Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CT Communications, Inc.
(Exact name of registrant as specified in its charter)
North Carolina 56-1837282
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
68 Cabarrus Avenue, East
Post Office Box 227
Concord, N.C. 28026-0227
(Address of Principal Executive Offices)
CT Communications, Inc. Omnibus Stock Compensation Plan
(Full title of the Plan)
MICHAEL R. COLTRANE
President and CEO
CT Communications, Inc,
68 Cabarrus Avenue, East
Post Office Box 227
Concord, North Carolina 28026-0227
(Name and address of agent for service)
(704) 722-2400
(Telephone number, including area code, of agent for service)
Copy To:
R. DOUGLAS HARMON
Smith Helms Mulliss & Moore, L.L.P.
Post Office Box 31247
Charlotte, North Carolina 28231
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration
Statement.
CALCULATION OF REGISTRATION FEE
Title of each Amount to Be Proposed Proposed
Class of Registered Maximum Maximum
Securities to Offering Aggregate
be Registered Price Per Offering
Share (1) Price (1)
Class B Nonvoting 100,000
Common Stock Shares $130.00 $13,000,000
Amount of
Registration Fee
$3,940.00
(1) Estimated solely for the purpose of calculating the
registration fee and computed according to Rule 457(h)
under the Securities Act of 1933, as amended, based on
the price of the Common Stock of which options granted
pursuant to the Plan may be exercised.
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents constituting the Prospectus of CT
Communications, Inc. (the "Registrant") with respect to this
Registration Statement in accordance with Rule 428 promulgated
pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), are kept on file at the offices of the
Registrant. The Registrant will provide without charge to
participants in the Plan referenced herein, on the written or
oral request of any such person, a copy of any or all of the
documents constituting the Prospectus. Written requests for such
copies should be directed to the Barry R. Rubens, Senior Vice
President, CT Communications, Inc., 68 Cabarrus Avenue, East,
Post Office Box 227, Concord, North Carolina 28026-0227.
Telephone requests may be directed to (704) 722-2404.
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Registrant with the
Securities and Exchange Commission (the "Commission") pursuant to
Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), are incorporated by reference herein and in
the Prospectus constituting a part of this Registration
Statement:
(a) The Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996, as amended on Form 10-K/A on
June 26, 1997;
(b) The Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997;
(c) The Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997, as amended on Form 10-Q/A
on October 27, 1997; and
(d) The description of the Registrant's Class B Nonvoting
Common Stock contained in the Registrant's Definitive Proxy
Statement filed with the Commission on September 21, 1993
(updating and amending the description contained in
previous filings by the Registrant).
All documents filed by the Registrant with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act subsequent to the effectiveness of this Registration
Statement and prior to the filing of a post-effective amendment
hereto, which either indicates that all securities offered hereto
have been sold or deregisters all securities then remaining
unsold shall be deemed to be incorporated by reference in this
Registration Statement and the Prospectus and to be a part hereof
and thereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be
incorporated by reference herein or therein shall be deemed to be
modified or superseded for purposes of this Registration
Statement and the Prospectus to the extent that a statement
contained herein or therein or in any other subsequently filed
document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Registration Statement or the Prospectus.
The Registrant will provide without charge to each person to
whom the Prospectus constituting a part of this Registration
Statement is delivered, on the written or oral request of any
such person, a copy of any or all of the documents incorporated
herein and in the Prospectus by reference (other than exhibits to
such documents which are not specifically incorporated by
reference in such documents). Written requests for such copies
should be directed to the Barry R. Rubens, Senior Vice President,
CT Communications, Inc., 68 Cabarrus Avenue, East, Post Office
Box 227, Concord, North Carolina 28026-0227. Telephone requests
may be directed to (704) 722-2404.
Item 6. Indemnification of Directors and Officers.
There are no provisions in the Registrant's Restated Articles
of Incorporation, and no contracts between the Registrant and its
directors and officers nor resolutions adopted by the Registrant,
relating to indemnification. The Registrant's Restated Articles
of Incorporation prevent the recovery by the Registrant of
monetary damages against its directors. However, in accordance
with the provisions of the North Carolina Business Corporation
Act (the "Act"), the Registrant's Bylaws provide that, in
addition to the indemnification of directors and officers
otherwise provided by the Act, the Registrant shall, under
certain circumstances, indemnify its directors, executive
officers and certain other designated officers against any and
all liability and litigation expense, including reasonable
attorneys' fees, arising out of their status or activities as
directors and officers, except for liability or litigation
expense incurred on account of activities that were at the time
known or reasonably should have been known by such director or
officer to be clearly in conflict with the best interests of the
Registrant. Pursuant to such Bylaws and as authorized by
statute, the Registrant maintains insurance on behalf of its
directors and officers against liability asserted against such
persons in such capacity whether or not such director or officers
have the right to indemnification pursuant to the Bylaws or
otherwise.
In addition to the above-described provisions, Sections 55-8-50
through 55-8-58 of the Act contain provisions prescribing the
extent to which directors and officers shall or may be
indemnified. Section 55-8-51 of the Act permits a corporation,
with certain exceptions, to indemnify a present or former
director against liability if (i) he conducted himself in good
faith, (ii) he reasonably believed (x) that his conduct in his
official capacity with the corporation was in its best interests
and (y) in all other cases his conduct was at least not opposed
to the corporation's best interest, and (iii) in the case of any
criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. A corporation may not indemnify a director
in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation or in connection with a proceeding charging improper
personal benefit to him in which he was adjudged liable on such
basis. The above standard of conduct is determined by the Board
of Directors, or a committee thereof, special legal counsel or
the shareholders as prescribed in Section 55-8-55 of the Act.
Sections 55-8-52 and 55-8-56 of the Act require a corporation
to indemnify a director or officer in the defense of any
proceeding to which he was a party because of his capacity as a
director or officer against reasonable expenses when he is wholly
successful in his defense, unless the articles of incorporation
provide otherwise. Upon application, the court may order
indemnification of the director or officer if he is adjudged
fairly and reasonably so entitled under Section 55-8-54. Section
55-8-56 allows a corporation to indemnify and advance to an
officer, employee or agent who is not a director to the same
extent as a director or as otherwise set forth in the
corporation's articles of incorporation or bylaws or by a
resolution of the board of directors.
In addition, Section 55-8-57 permits a corporation to provide
for indemnification of directors, officers, employees or agents,
in its articles of incorporation or bylaws or by contract or
resolution, against liability in various proceedings and to
purchase and maintain insurance policies on behalf of these
individuals.
The foregoing is only a general summary of certain aspects of
North Carolina law dealing with indemnification of directors and
officers and does not purport to be complete. It is qualified in
its entirety by reference to the relevant statutes which contain
detailed specific provisions regarding the circumstances under
which and the person for whose benefit indemnification shall or
may be made and accordingly are set forth in Exhibit 99.2 hereto
and incorporated herein by reference.
Item 8. Exhibits.
The following exhibits are filed with or incorporated by
reference in this Registration Statement.
Exhibit No. Description of Exhibit
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P., as
to legality of securities to be registered.
23.1 Consent of Smith Helms Mulliss & Moore, L.L.P.
(included in Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP, independent
certified public accountants.
23.3 Consent of Arthur Andersen LLP, independent public
accountants.
24.1 Power of Attorney (included in signature page).
99.1 CT Communications, Inc. Omnibus Stock Compensation
Plan.
99.2 Provisions of North Carolina law relating to
indemnification (incorporated herein by reference
to Exhibit 99.2 of the CT Communications, Inc.
Registration Statement on Form S-8 (Registration
No. 33-59645) filed on May 26, 1995).
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar
value of securities offered would not exceed that which
was registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a
20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table
in the effective Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the Registration Statement is on Form S-3 or
Form S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the
Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Concord,
North Carolina, on October 28, 1997.
CT COMMUNICATIONS, INC.
By: /S/ MICHAEL R. COLTRANE
Michael R. Coltrane
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose
signature appears below constitutes and appoints Michael R.
Coltrane and Barry R. Rubens, and each of them acting
individually, his true and lawful attorneys-in-fact and agents
with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to
this registration statement, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with
the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them acting
individually, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them acting
individually, or his substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/S/ MICHAEL R. COLTRANE President, Chief Executive October 28, 1997
Michael R. Coltrane Officer and Director
(Principal Executive Officer)
/S/ L.D. COLTRANE III Chairman of the Board October 28, 1997
L.D. Coltrane III and Director
/S/ BARRY R. RUBENS Senior Vice President October 28, 1997
Barry R. Rubens (Principal Financial
and Principal Accounting
Officer)
/S/ JOHN R. BOGER, JR. Director October 28, 1997
John R. Boger, Jr.
/S/ O. CHARLIE CHEWNING Director October 28, 1997
O. Charlie Chewning
/S/ SAMUEL E. LEFTWICH Director October 28, 1997
Samuel E. Leftwich
/S/ JERRY H. MCCLELLAN Director October 28, 1997
Jerry H. McClellan
/S/ BEN F. MYNATT Director October 28, 1997
Ben F. Mynatt
/S/ PHIL W. WIDENHOUSE Director October 28, 1997
Phil W. Widenhouse
EXHIBIT INDEX
Sequential
Exhibit No. Description of Exhibit Page No.
5.1 Opinion of Smith Helms Mulliss &
Moore, L.L.P., as to legality of
securities to be registered.
23.1 Consent of Smith Helms Mulliss &
Moore, L.L.P. (included in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP,
independent certified public accountants.
23.3 Consent of Arthur Andersen LLP,
independent public accountants.
24.1 Power of Attorney (included in signature
page).
99.1 CT Communications, Inc. Omnibus
Stock Compensation Plan.
99.2 Provisions of North Carolina law
relating to indemnification (incorporated
herein by reference to Exhibit 99.2 of
the CT Communications, Inc.
Registration Statement on Form S-8
(Registration No. 33-59645) filed on
May 26, 1995).
SMITH HELMS MULLISS & MOORE, L.L.P.
Attorneys at Law
Post Office Box 31247
Charlotte, North Carolina 28231
Tel (704)343-2000
October 28, 1997
CT Communications, Inc.
68 Cabarrus Avenue, East
P. O. Box 227
Concord, North Carolina 28025
Re: Registration Statement on Form S-8 Filed October 28, 1997
100,000 Shares of Class B Nonvoting Common Stock to be Issued
Pursuant to CT Communications, Inc. Omnibus Stock Compensation Plan
Ladies and Gentlemen:
In connection with the possible offering and sale from time to time of all
or a portion of 100,000 shares of the Class B Nonvoting Common Stock of CT
Communications, Inc. (the "Shares"), upon the terms and conditions set forth
in the Registration Statement on Form S-8 (the "Regisstration Statement") filed
on October 28, 1997 by the registrant with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, we are of the opinion
that when (a) the Registration Statement shall become effective and (b)
the Shares have been sold upon the terms and conditions set forth in the
Registration Statement, the Shares will be validly authorized and validly
issued, fully paid and non-assessable.
We hereby consent to the filing of a copy of this opinion as Exhibit 5.1
of the Registration Statement.
Very Truly Yours,
/S/ SMITH HELMS MULLISS & MOORE, L.L.P.
Independent Auditor's Consent
The Board of Directors
CT Communications, Inc.:
We consent to incorporation by reference in the registration statement on
Form S-8 pertaining to the CT Communications, Inc. Omnibus Stock Compensation
Plan of our report dated February 28, 1997, related to the consolidated
balance sheets as of December 31, 1996 and 1995, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1996, and the related
financial statement schedule which report appears in the December 31, 1996
annual report on Form 10-K of CT Communications, Inc.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Charlotte, North Carolina
October 24, 1997
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of CT Communications, Inc. on Form
S-8 of our reports dated January 22, 1997 incorporated by reference in CT
Communications, Inc.'s Form 10-K, as amended, for the year ended
December 31, 1996 and to all references to our firm included in this
Registration Statement.
/S/ ARTHUR ANDERSEN LLP
Little Rock, Arkansas
October 23, 1997
CT COMMUNICATIONS, INC.
OMNIBUS STOCK COMPENSATION PLAN
EFFECTIVE APRIL 24, 1997
CT COMMUNICATIONS, INC.
OMNIBUS STOCK COMPENSATION PLAN
TABLE OF CONTENTS
ARTICLE I - PREAMBLE . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . . . . . .2
ARTICLE III - ADMINISTRATION . . . . . . . . . . . . . . . . . .6
ARTICLE IV - INCENTIVE STOCK OPTIONS . . . . . . . . . . . . . 11
ARTICLE V - NONQUALIFIED STOCK OPTIONS . . . . . . . . . . . . 13
ARTICLE VI - LIMITED STOCK APPRECIATION RIGHTS . . . . . . . . 14
ARTICLE VII - INCIDENTS OF STOCK OPTIONS AND STOCK RIGHTS. . . 15
ARTICLE VIII - RESTRICTED STOCK. . . . . . . . . . . . . . . . 17
ARTICLE IX - STOCK AWARDS. . . . . . . . . . . . . . . . . . . 20
ARTICLE X - PERFORMANCE SHARES . . . . . . . . . . . . . . . . 21
ARTICLE XI -CHANGES IN SHARES OR CHANGE OF CONTROL . . . . . . 23
ARTICLE XII - AMENDMENT AND TERMINATION. . . . . . . . . . . . 25
ARTICLE XIII - MISCELLANEOUS PROVISIONS. . . . . . . . . . . . 27
<PAGE>
CT COMMUNICATIONS, INC.
OMNIBUS STOCK COMPENSATION PLAN
ARTICLE I - PREAMBLE
1.1 The Plan is intended to secure for the Corporation, its Subsidiaries
and its shareholders the benefits arising from ownership the Corporation's
Common Stock by the executives, non-employee directors and key employees
of the Corporation and its Subsidiaries who are and will be responsible
for the Corporation's future growth. The Plan is designed to help
attract and retain for the Corporation and its Subsidiaries personnel of
superior ability for positions of exceptional responsibility, and to
motivate such personnel through added incentives to further contribute
to the success of the Corporation. It is also intended that
the Plan shall satisfy the requirements of Rule 16b-3 of the Act.
1.2 Awards under the Plan may be made to Participants in the form of (i)
Incentive Stock Options; (ii) Nonqualified Stock Options (to employees
and directors); (iii) Limited Stock Appreciation Rights; (iv) Restricted
Stock; (v) Stock Awards; (vi) Performance Shares; and (vii) other forms
of equity-based compensation as may be provided and are
permissible under this Plan and the state and federal laws.
1.3 The Plan shall be effective April 24, 1997 (the "Effective Date").
ARTICLE II - DEFINITIONS
DEFINITIONS. Except where the context otherwise indicates, the following
definitions apply:
2.1 "Act" means the Securities Exchange Act of 1934, as now in effect or as
hereafter amended.
2.2 "Agreement" means the separate written agreement evidencing each Award
granted to a Participant under the Plan.
2.3 "Award" means an award granted to a Participant in accordance with the
provisions of the Plan, including, but not limited to, a Stock Option,
Stock Right, Restricted Stock, Stock Award, Performance Share, or any
combination of the foregoing.
2.4 "Board of Directors" means the Board of Directors of the Corporation.
2.5 "Change in Control" shall mean (i) the effective date of a plan of merger
or consolidation of the Corporation with any other corporation as a
result of which the holders of the voting capital stock of the
Corporation as a group would receive less than 50% of the voting
capital stock of the surviving or resulting corporation, (ii) the
effective date of an agreement providing for the sale or transfer (other
than as security for obligations of the Corporation) of substantially all
the assets of the Corporation, or (iii) in the absence of a prior
expression of approval by the Board of Directors, the acquisition
except by inheritance or devise of more than 20% of the Corporation's
voting capital stock by any person within the meaning of Section
13(d)(3) of the Act, as amended, other than by a person, or group
including a person, who beneficially owned, as of the effective date of
the Plan, more than five percent of the Corporation's voting stock or
equity.
2.6 "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. (All citations to sections of the Code are to such
sections as they may from time to time be amended or renumbered.)
2.7 "Committee" means the Compensation Committee of the Board of Directors
or such other committee consisting of two (2) or more members as may be
appointed by the Board of Directors to administer this Plan pursuant to
Article III. To the extent required by Rule 16b-3 under the Act, the
Committee shall consist of individuals who are members of the
Board of Directors and at least two Non-Employee Directors. Committee
members may also be appointed for such limited purposes as may be
provided by the Board of Directors.
2.8 "Common Stock" means the Nonvoting Class B Common Stock, no par value,
of the Corporation to be issued pursuant to the Plan.
2.9 "Corporation" means CT Communications, Inc., a North Carolina corporation,
and its successors and assigns. "Corporation" also means CT
Communications, Inc. and its Subsidiaries, unless the context clearly
indicates otherwise.
2.10 "Director" means a member of the Board of Directors of the Corporation.
2.11 "Disability" means disability as determined under procedures established
by the Committee or in any Award.
2.12 "Early Retirement" means retirement from active employment with the
Corporation or any Subsidiary, with the express consent of the
Committee, pursuant to the early retirement provisions established by
the Committee or in any Award Agreement.
2.13 "Effective Date" shall be the date set forth in Section 1.3 of the Plan.
2.14 "Eligible Participant" means any executive, director or key employee of
the Corporation or its Subsidiaries, as shall be determined by the
Committee, as well as any other person, other than a person designated
as a Non-Employee Director whose participation the Committee determines
is in the best interest of the Corporation, subject to limitations as
may be provided by the Code, the Act or the Committee.
2.15 "ERISA" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
2.16 "Fair Market Value" means, with respect to any given day, the value for
a share of Common Stock determined by using the weighted average price
of the two (2) most recent arm's length trades between unrelated parties
of the Common Stock as reported to the Corporation.
2.17 "Incentive Stock Option" means a Stock Option granted under Article
IV of the Plan, and as defined in Section 422 of the Code.
2.18 "Limited Stock Appreciation Right" means a Stock Right which is exercisable
only in the event of a Change in Control, as described in Article VI of
this Plan, which provides for an amount payable solely in cash, equal
to the excess of the Limited Stock Appreciation Right Fair Market Value
of a share of Common Stock on the day the Stock Right is surrendered
over the price at which a Participant could exercise a related Stock
Option to purchase the share of Common Stock.
2.19 "Limited Stock Appreciation Right Fair Market Value" means a value
established by the Committee for the exercise of a Limited Stock
Appreciation Right.
2.20 "Non-Employee Director" shall have the meaning set forth in Rule 16b-3
under the Act.
2.21 "Nonqualified Stock Option" means a Stock Option granted under Article V
of the Plan.
2.22 "Normal Retirement" means retirement from active employment with the
Corporation or any Subsidiary on or after age 65, or pursuant to such
other requirements as may be established by the Committee or in any
Award.
2.23 "Option Grant Date" means, as to any Stock Option, the latest of:
(a) the date on which the Committee grants the Stock Option by entering
into an Award Agreement with the Participant;
(b) the date the Participant receiving the Stock Option becomes an
employee or a director of the Corporation or its Subsidiaries, to
the extent employment status is a condition of the grant or a
requirement of the Code or the Act; or
(c) such other date (later than the dates described in (i) and (ii)
above) as the Committee may designate.
2.24 "Participant" means an Eligible Participant to whom an Award has been
granted and who has entered into an Agreement evidencing the Award.
2.25 "Performance Share" means an Award under Article X of the Plan of a unit
valued by reference to a designated number of shares of Common Stock,
which value may be paid to the Participant by delivery of such property
as the Committee shall determine, including, without limitation, cash,
Common Stock, or any combination thereof, upon achievement
of such Performance Objectives during the Performance Period as the
Committee shall establish at the time of such Award or thereafter.
2.26 "Performance Objectives" shall have the meaning set forth in Article X
of the Plan.
2.27 "Performance Period" shall have the meaning set forth in Article X of
the Plan.
2.28 "Plan" means the CT Communications, Inc. Omnibus Stock Compensation
Plan, as amended and restated as of the date hereof, and as further
amended from time to time.
2.29 "Restricted Stock" means an Award of Common Stock under Article VIII of
the Plan, which Common Stock is issued with the restriction that the
holder may not sell, transfer, pledge, or assign such Common Stock and
with such other restrictions as the Committee, in its sole discretion,
may deem appropriate (including, without limitation, restrictions on
the right to vote such Common Stock, the right to receive any cash
dividends on such stock, the forfeiture of such Common Stock upon
certain events and the obligation to sell the stock back to the
Corporation at a fixed price), which restrictions may lapse separately
or in combination at such time or times, in installments or otherwise,
as the Committee may deem appropriate.
2.30 "Restriction Period" means the period commencing on the date an Award of
Restricted Stock is granted and ending on such date as the Committee
shall determine.
2.31 "Retirement" means Normal or Early Retirement.
2.32 "Stock Award" means an Award of Common Stock granted in payment of
compensation, as provided in Article IX of the Plan.
2.33 "Stock Option" means an Award under Article IV or V of the Plan of an
option to purchase Common Stock. A Stock Option may be either an
Incentive Stock Option or a Nonqualified Stock Option.
2.34 "Stock Right" means an Award of a Limited Stock Appreciation Right.
2.35 "Subsidiary" means a subsidiary corporation of the Corporation as that
term is defined in Code section 424(f). "Subsidiaries" means more
than one Subsidiary.
2.36 "Termination of Employment" means the discontinuance of employment of a
Participant with the Corporation or its Subsidiaries for any reason
other than a transfer to another member of the group consisting of the
Corporation and its Subsidiaries. The determination of whether a
Participant has discontinued employment shall be made by the Committee
in its discretion. In determining whether a Termination of Employment
has occurred, the Committee may provide that service as a consultant or
service with a business enterprise in which the Corporation has a
significant ownership interest shall be treated as employment with the
Corporation. The Committee shall have the discretion, exercisable
either at the time the Award is granted or at the time the
Participant terminates employment, to establish as a provision
applicable to the exercise of one or more Awards that during the
limited period of exercisability following Termination of Employment,
the Award may be exercised not only with respect to the number of
shares of Common Stock for which it is exercisable at the time of the
Termination of Employment but also with respect to one or more
subsequent installments for which the Award would have become
exercisable had the Termination of Employment not occurred.
ARTICLE III - ADMINISTRATION
3.1 This Plan shall be administered by the Committee. A Committee member
who is not a Non-Employee Director, with respect to action to be taken
by the Committee, shall not be able to participate in the decision to
the extent prescribed by Rule 16b-3 under the Act. The Committee, in
its discretion, may delegate to one or more of its members such of its
powers as it deems appropriate. The Committee also may limit the power
of any member to the extent necessary to comply with Rule 16b-3 under
the Act or any other law. Members of the Committee shall be appointed
originally, and as vacancies occur, by the Board of Directors, to serve
at the pleasure of the Board of Directors. The Board of Directors may
serve as the Committee, if by the terms of the Plan all Board of Directors
members are otherwise eligible to serve on the Committee.
3.2 The Committee shall meet at such times and places as it determines.
A majority of its members shall constitute a quorum, and the decision
of a majority of those present at any meeting at which a quorum is
present shall constitute the decision of the Committee. A memorandum
signed by all of its members shall constitute the decision of the
Committee without necessity, in such event, for holding an actual
meeting.
3.3 The Committee shall have the exclusive right to interpret, construe and
administer the Plan, to select the persons who are eligible to receive
an Award, and to act in all matters pertaining to the granting of an
Award and the contents of the Agreement evidencing the Award, including,
without limitation, the determination of the number of Stock Options,
Stock Rights, shares of Stock or Performance Shares subject to an Award
and the form, terms, conditions and duration of each Award, and any
amendment thereof consistent with the provisions of the Plan. All acts,
determinations and decisions of the Committee made or taken pursuant to
grants of authority under the Plan or with respect to any questions
arising in connection with the administration and interpretation of the
Plan, including the severability of any and all of the provisions
thereof, shall be conclusive, final and binding upon all Participants,
Eligible Participants and their beneficiaries.
3.4 The Committee may adopt such rules, regulations and procedures of
general application for the administration of this Plan, as it deems
appropriate.
3.5 Without limiting the foregoing Sections 3.1, 3.2, 3.3 and 3.4, and
notwithstanding any other provisions of the Plan, the Committee is
authorized to take such action as it determines to be necessary or
advisable, and fair and equitable to Participants, and to the
Corporation with respect to an Award in the event of a Change of Control
as defined in Article XI or other similar event. Such action may
include, but shall not be limited to, establishing, amending or waiving
the forms, terms, conditions and duration of an Award and the Award
Agreement, so as to provide for earlier, later, extended or additional
times for exercise or payments, differing methods for calculating
payments, alternate forms and amounts of payment, an accelerated
release of restrictions or other modifications. The Committee may take
such actions pursuant to this Section 3.5 by adopting rules and
regulations of general applicability to all Participants or to certain
categories of Participants, by including, amending or waiving terms and
conditions in an Award and the Award Agreement, or by taking action with
respect to individual Participants.
3.6 The aggregate number of shares of Common Stock which are subject to an
Award under the Plan shall be One Hundred Thousand (100,000) shares.
Such shares of Common Stock shall be made available from authorized and
unissued shares of the Corporation.
(a) If, for any reason, any shares of Common Stock or Performance
Shares awarded or subject to purchase under the Plan are not
delivered or purchased, or are reacquired by the Corporation, for
reasons including, but not limited to, a forfeiture of Restricted
Stock or termination, expiration or cancellation of a Stock
Option, Stock Right or Performance Share, or any other termination
of an Award without payment being made in the form of Common Stock
(whether or not Restricted Stock), such shares of Common Stock or
Performance Shares shall not be charged against the aggregate
number of shares of Common Stock available for Award under the
Plan, and shall again be available for Award under the Plan.
(b) For all purposes under the Plan, each Performance Share awarded
shall be counted as one share of Common Stock subject to an Award.
(c) To the extent a Stock Right granted in connection with a Stock
Option is exercised without payment being made in the form of
Common Stock (whether or not Restricted Stock), the shares of
Common Stock which otherwise would have been issued upon the
exercise of such related Stock Option shall not be charged
against the aggregate number of shares of Common Stock subject to
an Award under the Plan, and shall again be available for Award
under the Plan.
(d) The foregoing subsections (a), (b), and (c) of this Section 3.6
shall be subject to any limitations provided by Rule 16b-3 under
the Act.
3.7 Each Award granted under the Plan shall be evidenced by a written Award
Agreement. Each Award Agreement shall be subject to and incorporate (by
reference or otherwise) the applicable terms and conditions of the Plan,
and any other terms and conditions (not inconsistent with the Plan)
required by the Committee.
3.8 The Corporation shall not be required to issue or deliver any
certificates for shares of Common Stock prior to:
(a) the approval of the Plan by the shareholders of the Corporation; and
(b) the completion of any registration or qualification of such shares
of Common Stock under any federal or state law, or any ruling or
regulation of any government body which the Corporation shall, in
its discretion, determine to be necessary or advisable.
3.9 All certificates for shares of Common Stock delivered under the Plan
shall also 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 upon which the Common Stock is then
listed and any applicable federal or state laws, and the Committee may
cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions. In making such
determination, the Committee may rely upon an opinion of counsel for the
Corporation.
3.10 Subject to the restrictions on Restricted Stock, as provided in
Article VIII of the Plan and in the Restricted Stock Award Agreement,
each Participant who receives an Award of Restricted Stock shall have
all of the rights of a stockholder with respect to such shares of
Common Stock, including the right to vote the shares and receive
dividends and other distributions. Except as provided otherwise in the
Plan or in an Award Agreement, no Participant awarded a Stock Option,
Stock Right, Deferred Stock, Stock Award or Performance Share shall have
any right as a stockholder with respect to any shares of Common Stock
covered by his or her Stock Option, Stock Right, Deferred Stock, Stock
Award or Performance Share prior to the date of issuance to him or her
of a certificate or certificates for such shares of Common Stock.
3.11 If any reorganization, recapitalization, reclassification, stock
split-up, spin-off of one or more Subsidiaries that results in a
material distribution of shares, stock dividend, or consolidation of
shares of Common Stock, merger or consolidation of the Corporation or
its Subsidiaries or sale or other disposition by the Corporation or its
Subsidiaries of all or a portion of its assets, any other change in the
Corporation's or its Subsidiaries' corporate structure, or any
distribution to stockholders other than a cash dividend results in the
outstanding shares of Common Stock, or any securities exchanged
therefor or received in their place, being exchanged for a different
number or class of shares of Common Stock or other securities of the
Corporation, or for shares of Common Stock or other securities of
any other corporation; or new, different or additional shares or other
securities of the Corporation or of any other corporation being received
by the holders of outstanding shares of Common Stock, then equitable
adjustments shall be made by the Committee in:
(a) the limitation of the aggregate number of shares of Common Stock
that may be awarded as set forth in Section 3.6 of the Plan;
(b) the number and class of Common Stock that may be subject to an
Award, and which have not been issued or transferred under an
outstanding Award;
(c) the purchase price to be paid per share of Common Stock under
outstanding Stock Options and the number of shares of Common Stock
to be transferred in settlement of outstanding Stock Rights; and
(d) the terms, conditions or restrictions of any Award and Award
Agreement, including the price payable for the acquisition of
Common Stock; provided, however, that all adjustments made as the
result of the foregoing in respect of each Incentive Stock Option
shall be made so that such Stock Option shall continue to be an
Incentive Stock Option, as defined in Section 422 of the Code.
3.12 In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee
shall be indemnified by the Corporation against reasonable expenses,
including attorney's fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be
a party by reason of any action taken or failure to act under or in
connection with the Plan or any Award granted thereunder, and against
all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Corporation) or
paid by them in satisfaction of a judgment or settlement in any such
action, suit or proceeding, except as to matters as to which the
Committee member has been negligent or engaged in misconduct in the
performance of his duties; provided, that within sixty (60) days after
institution of any such action, suit or proceeding, a Committee member
shall in writing offer the Corporation the opportunity, at its own
expense, to handle and defend the same.
3.13 The Committee may require each person purchasing shares of Common Stock
pursuant to a Stock Option or other Award under the Plan to represent to
and agree with the Corporation in writing that he is acquiring the
shares of Common Stock for investment purposes and without a view to
distribution thereof. The certificates for such shares of Common Stock
may include any legend which the Committee deems appropriate to reflect
any restrictions on transfer.
3.14 The Committee shall be authorized to make adjustments in a performance
based criteria or in the terms and conditions of other Awards in
recognition of unusual or nonrecurring events affecting the Corporation
(or any Subsidiary, if applicable) or its financial statements or
changes in applicable laws, regulations or accounting principles. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award Agreement in the manner and to
the extent it shall deem desirable to carry it into effect. In the
event the Corporation (or any Subsidiary, if applicable) shall assume
outstanding employee benefit awards or the right or obligation to make
future such awards in connection with the acquisition of another
corporation or business entity, the Committee may, in its discretion,
make such adjustments in the terms of Awards under the Plan as it shall
deem appropriate.
3.15 The Committee shall have full power and authority to determine whether,
to what extent and under what circumstances, any Award shall be canceled
or suspended. Notwithstanding the foregoing, all outstanding Awards to
any Participant shall be canceled if (a) the Participant, without the
consent of the Committee, while employed by the Corporation or any
Subsidiary or for a period of two (2) years after termination of
such employment, directly or indirectly engages in the business of
sales, marketing, distribution or provision of telecommunications
services or equipment or other products sold by the Employee during his
employment with the Corporation, becomes associated with, employed by,
renders services to, or owns any interest in (other than any
nonsubstantial interest, as determined by the Committee), any business
that is in competition with the Corporation or with any business in
which the Corporation and its Subsidiaries has a substantial interest as
determined by the Committee; (b) materially breeches (as determined in
the sole discretion of the Committee) any term or provision of
any employment agreement entered into between a Participant and the
Corporation or a Subsidiary; (c) solicits, hires or recruits (or causes
or assists another party to solicit, hire or recruit) any person in the
employ of the Corporation or its Subsidiaries to leave his or her
employment with the Corporation or Subsidiary; or (d) is terminated for
cause as determined by the Committee.
3.16 The Committee may require in the Agreement or Award that upon the
termination of any Participant's employment with the Corporation or
Subsidiary for any reason other than retirement with the consent of the
Corporation or Subsidiary, the Corporation shall have the option, but
not the obligation, to purchase any part or all of any shares of the
Common Stock which were acquired by the Participant pursuant to this
Plan and owned by Participant at the date of the termination of his
employment with the Corporation or Subsidiary. The purchase price of
any share purchased by the Corporation pursuant to the repurchase option
under this Section 3.16 will be the Fair Market Value of a share of
Common Stock as of the date of the repurchase, and the Corporation must
exercise its right to repurchase within thirty (30) days of the
Participant's termination of employment.
ARTICLE IV - INCENTIVE STOCK OPTIONS
4.1 Each provision of this Article IV and of each Incentive Stock Option
granted hereunder shall be construed in accordance with the provisions
of Section 422 of the Code, and any provision hereof that cannot be so
construed shall be disregarded. Incentive Stock Options shall be
granted only to Eligible Participants who are not Directors, each of whom
may be granted one or more such Incentive Stock Options at such time or
times determined by the Committee following the Effective Date until a
date not more than 10 years from the Effective Date, subject to the
following conditions:
(a) The Incentive Stock Option price per share of Common Stock shall be
set in the Award Agreement, but shall not be less than one hundred
percent (100%) of the Fair Market Value of the Common Stock at the
time of the Option Grant Date.
(b) The Incentive Stock Option and its related Stock Right, if any, may
be exercised in full or in part from time to time within ten (10)
years from the Option Grant Date, or such shorter period as may be
specified by the Committee in the Award; provided, that in any
event, the Incentive Stock Option and related Stock Right shall
lapse and cease to be exercisable upon, or within such period
following, a Termination of Employment as shall have been
determined by the Committee and as specified in the Incentive Stock
Option Award Agreement or its related Stock Right Award Agreement;
provided, however, that such period following a Termination of
Employment shall not exceed three (3) months unless employment
shall have terminated:
(i) as a result of death or Disability, in which event, such
period shall not exceed one year after the date of death or
Disability; or
(ii) as a result of death, if death shall have occurred following a
Termination of Employment and while the Incentive Stock Option
or Stock Right was still exercisable, in which event, such
period shall not exceed one year after the date of death;
provided, further, that such period following a Termination of
Employment shall in no event extend the original exercise
period of the Incentive Stock Option or any related Stock Right.
(c) The aggregate Fair Market Value, determined as of the Option Grant
Date, of the shares of Common Stock with respect to which Incentive
Stock Options are first exercisable during any calendar year by any
Eligible Participant shall not exceed one hundred thousand dollars
($100,000); provided, however, to the extent permitted under
Section 422 of the Code:
(i) if a Participant's employment is terminated by reason of
death, Disability or Retirement and the portion of any
Incentive Stock Option that is otherwise exercisable during
the post-termination period applied without regard to the one
hundred thousand dollar ($100,000) limitation contained in
Section 422 of the Code is greater than the portion of such
option that is immediately exercisable as an Incentive Stock
Option during such post-termination period under Section 422,
such excess shall be treated as a Nonqualified Stock Option; and
(ii) if the exercise of an Incentive Stock Option is accelerated by
reason of a Change of Control, any portion of such Award that
is not exercisable as an Incentive Stock Option by reason of
the one hundred thousand dollar ($100,000) limitation
contained in Section 422 of the Code shall be treated as a
Nonqualified Stock Option.
(d) Incentive Stock Options shall be granted only to an Eligible
Participant who, at the time the Option Grant Date, does not own
stock possessing more than 10% of the total combined voting power
of all classes of stock of the Corporation.
(e) Subject to the limitations of Section 3.6, the maximum number of
shares of Common Stock subject to Incentive Stock Option Awards
shall be One Hundred Thousand (100,000).
(f) The Committee may adopt any other terms and conditions which it
determines should be imposed for the Incentive Stock Option to
qualify under Section 422 of the Code, as well as any other terms
and conditions not inconsistent with this Article IV as determined
by the Committee.
4.2 The Committee may at any time offer to buy out for a payment in cash,
Stock, or Restricted Stock an Incentive Stock Option previously granted,
based on such terms and conditions as the Committee shall establish and
communicate to the Participant at the time that such offer is made.
4.3 If the Incentive Stock Option Award Agreement so provides, the
Committee may require that all or part of the shares of Common Stock to
be issued upon the exercise of an Incentive Stock Option shall take the
form of Restricted Stock, which shall be valued on the date of exercise,
as determined by the Committee, on the basis of the Fair Market Value of
such Restricted Stock determined without regard to the deferral
limitations and/or forfeiture restrictions involved.
ARTICLE V - NONQUALIFIED STOCK OPTIONS
5.1 One or more Stock Options may be granted as Nonqualified Stock Options
to Eligible Participants to purchase shares of Common Stock at such time
or times determined by the Committee, following the Effective Date,
subject to the terms and conditions set forth in this Article V.
5.2 The Nonqualified Stock Option price per share of Common Stock shall be
established in the Award Agreement and may be less than one hundred
percent (100%) of the Fair Market Value at the time of the grant, or at
such later date as the Committee shall determine.
5.3 The Nonqualified Stock Option and its related Stock Right, if any, may
be exercised in full or in part from time to time within such period as
may be specified by the Committee or in the Award Agreement; provided,
that, in any event, the Nonqualified Stock Option and the related Stock
Right shall lapse and cease to be exercisable upon, or within such period
following, Termination of Employment as shall have been determined by
the Committee and as specified in the Nonqualified Stock Option Award
Agreement or Stock Right Award Agreement; provided, however, that such
period following Termination of Employment shall not exceed three (3)
months unless employment shall have terminated:
(a) as a result of Retirement or Disability, in which event, such
period shall not exceed one year after the date of Retirement or
Disability, or within such longer period as the Committee may
specify; or
(b) as a result of death, or if death shall have occurred following a
Termination of Employment and while the Nonqualified Stock Option
or Stock Right was still exercisable, in which event, such period
may exceed one year after the date of death, as provided by the
Committee or in the Award Agreement.
5.4 The Nonqualified Stock Option Award Agreement may include any other
terms and conditions not inconsistent with this Article V or in
Article VII, as determined by the Committee.
5.5 Nonqualified Stock Options may be made to Directors under the additional
provisions of this Section 5.5. Directors may be granted Nonqualified
Stock Options as provided in Sections 5.1 through 5.4 above only if the
grant of the Nonqualified Stock Options is approved in advance by the
full Board of Directors or by a committee of the Board of Directors
composed solely of two or more Non-Employee Directors as described by
Rule 16b-3 of the Act. All Awards under this Plan to Directors will be
made pursuant to this Article V, and no other Awards may be made to a
Director under any other Article or Section of the Plan.
ARTICLE VI - LIMITED STOCK APPRECIATION RIGHTS
The Committee may grant Limited Stock Appreciation Rights under this
Article VI. Limited Stock Appreciation Rights become exercisable only
in the event of a Change in Control, subject to such terms and
conditions as the Committee, in its sole discretion, may specify at
grant. Such Limited Stock Appreciation Rights shall be settled only in
cash. A Limited Stock Appreciation Right shall entitle the holder of
the related Stock Option to surrender such Stock Option, or any portion
thereof, to the extent unexercised in respect of the number of shares of
Common Stock as to which such Limited Stock Appreciation Right is
exercised, and to receive a cash payment equal to the difference between
(a) the Limited Stock Appreciation Right Fair Market Value (at the date
of surrender) of a share of Common Stock for which the surrendered Stock
Option or portion thereof is then exercisable, and (b) the price at
which a Participant could exercise a related Stock Option to purchase
the share of Stock. Such Stock Option shall, to the extent so surrendered,
thereupon cease to be exercisable. A Limited Stock Appreciation Right
shall be subject to such further terms and conditions as the Committee
shall, in its sole discretion, deem appropriate, including any
restrictions necessary to comply with Section 16(b) of the Act and Rule
16b-3 promulgated thereunder.
ARTICLE VII - INCIDENTS OF STOCK OPTIONS AND STOCK RIGHTS
7.1 Each Stock Option and Stock Right shall be granted subject to such terms
and conditions, if any, not inconsistent with this Plan, as shall be
determined by the Committee, including any provisions as to continued
employment as consideration for the grant or exercise of such Stock
Option or Stock Right and any provisions which may be advisable to comply
with applicable laws, regulations or rulings of any governmental authority.
7.2 A Stock Option or Stock Right shall not be transferable by the
Participant other than by will or by the laws of descent and
distribution, or, to the extent otherwise allowed by Rule 16b-3 under
the Act, and shall be exercisable during the lifetime of the Participant
only by the Participant or the Participant's guardian or legal
representative.
7.3 Shares of Common Stock purchased upon exercise of a Stock Option shall
be paid for in such amounts, at such times and upon such terms as shall
be determined by the Committee, subject to limitations set forth in the
Stock Option Award Agreement.
7.4 No cash dividends shall be paid on shares of Common Stock subject to
unexercised Stock Options.
7.5 In the event of death or Disability, the Committee, with the consent of
the Participant or his legal representative, may authorize payment, in
cash or in Common Stock, or partly in cash and partly in Common Stock,
as the Committee may direct, of an amount equal to the difference at the
time between the Fair Market Value of the Common Stock subject to a
Stock Option and the Option price in consideration of the surrender of
the Stock Option.
7.6 If a Participant is required to pay to the Corporation an amount with
respect to income and employment tax withholding obligations in
connection with (i) the exercise of a Nonqualified Stock Option,
(ii) certain dispositions of Common Stock acquired upon the exercise of
an Incentive Stock Option, (iii) the receipt of Limited Stock Appreciation
Rights or (iv) payments made pursuant to Section 7.5 hereof, then the
exercise of such Option shall not be effective unless such withholding
tax or other withholding liabilities shall have been satisfied in a
manner acceptable to the Corporation. The Committee, in its sole
discretion and subject to such rules as it may adopt, may permit the
Participant to satisfy the obligation, in whole or in part, by making an
irrevocable election that a portion of the total Fair Market Value of
the shares of Common Stock subject to the Nonqualified Stock Option
and/or with respect to certain dispositions of Common Stock acquired upon
the exercise of an Incentive Stock Option, be paid in the form of cash
in lieu of the issuance of Common Stock and that such cash payment be
applied to the satisfaction of the withholding obligations. The amount
to be withheld shall not exceed the statutory minimum Federal and State
income and employment tax liability arising from the Stock Option
exercise transaction. Notwithstanding any other provision of the Plan,
any election under this Section 7.7 is required to satisfy the
applicable requirements under Rule 16b-3 of the Act.
7.7 The Committee may permit the voluntary surrender of all or a portion of
any Stock Option granted under the Plan to be conditioned upon the
granting to the Participant of a new Stock Option for the same or a
different number of shares of Common Stock as the Stock Option
surrendered, or may require such voluntary surrender as a condition
precedent to a grant of a new Stock Option to such Participant. Subject
to the provisions of the Plan, such new Stock Option shall be
exercisable at the same price, during such period and on such other
terms and conditions as are specified by the Committee at the time the new
Stock Option is granted. Upon surrender, the Stock Options surrendered
shall be canceled and the shares of Common Stock previously subject to
them shall be available for the grant of other Stock Options.
7.8 The Corporation shall have a right of first refusal to purchase from the
Participant prior to any transfer or sale any part or all of any shares
of the Common Stock which were acquired by the Participant pursuant to
this Plan. The purchase price of any share purchased by the Corporation
pursuant to the right of first refusal under this Section 7.8 will be
the lesser of (i) the Fair Market Value of a share of Common Stock as of
the date of the proposed transfer or sale and (ii) the proposed price
per share to be paid by the proposed buyer or transferee. The
Corporation's right of first refusal may be exercised by the
Corporation, if at all and in its sole discretion, within ten (10) days
of receiving notice from the Participant of the proposed transfer or
sale. The Corporation may waive this right of first refusal at any time
and in whole or in part.
ARTICLE VIII - RESTRICTED STOCK
8.1 Restricted Stock Awards may be made to certain Participants as a reward
for past service and an incentive for the performance of future services
that will contribute materially to the successful operation of the
Corporation and its Subsidiaries. Awards of Restricted Stock may be
made either alone, in addition to or in tandem with other Awards granted
under the Plan and/or cash payments made outside of the Plan.
8.2 With respect to Awards of Restricted Stock, the Committee shall:
(a) determine the purchase price, if any, to be paid for such
Restricted Stock, which may be equal to or less than par value and
may be zero, subject to such minimum consideration as may be
required by applicable law;
(b) determine the length of the Restriction Period and whether any
events may accelerate or delay the end of the Restriction Period;
(c) determine any restrictions applicable to the Restricted Stock such
as service or performance, other than those set forth in this
Article VIII;
(d) determine if the restrictions shall lapse as to all shares of
Restricted Stock at the end of the Restriction Period or as to a
portion of the shares of Restricted Stock in installments during
the Restriction Period by means of one or more vesting schedules;
(e) determine if the Restricted Stock is subject to repurchase by the
Corporation or a right of first refusal at a predetermined price or
if the Restricted Stock may be forfeited entirely under certain
conditions;
(f) determine what, if any, performance goals may apply to the
Restriction Period to shorten or lengthen such period;
(g) determine if dividends and other distributions on the Restricted
Stock are to be paid currently to the Participant or withheld by
the Corporation or its Subsidiaries for the account of the
Participant; and
(h) generally determine the terms and conditions of each Restricted
Stock Award.
8.3 Awards of Restricted Stock must be accepted within a period of sixty (60)
days (or such shorter periods as the Committee may specify at grant)
after the Award date, by executing a Restricted Stock Award Agreement
and paying whatever price (if any) is required.
The prospective recipient of a Restricted Stock Award shall not have any
rights with respect to such Award, unless such recipient has executed a
Restricted Stock Award Agreement and has delivered a fully executed copy
thereof to the Committee, and has otherwise complied with the applicable
terms and conditions of such Award.
8.4 Except when the Committee determines otherwise, or as otherwise provided in
the Restricted Stock Award Agreement, if a Participant terminates
employment with the Corporation or its Subsidiaries for any reason
before the expiration of the Restriction Period, all shares of
Restricted Stock still subject to restriction shall be forfeited by the
Participant and shall be reacquired by the Corporation.
8.5 Except as otherwise provided in this Article VIII, no shares of
Restricted Stock received by a Participant shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period.
8.6 To the extent not otherwise provided in a Restricted Stock Award
Agreement, in cases of death, Disability or Retirement or in cases of
special circumstances, the Committee, if it finds that a waiver would be
appropriate, may elect to waive any or all remaining restrictions with
respect to all or any part of such Participant's Restricted Stock.
8.7 In the event of hardship or other special circumstances of a Participant
whose employment with the Corporation or any Subsidiary is involuntarily
terminated, the Committee may waive in whole or in part any or all
remaining restrictions with respect to any or all of the Participant's
Restricted Stock, based on such factors and criteria as the Committee may
deem appropriate.
8.8 The certificates representing shares of Restricted Stock may either:
(a) be held in custody by the Corporation until the Restriction Period
expires or until restrictions thereon otherwise lapse, and the
Participant shall deliver to the Corporation a stock power endorsed
in blank relating to the Restricted Stock; and/or
(b) be issued to the Participant and registered in the name of the
Participant, and shall bear an appropriate restrictive legend and
shall be subject to appropriate stop-transfer orders.
8.9 Except as provided in this Article VIII, a Participant receiving a
Restricted Stock Award shall have, with respect to the shares of
Restricted Stock covered by any Award, all of the rights of a
shareholder of the Corporation, including the right to vote the shares,
and the right to receive any dividends; provided, however, the Committee
may require that any dividends on such shares of Restricted Stock shall
be automatically deferred and reinvested in additional Restricted Stock
subject to the same restrictions as the underlying Award, or may require
that dividends and other distributions on Restricted Stock shall be
withheld by the Corporation or its Subsidiaries for the account of the
Participant. The Committee shall determine whether interest shall be
paid on amounts withheld, the rate of any such interest, and the other
terms applicable to such withheld amounts.
8.10 If and when the Restriction Period expires without a prior forfeiture of
the Restricted Stock subject to such Restriction Period, unrestricted
certificates for such shares shall be delivered to the Participant
(in exchange for the Restricted Stock certificates if the Participant
has possession of certificates with a restricted legend).
8.11 In order to better ensure that Award payments actually reflect the
performance of the Corporation and its Subsidiaries and the service of
the Participant, the Committee may provide, in its sole discretion, for
a tandem performance-based or other Award designed to guarantee a
minimum value, payable in cash or Common Stock to the recipient of a
Restricted Stock Award, subject to such performance, future service,
deferral and other terms and conditions as may be specified by the
Committee.
ARTICLE IX - STOCK AWARDS
9.1 A Stock Award shall be granted only in payment of compensation that has
been earned or as compensation to be earned, including, without
limitation, compensation awarded concurrently with or prior to the grant
of the Stock Award.
9.2 For the purposes of this Plan, in determining the value of a Stock
Award, all shares of Common Stock subject to such Stock Award shall be
valued at not less than one hundred percent (100%) of the Fair Market
Value of such shares of Common Stock on the date such Stock Award is
granted, regardless of whether or when such shares of Common Stock are
issued or transferred to the Participant and whether or not such shares of
Common Stock are subject to restrictions which affect their value.
9.3 Shares of Common Stock subject to a Stock Award may be issued or
transferred to the Participant at the time the Stock Award is granted,
or at any time subsequent thereto, or in installments from time to time,
as the Committee shall determine. If any such issuance or transfer
shall not be made to the Participant at the time the Stock Award is
granted, the Committee may provide for payment to such Participant,
either in cash or shares of Common Stock, from time to time or at the
time or times such shares of Common Stock shall be issued or transferred
to such Participant, of amounts not exceeding the dividends which would
have been payable to such Participant in respect of such shares of Common
Stock (as adjusted under Section 3.11) if such shares of Common Stock
had been issued or transferred to such Participant at the time such
Stock Award was granted. Any issuance payable in shares of Common
Stock under the terms of a Stock Award may, at the discretion of the
Committee, be paid in cash on each date on which delivery of shares
of Common Stock would otherwise have been made, in an amount equal to
the Fair Market Value on such date of the shares of Common Stock which
would otherwise have been delivered.
9.4 A Stock Award shall be subject to such terms and conditions, including,
without limitation, restrictions on the sale or other disposition of the
Stock Award or of the shares of Common Stock issued or transferred
pursuant to such Stock Award, as the Committee shall determine;
provided, however, that upon the issuance or transfer of shares pursuant
to a Stock Award, the Participant, with respect to such shares of Common
Stock, shall be and become a shareholder of the Corporation fully
entitled to receive dividends, to vote and to exercise all other rights
of a shareholder except to the extent otherwise provided in the Stock
Award. Each Stock Award shall be evidenced by a written Award Agreement
in such form as the Committee shall determine.
ARTICLE X - PERFORMANCE SHARES
10.1 Awards of Performance Shares may be made to certain Participants as an
incentive for the performance of future services that will contribute
materially to the successful operation of the Corporation and its
Subsidiaries. Awards of Performance Shares may be made either alone, in
addition to or in tandem with other Awards granted under the Plan and/or
cash payments made outside of the Plan.
10.2 With respect to Awards of Performance Shares, which may be issued for no
consideration or such minimum consideration as is required by applicable
law, the Committee shall:
(a) determine and designate from time to time those Participants to
whom Awards of Performance Shares are to be made;
(b) determine the performance period (the "Performance Period") and/or
performance objectives (the "Performance Objectives") applicable to
such Awards;
(c) determine the form of settlement of a Performance Share; and
(d) generally determine the terms and conditions of each such Award.
At any date, each Performance Share shall have a value equal to the
Fair Market Value, determined as set forth in Section 2.17.
10.3 Performance Periods may overlap, and Participants may participate
simultaneously with respect to Performance Shares for which different
Performance Periods are prescribed.
10.4 The Committee shall determine the Performance Objectives of Awards of
Performance Shares. Performance Objectives may vary from Participant to
Participant and between Awards and shall be based upon such performance
criteria or combination of factors as the Committee may deem
appropriate, including for example, but not limited to, minimum earnings
per share or return on equity. If during the course of a Performance
Period there shall occur significant events which the Committee expects
to have a substantial effect on the applicable Performance Objectives
during such period, the Committee may revise such Performance Objectives.
10.5 The Committee shall determine for each Participant the number of
Performance Shares which shall be paid to the Participant if the
applicable Performance Objectives are exceeded or met in whole or in part.
10.6 If a Participant terminates service with the Corporation or its
Subsidiaries during a Performance Period because of death, Disability,
Retirement or under other circumstances in which the Committee in its
discretion finds that a waiver would be appropriate, that Participant,
as determined by the Committee, may be entitled to a payment of Performance
Shares at the end of the Performance Period based upon the extent to
which the Performance Objectives were satisfied at the end of such
period and pro rated for the portion of the Performance Period during
which the Participant was employed by the Corporation or any Subsidiary;
provided, however, the Committee may provide for an earlier payment in
settlement of such Performance Shares in such amount and under such
terms and conditions as the Committee deems appropriate or desirable.
If a Participant terminates service with the Corporation or its
Subsidiaries during a Performance Period for any other reason, then such
Participant shall not be entitled to any payment with respect to that
Performance Period unless the Committee shall otherwise determine.
10.7 Each Award of a Performance Share shall be paid in whole shares of
Common Stock, or cash, or a combination of Common Stock and cash as the
Committee shall determine, with payment to be made as soon as
practicable after the end of the relevant Performance Period.
10.8 The Committee shall have the authority to approve requests by
Participants to defer payment of Performance Shares on terms and
conditions approved by the Committee and set forth in a written Award
Agreement between the Participant and the Corporation or its
Subsidiaries entered into in advance of the time of receipt or
constructive receipt of payment by the Participant.
10.9 The Committee shall have the authority to place restrictions on the
Performance Shares including, but not limited to, restrictions on
exercise or transfer following receipt of such shares.
ARTICLE XI -CHANGES IN SHARES OR CHANGE OF CONTROL
11.1 The total amount of shares for which Stock Options, Restricted Stock,
Stock Awards or Performance Shares may be granted under the Plan and
option rights (both as to the number of shares and the option exercise
price per share) shall be appropriately adjusted for any increase or
decrease in the number of outstanding shares of Common Stock resulting
from payment of a stock dividend on the Common Stock, a subdivision or
combination of shares of the Common Stock or from a reclassification of
the Common Stock, and (in accordance with the provisions contained in
the next following paragraph) in the event of a merger or consolidation.
11.2 At the time of a Change of Control, as defined in Section 2.5, any Award
granted hereunder shall become exercisable in full and restrictions
shall lapse as described in Section 11.3 through 11.5, subject to any
appropriate adjustments in the number of shares subject to the Stock
Option and the option exercise price per share.
11.3 Anything contained herein to the contrary notwithstanding, upon the
dissolution or liquidation of the Corporation each Award granted under
the Plan shall terminate; provided, however that following the adoption
of a plan of dissolution or liquidation, and in any event prior to the
effective date of such dissolution or liquidation (and as provided
above regarding certain mergers and consolidations), each Award granted
hereunder shall be exercisable in full and all restrictions lapse,
regardless of any provision contained in the Agreement with respect
thereto requiring that the Award or any portion thereof be outstanding
for a minimum amount of time prior to exercise, subject to all of the
terms hereof and of the Agreement with respect thereto not inconsistent
with this paragraph.
The grant of an Award pursuant to this Plan shall not affect in any way
the right or power of the Corporation or any of its Subsidiaries to make
adjustments, reclassification, reorganizations, or changes of its
capital or business structure, or to merge or consolidate, or to
dissolve, liquidate or sell, or transfer all or part of its business or
assets.
11.4 Upon the occurrence of a Change of Control, and unless otherwise
provided in the Agreement, all then outstanding Performance Shares with
respect to which the applicable Performance Period has not been completed
shall be paid as soon as practicable as follows:
(a) All Performance Objectives applicable to the Award of Performance
Shares shall be deemed to have been satisfied to the extent
necessary to result in payment of one hundred percent (100%) of the
Performance Shares covered by the Award; and
(b) The applicable Performance Period shall be deemed to have ended on
the date of the Change of Control;
(c) The payment to the Participant shall be the amount determined
either by the Committee, in its sole discretion, or in the manner
stated in the Award Agreement. This amount shall then be
multiplied by a fraction, the numerator of which is the number of
full calendar months of the applicable Performance Period that have
elapsed prior to the date of the Change of Control, and the
denominator of which is the total number of months in the original
Performance Period; and
(d) Upon the making of any such payment, the Award Agreement as to
which it relates shall be deemed canceled and of no further force
and effect.
11.5 Upon the occurrence of a Change of Control, the Committee in its
discretion, shall declare the restrictions applicable to Awards of
Restricted Stock to have lapsed, in which case the Corporation shall
remove all restrictive legends and stop-transfer orders applicable to
the certificates for such shares of Common Stock, and deliver such
certificates to the Participants in whose names they are registered, or
deliver to such Participants unrestricted certificates in exchange for
the Restricted Stock certificates.
ARTICLE XII - AMENDMENT AND TERMINATION
12.1 The Board of Directors, upon recommendation of the Committee, or
otherwise, at any time and from time to time, may amend or terminate the
Plan as may be necessary or desirable to implement or discontinue this
Plan or any provision thereof. To the extent required by Rule 16b-3
under the Act, no amendment, without approval by the Corporation's
stockholders, shall:
(a) alter the group of persons eligible to participate in the Plan;
(b) except as provided in Section 3.6 or 11.1, increase the maximum
number of shares of Common Stock or Stock Options or Stock Rights
which are available for Awards under the Plan;
(c) extend the period during which Incentive Stock Option Awards may
granted beyond April 24, 2007.
(d) limit or restrict the powers of the Committee with respect to the
administration of this Plan;
(e) change the definition of an Eligible Participant for the purpose of
an Incentive Stock Option or increase the limit or the value of
shares of Common Stock for which an Eligible Participant may be
granted an Incentive Stock Option;
(f) materially increase the benefits accruing to Participants under
this Plan;
(g) materially modify the requirements, as to eligibility for
participation in this Plan;
(h) modify the Plan or terms of awards in such a way that the members
of the Committee lose their status as Nonemployee Directors under
Rule 16b-3 of the Securities Exchange Act of 1934, as amended; or
(i) change any of the provisions of this Article XII.
12.2 No amendment to or discontinuance of this Plan or any provision thereof
by the Board of Directors or the stockholders of the Corporation shall,
without the written consent of the Participant, adversely affect, as
shall be determined by the Committee, any Award theretofore granted to
such Participant under this Plan; provided, however, the Committee
retains the right and power to:
(a) annul any Award if the Participant is terminated for cause as
determined by the Committee;
(b) provide for the forfeiture of shares of Common Stock or other gain
under an Award as determined by the Committee for competing against
the Corporation or any Subsidiary; and
(c) convert any outstanding Incentive Stock Option to a Nonqualified
Stock option.
12.3 If a Change of Control has occurred, no amendment or termination shall
impair the rights of any person with respect to an outstanding Award as
provided in Article XI.
ARTICLE XIII - MISCELLANEOUS PROVISIONS
13.1 Nothing in the Plan or any Award granted hereunder shall confer upon any
Participant any right to continue in the employ of the Corporation or
its Subsidiaries (or to serve as a director thereof) or interfere in any
way with the right of the Corporation or its Subsidiaries to terminate
his or her employment at any time. Unless specifically provided
otherwise, no Award granted under the Plan shall be deemed salary or
compensation for the purpose of computing benefits under any employee
benefit plan or other arrangement of the Corporation or its Subsidiaries
for the benefit of its employees unless the Corporation shall determine
otherwise. No Participant shall have any claim to an Award until it is
actually granted under the Plan. To the extent that any person acquires
a right to receive payments from the Corporation under the Plan, such
right shall, except as otherwise provided by the Committee, be no
greater than the right of an unsecured general creditor of the
Corporation. All payments to be made hereunder shall be paid from the
general funds of the Corporation, and no special or separate fund shall
be established and no segregation of assets shall be made to assure
payment of such amounts, except as provided in Section 8.8 with respect
to Restricted Stock and except as otherwise provided by the Committee.
13.2 The Corporation may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes which the
Corporation is required by any law or regulation of any governmental
authority, whether federal, state or local, domestic or foreign, to
withhold in connection with any Stock Option or the exercise thereof, any
Stock Right or the exercise thereof, or in connection with any other
type of equity-based compensation provided hereunder or the exercise
thereof, including, but not limited to, the withholding of payment of
all or any portion of such Award or another Award under this Plan until
the Participant reimburses the Corporation or its Subsidiaries for the
amount the Corporation or its Subsidiaries is required to withhold with
respect to such taxes, or canceling any portion of such Award or another
Award under this Plan in an amount sufficient to reimburse itself for
the amount it is required to so withhold, or selling any property
contingently credited by the Corporation for the purpose of paying such
Award or another Award under this Plan, in order to withhold or
reimburse itself for the amount it is required to so withhold.
13.3 The Plan and the grant of Awards shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by
any government or regulatory agency as may be required. Any provision
herein relating to compliance with Rule 16b-3 under the Act shall not be
applicable with respect to participation in the Plan by Participants who
are not subject to Section 16(b) of the Act.
13.4 The terms of the Plan shall be binding upon the Corporation, its
Subsidiaries and their successors and assigns.
13.5 Neither a Stock Option, Stock Right, nor any other type of equity-based
compensation provided for hereunder, shall be transferable except as
provided for herein. In addition to the transfer restrictions otherwise
contained herein, additional transfer restrictions shall apply to the
extent required by federal or state securities laws. If any Participant
makes such a transfer in violation hereof, any obligation of the
Corporation shall forthwith terminate.
13.6 This Plan and all actions taken hereunder shall be governed by the laws
of the State of North Carolina, except to the extent preempted by ERISA.
13.7 The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant by the Corporation, nothing contained herein shall give any
such Participant any rights that are greater than those of a general
creditor of the Corporation. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver shares of Common Stock or
payments in lieu of or with respect to Awards hereunder; provided,
however, that, unless the Committee otherwise determines with the
consent of the affected Participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.
13.8 Each Participant exercising an Award hereunder agrees to give the
Committee prompt written notice of any election made by such Participant
under Section 83(b) of the Code, or any similar provision thereof.
13.9 If any provision of this Plan or an Award Agreement is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award Agreement under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws or if it cannot be construed or
deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award Agreement, it
shall be stricken and the remainder of the Plan or the Award Agreement
shall remain in full force and effect.
