), or shares of Common Stock
reacquired by the Parent in any manner. The aggregate number of shares that may
be issued pursuant to the Plan is 1,188,150 shares, subject to adjustment as
provided herein. Any such shares may be issued as ISOs, NSOs or Stock Bonuses,
or to persons or entities making purchases pursuant to Purchase Rights, so long
as the number of shares so issued does not exceed such aggregate number, as
adjusted. If any Option granted under the
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Plan shall expire or terminate for any reason without having been exercised in
full or shall cease for any reason to be exercisable in whole or in part, or if
the Company shall reacquire any shares issued pursuant to Stock Rights, the
unpurchased shares subject to such Options and any shares so reacquired by the
Company shall again be available for grants of Stock Rights under the Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the Plan
at any time after the Effective Date, as set forth in Section 16, and prior to
10 years thereafter. The date of grant of a Stock Right under the Plan will be
the date specified by the Committee at the time it grants the Stock Right;
provided, however, that such date shall not be prior to the date on which the
Committee acts. The Committee shall have the right, with the consent of the
optionee, to convert an ISO granted under the Plan to an NSO pursuant to Section
17.
6. Minimum Price; ISO Limitations.
(a) The price per share specified in the agreement relating to
each NSO, Stock Bonus or Purchase Right granted under the Plan shall be
established by the Board or the Committee, taking into account any noncash
consideration to be received by the Company from the recipient of Stock Rights.
(b) The price per share specified in the agreement relating to
each ISO granted under the Plan shall not be less than the fair market value per
share of Common Stock on the date of such grant. In the case of an ISO to be
granted to an employee owning stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Related
Corporation, the price per share specified in the agreement relating to such ISO
shall not be less than 110% of the fair market value per share of Common Stock
on the date of the grant.
(c) In no event shall the aggregate fair market value
(determined at the time an ISO is granted) of Common Stock for which ISOs
granted to any employee are exercisable for the first time by such employee
during any calendar year (under all stock option plans of the Company and any
Related Corporation) exceed $100,000; provided that this Section shall have no
force or effect to the extent that its inclusion in the Plan is not necessary
for Options issued as ISOs to qualify as ISOs pursuant to Section 422 of the
Code.
(d) If, at the time an Option is granted under the Plan, the
Parent's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the time such Option is granted and
shall mean:
(i) the average as of the close of business on that date
of the high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common Stock is
then traded on a national securities exchange;
(ii) the last reported sale price as of the close of
business on that date of the Common Stock on the Nasdaq National Market System
(the "NASDAQ/NMS"), if the Common Stock is not then traded on a national
securities exchange but is then traded on the NASDAQ/NMS; or
(iii) the closing bid price or average of bid prices last
quoted on that date by an established quotation service, if the Common Stock is
not reported on the NASDAQ/NMS.
However, if the Common Stock is not publicly traded
at the time an Option is granted under the Plan, "fair market value" shall be
deemed to be the fair value of the Common Stock as determined by the Committee
after taking into consideration all factors that it deems appropriate,
including, without limitation, recent sale and offer prices on the Common Stock
in private transactions negotiated at arm's length, but determined without
regard to any restriction other than a restriction that, by its terms, will
never lapse.
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7. Option Duration. Subject to earlier termination as provided in
Sections 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than:
(a) 10 years from the date of grant in the case of NSOs;
(b) 10 years from the date of grant in the case of ISOs
generally; and
(c) 5 years from the date of grant in the case of ISOs granted
to an employee owning stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Related Corporation.
Subject to earlier termination as provided in Sections 9 and
10, the term of each ISO shall be the term set forth in the original instrument
granting such ISO, except with respect to any part of such ISO that is converted
into an NSO pursuant to Section 17.
8. Exercise of Options. Subject to the provisions of Section 9 through
Section 12 of the Plan, each Option granted under the Plan shall be exercisable
as follows:
(a) the Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify;
(b) once an installment becomes exercisable it shall remain
exercisable until expiration or termination of the Option, unless otherwise
specified by the Committee;
(c) each Option or installment may be exercised at any time or
from time to time, in whole or in part, for up to the total number of shares
with respect to which it is then exercisable; and
(d) the Committee shall have the right to accelerate the date
of exercise of any installment of any Option, provided that the Committee shall
not accelerate the exercise date of any installment of any ISO granted to any
employee (and not previously converted into an NSO pursuant to Section 17) if
such acceleration would violate the annual vesting limitation contained in
Section 422 of the Code, as described in Section 6(c).
9. Termination of Employment. If an ISO optionee ceases to be employed
by the Company and all Related Corporations other than by reason of death or
disability as defined in Section 10, unless otherwise specified in the
instrument granting such ISO, the ISO optionee shall have the continued right to
exercise any ISO held by him or her, to the extent of the number of shares with
respect to which he or she could have exercised it on the date of termination,
until the ISO's specified expiration date; provided, however, in the event the
ISO optionee exercises any ISO after the date that is three months following the
date of termination of employment, such ISO will automatically be converted into
an NSO subject to the terms of the Plan. Employment shall be considered as
continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment with the Company is
guaranteed by statute or by contract. A bona fide leave of absence with the
written approval of the Company shall not be considered an interruption of
employment under the Plan, provided that such written approval contractually
obligates the Company or any Related Corporation to continue the employment of
the optionee after the approved period of absence. ISOs granted under the Plan
shall not be affected by any change of employment within or among the Company
and Related Corporations, so long as the optionee continues to be an employee of
the Company or any Related Corporation.
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NOTHING IN THE PLAN SHALL BE DEEMED TO GIVE ANY GRANTEE OF ANY STOCK
RIGHT THE RIGHT TO BE RETAINED IN EMPLOYMENT OR OTHER SERVICE BY THE COMPANY OR
ANY RELATED CORPORATION FOR ANY PERIOD OF TIME.
10. Death; Disability.
(a) If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of death, any ISO of his or hers may be
exercised to the extent of the number of shares with respect to which he or she
could have exercised it on the date of death, by his or her estate, personal
representative or beneficiary who has acquired the ISO by will or by the laws of
descent and distribution, at any time prior to the ISO's specified expiration
date, unless otherwise specified in the instrument granting such ISO.
(b) If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of disability, he or she shall continue
to have the right to exercise any ISO held by him or her on the date of
termination until the ISO's specified expiration date, unless otherwise
specified in the instrument granting such ISO; provided, however, in the event
the optionee exercises after the date that is one year following the date of
termination, such ISO will automatically be converted into a NSO subject to the
terms of the Plan. For the purposes of the Plan, the term "disability" shall
mean "permanent and total disability" as defined in Section 22(e)(3) of the
Code.
11. Assignability. No Stock Right shall be assignable or transferable
by the grantee except with the consent of the Committee, by will or by the laws
of descent and distribution, and during the lifetime of the grantee each Stock
Right shall be exercisable only by him or her, except with the prior consent of
the Committee; provided that no such assignment shall be made in the case of an
ISO.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in Sections 6 through 11 hereof and may contain such other
provisions as the Committee deems advisable that are not inconsistent with the
Plan, including restrictions (or other conditions deemed by the Committee to be
in the best interests of the Company) applicable to the exercise of Options or
to shares of Common Stock issuable upon exercise of Options. In granting any
NSO, the Committee may specify that such NSO shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company or any Related Corporation to
execute and deliver such instruments. The proper officers of the Company or any
Related Corporation are authorized and directed to take any and all action
necessary or advisable from time to time to carry out the terms of such
instruments.
13. Adjustments. Upon the occurrence of any of the following events,
the rights of a recipient of a Stock Right granted hereunder shall be adjusted
as hereinafter provided, unless otherwise provided in the written agreement
between the recipient and the Parent relating to such Stock Right:
(a) If the shares of Common Stock shall be subdivided or
combined into a greater or smaller number of shares or if the Parent shall issue
shares of Common Stock as a stock dividend on its outstanding Common Stock, the
number of shares of Common Stock deliverable upon the exercise of outstanding
Stock Rights shall be appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price (if any) per share
to reflect such subdivision, combination or stock dividend.
(b) If the Parent is to be consolidated with or acquired by
another entity in a merger, sale of all or substantially all of the Parent's
assets or otherwise (an "Acquisition"), unless otherwise
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provided by the Committee, in its sole discretion, all conditions to the
exercisability of Options and rights of the Parent to repurchase or restrict the
sale of shares of Common Stock issued pursuant to exercise of a Stock Right
shall lapse and the Committee or the board of directors of any entity assuming
the obligations of the Parent hereunder (the "Successor Board") shall, as to
outstanding Options, make appropriate provision for the continuation of such
Options by substituting on an equitable basis for the shares then subject to
such Options the consideration payable with respect to the outstanding shares of
Common Stock in connection with the Acquisition.
(c) In the event of a recapitalization or reorganization of
the Parent (other than a transaction described in subsection (b) above) pursuant
to which securities of the Parent or of another corporation are issued with
respect to the outstanding shares of Common Stock, an optionee upon exercising
an Option shall be entitled to receive for the purchase price paid upon such
exercise the securities he or she would have received if he or she had exercised
the Option immediately prior to such recapitalization or reorganization.
(d) Notwithstanding the foregoing, any adjustments made
pursuant to subsections (a), (b) or (c) with respect to ISOs shall be made only
after the Committee determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424 of the Code)
or would cause any adverse tax consequences for the holders of such ISOs. If the
Committee determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from making such
adjustments as to all or some of such ISOs.
(e) In the event of the proposed dissolution or liquidation of
the Parent, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as shall be determined by the Committee.
(f) Except as expressly provided herein, no issuance by the
Parent of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares subject to Options. No
adjustments shall be made for dividends paid in cash or in property other than
Common Stock of the Parent.
(g) No fractional shares shall be issued under the Plan and
any optionee who would otherwise be entitled to receive a fraction of a share
upon exercise of an Option shall receive from the Parent cash in lieu of such
fractional shares in an amount equal to the fair market value of such fractional
shares, as determined in the sole discretion of the Committee.
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(h) Upon the happening of any of the foregoing events
described in subsections (a), (b) or (c) above, the class and aggregate number
of shares set forth in Section 4 hereof that are subject to Stock Rights that
previously have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described. The Committee or the
Successor Board shall determine the specific adjustments to be made under this
Section 13 and, subject to Section 2, its determination shall be conclusive.
14. Means of Exercising Stock Rights. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Parent
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the exercise price therefor
either (a) in United States dollars in cash or by check, (b) at the discretion
of the Committee, through the delivery of already-owned shares of Common Stock
having a fair market value equal as of the date of the exercise to the cash
exercise price of the Stock Right, or (c) at the discretion of the Committee, by
delivery of the grantee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the lowest applicable Federal rate,
as defined in Section 1274(d) of the Code, or (d) at the discretion of the
Committee, by any combination of (a), (b) and (c). If the Committee exercises
its discretion to permit payment of the exercise price of an ISO by means of the
methods set forth in clauses (b), (c) or (d) of the preceding sentence, such
discretion shall be exercised in writing at the time of the grant of the ISO in
question. The holder of a Stock Right shall not have the rights of a shareholder
with respect to the shares covered by the Stock Right until the date of issuance
of a stock certificate for such shares. Except as expressly provided above in
Section 13 with respect to changes in capitalization and stock dividends, no
adjustment shall be made for dividends or similar rights for which the record
date is before the date such stock certificate is issued.
15. Stock Appreciation Rights; Surrender of Options. The Committee may,
in its sole and absolute discretion and subject to such terms and conditions as
it deems appropriate, accept the surrender by an optionee of an Option granted
to him under the Plan and authorize payment in consideration therefor of an
amount equal to the difference between the purchase price payable for the shares
of Common Stock under the instrument granting the Option and the fair market
value of the shares subject to the Option (determined as of the date of such
surrender of the Option). Such payment shall be made in shares of Common Stock
valued at fair market value on the date of such surrender, or in cash, or partly
in such shares of Common Stock and partly in cash as the Committee shall
determine. The surrender shall be permitted only if the Committee determines
that such surrender is consistent with the purpose set forth in Section 1, and
only to the extent that the Option is exercisable under Section 8 on the date of
surrender. In no event shall an optionee surrender his Option under this Section
if the fair market value of the shares on the date of such surrender is less
than the purchase price payable for the shares of Common Stock subject to the
Option. Any ISO surrendered pursuant to the provisions of this Section 15 shall
be deemed to have been converted into a NSO immediately prior to such surrender.
Notwithstanding the foregoing, if on the date of surrender the optionee is an
Insider, then any election to surrender an Option shall not be permitted unless
(a) such surrender shall occur after the date six (6) months from the date such
Option was granted, (b) the Insider shall have made an irrevocable election to
surrender the Option pursuant to this paragraph 15 at least six (6) months prior
to the date the Option is surrendered or (c) the surrender of the Option
hereunder by the Insider is otherwise exempt pursuant to the regulations
promulgated under Section 16 of the Exchange Act.
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16. Term and Amendment of Plan. This Plan was adopted by the Company's
Board on September 12, 1995 (the "Effective Date"), by the shareholders of the
Company in November 1995 and was assumed by the Parent in connection with the
holding company reorganization effective in December 1998. The Plan shall expire
10 years after the Effective Date (except as to Stock Rights outstanding on that
date). Subject to the provisions of Section 5 above, Stock Rights may be granted
under the Plan prior to the date of shareholder approval of the Plan. The Board
may terminate or amend the Plan in any respect at any time, except that without
the approval of the shareholders obtained within 12 months before or after the
Board adopts a resolution authorizing any of the following actions,
(a) the total number of shares that may be issued under the
Plan may not be increased (except by adjustment pursuant to Section 13);
(b) the provisions of Section 3 regarding eligibility for
grants of ISOs may not be modified;
(c) the provisions of Section 6(b) regarding the exercise
price at which shares may be offered pursuant to ISOs may not be modified
(except by adjustment pursuant to Section 13); and
(d) the expiration date of the Plan may not be extended.
Except as provided in Section 13(b) and the second sentence of this
Section 16, in no event may action of the Board or shareholders alter or impair
the rights of a grantee, without his or her consent, under any Stock Right
previously granted.
17. Conversion of ISOs into NSOs; Termination of ISOs. The Committee,
at the request of any optionee, may in its discretion take such actions as may
be necessary to convert such optionee's ISOs (or any installments or portions of
installments thereof) that have not been exercised on the date of conversion
into NSOs at any time prior to the expiration of such ISOs. Such actions may
include, but not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such Options. At the time of
such conversion, the Committee (with the consent of the optionee) may impose
such conditions on the exercise of the resulting NSOs as the Committee in its
discretion may determine, provided that such conditions shall not be
inconsistent with the Plan. Nothing in the Plan shall be deemed to give any
optionee the right to have such optionee's ISOs converted into NSOs, and no such
conversion shall occur until and unless the Committee takes appropriate action.
The Committee, with the consent of the optionee, may also terminate any portion
of any ISO that has not been exercised at the time of such termination.
18. Application of Funds. The proceeds received by the Parent from the
sale of shares pursuant to Stock Rights shall be used for general corporate
purposes.
19. Governmental Regulation. The Parent's obligation to sell and
deliver shares of the Common Stock under the Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.
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20. Withholding of Additional Income Taxes.
(a) Upon the exercise of an NSO, or the grant of a Stock Bonus
or Purchase Right for less than the fair market value of the Common Stock, the
making of a Disqualifying Disposition (as defined in Section 21), the vesting of
restricted Common Stock acquired on the exercise of a Stock Right hereunder or
the surrender of an Option pursuant to Section 15, the Company, in accordance
with Section 3402(a) of the Code and any applicable state statute or regulation,
may require the optionee, Stock Bonus recipient or purchaser to pay to the
Parent additional withholding taxes in respect of the amount that is considered
compensation includable in such person's gross income. With respect to (a) the
exercise of an Option, (b) the grant of a Stock Bonus, (c) the grant of a
Purchase Right of Common Stock for less than its fair market value, (d) the
vesting of restricted Common Stock acquired by exercising a Stock Right, or (e)
the acceptance of a surrender of an Option, the Committee in its discretion may
condition such event on the payment by the optionee, Stock Bonus recipient or
purchaser of any such additional withholding taxes.
(b) At the sole and absolute discretion of the Committee, the
holder of Stock Rights may pay all or any part of the total estimated federal
and state income tax liability arising out of the exercise or receipt of such
Stock Rights, the making of a Disqualifying Disposition, or the vesting of
restricted Common Stock acquired on the exercise of a Stock Right hereunder
(each of the foregoing, a "Tax Event") by tendering already-owned shares of
Common Stock or (except in the case of a Disqualifying Disposition) by directing
the Parent to withhold shares of Common Stock otherwise to be transferred to the
holder of such Stock Rights as a result of the exercise or receipt thereof in an
amount equal to the estimated federal and state income tax liability arising out
of such event. In such event, the holder of Stock Rights must, however, notify
the Committee of his or her desire to pay all or any part of the total estimated
federal and state income tax liability arising out of a Tax Event by tendering
already-owned shares of Common Stock or having shares of Common Stock withheld
prior to the date that the amount of federal or state income tax to be withheld
is to be determined. If the holder of Stock Rights is an Insider, an election by
an Insider to pay all or any part of the total estimated federal and state
income tax liability arising out of any Tax Event (other than a Disqualifying
Disposition) by having shares of Common Stock withheld (i) shall be made at
least six (6) months prior to the date of the Tax Event and shall be irrevocable
(except that an Insider can revoke such election upon six months' notice to the
Committee by making a written irrevocable election to revoke the prior
election); or (ii) shall be made in accordance with paragraph 15 of the Plan or
as otherwise may be permitted pursuant to the regulations promulgated under
Section 16 of the Exchange Act. For purposes of this paragraph 20, shares of
Common Stock shall be valued at their fair market value on the date that the
amount of the tax withholdings is to be determined.
21. Notice to Parent of Disqualifying Disposition. Each employee who
receives an ISO must agree to notify the Parent in writing immediately after the
employee makes a Disqualifying Disposition (as defined below) of any Common
Stock acquired pursuant to the exercise of an ISO. A "Disqualifying Disposition"
is any disposition (including any sale) of such Common Stock before either (a)
two years after the date the employee was granted the ISO, or (b) one year after
the date the employee acquired Common Stock by exercising the ISO. If the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.
22. Governing Law; Construction. The validity and construction of the
Plan and the instruments evidencing Stock Rights shall be governed by the laws
of the State of North Carolina. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.
