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EXHIBIT 4
McRAE INDUSTRIES, INC.
INCENTIVE EQUITY PLAN
Section 1. Purpose. The purpose of the McRae Industries, Inc. Incentive
Equity Plan (the "Plan") is to attract and retain managerial and other key
employees, and to reward such employees for making major contributions to the
success of McRae Industries, Inc. (the "Company"). The Plan is designed to meet
these objectives by offering performance-based stock and cash incentives and
other equity-based incentive awards, thereby providing such employees a
proprietary interest in the long term growth and performance of the Company.
Section 2. Definitions. For purposes of the Plan, unless the context
clearly indicates otherwise, the following terms shall have the meanings set
forth below:
(a) "Award" (collectively, "Awards") means an award or grant
made to a Participant under Sections 6 through 8, inclusive, of the
Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as in
effect from time to time, or any successor thereto, together with
rules, regulations and interpretations promulgated thereunder.
(d) "Common Stock" means the Class A Common Stock of the
Company or any security of the Company issued in substitution, exchange
or lieu thereof pursuant to Section 12 hereof.
(e) "Company" means McRae Industries, Inc., a Delaware
corporation, and any subsidiary corporations within the meaning of
Section 424(f) of the Code, as well as any successor corporation or
corporations thereto.
(f) "Compensation Committee" means the committee of the Board
constituted as provided in Section 3 of the Plan.
(g) "Disability" means the inability, by reason of physical or
mental infirmity or both, of an individual to perform satisfactorily
the duties then assigned to such individual or any other duties the
Company is willing to assign to such individual for which compensation
is payable. Disability shall be determined by the Compensation
Committee based upon such evidence as the Compensation Committee shall
deem sufficient and, upon medical evidence, if available, and, in the
discretion of the Compensation Committee, upon certification of such
Disability by an independent qualified physician.
(h) "Exchange Act" means the Securities Exchange Act of 1934,
as amended and in effect from time to time, or any successor statute.
(i) "Fair Market Value," with respect to a share of the Common
Stock at a particular time, shall be that value as determined by the
Compensation Committee which shall be (i) if such Common Stock is
listed on a national securities exchange or traded on the National
Market System, the mean between the highest price and the lowest price
at which the Common Stock shall have been sold regular way on a
national securities exchange or the National Market System on said
date, or, if no sales occur on said date, then on the next preceding
date on which there were such sales of Common Stock, (ii) if the Common
Stock shall not be listed on a national securities exchange or traded
on the National Market System, the mean between the bid and asked
prices last reported by the National Association of Securities Dealers,
Inc. for the over-the-counter
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market on said date or, if no bid and asked prices are reported on said
date, then on the next preceding date on which there were such
quotations, or (iii) if at any time quotations for the Common Stock
shall not be reported by the National Association of Securities
Dealers, Inc. for the over-the-counter market and the Common Stock
shall not be listed on any national securities exchange or traded on
the National Market System, the fair market value determined by the
Compensation Committee in such manner as it may deem reasonable.
(j) "Incentive Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of the Plan that is intended to
be and is specifically designated as an "incentive stock option" within
the meaning of Section 422 of the Code.
(k) "Non-Qualified Stock Option" means any Stock Option
granted pursuant to the provisions of Section 6 of the Plan that is not
an Incentive Stock Option.
(l) "Participant" means an employee of the Company who is
granted an Award under the Plan.
(m) "Plan" means the McRae Industries, Inc. Incentive Equity
Plan as set forth herein, as the same may be hereafter amended and from
time to time in effect.
(n) "Restricted Stock Grant" means an Award of shares of
Common Stock granted pursuant to the provisions of Section 7 of the
Plan.
(o) "Retirement" means the termination of an employee's
employment with the Company at any time after the last day of the
calendar month immediately preceding the calendar month in which the
employee attains the age of 65 years.
(p) "Stock Option" means an Award to purchase shares of Common
Stock granted pursuant to the provisions of Section 6 of the Plan.
Section 3. Administration.
(a) The Plan shall be administered by those members of the Audit and
Incentive Stock Option Committee of the Board who are "nonemployee directors"
for purposes of Rule 16b-3 under the Exchange Act.
(b) The Compensation Committee is authorized to grant Awards under the
Plan, to construe and interpret the Plan, to promulgate, amend and rescind rules
and regulations relating to the implementation of the Plan, and to make all
other determinations necessary or advisable for the administration of the Plan.
Any determination, decision or action of the Compensation Committee in
connection with the construction, interpretation, administration or application
of the Plan shall be final, conclusive and binding upon all persons
participating in the Plan and any person validly claiming under or through
persons participating in the Plan. The Company shall effect the granting of
Awards under the Plan in accordance with the determinations made by the
Compensation Committee, by execution of instruments in writing in such form as
are approved by the Compensation Committee.
Section 4. Duration of and Common Stock Subject to Plan.
(a) Term. The Plan shall be effective on December 17, 1998, subject to
approval by a plurality of the shares voting on approval of the Plan at the
Annual Meeting of Stockholders held on said date or any adjournment thereof. The
Plan shall terminate on December 16, 2008.
(b) Shares of Common Stock Subject to Plan. The maximum number of
shares of Common Stock with respect to which Awards may be granted under the
Plan, subject to adjustment as provided in Section 12 of the Plan, shall be
100,000 shares of the total authorized shares of the Common Stock. For the
purpose of computing the total number of shares of Common Stock available for
Awards under the Plan, there shall be counted against the foregoing limitation
the number of shares of Common Stock subject to issuance upon exercise or
settlement of Awards and other stock-based Awards in each case determined as of
the dates on which such Awards are granted. If
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any Awards are forfeited, terminated, settled in cash in lieu of stock,
exchanged for other Awards, or expire unexercised, the shares of Common Stock
which were theretofore subject to such Awards shall again be available for
Awards under the Plan to the extent of such forfeiture, termination, settlement,
exchange or expiration. Further, any shares of Common Stock which are used as
full or partial payment to the Company by a Participant of the purchase price of
shares of Common Stock upon exercise of Stock Options shall again be available
for Awards under the Plan. Common Stock which may be issued under the Plan may
be either authorized and unissued shares or issued shares which have been
reacquired by the Company. No fractional shares of Common Stock shall be issued
under the Plan.
(c) Individual Award Limit. In no event shall a Participant receive an
Award or Awards during any one calendar year covering in the aggregate more than
10,000 shares of Common Stock.
Section 5. Eligibility. Only managerial and other key employees shall
be eligible to be granted Awards under the Plan. The Compensation Committee
shall, from time to time, (i) determine those managerial and other key employees
to whom Awards shall be granted and the conditions of each such Award or issue
and sale and (ii) grant such Awards. No member of the Compensation Committee
while serving as such shall be eligible to receive any Award hereunder.
Section 6. Stock Options. Stock Options may be granted under the Plan
in the form of Incentive Stock Options or Non-Qualified Stock Options; and such
Stock Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the express
provisions of the Plan, as the Compensation Committee shall determine:
(a) Grant. Stock Options may be granted under the Plan on such
terms and conditions not inconsistent with the provisions of the Plan
and in such form as the Compensation Committee may from time to time
approve. Stock Options may be granted alone, in addition to or in
combination with other Awards under the Plan.
(b) Stock Option Price. The option exercise price per share of
Common Stock purchasable under a Stock Option shall be determined by
the Compensation Committee at the time of grant, but in no event shall
the exercise price of an Incentive Stock Option be less than 100% of
the Fair Market Value of the Common Stock on the date of the grant of
such Incentive Stock Option.
(c) Option Term. The term of each Stock Option shall be fixed
by the Compensation Committee; except that the term of Incentive Stock
Options shall not exceed 10 years after the date the Incentive Stock
Option is granted.
(d) Exercisability. A Stock Option shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Compensation Committee at the date of grant.
(e) Method of Exercise. A Stock Option may be exercised, in
whole or in part, by a Participant's giving written notice of exercise
to the Company specifying the number of shares to be purchased. Such
notice shall be accompanied by payment in full of the purchase price in
cash or, if acceptable to the Compensation Committee in its sole
discretion, in shares of Common Stock already owned by the Participant,
or by surrendering outstanding Awards denominated in stock.
(f) Special Rule for Incentive Stock Options. With respect to
Incentive Stock Options granted under the Plan, the aggregate Fair
Market Value (determined as of the date the Incentive Stock Option is
granted) of the number of shares with respect to which Incentive Stock
Options are exercisable for the first time by a Participant during any
calendar year shall not exceed $100,000 or such other limit as may be
required by the Code.
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Section 7. Restricted Stock Grants. Restricted Stock Grants shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the express provisions of the Plan,
as the Compensation Committee shall determine:
(a) Restricted Stock Grants. A Restricted Stock Grant is an
Award of shares of Common Stock to a Participant subject to such terms
and conditions as the Compensation Committee deems appropriate,
including, without limitation, restrictions on the sale, assignment,
transfer or other disposition of such shares and the requirement that
the Participant forfeit such shares back to the Company upon
termination of employment prior to vesting.
(b) Grants of Awards. Restricted Stock Grants may be granted
under the Plan in such form and on such terms and conditions as the
Compensation Committee may from time to time approve. Restricted Stock
Grants may be granted alone, in addition to or in combination with
other Awards under the Plan. Subject to the terms of the Plan, the
Compensation Committee shall determine the number of Restricted Stock
Grants to be granted to a Participant and the Compensation Committee
may impose different terms and conditions on any particular Restricted
Stock Grant made to any Participant. Each Participant receiving a
Restricted Stock Grant shall be issued a stock certificate in respect
of such shares of Common Stock. Such certificate shall be registered in
the name of such Participant, shall be accompanied by a stock power
duly executed by such Participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Award; which certificate evidencing such shares shall be held in
custody by the Company until the restrictions thereon shall have
lapsed.
(c) Restriction Period. Restricted Stock Grants shall provide
that in order for a Participant's rights to vest in such Awards, the
Participant must remain in the employment of the Company, subject to
relief for specified reasons, for a period of time commencing on the
date of the Award and ending on such later date or dates as the
Compensation Committee may designate at the time of the Award
("Restriction Period"). During the Restriction Period, a Participant
may not sell, assign, transfer, pledge, encumber or otherwise dispose
of shares of Common Stock received under a Restricted Stock Grant. The
Compensation Committee, in its sole discretion, may provide for the
lapse of restrictions in installments during the Restriction Period.
Upon expiration of the applicable Restriction Period (or lapse of
restrictions during the Restriction Period where the restrictions lapse
in installments), the Participant shall be entitled to receive his or
her Restricted Stock Grant or portion thereof, as the case may be.
(d) Payment of Awards. The Compensation Committee may, in its
discretion, permit a Participant to elect to receive, in lieu of shares
of unrestricted stock at the conclusion of a Restriction Period, a cash
payment equal to the Fair Market Value of the Restricted Stock vesting
on the date the restrictions expire.
(e) Rights as a Stockholder. A Participant shall have, with
respect to the shares of Common Stock received under a Restricted Stock
Grant, all of the rights of a stockholder of the Company, including the
right to vote the shares, and the right to receive any cash dividends.
Stock dividends issued with respect to the shares covered by a
Restricted Stock Grant shall be treated as additional shares under the
Restricted Stock Grant and shall be subject to the same restrictions
and other terms and conditions that apply to shares under the
Restricted Stock Grant with respect to which such dividends are issued.
Section 8. Other Stock-Based and Combination Awards.
(a) The Compensation Committee may grant other Awards under the Plan
pursuant to which Common Stock is or may in the future be acquired. Such other
stock-based Awards may be granted either alone, in addition to or in combination
with any other type of Award granted under the Plan.
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(b) The Compensation Committee may also grant Awards under the Plan in
combination with other Awards or in exchange of Awards, or in combination with
or as alternatives to grants or rights under any other employee plan of the
Company, including the plan of any acquired entity.
(c) Subject to the provisions of the Plan, the Compensation Committee
shall have authority to determine the individuals to whom and the time or times
at which such Awards shall be made, the number of shares of Common Stock to be
granted or covered pursuant to such Awards, and any and all other conditions
and/or terms of the Awards.
Section 9. Deferral Elections. The Compensation Committee may permit a
Participant to elect to defer his or her receipt of the payment of cash or the
delivery of shares of Common Stock that would otherwise be due to such
Participant by virtue of the exercise or earn out of an Award made under the
Plan. If any such election is permitted, the Compensation Committee may
establish rules and procedures for such payment deferrals, including the
possible (a) payment or crediting of reasonable interest on such deferred
amounts credited in cash, and (b) the payment or crediting dividend equivalents
in respect of deferrals credited in Common Stock.
Section 10. Termination of Employment. The terms and conditions under
which an Award may be exercised after a Participant's termination of employment
shall be determined by the Compensation Committee.
Section 11. Non-transferability of Awards. No Award under the Plan, and
no rights or interests therein, shall be assignable or transferable by a
Participant except by will or the laws of descent and distribution. During the
lifetime of a Participant, Stock Options are exercisable only by, and payments
in settlement of Awards will be payable only to, the Participant or his or her
legal representative.
Section 12. Adjustments Upon Changes in Capitalization, Etc.
(a) The existence of the Plan and the Awards granted hereunder shall
not affect or restrict in any way the right or power of the Board or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, other debentures, preferred or prior preference stocks, the
dissolution or liquidation of the Company or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding.
(b) In the event that a dividend shall be declared upon the Common
Stock payable in shares of Common Stock, the number of shares of Common Stock
then subject to any Award and the number of shares reserved for issuance
pursuant to the Plan but not yet covered by an Award shall be adjusted by adding
to each such share the number of shares which would be distributable thereon if
such share had been outstanding on the date fixed for determining the
stockholders entitled to receive such stock dividend. In the event that the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, merger or consolidation, then there shall
be substituted for each share of Common Stock subject to any Award and for each
share of Common Stock reserved for issuance pursuant to the Plan but not yet
covered by an Award, the number and kind of shares of stock or other securities
into which each outstanding share of Common Stock shall be so changed or for
which each such share shall be exchanged. In the event there shall be any change
other than as specified above in this Section 12, in the number or kind of
outstanding shares of Common Stock or of any stock or other securities into
which such Common Stock shall have been changed or for which it shall have been
exchanged, then if the Compensation Committee shall in its sole discretion
determine that such change equitably requires an adjustment in the number or
kind of shares theretofore reserved for issuance pursuant to the Plan but not
yet covered by an Award and of the shares then subject to an Award or Awards,
such adjustment shall be made by the Compensation Committee and shall be
effective and binding for all purposes of the Plan and each agreement entered
into with a Participant under the Plan. In the case of any such substitution or
adjustment as provided for in this Section 12, the Award price for each share
covered thereby prior to such substitution or adjustment will be the Award price
for all shares of stock or other securities which shall have been substituted
for such share or to which such share shall have been adjusted pursuant to this
Section 12. No adjustment or substitution provided for in this Section 12 shall
require the Company in any agreement with a
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Participant to issue a fractional share and the total substitution or adjustment
with respect to each agreement with a Participant shall be limited accordingly.
Section 13. Change in Control.
(a) In the event of a Change in Control (as defined below) of the
Company, (i) all Stock Options then outstanding shall become fully exercisable
as of the date of the Change in Control, whether or not then exercisable and
(ii) all restrictions and conditions of all Restricted Stock Grants then
outstanding shall be deemed satisfied as of the date of the Change in Control.
(b) "Change in Control" means:
(1) The acquisition by any "person" or "group" (as defined in
the Exchange Act) of beneficial ownership of a majority of the combined
voting power of the Company's then outstanding voting securities
(determined in accordance with Rule 13d-3 under the Exchange Act);
provided, however, that a Change in Control shall not include a sale by
the Company of securities of the Company to investors in connection
with an offering of securities that is subject to a registration
statement that has been declared effective under the Securities Act of
1933, as amended; or
(2) Approval by the stockholders of the Company and
consummation of (A) a reorganization, merger, consolidation or sale of
substantially all the assets of the Company, in each case, with or to
an entity of which Persons who were the stockholders of the Company
immediately prior to such reorganization, merger, consolidation or sale
do not immediately thereafter, beneficially own more than a majority of
the combined voting power of the outstanding voting securities of the
reorganized, merged, consolidated or purchasing entity (determined in
accordance with Rule 13d-3 under the Exchange Act); or (B) a
liquidation or dissolution of the Company.
Section 14. Amendment and Termination. Without further approval of the
stockholders, the Board may at any time terminate the Plan, or may amend it from
time to time in such respects as the Board may deem advisable, except that the
Board may not, without approval of the stockholders, make any amendment which
would (i) require stockholder approval for Incentive Stock Options granted or to
be granted under the Plan to qualify as incentive stock options within the
meaning of Section 422 of the Code or (ii) require stockholder approval under
applicable law or the rules of any national securities exchange upon which the
Common Stock is listed at the time such amendment is proposed.
Section 15. Miscellaneous.
(a) Tax Withholding. The Company shall have the right to deduct from
any settlement, including the delivery or vesting of shares, made under the Plan
any federal, state or local taxes of any kind required by law to be withheld
with respect to such payments or to take such other action as may be necessary
in the opinion of the Company to satisfy all obligations for the payment of such
taxes. If Common Stock is used to satisfy tax withholding, such stock shall be
valued based on the Fair Market Value when the tax withholding is required to be
made.
(b) No Right To Employment. Neither the adoption of the Plan nor the
granting of any Award hereunder shall confer upon any employee of the Company
any right to continued employment with the Company, nor shall it interfere in
any way with the right of the Company to terminate the employment of any of its
employees at any time, with or without cause.
(c) Unfunded Plan. The Plan shall be unfunded and the Company shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan. Any liability of the Company to any person with respect
to any Award under the Plan shall be based solely upon any contractual
obligations that may be effected pursuant to the Plan. No such obligation of the
Company shall be deemed to be secured by any pledge of, or other encumbrance on,
any property of the Company.
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(d) Payments to Trust. The Compensation Committee is authorized to
cause to be established a trust agreement or several trust agreements whereunder
the Company may make payments of amounts due or to become due to Participants in
the Plan.
(e) Engaging in Competition With Company. In the event a Participant's
employment with the Company is terminated for any reason whatsoever, and within
12 months after the date thereof such Participant accepts employment with any
competitor of, or otherwise engages in competition with, the Company, the
Compensation Committee, in its sole discretion, may require such Participant to
return to the Company the economic value of any Award which is realized or
obtained (measured at the date of exercise, vesting or payment) by such
Participant at any time during the period beginning on that date which is 6
months prior to the date of such Participant's termination of employment with
the Company.
(f) Securities Law Restrictions. No shares of Common Stock shall be
issued under the Plan unless counsel for the Company shall be satisfied that
such issuance will be in compliance with applicable Federal and state securities
laws. Certificates for shares of Common Stock delivered under the Plan may be
subject to such stop-transfer orders and other restrictions as the Compensation
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
securities law. The Compensation Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.
(g) Award Agreement. Each Participant receiving an Award under the Plan
shall enter into an agreement with the Company in a form specified by the
Compensation Committee agreeing to the terms and conditions of the Award and
such related matters as the Compensation Committee shall, in its sole
discretion, determine.
(h) Costs of Plan. The costs and expenses of administering the Plan
shall be borne by the Company.
(i) Governing Law. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware.
